Governing Body

27 April 2023

Investment in Drury

File No.: CP2023/03898

Te take mō te pūrongo

Purpose of the report

1. To endorse the infrastructure investment required to support the full development planned for Drury over the next 30 years.

Whakarāpopototanga matua

Executive summary

2. Drury has been a key part of Auckland’s plans for growth since 2012. In this time the council has worked with the government and private sector on planning for growth in the area. Structure planning was completed in 2019.

3. Over the next 40 years the Drury growth area is forecast to grow to a city the size of Napier. The population is predicted to increase by 58,000, with 23,000 new households, and 9,000 new jobs.

4. Development is already occurring and consents have been lodged for over 6,000 residential dwellings and a substantial quantity of business floor space. At this time, taking into account the recent plan changes, over half the expected dwelling capacity has been live zoned.

5. Given the council’s limited resources, the 10-year Budget 2021-2031, and the associated 30-year Infrastructure Strategy, focussed investment in growth infrastructure on the investment priority areas (IPAs) including Drury. With recent land use planning changes allowing for greater intensification across the existing Auckland urban area, demand for new infrastructure in other existing urban areas will rise. The council will be able to consider adjusting financial settings to enable more areas to be added to the priority list through the 10-year budgeting process.

6. Government and council investment in infrastructure (transport, three waters, community facilities, and parks) to support growth in the Drury growth area is estimated at around $4.2 billion. The council share of this investment will be $2.329 billion. Watercare has provided for $223.5 million of water and wastewater investment in the 10-year Budget 2021-2031. Requirements for additional water and wastewater investment will be established as development proceeds. Council Stormwater investments are dependent on location and form of development and will be confirmed as development progresses.

7. Transport is the key element with $3.3 billion of government, ($1.665 billion) and council, ($1.622 billion), investment planned for a public transport focused system based around connection to the rail network. The council’s investment will provide connections to the rail stations, including bus lanes and active modes, with the government developing the two Drury rail stations and upgrading State Highway 1.

8. The council plans to invest $524 million to provide 43 new parks across the Drury-Ōpaheke area requiring 32.4 hectares of land. A single, multi-purpose facility, forecast to cost $183 million is also planned for 2039 that will house a community facility, leisure centre, library and a local pool.

9. The council investments proposed are listed in Attachment A: 30-year capital expenditure programme for Drury: Project List. Endorsing this programme of proposed works will provide clarity about the council’s intentions, facilitate planning with other infrastructure providers, and support planning for their financing and funding. The uncertainty associated with long-term planning is recognised in the three yearly review of our infrastructure planning priorities. This allows the council to manage the risk of the pace of growth changing from our forecasts and consequent changes in the required infrastructure.

10. Officers considered continuing with our current 10-year planning focus. However, this would continue uncertainty for developers, landowners, and other infrastructure providers. It would also make it difficult to recover a fair share of the funding of expected capital expenditure in Years 11-30 from early developers, risking future investment and placing more demand on future ratepayers. Officers consider that we have sufficient certainty now to endorse the programme.

Ngā tūtohunga

Recommendation/s

That the Governing Body:

a) tuhi ā-taipitopito / note that the council’s 10-year budget 2021-2031 and its associated 30-year Infrastructure Strategy identifies Drury as one of several priority growth areas in which the council intends to focus its investment to support growth;

b) tuhi ā-taipitopito / note that the proposed 30-year programme of proposed Auckland Council capital expenditure for Drury set out in Attachment A to this report includes $2.329 billion of investment broken down into:

i) $417 million in the first 10 years, which is already included in the 10-year budget 2021-2031; and

ii) an additional $1.911 billion of investment for delivery beyond 2031.

c) ohia / endorse the 30-year programme of proposed works for Drury set out in Attachment A as those which it intends to deliver, subject to available funding and to (d) below;

d) tuhi ā-taipitopito / note that the precise scope and timing of investments included in the programme will be subject to review as part of the development of future council long-term plans, the development and on-going review of the Future Development Strategy and Auckland Transport Regional Land Transport Plans.

Horopaki

Context

Planning for urbanisation

Identifying and phasing the development area

11. The first Auckland Plan, adopted in 2012, identified the Drury area as a “greenfield area of investigation”. The plan said that “These areas either have existing infrastructure or, are viable areas for the provision of new infrastructure. They are close to or can provide new employment and new homes and are relatively unconstrained by environmental factors.”^{^[2]}

12. The Proposed Auckland Unitary Plan which was notified on 30 September 2013 identified the Drury growth area as Future Urban Zone (FUZ). The proposed plan defined this as “a transitional zone which provides for the land to be used for rural activities until it is able to be developed for urban activities, via the structure plan and plan change process”^{^[3]}.

13. From 2014, three Special Housing Areas (SHAs) were proposed in the Drury FUZ. These were Drury South (2016), Auranga (2015), and Bellfield (2014). They were approved and development in these areas is well under way. This initiated demand for new development infrastructure in Drury.

14. The first Future Urban Land Supply Strategy (FULSS), in 2015, set out an expected timeline for the transition of FUZ land into urban development.

15. The Auckland Unitary Plan decisions 2016 confirmed the operative FUZ zoning for Drury.

16. The FULSS was updated in 2017 with revised scheduling of urban development of the FUZ. The scheduling indicated that parts of Drury West north of State Highway 22 would be development ready from 2022 and that the remainder of Drury would be development ready between 2028 and 2032. This phasing was reconfirmed in the council’s Development Strategy, part of The Auckland Plan 2050 adopted in 2018.

Structure plan

17. The Drury–Opāheke Structure Plan, completed in August 2019, guides the layout of urban residential and business zones, open space and infrastructure for urban development of the Drury FUZ.

18. The structure plan area was expected to include, over 30 years, “about 22,000 houses and about 12,000 jobs with a population of about 60,000. By comparison, this is a population similar in size to that of Rotorua or Napier.”^{^[4]}

Accelerated development

19. Eight private plan changes have been approved since 2016 that rezone Drury FUZ areas to Urban zoning. These have provided substantial areas of operative residential, centre and business mixed use zoning, and the pattern of development has broadly followed that indicated in the Drury-Opāheke Structure Plan.

20. For some of these areas (particularly in Drury East) the zoning change has occurred in advance of the timelines indicated in the FULSS, and some of the plan changes have triggers built in that only allow development on completion of certain infrastructure provision.

Growth projections

21. Latest projections indicate that the total growth will be similar to that anticipated in the 2019 structure plan but with it now expected over a 40-year horizon (rather than 30-years). This slower path reflects increased competition from new development opportunities being enabled, via Plan Change 78 (NPS-UD and MDRS), in higher demand locations within the existing urban area.

22. It is projected that between 2022 and 2060 the population of the Drury growth area (comprised of the structure plan area, the existing Drury township, and the Bellfield and Auranga SHAs) will grow by over 58,000, with over 23,000 new households and almost 9,000 new jobs (noting an additional 6,000 jobs are also expected to come in Drury South over this time).

23. As with all projections these are based on assumptions made following consideration of the information currently available to the council on projected region-wide population growth, the location of development activity around the region in response to demand from households, assumptions of enabling infrastructure delivery and the stated intentions of the development community.

24. The charts below show the projected cumulative growth in the Drury growth area from 2022 onwards.^{^[5]}

Prioritisation of infrastructure investment

25. In the development of its 10-year Budget 2021-2031, and the associated 30-year Infrastructure Strategy, the council noted that Auckland’s population continues to grow rapidly. The demand for new infrastructure is rising alongside a growing need to look after existing networks.

26. The council had major and smaller projects underway across the region to support growth but noted that the capacity to support that growth is not unlimited and prioritisation was required.

27. A few key locations were identified to focus the limited resources. These areas (sometimes referred to as Infrastructure Priority Areas, or IPAs) included:

· Auckland Housing Programme (Mt Roskill, Oranga, Māngere, and Northcote) and Tamaki

· North West (including Red Hills, Whenuapai and Westgate)

· Drury

· CRL Stations (Mt Eden and Karangahape)

28. While this report discusses planned investment for Drury, development in the other priority areas continues but is at different stages.

Auckland Housing Programme

· Existing development by Kāinga Ora and other developers continues.

· The council and Kāinga Ora are working together to establish a long-term investment programme to support the projected long-term development of these areas.

Inner North West

· The council is working to understand the infrastructure required to support the projected long-term development of these areas.

CRL Stations

· Work is being led by Eke Panuku and Kāinga Ora to enable optimum development of the areas following completion of the CRL project. This includes work around the infrastructure required.

29. Recent land use planning changes, such as the National Policy Statement on Urban Development and the Medium Density Residential Standards, have enabled a greater level of intensification across the existing Auckland urban area. Enabling more households to locate in relatively accessible locations will increase the demand for new infrastructure in those areas and, conversely, may be expected to lead to demand at relatively less accessible locations at the urban periphery being lower than otherwise.

30. The council’s capacity to invest remains limited but it could choose, through the 10-year budgeting process, to adjust financial settings to enable more areas to be added to the priority list noting that this would inevitably require some difficult trade-off decisions. This prioritisation will be guided by the Future Development Strategy which is currently in development and will be adopted later this year.

Tātaritanga me ngā tohutohu

Analysis and advice

Identifying Drury infrastructure requirements

31. The Auckland Council group has been working with central government since 2015 to identify the infrastructure required to ensure the Drury-Ōpaheke area develops into a well-functioning urban environment.

Transport infrastructure

32. Drury’s location alongside the rail network meant transport planning was undertaken with a focus on connections to rail stations, including bus lanes and active transport modes.

33. The Strategic Growth Alliance developed a plan for a transport network in 2019 that, if provided in time, would enable a less car-dependent community. Jobs, education and services, both locally and in other parts of the region, would be able to be accessed through public and active transport.

34. The estimated total cost of the planned transport network is approximately $4.8 billion. This includes components that would normally be provided by Waka Kotahi, Kiwirail, developers, and Auckland Council. It does not include local components within developments, such as local roads.

35. On 29 January 2020 the Government announced the New Zealand Upgrade Programme which included direct Crown investment in transport infrastructure for Auckland. This programme includes a number of key strategic projects that will support the development of Drury such as the Drury rail stations, upgrades to State Highway 1, and electrification of the rail line between Papakura and Pukekohe. While these projects play a key role in the transport plan for Drury, they also provide wider regional, and national, benefits.

36. Alongside this we expect investment to be provided by Waka Kotahi (for state highways), and directly by developers to address the mitigation requirements of their resource consents, through the delivery of collector roads and their share of the cost of arterial roads. Given these the transport investment proposed to be included in the council group’s plans, over the 2021-2051 period, is $1.622 billion.

$ million	Projected total cost
Auckland Council group^{^[6]}	1,622
New Zealand Upgrade Programme	1,423
Waka Kotahi (state highways)	242
Developer mitigation	1,545
Total	4,832

Parks and community infrastructure

37. The requirements for parks and community infrastructure is based on the provisions metrics Open Space Provision Policy and the Community Facilities Network Plan. The council plans to provide 43 new parks across the Drury-Ōpaheke area with a total land requirement of 32.4 hectares. This is projected to cost $524 million. A single, multi-purpose facility is also planned for 2039 that will house a community facility, leisure centre, library and a local pool. This is projected to cost $183 million.

Water supply infrastructure

38. The transmission infrastructure required to provide water supply services across the development area has been assessed by Watercare Services Limited. Watercare’s investment in water and wastewater infrastructure will be funded by Infrastructure Growth Charges. Veolia manages the local network between the Flannigan Road bulk supply point (BSP) and the developments.

39. In the eastern part of the Drury area there is existing capacity in the bulk water network to support the first three developments proposed. The infrastructure beyond the BSP is for the developers to deliver and fund.

40. Watercare assess that current bulk water supply infrastructure is sufficient to support all anticipated development in Drury West. This is currently supplied from the Flannigan Road BSP, which also supports Drury East. To bring the local network across to Drury West connections to bulk supply points will be required. These discussions and consents are managed by Veolia.

Wastewater infrastructure

41. Watercare have also assessed the necessary wastewater infrastructure required to support the expected development in the Drury-Ōpaheke area.

42. The existing wastewater network has sufficient capacity to support the initial growth. To support future development across the area, there will need to be upgrades to the existing transmission network.

43. Areas within Drury West are serviced by several wastewater projects, however there are known wastewater infrastructure constraints that require investment to address.

44. Watercare’s Asset Management Plan (AMP) identifies two projects (estimated for completion around 2026/2027) providing a transmission wastewater network to the north-western part of Drury West 1 between Jesmond Road and the Bremner Road Pumpstation. Further extensions are required to extend the network further into Drury West 1 and enable development.

45. Supporting stage 2 of the Drury West area will require additional investment in wastewater infrastructure to alter the current timing between 2029 and 2032.

Stormwater infrastructure

46. The Drury-Opāheke Structure Plan identifies flood hazards as the most prominent risk associated with urban development in the area. The Slippery Creek floodplain is the largest floodplain covering 260 hectares in the northern portion of Drury-Ōpaheke.

47. The structure plan proposes floodplains be kept free of urban development in accordance with Auckland Unitary Plan rules and states urban land uses may be unsuitable for much of the Slippery Creek floodplain. Growth projections have been prepared assuming no development will occur across the Slippery Creek floodplain.

48. Of the eight approved plan changes in Drury-Ōpaheke, development activities are not proposed in the floodplain and any further development will be subject to the Auckland Unitary Plan rules managing development at risk of flood hazards.

49. Stormwater infrastructure requirements are highly dependent on the specific location and form of development and are largely delivered directly by developers. Council investment occurs where coordination between developers is needed or where large-scale infrastructure is needed to support a wider area across multiple developments.

50. Stormwater assessments and engagement with developers in Drury is being continued by council staff. At this stage limited council stormwater investment is planned in the Drury-Ōpaheke area but this will continually be reviewed as development progresses.

Total council group infrastructure required

51. The total council group infrastructure investment identified through the planning processes discussed above that will be required in order to support the full development of the Drury area over the next 30 years is included in Attachment A. This will be continually reviewed as plans develop.

52. The table below shows a summary of the projected cost of this investment by activity (infrastructure type).

Infrastructure $ million	Projected total cost
Infrastructure $ million	2021-2031	2031-2041	2041-2051	Total
Transport	246	495	880	1,622
Parks	171	196	156	524
Multi-purpose facility	0	183	0	183
Water Supply	The 10-year Budget 2021-2031 includes $223.5 million of water and wastewater investment. Future investment plans to be specified by Watercare as development progresses.
Wastewater management
Stormwater management	0	0	0	0
Total	417	874	1,036	2,329^{^[7]}

Options assessment

Endorse the 30-year programme now (recommended option)

53. The 10-year budget and its associated Infrastructure Strategy notes that “sizeable investment in growth priority areas will continue beyond 2021-2031”^{^[8]} and identifies investment in Drury under major projects for years 11-30 for each infrastructure type. The Infrastructure Strategy does not itemise, cost, or phase this investment (this is a function of the Asset Management Plans for each infrastructure type).

54. Endorsing the programme provided in Attachment A will provide increased clarity about the council’s current intentions for investment. This will support better alignment of land-use decisions, including the phasing of development, and planning for other network infrastructure providers.

55. For the council, the increased detail will support funding and financing of the required investment utilising tools currently in use (including Development Contributions and rates) and potentially new tools such as targeted rates and those enabled under the Infrastructure Funding and Financing Act 2020.

56. Endorsing this 30-year programme will enable more transparency about the council’s intentions as it develops its next Infrastructure Strategy.

57. The council will continue to update both its 10-year Budget and Infrastructure Strategy every three years. The agreed capital expenditure programme for Drury will be reviewed at the same time, to ensure that it reflects the latest information on central government investment, progress and nature of Drury development and technological advances.

58. Endorsing the 30-year approach involves risks associated with over or underestimating the scope and cost of investment that will be incurred many years in the future. That risk is greater than with a 10-year programme. However, the 30-year programme can be revised and refined as circumstances change, in the normal way, and the possibility of changes should not prevent endorsement of the programme now.

59. If development is slower than projected, the council can make changes to the timing of its investment. If a sector of the development is not rezoned to urban, and the development is no longer predicted, the required infrastructure can be reviewed through future plans and scaled back.

Continue with 10-year planning approach

60. The council could choose to continue to only include detailed infrastructure plans for Drury in its 10-year budget and continue to identify further investment over years 11-30 without itemisation, cost or phasing of this investment.

61. A 10-year planning approach reduces the risks associated with over or underestimating the scope and cost of investment that will be incurred many years in the future.

62. This approach would continue the current level of uncertainty around the infrastructure provision and could lead to misaligned investment plans between the public and private sectors.

63. Planning only for 10-year phases of the development will limit the council’s ability to recover the costs of all the investments from all the beneficiaries. A fair and appropriate share of later expenditure that looks to address the cumulative impacts of the development would not be able to be collected from early developers.

64. Failing to plan adequately for the long-term has the potential to lead to underinvestment (or delayed investment) in infrastructure resulting in lost productivity, higher congestion, worse climate outcomes and poorer safety outcomes.

Defer endorsement of 30-year programme

65. Council could defer the endorsement of the full infrastructure programme until we have more certainty around the specifics of growth projections, projects and costs.

66. Levels of certainty in relation to growth projections, project scope and costs will always improve with time, and a greater level of certainty may be seen as an advantage. However, a degree of uncertainty will still remain. Officers consider that at this time we do have sufficient certainty in order to endorse the programme as that which the Council’s group intends to deliver and the capital expenditure it expects to incur.

67. Deferring the endorsement of the full programme will also impact on the Council’s ability to recover some of those costs from early developers through development contributions. This under-recovery will most likely need to be covered by ratepayers from across the region.

Community views

68. Extensive public, stakeholder, and mana whenua engagement was undertaken through the development of both the structure plan and the transport network plan.

69. The final structure plan notes that most of the feedback received on the structure plan concerned the infrastructure, with over two thirds of written feedback providing specific transport related comments. “The key message that emerged through the feedback was the importance of the new roads and infrastructure being built as soon as possible, particularly before any significant development occurs. This need was reiterated through feedback items noting that the current infrastructure will not cope with additional development in the structure plan area, and concerns about impacts such as increased congestion.”^{^[9]}

70. Additionally, through the 2022 consultation on the amendment to the Development Contributions policy feedback was received on the infrastructure needs identified. Feedback noted that infrastructure would be required to support the area as it grows. It was also suggested in the feedback that to date planning and infrastructure in Drury has not been integrated.

Conclusion

71. Auckland Council has signalled for over a decade that the Drury area provides greenfield development capacity to support Auckland’s long-term growth. This opportunity has led to private investment in land, plans for residential and commercial development, and a number of approved private plan changes which have live zoned land to enable development to proceed.

72. In 2021 the council recognised that its capacity to support growth across the region with infrastructure was limited and decided to focus its investment in a few key areas, including Drury.

73. Extensive work has been undertaken by the council group, alongside partners in central government, to identify the infrastructure required over the life of the development to support a well-functioning urban environment.

74. Endorsing the 30-year programme that will support the full buildout will provide for better transparency around the nature, cost and phasing of investment, as well as improved alignment of funding sources to the cost drivers and beneficiaries.<Enter text>

Tauākī whakaaweawe āhuarangi

Climate impact statement

75. Greenfield development in Auckland is correlated with an increased use of private vehicles, potentially leading to an increase in vehicle kilometres travelled and higher transport emissions. This has been derived from mode share data from the 2018 census for journeys to work and education, with the commuting mode share from areas of greenfield development compared against the Auckland average. The findings show the use of sustainable modes of transport for travel to education and work is less in recent areas of greenfield development than the rest of Auckland. This finding is consistent with research from Australia which found proximity to the centre to be a stronger predictor of average household vehicles kilometres travelled than proximity to good public transport or density of urban development.

76. Development in Drury is expected to result in an increased use of private vehicles and higher overall vehicle kilometres travelled and a likely increase in transport emissions. Planning now for the delivery of a full transport network for Drury will ensure that this new community can connect to the rest of the city with a reduced climate impact. The planned network provides for efficient connection to the region’s road and public transport networks, including walking and cycling investments.

77. If a fully integrated network is not planned, and development progresses as expected the climate impacts of development in Drury would be worsened. Without planning for, and forward-delivering, investment that addresses the cumulative impacts of the growth a less efficient network, without the public and active transport focus, is possible. This could result in significant additional travel by private motor vehicle and consequential additional emissions.

Ngā whakaaweawe me ngā tirohanga a te rōpū Kaunihera

Council group impacts and views

78. The advice in this report has been developed with support from Auckland Transport for technical advice and in conjunction with the following council-controlled organisations and council units:

· Finance

· Legal

· Development Programme Office

· Community Facilities

· Community and Social Policy.

· Watercare

· Healthy Waters

· Auckland Plan Strategy and Research

· Research Investigations Monitoring Unit

· Chief Economists Unit.

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

Local impacts and local board views

79. The Drury-Ōpaheke development area is within the Franklin and Papakura local board areas.

80. On 3 February 2023 local board members were provided information on the investment requirements for Drury as a part of a briefing on the Council’s proposed amendments to the Contributions Policy 2022. Local boards were also provided with a summary of the feedback received from consultation. At their February 2023 meetings, local boards provided their views on the proposed amendments to the policy.

81. Local boards were generally in support of the longer-term consideration of infrastructure requirements.

Tauākī whakaaweawe Māori

Māori impact statement

82. The Drury 30-year capital expenditure programme was consulted on as part of the proposal to amend the contributions policy. Feedback on this proposal can be found in the next report on this meeting’s agenda.

83. The development of the 30-year capital expenditure programme attached to this report identifies at a high-level, requirements for transport, parks and community facilities based on expected future development in Drury. Input from the local community and Maori will be sought as council develops and refines its investment plans for Drury through the development of its future 10-year long-term plans and 30-year Infrastructure strategies.

Ngā ritenga ā-pūtea

Financial implications

84. Endorsement of the 30-year investment programme will require the full $2.329 billion programme to be considered through the development of the 10-year Budget 2024-2034 and the associated Infrastructure Strategy.

85. The precise scope and timing of the investment will need to be considered in the context of both the funding available across the 30 years, and the council’s priorities.

86. A significant portion of the proposed investment could be funded from Development Contributions. Endorsing the programme now and setting contribution levels in order to spread the cost of all the infrastructure across all the expected development, ensures that the costs of growth are appropriately recovered, and do not place an undue impact on ratepayers across Auckland.

Ngā raru tūpono me ngā whakamaurutanga

Risks and mitigations

87. There is inherent uncertainty in forecasting the location and timing of growth that will occur over the next thirty years and in the scope and projected cost of the infrastructure required to support this. The agreed capital expenditure programme for Drury will be reviewed and updated every three years as part of the development of the future 10-year budgets and infrastructure strategies, to ensure that the programme reflects the latest information on the pace and nature of development, central government investment, and technological advances. This will include confirming the requirement for any additional projects as plans develop and accommodating the stormwater requirements of planned development. If there is more development than we are planning for additional projects might be needed or if growth is slower the scale and/or timing of investment will be adjusted.

Ngā koringa ā-muri

Next steps

88. The 30-year capital expenditure programme for Drury will be subject to review at least every three years as part of the development of future council long-term plans (which include the Infrastructure Strategy), the development and on-going review of the Future Development Strategy, and Auckland Transport Regional Land Transport Plans.

Ngā tāpirihanga

Attachments

No.	Title	Page
a ⇨	Drury project list

Ngā kaihaina

Signatories

Authors

Michael Burns - Manager Financial Strategy

Andrew Duncan - Manager Financial Policy

Authorisers

Pramod Nair - Manager Group Financial Planning & Analysis

Peter Gudsell - Group Chief Financial Officer

Jim Stabback - Tumu Whakarae / Chief Executive

Governing Body

27 April 2023

Contributions Policy 2022 Amendments

File No.: CP2023/03897

Te take mō te pūrongo

Purpose of the report

1. To decide whether to adopt the proposed amendment to the Contributions Policy 2022 which adds projects planned to be delivered beyond 2031 to support growth in Drury.

Whakarāpopototanga matua

Executive summary

Introduction

2. Development contributions help recover a portion of the costs of the infrastructure required to support growth in Auckland. Growth, both now and into the future, benefits from and creates the need for the infrastructure that makes Auckland a well-functioning and vibrant city. To serve this growth the council will need to make investments now and over the coming decades. However, the Contributions Policy 2022 only recovers contributions for the investments planned in the 10-year Budget 2021 to 2031, rather than over a longer time horizon.

3. At its meeting on 9 December 2021 the Council agreed in principle to include in the Contributions Policy projects planned for delivery beyond 2031 in the Investment Priority Areas (IPAs) identified in the 10-year Budget 2021 to 2031, starting with Drury. The other areas are Inner Northwest, CRL stations, and Auckland Housing Programme areas - Tāmaki, Mangere, Northcote, Oranga and Mt Roskill. By including these longer-term investments in the Contributions Policy, the cost will be spread over development occurring now and in the future.

4. This is therefore a first step in taking a longer-term view of the infrastructure needed for growth. This strategy makes sure that the cost of new infrastructure to be delivered over the next 30 years is fairly shared between developers and ratepayers, based on who creates the need for and benefits from the investments.

5. In the previous item on this agenda the Governing Body was asked to endorse the 30-year programme of capital expenditure for Drury set out in Attachment A to that report. The recommendations in this report assume that the Governing Body decides to do so.

Growth and investment in Drury

6. The Drury growth area (including the Drury-Ōpāheke Structure Plan area, the existing Drury township and the Bellfield and Auranga Special Housing Areas) is expected to grow by around 22,000 houses to a city the size of Napier over the next 40 years. The government and Auckland Council will be investing billions of dollars in infrastructure to support Drury’s development. The preceding report on this agenda recommends the council endorse the $2.329 billion 30-year programme of proposed works for Drury to be delivered by the council group to provide the infrastructure to serve the growth expected over 40 years. This is made up of $417 million up to 2031 (10-year Budget 2021-2031), already included in the Contributions Policy 2022, and $1.911 billion for delivery beyond 2031.

Consultation

7. The proposal to add projects in Drury beyond 2031 to the DC policy was originally consulted on in September and October 2021. In response to developers’ requests for more information and time, the council deferred a decision so that more detail could be provided. Officers undertook more work on the proposal including seeking external expert reviews of the methodology for calculating DCs and advice on key economic issues.

8. The results of this work were incorporated in a revised proposal that was consulted on in September and October 2022.The revised proposal provided for the investment of $2.470 billion beyond 2031 to be funded by $478 million general rates, $850 million assumed from Waka Kotahi NZTA subsidies, and $1.142 billion from development contributions. This would increase the average contributions price per household equivalent unit in Drury from $22,564 to $83,251.

Analysis

9. The revised proposal was supported by 35 per cent of respondents while 50 per cent of all submitters were opposed. 79 per cent of developers who made submissions were opposed. Support for the proposal noted developers should pay their fair share of the new investment based on them creating the need for the investment and benefiting proportionately from it. The key matters raised by developers and officers’ responses are set out later in the report.

Alternatives considered

10. Feedback called for more consideration of alternative funding tools like targeted rates and the use of levies to fund third party financing under the provisions of the Infrastructure Funding and Financing Act 2020. This report summarises alternative funding tools, but officers consider that at this time development contributions are the most appropriate tool to fund the growth share of the cost to provide the infrastructure required to support the projected growth in Drury over a 30-year time horizon.

11. Submissions from developers supported retaining the status quo 10-year investment horizon, which extends by three years at each triennial update of the contributions policy following the long-term plan cycle. Staff do not recommend this approach because it would impose a minimum $238 million additional cost on future general ratepayers across the city from the revenue not collected from early developers. The option of providing a price transition or setting a lower price was also considered but not recommended as this would also increase the burden on general ratepayers across the city without them receiving a commensurate share of the benefits.

Updates to the proposal as consulted on

12. The proposal consulted on has been updated to reflect changes in current economic conditions and forecasts, government decisions on their investment, feedback from consultation, and refinement following additional analysis conducted by officers. Key changes are as follows:

· Assessing transport property acquisition costs on a property-by-property basis, rather than applying average values across the programme. A project by project assessment of the land required, its valuation (particularly for land in the Slippery Creek flood plain), and the assumed level of developer mitigation was also undertaken. The overall impact of these changes has reduced costs for Drury transport projects by $497 million.

· reducing the funding area for the combined community facility to exclude developments within an area of benefit from existing facilities, raising the DC price for community facilities and hence the overall average DC price by $5,042 per HUE^{^[10]}, due to the cost being shared over fewer developments

· moving some projects to delivery beyond 2031 and some to before 2031 to reflect updated growth forecasts and therefore appropriate project timing has raised the costs for some funding areas and lowered it for others.

13. As a result of the changes the total projected cost of the proposed infrastructure investment by the council group is $2.329 billion to be funded from $722 million Waka Kotahi NZTA, $526 million from rates, and $1.081 billion from DCs. The updated proposal has an average DC price of $74,142. The table below shows the total DC charges per HUE relative to those on which consultation was based and the charge in the current policy. (There are also DC charges for the three Southern Growth Areas, and these range from $20,800 to $42,000 presented later in this report.)

Funding area	Current operative 2022 policy per HUE	2022 consultation per HUE	2023 final proposal per HUE	Change to current operative policy per HUE
Drury East	$22,564	$99,298	$91,494	$68,930
Drury West 1	$22,564	$75,161	$70,758	$48,194
Drury West 2	$22,564	$55,436	$59,604	$37,040
Ōpaheke	$22,564	$98,618	$67,144	$44,580

Conclusion

14. The purpose of the development contributions set out in section 197AB of the Local Government Act 2002 (LGA) is to enable territorial authorities to recover from those persons undertaking development a fair, equitable, and proportionate portion of the total cost of capital expenditure necessary to service growth over the long term. Officers recommend the proposed amendments to the Contributions Policy 2022 be adopted in line with the decision to include projects planned for delivery beyond 2031 in the DC policy for the IPAs. This will ensure that early developers make a contribution to the funding of infrastructure that they, along with other development, create the need for, as well as benefit from. Without this funding there is the risk of infrastructure shortfalls and/or an unfair cost burden on the rest of the city’s ratepayers.

15. Development contributions are the best option to recover these costs at this time. Delaying a decision until further work is done on the other IPAs would continue uncertainty for landowners and developers in Drury and ratepayers would bear the cost of foregone revenue from development in the meantime.

Next steps

16. If the recommendations of this report are agreed, the amendments to the Contributions Policy 2022 as set out in Attachments A and B (referred to as the Contributions Policy 2022 Variation A) will come into effect on 1 June 2023. Over the next 15 months officers will work on the inclusion of projects beyond 2031 in the other IPAs in the contributions policy.

Ngā tūtohunga

Recommendation/s

That the Governing Body:

a) tuhi ā-taipitopito / note its endorsement of the 30-year programme of proposed works for Drury as referred to in its previous resolution;

b) tuhi ā-taipitopito / note the Finance and Performance Committee’s decisions on 9 December 2021 (FIN/2021/119) to:

i) agree in principle to add [to the Contributions Policy] investments beyond 2031 to the Investment Priority Areas identified in the 10-year Budget 2021-2031 (specifically Inner Northwest, City Rail Link 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; and

ii) agree to defer a decision on adding [to the Contributions Policy] 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) tuhi ā-taipitopito / note the feedback received through consultation on the proposed amendments to the Contributions Policy 2022 to add the investments in Drury beyond 2031, and the officer comments and recommendations in response to that feedback;

d) tuhi ā-taipitopito / note the proposed amendments to the Contributions Policy shown in Attachments A and B of the agenda following consultation, includes a reduction in the average contribution price for Drury (as compared to the price consulted on) to $74,142;

e) whakaae / agree that development contributions are the appropriate funding source for the growth share of capital expenditure the council intends to incur over a 30-year period (including the 20 years beyond 2031) to meet increased demand for open space, community facilities and transport infrastructure in Drury;

f) whakaae / agree that it is satisfied that the proposed amendments to the Contributions Policy:

i) accord with the purpose of development contributions in section 197AA and have been prepared taking into account the development contributions principles in section 197AB of the Local Government Act 2002;

ii) comply with the relevant requirements for a contributions policy in the Local Government Act 2002;

g) whai / adopt the amendments to the Contributions Policy 2022 shown in Attachments A and B to the agenda report;

h) tautapa / delegate the authority and responsibility for making any required minor changes to the Contributions Policy 2022 shown in Attachments A and B to the Mayor, Deputy Mayor and the Group Chief Financial Officer prior to the policy coming into effect on 1 June 2023

i) tuhi ā-taipitopito / note that officers intend to propose further amendments to the Contributions Policy to add investments beyond 2031 in the other 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).

Horopaki

Context

17. Auckland Council uses development contributions (DCs) to ensure an appropriate share of growth-related investment in infrastructure is recovered from those that create the need for, and benefit from, the investment.

18. The contributions policy sets out the costs to be recovered and how these are translated into contribution charges in different parts of the region. This is regularly updated to reflect new information on growth projections, planned investment, or policy decisions.

Growth and infrastructure investment

19. Auckland’s population is expected to grow by 260,000 in the next ten years on top of the rapid population growth experienced in the last decade, bringing the projected population to approximately 1.9 million by 2031. Construction of 145,800 new dwellings is forecast in the next ten years.

20. To support the development enabled by the Auckland Unitary Plan, the council is facing both immediate and longer-term demands for infrastructure in growth areas. Significant investment in infrastructure is required in the next 30 years to ensure future development has the infrastructure to support a well-functioning urban environment and that the climate impacts of growth are managed. Current planning law is allowing growth to proceed without plans for financing and funding of infrastructure investment in place. The cumulative effects of this development will present future councils strong expectations to at a minimum invest to address safety and congestion issues.

21. The council’s capacity to support growth with infrastructure is limited in the next decade by constraints on our ability to borrow. As a result, investment in this time period has been prioritised. Through our 10-year Budget and 30-year Infrastructure Strategy we identified a few key locations to focus our limited resources. These are all joint priority areas with government and include the Auckland Housing Programme (Mt Roskill, Oranga, Māngere, and Northcote and Tamaki), the Northwest (including Redhills, Whenuapai and Westgate), Drury, and the CRL Stations at Mt Eden and Karangahape.

22. In the previous item on this agenda the Governing Body considered endorsement of the 30-year programme of capital expenditure for Drury set out in Attachment A to that report. The recommendations in this report assume that the Governing Body decided to do so. We note that the precise nature and timing of investment included in the programme will be subject to review as part of the development of future council long-term plans, Infrastructure Strategies, and Auckland Transport Regional Land Transport plans.

23. Drury is expected to grow to a city the size of Napier over the next 40 years. The government and Auckland Council will be investing billions of dollars of infrastructure to ensure it develops into a functional community well connected to the rest of Auckland.

Economic context

24. Development in Drury and the other priority growth areas will take a lot longer than ten years and our plans noted above for Drury now include investment over a thirty-year period. These investment plans are based on the investments required to service Drury once it is fully built out. Full build out of Drury will be complete well after our investments are fully delivered, investing earlier allows delivery at lower cost and is also required to meet the needs of the population as it grows and to allow development to proceed. The early development occurring now in combination with future development generates a cumulative demand for infrastructure in excess of that required by each development individually.

25. The current development contributions price in the Contributions Policy 2022 only recovers the growth share of investments within the ten years of the Long-term Plan 2021-2031. Therefore, the DC price for new developments does not reflect the full programme of infrastructure investments that development already occurring creates the need for and will benefit from. As a result, the price being paid for development land in Drury and other IPAs does not reflect the cost of the infrastructure required.

26. Without a change to the contributions policy, a significant portion of the growth share of the cost of investments after 2031 will fall on ratepayers as the foregone revenue from early developers cannot be recovered from future developers. None of the council’s current funding tools (targeted rates, DCs, or IFF levies) would allow the council to charge the full long-term growth share of the cost of future investments to the future marginal developer(s). This growth share of the cost would fall on general ratepayers who do not create the need for, and receive either no or little benefit from these investments (any non-growth related benefits ratepayers do receive is identified in the methodology for calculating DCs and allocated to them accordingly).

27. In addition, it would be difficult for the council to retrospectively fund the growth share of the investment costs attributable to early developers by a charge on properties developed subsequent to a decision not to increase DCs as proposed in this report. The council cannot impose DCs after development has occurred.

28. Extending our funding horizon to 30 years ensures the council can deliver on its endorsement of the 30-year programme of capital expenditure for Drury and subsequently the other IPAs.

29. Without the revenue from early developers, there is a risk that future investments will not be delivered, or that the level of investment will not meet the standards we have set for a well-functioning urban environment or managing the climate impacts of growth.

Funding context

30. The council’s Revenue and Financing Policy provides for the use of DCs and targeted rates to fund the growth share of the cost of infrastructure investment in transport, reserves, community facilities, and stormwater. The policy provides specifically that:

· DCs are used to fund the majority of the total cost of interest and capital expenditure on qualifying growth-related public infrastructure

· targeted rates may be used to fund interest and capital expenditure cost for infrastructure (including projects to support growth) not funded from development contributions where a project benefits a specific group of ratepayers.

31. While the council has referred to the use of targeted rates to fund the growth share of infrastructure investments it has yet to do so. As discussed below, there are complications with fairly accommodating recovery of such expenditure within the framework of the council’s targeted rating powers (in addition to the affordability issues which may arise).

32. Schedule 5 of the Contributions Policy 2022 sets out the council’s position on the use of DCs to fund the share of the cost of investment attributable to growth. This schedule concludes, after weighing the matters in section 101 (3) of the LGA that using DCs “… best advances the needs of the community by providing a revenue stream to fund growth-related infrastructure that would otherwise be met by general ratepayers.”

33. However, as noted above the current policy only has a 10-year horizon and the infrastructure investment requirements to serve growth extend well beyond that period. A longer funding horizon is required to match our planning horizon and ensure that these future investment costs don’t fall on the general ratepayer as discussed above. While our policies to date have limited the funding horizon to 10-years, the LGA expressly allows development contributions to fund investments required to serve growth over a longer time horizon (beyond 10 years), where provided for in the contributions policy.

Legal requirements and analytical criteria

34. Officers’ advice to you, and your decision making on the Contributions Policy 2022, is made in the context of prescriptive provisions of the LGA which must be strictly complied with.

35. Officers have reviewed the proposal 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. How these requirements have been met are set out in the following sections of this report.

Tātaritanga me ngā tohutohu

Analysis and advice

36. The following sections set out:

· analysis of the options for funding growth-related infrastructure investments beyond the current 10-year horizon

· history of the proposal

· details of the proposal

· consultation process

· feedback received on the proposal

· alternative DC options considered

· updated methodology and proposal

· conclusions and officers’ recommendations

· next steps.

Analysis of funding tool options

37. The council has the following options for funding the cost of growth-related infrastructure:

· general rates

· targeted rates

· levies under the Infrastructure Funding and Financing (IFF) Act

· development contributions.

Officers note that these options are not mutually exclusive as a matter of principle, however the council cannot of course use different mechanisms to fund the same expenditure. Some options could potentially be used in tandem, structured so as to ensure no payee was charged twice for the same expenditure. They also do not need to be introduced in parallel but could be progressively applied.

38. Officers considered that the option of establishing a Specified Development Area (SDA) through the Urban Development Act was not a viable choice at the present time. This is because development is already underway and the process of establishing an SDA would take considerable time and requires government approval. A further loss of time before the issue of funding was resolved would continue uncertainty for developers in Drury and present financial risk for general ratepayers across the city in terms of foregone revenue from early developers. If an SDA was established Kainga Ora would have the same funding options, except general rates, listed above available to it. The legislation would require them to assess the choice of funding option(s) against the same criteria and apply them within the same legal rules that govern local authorities.

Options

39. The key features that differentiate each of the options are described below.

General rates

40. General rates are applied to all rateable properties across the Auckland area from Wellsford in the north to Waiuku in the south. Revenue from the general rate is used to fund the council activities that are deemed to generally and equally benefit Auckland, and activities (or share of activities) not funded by other sources. The general rate includes both a fixed charge and a non-fixed portion based on capital value and applied differentially based on location and use of land. The differentials reflect the council’s view of the relative demand land uses place on council services and their relative affordability to ratepayers.

Targeted rates

41. The key distinction between targeted rates and general rates is that targeted rates can be applied geographically to recognise the benefits received by, or the costs imposed by, a specific group of ratepayers. Targeted rates differ from DCs applied in a particular area in that they are payable by landowners irrespective of whether they wish to develop or when they intend to develop. Targeted rates are paid over time, which could be 30 years or more, but can provide for an earlier lump sum payment.

42. A targeted rate and an IFF levy provide the infrastructure financier (the council for a targeted rate and a Special Purpose Vehicle for an IFF levy) with a more secure revenue stream as they are payable whether or not development occurs. A targeted rate is also more easily adjusted than a DC in response to changes in infrastructure scale, scope, investment timing, and cost.

Levies under the IFF Act

43. Levies under the IFF Act apply in the same way as targeted rates but require the prior approval of the levy by Order in Council, meaning the council does not have full control over this funding source.

Development contributions

44. Development contributions can only recover the growth share of infrastructure investment. They are assessed based on the policy in force at the time a complete resource or building consent application is lodged. The charge specified in that policy applies even though the consent may be implemented several years later.

Assessment of options against funding source criteria in the LGA, s101(3)

45. When determining the funding sources it will use for its activities a local authority must consider the matters set out in s101(3) of the LGA. The discussion below assesses the options for funding the growth component of the transport, community facilities and reserves activities in Drury against those criteria. The key points in the assessment are similar for each activity, and so a separate analysis is not included for each activity. A specific section 101(3) analysis has been undertaken for including projects beyond 2031 for Drury in the contributions policy and is set out Attachment C: Consideration of activity funding.

Community outcomes

46. All the funding options are able to deliver the community outcomes. The community outcomes are the delivery of the infrastructure to provide a well-functioning urban environment in Drury and to manage the climate impacts of development. However, the council’s preference for lower general rates increases is likely to place pressure on the ability to fully fund the required investment with general rates.

Distribution of benefits

47. There are various benefits of capital expenditure on growth-related infrastructure. Land value increases are experienced by all landowners (developers and non-developers alike) in the area that is or will be served by that infrastructure, because of access to the services the infrastructure provides or will provide. Developers in Drury receive a particular benefit because the investment in infrastructure facilitates the development (or more intensive development) of the land, with the benefits that brings to the developer. There are several district plan provisions applicable to Drury which make the provision of major infrastructure a precondition to further development of land, or at least provide for a simpler consenting pathway once that infrastructure has been provided. More generally, development is less “consentable” if basic infrastructure required to service that development (only some of which is provided by developers themselves) is not available. The provision or availability of infrastructure therefore “unlocks” the development potential of land. DCs are directly linked to this benefit because they are triggered when relevant consents to develop land are granted. The infrastructure also provides benefits to residents and businesses occupying completed residential and commercial developments associated with the use, or availability to use, the infrastructure once delivered.

48. General rates across the city are an appropriate funding source for the share of the growth-related infrastructure costs that would be required to renew any existing assets that would be replaced. General rates are also appropriate to fund the benefits to existing properties of service level increases arising from investment in growth-related infrastructure in Drury. However, general ratepayers across the city do not benefit from the provision of the growth component of this infrastructure. In principle, DCs, targeted rates, and IFF levies can all be set to apply to those properties that are benefiting from the growth share of the costs of the infrastructure. Targeted rates, and therefore IFF levies, can be applied in greenfield development areas. Targeted rates and IFF levies could also be applied to existing developed properties to recover the costs of the share of the investments that they will benefit from in excess of the service level that would otherwise have been available.

49. However, current rating legislation does not readily accommodate the use of targeted rates to specifically recover only growth-related costs. Therefore, there are likely to be difficulties in structuring such a rate in a way which fairly differentiates between undeveloped, partly developed, and fully developed land. This issue is difficult in Drury where there is already some development, and even more difficult in brownfields areas where there is already substantial development. The problem does not arise for development contributions, which are triggered by actual development.

Period over which benefits are expected to occur

50. Landowners benefit from growth related infrastructure, through an increase in land value because of their land’s access or proximity to the services and amenities which are provided, or will be provided, by that infrastructure. That land value increase starts as the council planning makes provision for development, with its promise of infrastructure, when infrastructure is provided and (other things being equal) continues as further infrastructure and services become available.

51. Developers realise the benefit from growth related infrastructure when they develop their land. This benefit occurs initially at the time they are granted consents to subdivide or develop, which allows actual development of the land to proceed; and then when connections are made to roading infrastructure in particular. Development is already occurring, and expected to occur for a further 30 – 40 years in Drury. This type of benefit to developers will occur for the duration of Drury’s development.

52. The “usage” benefit provided by growth related infrastructure accrues over the period that the infrastructure is in service and used by households and businesses in Drury. Council provided infrastructure that supports growth has very long useful lives, often in excess of 50 years.

Groups or individuals contributing to the need to invest

53. General ratepayers across the city do not create the need for investment to service growth. That need is created by the development which is occurring or envisaged. DCs, targeted rates, and IFF levies can all be set to apply to those properties where the growth will occur, however only DCs target the development itself.

Transparency of funding

54. The use of DCs, targeted rates, and levies under the IFF Act all make the cost of investment to support growth more transparent, representing an advantage of each of these funding tools when compared to general rates. The use of general rates would not provide for any additional transparency beyond the council’s usual planning and reporting requirements.

Conclusion

55. After weighing the factors above, and the advantages and disadvantages of each funding source, officers consider that DCs continue to be the most appropriate tool to fund the share of costs of growth-related infrastructure that benefits growth, or which growth creates the need for. This is the case for proposed expenditure in Drury beyond the horizon of the 10-year Budget, as well as within that period (as already provided for in the Contributions Policy). General rates across the city are appropriate to fund the share of the cost in the growth-related investment required to renew or replace any asset, and any benefits to existing properties in the area. DCs are therefore the appropriate funding source for growth related infrastructure in Drury at this time and their use is consistent with the Revenue and Financing Policy.

56. As explained, there are complications with using targeted rates to recover growth-related costs in a way which appropriately recognises the different circumstances of each property and (potentially) ratepayer. Substantial further work would be required to support decision making on their use. This work would need to consider the options for timing and incidence of the application of a targeted rate given it could apply to all land that benefited from the investment whether or not the landowners intended to develop or if they intended to develop now or much later.

57. Officers understand that the use of an IFF levy would require more certainty from potential financiers about the cost of the investment than is required for the application of DCs or targeted rates. Like a targeted rate, the development of an IFF levy proposal would also require consideration of the timing and incidence of the levy. An IFF levy also requires, ultimately, government approval, which provides less certainty as to the availability of this funding mechanism

58. DCs are the bespoke funding tool provided in the LGA for growth-related capital expenditure and are well understood by the developer community. The council now has the necessary information to support the proposed changes to DCs for Drury. Officers consider DCs are the most appropriate tool for funding growth related investment in Drury both within and beyond the 10-year planning horizon.

History of the proposal

59. Consultation on the draft Contributions Policy 2021 proposed the addition of growth-related investments beyond 2031 in the IPAs, starting with Drury, to address the cumulative effects of growth. The proposal was to add these investments to Drury in the 2021 policy (adding $50,600 to the price), and over the next 15 months to the other Investment Priority Areas (IPAs). The report recommending consultation on the proposal can be found on the council’s website at Agenda of Extraordinary Finance and Performance Committee - Thursday, 16 September 2021 (aucklandcouncil.govt.nz) . 71 responses were received including 22 submissions from developers. 48 per cent supported the proposal while 33 per cent were opposed. 82 per cent of developers were opposed.

60. The Finance and Performance Committee considered a report on the proposal at its meeting on 9 December 2021. This can be found on the council’s website at Agenda of Finance and Performance Committee - Thursday, 9 December 2021 (aucklandcouncil.govt.nz). The committee agreed in principle (resolution FIN/2021/119 b) to include projects planned for delivery beyond 2031 in the DC policy for the Investment Priority Areas (IPAs). However, they decided to defer a decision on adding investment beyond 2031 in the Drury area to allow for the provision of further information and an additional submission process once that information was provided.

61. Following the council’s direction, staff undertook additional work internally. The proposal was amended taking into account the issues raised in feedback and undertaking in depth analysis of the proposed infrastructure investment. Additional external expert transport planning and engineering advice was also obtained on the proposed investments. This work included updates to the forecasts for the timing and location of growth within Drury and of construction costs, land price inflation, and interest rates.

62. Independent external reviews were commissioned of the growth forecasting, cost estimation, and the approach to calculating the share of costs to be recovered from developers. External expert advice was also sought on the key economic issues. The recommendations from these reviews were applied to the calculation of DCs for Drury.

63. While our original intention was to complete this work with the goal of seeking a council decision in June 2022, this wasn’t practical. More time was needed in order to complete the work to the level of detail appropriate for such a significant change to the contributions policy based on a 30-year investment programme for Drury. Final assessments on the content of the revised proposal were made by officers within the scope of the direction of the resolutions of the 9 December 2021 Finance and Performance Committee meeting referred to above. This meant that consultation was not able to be commenced until September 2022.

64. Based on this experience officers consider that decisions on adding to the contributions policy investments in other IPAs to be delivered beyond 2031 will be possible in June 2024. While there are some efficiencies from applying the revised methodology this applies most directly to greenfields developments and will need to be adjusted for the brownfield Auckland Housing Programme areas like Mt Roskill.

Details of the proposal consulted on in 2022

65. The additional work referenced above meant the projects and costings were presented in more detail and underpinned by more in-depth analysis than the original consultation. Following completion of the work above the investments planned for beyond 2031 included in the proposal consulted on were:

a) $1.882 million in transport including arterial roads and key elements of the collector network to provide an integrated public and private transport network and active transport investment connecting Drury to the wider city (in addition to the $243 million the council has already committed to invest before 2031)

b) $403 million for 43 new reserves, with a total land requirement of 32.4 hectares (in addition to the $156 million the council has already committed to invest before 2031)

c) $185 million for a single multi-purpose facility including a community facility, leisure centre, library, and local pool.

66. Stormwater requirements for Drury beyond 2031 were to be identified and added to the contributions policy as more information became available on the location and form of development.

67. Of the $2.470 billion of projects that the proposal identified for delivery beyond 2031, $1.142 billion was proposed to be funded by developers through DCs. This additional revenue requirement raised the contributions price for Drury by an average of $60,687, per household equivalent unit (HUE) to a total of on average $83,251 per HUE. Different charges applied to different geographical areas based on the relevant activity funding areas in the proposal. The charges initially proposed in 2022 are set out in the table below.

68.

Changes to Drury/Ōpaheke/Southern Growth Area funding area charges
Funding area	Current DC charge	Adjusted DC charge: inside 10 years	Additional 2031+ DC charge	Total: Proposed DC charge	Drury infrastructure funded by additional charges
Drury East	$22,564	$21,674	$77,624	$99,298	Community centre + reserves + share of transport, library, pool, and leisure centre
Drury West 1	$22,564	$22,650	$53,198	$75,849
Drury West 2	$22,564	$19,880	$35,976	$55,855
Ōpaheke	$22,564	$17,814	$83,817	$101,632
Southern Growth Area 1	$41,647	$41,683	$3,656	$45,339	Share of transport, library, pool, and leisure centre
Southern Growth Area 2	$15,599	$15,937	$4,084	$20,021
Southern Growth Area 3	$17,183	$17,631	$3,483	$21,113

Consultation process

69. Consultation took place between 13 September and 8 November 2022. To support the consultation a number of documents were made available on the council’s Have Your Say page. A full description of the consultation process along with the documents provided are set out in Attachment D Analysis of feedback received.

70. The consultation was promoted to previous submitters and through Our Auckland and media releases. Online and face to face events were held and officers also attended meetings with developers and their representatives at their request. An opportunity for developers to present their submissions directly to the Governing Body was provided on 14 December 2022 to which 14 organisations presented.

71. Officers consider that the information made available to support consultation was sufficient to enable interested or affected persons to engage meaningfully via the consultation process. As such, reasonable access to relevant information was provided as part of the consultation, however additional information was also made available in response to a range of requests under the Local Government Official Information and Meetings Act 1987.

Feedback received on the proposal

72. Sixty submissions were received, Overall, the proposal was supported by 33 per cent of submitters with 50 per cent opposing it. A further 17 per cent did not clearly state their support or otherwise to the proposal. Of the 34 responses from developers 76 per cent opposed the proposal, six per cent supported it and 18 per cent did not state a clear view. One Māori entity, Te Rūnanga o Ngāti Whātuaprovided feedback in support of the proposal. 26 individuals responded with 69 per cent in support, 15 per cent opposed while the views of 16 per cent of submitters were not clearly stated. Key themes raised in the submissions are identified below. The submissions received in the consultation are available to elected members on the council’s meeting management system Nexus.

Impact of higher development contributions

73. Developers’ submissions suggested that higher DCs will:

· lead to higher house prices as developers seek to recover the increased costs.

· unfairly disadvantage developers who have already purchased land, as the increased DCs have not been included in the costs of their development and some may go out of business

· discourage the construction of affordable housing as developers seek to recover higher costs with more expensive developments

· redirect development from Drury to other areas of the city with lower DC prices. Lower DCs are charged in wealthy established central parts of the city where infrastructure is already in place whereas incoming residents to Drury, where affordable housing could be built, are less able to afford higher DCs

· encourage land banking in Drury until house prices rise further or the policy changes.

74. These are matters for elected members to consider. While developers may seek to recover higher DCs with higher house prices, economic research and independent economic advice (theoretical and empirical), is that house prices are set by supply and demand and higher DCs will not raise house prices but lower the price developers pay for land. This is also consistent with recognised international land valuation guidelines for developable land. While the market for housing and land in Auckland is very competitive it is not a perfectly competitive market, and it will take land prices some time to adjust. The conclusions from the economic analysis apply at a broad level to the Drury and Auckland markets. Individual market transactions may diverge from this outcome as they do in other parts of the real estate market reflecting the particular preferences of buyers and sellers in regard to individual properties. Officers also note that it is expected the developers would seek the highest price for a property irrespective of their costs. Even if higher DCs did lead to higher house prices in Drury this would not be a reason in and of itself to set lower DCs as this would require general ratepayers across the region to meet the cost of the foregone revenue.

75. In addition, higher DCs in Drury may mean some development may be diverted to other areas of the city until a new equilibrium is reached, and some development in Drury may be delayed (noting, however, that the full development of Drury is anticipated to take several decades). Given the large amount of developable land in Auckland this should not impact on the overall scale of development in the region as development can occur elsewhere.

76. The higher DC will impact on the expected profitability of development in Drury for those developers who have already purchased land. Although, as already discussed, the planned new infrastructure to be funded by the DCs will provide benefits including an uplift in land value, some developers may no longer be able to make a profit depending on what they paid for the land. Officers consider that this is one of the risks associated with land purchasing and should be borne by the investor and not passed to general ratepayers across the region. Officers also note the DCs set for development in key greenfields area of Hamilton which range up to $100,000 are comparable to those proposed for Drury.

77. Regarding the submission that higher DCs will mean that some forms of intense development in Drury will not be viable, officers note that development in Drury is forecast to be around 90 per cent stand-alone houses with some more intense development near the town centre and railway stations. These developments have a higher sale price and are considered likely to be viable with higher DCs. External reviewers consider that the proposed policy change poses no material risk to development feasibility after considering residential use over other uses for land.^{^[11]} In the event that some development is not viable, officers consider that the use of a subsidy from general ratepayers across Auckland to make the development viable would not be an appropriate policy response.

Equity of treatment of Drury relative to rest of city

78. Feedback identified several dimensions in which submitters were concerned that Drury developers, and subsequently developers in the remaining IPAs, would not be treated equitably relative to developers in the rest of the city. These were:

· Drury was to face higher DCs than the rest of the city

· DCs for Drury would rise at least 15 months before similarly based charges would apply to the other IPAs

· DCs for Drury, and subsequently the remaining IPAs, would be based on investment planned for delivery over a much longer period, out to 30 years, whereas the remainder of the city was only being charged for investments planned within 10 years yet may also place future demands on the council to invest

· DCs for Drury were calculated on a different basis than that which was used to establish the charges in the Contributions Policy 2022.

79. Most submitters presented these arguments as a basis for retaining the current 10-year horizon and approach to analysis. However, others supported the longer-term view but strongly argued for the council to implement this for the rest of the city and to do it quickly, particularly for the IPAs, to eliminate the issues identified above.

80. If these amendments are approved then DCs in Drury will be higher than the remainder of the city based on the level of growth investment there. They will also be higher than the other IPAs until the 30-year investment programmes for those IPAs are also added to the contributions policy. However, Drury and other IPAs warrant a longer-term planning horizon than for the rest of the city reflecting the council’s prioritisation of these areas for investment, and the significant expenditure anticipated beyond a limited 10 year horizon. The other areas of the city will face lower DCs to the extent they have lower planned council investment in growth-related infrastructure. Further work on key infrastructure investment needs across Auckland over a 30-year horizon will be undertaken as part of the developing the council’s next 30-year Infrastructure Strategy as part of the next LTP process.

81. The methodology for calculating DCs for Drury includes some differences from that used for the DCs in the Contributions Policy 2022. The differences are based on advice received from the independent reviewers and updated analysis conducted by officers following the first round of consultation on this proposal. This methodology will be applied as appropriate to the remaining IPAs and the wider policy following the adoption of the long-term plan 2024-2034. A more detailed discussion of the methodology is in the Attachment E: Methodology for calculating DCs for Drury.

Complexity and inequity associated with a 30-year time frame

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

83. A key role of Auckland Council is to plan for the future infrastructure needs of the city. The council cannot predict with certainty future costs and growth. As new information becomes available the council updates its growth forecasts, capital expenditure plans, and accordingly the contributions policy plans at least every three years and more often if required. Even under a ten-year policy, the precise scope and cost of investments towards the end of that period may not be certain. Regardless of whether the contributions policy covers 10 or 30 years, if growth doesn’t eventuate and planned infrastructure is not provided, the level of DCs can be lowered, and refunds to early developers may be payable as provided for under the LGA. However, if the capital works programme needs to be increased or actual costs are higher than forecast, ratepayers bear the risk that early developers haven’t met their fair share as DCs can’t be raised retrospectively.

84. As noted in the previous report on this agenda the Council has been able to plan with sufficient certainty to endorse the investment programme. Officers are confident that forecasts are sufficiently robust for it to be appropriate that these investments are included in the DC policy.

85. 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 increase in land value from the council’s plans to invest in infrastructure. Properties developed now will benefit from the services provided by infrastructure when it is built. Aside from benefits, early development in Drury creates the need for infrastructure included in the 30-year investment programme as much as late development.

86. Analysis from Market Economics (the consulting firm for a number of submitters) argued that the benefits of infrastructure relate to its use and it would be incorrect to assess the impact that the provision of infrastructure has on house prices or land prices. However, the LGA does not limit the benefits to be considered from providing infrastructure to those associated with use of that infrastructure, and benefits in the form of increased land value can also be considered by the council. The types of benefit from infrastructure investment is discussed in detail under the heading Distribution of benefits in the section entitled Assessment of options against funding source criteria in the LGA, s101(3) above.

Accuracy of assumptions used

87. Submitters commented that:

· the new policy encourages the council to design projects that are “gold plated” and have higher initial capital expenditure

· the costings for the various projects incorporate excessive assumptions in respect of land purchase pricing, construction cost, contingency funding cost, and general inflation

· the recent plan changes have not been considered

· land and infrastructure that developers will be required to build as a condition of consent and vest in the council at no cost are included as part of the costs to be recovered.

88. A formal review was undertaken of the methodology the council uses to set DC charges. To do this, three external advisors were contracted to review the methods for growth forecasting, cost estimation, and how beneficiaries are assessed that underpin the DC charge calculations. The recommendations of the reviews were incorporated into the methodology. The methodology to calculate DCs for Drury has been updated as discussed in the section on the Updated proposal below to ensure it reflects the latest information including the impact of the recent plan changes. The costs included in the proposal do not include local roads or the mitigation works developers are expected to be required to provide as a condition of consent.

Level of detail provided

89. Submitters were concerned that insufficient information was provided to enable them to understand how the proposed investments link to growth and the basis for the other assumptions used.

90. In depth detailed information was provided to support the consultation and this is described in the sections that cover the history of the consultation and its detail above and in more detail in Attachment D: Analysis of feedback received. Additional information was also provided in response to requests under the Local Government Official Information and Meetings Act 1987, this is also listed in Attachment D.

91. The additional work undertaken since December 2021, both to support the consultation and subsequently, means the identification of the projects, their costings, and DC calculations provide more detail than as originally proposed as directed by the council. The level of detail provided to support the changes proposed exceeds the level used to include projects in the later years of an LTP in the current and past contribution policies. This additional layer of detail has been provided to support these decisions given the scale of the changes proposed and their impact on developers, landowners, and ratepayers. The level of detailed analysis is appropriate for forecasting the cost of investments over a 30-year time horizon. The detailed designs and project by project costing using quantity surveyors is more appropriate for shorter time horizons. The council will undertake analysis at this level as the time for each project investment approaches and make any amendments to our long-term plans and contributions policies at that time.

92. The information supporting the 2022 consultation exceeded that provided in any previous contributions policy consultation. Officers have considered Auckland Council’s obligations under section 82 of the LGA and consider that sufficient information has been provided.

Consideration of other sources of funding

93. Several submitters considered the council should have given more consideration to alternative funding mechanisms before deciding to impose DCs such as targeted rates, congestion charging, Special Purpose Vehicles funded by a levy under the Infrastructure Funding and Financing Act 2020 and Specified Development Areas through the Urban Development Act.

All these tools have the same effective revenue for the council and cost for developers and landowners (the net present value is the same). However, as discussed in the analysis of options section above, there are complications in using targeted rates and IFF levies. On the other hand, DCs are a presently available option, and already the primary means by which the council funds the cost of growth-related capital expenditure across the city. Officers note that these options are not mutually exclusive, could potentially be used in tandem, and progressively applied. Officers consider DCs are the most appropriate tool for funding growth related investment in Drury.

94. Officers have not considered congestion charging as this tool is not available to the council. An SDA was also not considered as it would take considerable time to establish, requires government approval, and has the same funding tools available as a local authority.

Funding areas and projects

95. Officers have reviewed feedback on specific projects and funding areas. Adjustments have been made to the proposal where appropriate. The key changes are set out in the Updated proposal section below. Maps outlining the funding areas can be found in Attachment F Funding area maps Contribution Policy 2022 Variation A.

Time value of money charging

96. There was an option presented in our consultation materials to set charges on an annual basis reflecting the:

· interest benefit that the council receives from early developers who will pay before many of the investments are made

· additional interest costs the council will incur before DCs are received from later developers after investments are made.

97. The proposal consulted on setting a single price (average DC of $83,251) irrespective of when the payment was made i.e., in 2023 or 2060. Under the current Contributions Policy 2022 the contribution charge set for each funding area is fixed for the duration of the 10-year budget and will not change unless the policy is formally amended, or a new policy is adopted.

98. The consultation material identified an option to set in the policy annual incremental adjustments to reflect the benefit the council receives from early payment of contribution charges. Under this option, the developer will pay the incremented charge that applies at the time they pay as set out in the policy that was operative at the time they lodged their consent. The table below shows the fixed price and the 2023 and 2060 prices consulted on adjusted for the time value money based on the cost and timing adjustments reflecting the proposal updates set out in the preceding section.

Funding Area	Option 1: Fixed Price per HUE	Option 2: Incrementing Price per HUE
Funding Area	2023-2060	2023	2060
Drury East	$99,298	$58,580	$207,738
Drury West 1	$75,848	$53,808	$179,788
Drury West 2	$55,855	$38,107	$111,952
Ōpaheke	$101,631	$61,193	$236,445
Southern Growth Area 1	$45,339	$43,693	$52,154
Southern Growth Area 2	$20,021	$18,269	$28,025
Southern Growth Area 3	$21,113	$19,513	$27,458
Note that under both options, the prices will be subject to review at least every three years as a part of a general review of the Contributions Policy

99. There is no net benefit to the council under either approach. In either case contributions charges are assessed so that total expected DCs to be collected covers the cost of investment plus interest costs for payments received after the investment is made, less the interest on payments received early. However, by charging less in the early years to reflect interest savings to the council the cashflow would be $77 million lower than with a single price.

100. While the policy has clear economic benefits for early developers its implementation presents some risk. The provisions in the LGA are designed to provide certainty to developers around the DCs they will pay at the time they lodge a resource or building consent application. The legislation does not specifically authorise prices increasing over time as they would under the incrementing price approach (nor does it forbid this approach).

101. In addition, ratepayers will bear the risk of any future increases in cost of the planned investments as these will not be able to be retrospectively levied on developers who build early and pay the lower time value of money DC price. The higher single price shares this risk with developers. For example, the current investment plans do not yet include the provision of stormwater infrastructure. Once this is included in the contributions policy the price will rise. However, the share of the costs of stormwater infrastructure will not be able to be retrospectively imposed on early developers and will need to be met by ratepayers. A single price better manages this risk for ratepayers.

102. Although not decisive, it is relevant the council’s administration system to assess and charge DCs is designed to apply a single price based on the date of lodgement of a consent. Assessing and charging a DC based on an annual schedule under the policy operative at the time a consent is lodged is administratively complex. The complexities will become more challenging as the contributions policies are amended over time requiring review of multiple schedules under multiple historic policies to assess and then charge DCs accurately.

103. Given the above issues, and there being little support in submissions for the incrementing price approach, officers on balance recommend that the council adopt a single price as proposed. Officers will continue to work on developing approaches to reducing the risks identified above. If this work confirms that time value of money pricing can be practically and legally implemented at low risk to ratepayers, it can be included in a future contributions policy for consultation.

Alternative DC options considered

104. Consideration was given to a number of alternative approaches to the amendment of the DC policy including maintaining the status quo. Each of these is discussed below.

Status quo

105. At present the council updates its contributions policy at least every three years alongside the development of its long-term plan and infrastructure strategy. Each three years the policy therefore adds a further three years of investments.

106. The contributions policy will next be updated following the long-term plan 2024-2034 which will be adopted in June 2024. Based on the timing of the infrastructure investments in the updated proposal this would add the $238 million of investments planned in Drury in the three years 2032 to 2034 raising the average Drury DC price from $22,564 to $35,274.

107. This timing would reduce the impact of a higher DC price on current developers and landowners. It could also reduce but not eliminate the potential for higher DCs to shift the location of growth from Drury to other areas with lower DCs as the land price equilibrium adjusted to the new DCs.

108. While the DC price in Drury would be higher than in other areas when the proposal is adopted all areas would only be charged for projects planned to be delivered over a ten-year time horizon.

109. However, the status quo does not address the underlying infrastructure challenge. This option is estimated to impose a minimum of a $238 million additional cost on general ratepayers across the city over time being the loss in contribution from early developers.

110. Officers do not recommend this option as it does not fairly allocate the costs of growth to those who benefit from and create the need for the infrastructure.

Transition

111. The council could adopt the proposal but gradually phase in the new DC prices over three years to give the land market time to adjust to the new DC price. Phasing the change in DCs prices in over three years is estimated to lead to $10 million less revenue being collected in this period. This foregone revenue by setting a lower price for early developers would have to be made up by general ratepayers across the city.

112. Officers do not recommend this option as it does not fairly allocate the costs of growth to those who benefit from and create the need for the infrastructure.

Implementing of changes to Drury at the same time as the other IPAs

113. The council could defer implementation of the changes to DCs for Drury until it is ready to implement the changes for the other IPAs. This would eliminate any potential for higher DCs in Drury to divert the location of growth to these areas and treat Drury equitably with the other IPAs in terms of the timing of the changes. Officers consider that amendments to the other IPA areas can be completed by June 2024.

114. Officers do not recommend this approach. The council now has the information required to support the changes to Drury. The previous report on this agenda has endorsed the infrastructure investments required to serve the full build out of Drury. Further delaying a decision on Drury will create further policy uncertainty. It also raises the risk of more consents being lodged under the current policy to avoid the higher DC charges thus imposing additional costs on general ratepayers across the city.

20-year investment time horizon

115. The council could update the policy by only including the additional $874 million of investment planned in the decade from 2031 to 2041. This would still lead to a substantial increase in DCs. It would also mean that early developers would not contribute to the $1 billion of investment planned for the period 2041 to 2051. Like the status quo this would place an additional burden on general ratepayers across the region and put at risk the council’s ability to deliver the infrastructure. Officers do not recommend this option as it does not fairly allocate the costs of growth to those who benefit from and create the need for the infrastructure.

Updated proposal

116. The final proposal is based on the council’s methodology for setting DCs as updated by further work undertaken to refine the methodology and its application to Drury. To finalise the proposal officers have reviewed the projects lists, updated forecasts for the latest economic conditions, and considered feedback from the consultation. A full description of the methodology, changes to its application, and other key changes is set out in Attachment E: Methodology for calculating DCs for Drury. This section sets out at a high level the methodology used to calculate DCs for Drury, how this approach complies with the principles for setting DCs in the LGA, and how this has been updated following consultation.

Methodology for calculating DCs for Drury

117. The calculation of DCs follows the process set out in general terms below

(i) establish project cost based on land area required and its current valuation and standard construction costs escalated appropriately to the point when the land is planned to be purchased and construction commenced

(ii) subtract cost of renewals based on standard construction costs

(iii) subtract third party funding – primarily Waka Kotahi funding of qualifying roading projects

(iv) subtract share of cost that will be met by developers as a condition of resource consent – referred to as developer mitigation

(v) establish share of costs attributable to growth

(vi) share the cost attributable to growth for each project across the forecast growth in the relevant funding area adjusted for the forecast timing of payment of DCs as growth occurs in the funding area to set a price that will cover the interest costs incurred by the council following the planned time of land purchase and construction of the project net of the interest benefit received from payments made before the investment.

Updates to methodology and other changes to proposal

118. Officers have considered the feedback from the consultation, undertaken further work to refine the methodology and its application, reviewed the projects lists, and updated forecasts for the latest economic conditions. A full description of the methodology, changes to its application, and other key changes are set out in Attachment E: Methodology for calculating DCs for Drury.

119. A refresh of data inputs for the contributions modelling has been undertaken for all asset types. This includes:

· updating growth forecasts to reflect impact of recent plan changes and changes in economic conditions. Adjustments to the timing of development stages, project phasing, and beneficiary analysis have also been made to align with the new growth forecast

· construction and land price escalations inputs have been revised following updated economic analysis from the Chief Economist’s Unit

· Drury Land price and lease cost rates have been updated based on external and internal valuation advice.

Changes to Transport contributions modelling

120. For the consultation proposal, land costs for transport projects that did not have a detailed business case were assessed at the project level, using average values for the expected land cost and level of developer mitigation to be provided. Feedback from developers requested council give greater consideration to the specific circumstances of individual projects. Developers provided examples of projects where they expected to deliver a greater share of the project as mitigation, or where land costs were likely to be lower than average due to the location in the flood plain.

121. In response to this feedback, land acquisition costs have been reassessed for all projects, including those with detailed business cases. This assessment has used property specific data where available and included:

· assessment of transaction costs at the property level, in accordance with the Public Works Act. This approach enabled a refinement in the application of the charges, including adjustments where a residential dwelling is present, and sharing transactions costs between projects that require land from the same property. This approach has resulted in overall land transactions costs for projects being the same or reduced.

· undertaking property by property estimates of injurious affection (none, low, medium, or high) where these had been assessed for specific properties, otherwise the default risk level of 20 per cent has continued to be used. This approach has decreased costs for properties with a lower-than-average level of risk, but increased the cost for higher risk properties.

· assessing improvement values for full property acquisitions from rateable valuations, rather than assuming an average 20 per cent of the land value. This approach has increased assessed costs for more developed properties but lowered them for undeveloped land.

122. Developers may be required to deliver mitigation works as a condition of their consent. Developers are usually required to deliver the road frontage for their property (footpaths, kerbs etc), but may also be required to upgrade the road into their development. DC’s can only be charged for the share of works financed by council; the share of work provided as developer mitigation must be excluded.

123. The proposal for consultation applied an average value for mitigation to each project, based on the overall level of developer mitigation works expected to be undertaken across the full Drury transport programme. For the attached policy update, the level of mitigation works to be provided by developers has been reassessed on a project-by-project basis. This has resulted in price decreases for some projects where we expect developers to deliver a larger share of the project, and higher costs for others where more of the project is expected to be delivered by the council.

124. A developer providing mitigation works on part of a road will also pay DCs for any share of the road that is financed by the council. This occurs where some properties along the road won’t be developed (such as reserves) or will only be developed after the final road upgrade is required. While the early developer may pay more via mitigation and DCs for their road, they also benefit from the mitigation works provided by other developers on other roads within the funding area. To reflect the network benefits between developers within a funding area from the mitigation each will provide, the transport investments are presented at a programme level in Schedule 8 of the policy rather than as individual projects. The individual project information will be publicly available on our website.

125. Adjustments to the timing of some projects to align with growth and funding availability has resulted in lower costs for projects brought forward, and higher costs for those delayed.

126. The approach to pricing land for projects located in the Slippery Creek flood plain was also revised. For the consultation proposal, land in this flood plain was priced based on it being fully developable. This assumption was based on council’s experience with other flood plain sites, where development has been able to proceed despite council objections.

127. Over the last few years considerable work has been undertaken by council to ensure our planning approach accurately reflects the risks to development on such sites. This work has now provided a reasonable level of confidence that land within the Slippery Creek flood plain^{^[12]} will not be able to be developed. Accordingly, the land prices for land within this flood plain have now been reassessed to exclude future development potential, decreasing land costs for these properties substantially, see detailed discussion below. It should be noted that there remains a risk as to whether council planning decisions on flood plains are challenged in the future. Should this happen, the land may develop with consequential increase in land acquisition costs to council estimated at around $80 million.

128. The result of the revised assessment of project costs is that around half of the Drury transport projects included in the contribution policy have a decrease in costs, while the other half have an increase. Project price increases are due to a mix of increased construction costs, the land being more developed than assumed previously, or the level of developer mitigation being lower than the average applied in the consultation model. Project price decreases were due to land prices overall having fallen further than forecast, or a higher level of developer mitigation being expected than the average previously applied. Prices for land in the flood plain were also reduced in line with the expectation that council is now able to prevent the development of this land.

129. Overall, these changes to the pricing methodology have resulted in a $497 million reduction in total transport project costs to be delivered by council. This decrease is largely driven by the adjustment to the price of the North-South Ōpaheke Arterial over the Slippery Creek flood plain (project 37a(i)). This project originally had a total cost of around $867 million after developer mitigation but has now been assessed at a total cost after mitigation of $172 million. This decrease is due to:

· reassessment of the land costs that had originally been provided in the detailed business case (decreased costs by $400m)

· reduction of the assessed land price for land located within the Slippery Creek flood plain (decreased costs by $160m)

· increase of the amount of land to be provided by developers in mitigation works from 20 per cent 60 per cent of land costs (decreased costs by $135m) to be incurred by the council.

130. Consultation proposed to increase the Auckland wide regional transport charge by $33 to reflect the benefits to the wider region on the transport investments in Drury. As a result of the analytical changes noted above the adjustment to the regional charge is now assessed to be $14. Officers now propose to implement this change as part of the next broader amendment to the DC policy. This will ensure that Drury developers aren’t charged for the both the local and regional benefits.

Changes to community spaces contributions modelling

131. The community spaces contributions model used for consultation, proposed beneficiary catchment areas centred on Drury-East, with an approximate radius of five kilometres for the library/community space facilities, and 10 kilometres for the pool/leisure centre facility^{^[13]}. Some submissions on the proposal raised concerns about the overlap between this 10-kilometre catchment, and the catchments for existing community facilities at Papakura.

132. The timing of delivery of community facilities has been brought forward in response to the expectation that growth will occur earlier in Drury-East than previously forecast. This change, combined with the reduced library requirement, has reduced the assessed cost for community facilities from $185 million at consultation to $183 million.

133. Libraries are funded regionally. The $40 million cost of the library component of the multi-purpose community facility is included in the regional Community Spaces charge. This charge will be amended for the Drury library cost. The change to the regional Community Spaces DC is estimated at $48 down from the $97 consulted on.

134. In response to the feedback, the proposed contributions for the Drury community facilities charged to the Drury area (pool, leisure centre and community hall) have been aggregated into a single beneficiary catchment. This amended catchment:

· excludes the northern parts of Ōpaheke which are already served by facilities in Papakura

· includes part of the Southern Growth Area 3 in Drury South identified as benefiting from the proposed community facilities.

135. This change to the catchment reduces the size of the expected growth population within the catchment for the Drury community facilities, but still meets the Community Spaces policy population triggers for the provision of new library, community centre, pool, and leisure facilities. The requirement for library space is reduced slightly however, as library area provision is assessed on population size.

136. The reduction in funding area catchment for the pool, leisure and community centre has had a material impact on the community spaces contributions price for Drury, as the costs of these facilities will fall on a smaller population. Around 18,000 HUEs are expected to be built in the adjusted catchment area, compared to around 29,000 in the previous 10-kilometre catchment. The share of costs attributable to growth has also increased 10 per cent, as there is a smaller proportion of existing development in the adjusted catchment compared to the previous larger catchment. Overall, these changes result in the contributions charge for the pool, leisure and community centre for Drury rising from $3,057 at consultation to $8,177 per HUE.

Changes to reserve acquisitions and development contributions modelling

137. The updated growth forecast has resulted in changes to the timing of projects. Reserve acquisition now occurs earlier in Drury-East and later for Drury-West than was proposed at consultation. The updated land price, land stage and construction price escalations have been applied to the model. Project timings have also been revised in line with the updated growth forecast. The most significant impact is on construction prices, increasing development costs by $52 million, while land acquisition costs have decreased by $75 million.

138. The reserve development pricing model has been adjusted to remove contingency costs, resulting in a $12 million reduction in costs. This amended approach is consistent with the approach taken for community facility construction costs. This approach reflects that planning for Drury reserves is only at an early stage, with no committed designs developed, and costs are projected around the average. Contingency will be considered as part of the design phase – higher than forecast costs can be adjusted for by reducing the scope of the design. (This approach differs from transport construction costs, which include contingency. Roading projects have been priced for and must meet national construction standards, with no or limited flexibility to adjust designs to reduce costs.)

139. The combined impact of these changes is an overall decrease in reserve acquisition and development costs of $35 million, from $559 million at consultation to $524 million now.

140. The Contributions Policy 2022 has a single funding area for reserve acquisition and reserve development for Drury and this is consistent with the proposal consulted on. The updated proposal has a single reserve funding area for Drury. Adjustments to the funding area have been made to include beneficiaries in the northern part of the Southern Growth Area 3 in Drury South to the Drury sub-regional reserve acquisition and development funding area.

141. Beneficiaries of reserve acquisitions and development have also been reviewed. The review shows some variation in the costs between individual parts of Drury, which may suggest smaller funding areas could be appropriate. However, any such changes should apply over the full (30 year) programme of investments included within the contributions policy, and not just those in the post 2031 period covered by the proposal. Officers will therefore consider whether to propose making amendments to move to smaller funding areas for reserves acquisition and development, for consultation alongside the next policy amendment.

Amendments to proposal

142. The amended proposal is set out below.

143. After adjusting for the changes noted above the investments included in the proposal are:

a. $1,376 million in transport including arterial roads and key elements of the collector network to provide an integrated public and private transport network and active transport investment connecting Drury to the wider city to be delivered after 2031 and $246 million to be delivered before 2031 which is $3 million higher than council has already committed to invest before 2031

b. $352 million for 43 new reserves, with a total land requirement of 32.4 hectares to be delivered after 2031 and $171 million to be delivered before 2031 which is $15 million higher than the council has already committed to invest before 2031

c. $183 million for a single multi-purpose facility including a community facility, leisure centre, library, and local pool.

144. Stormwater requirements for Drury beyond 2031 are to be identified and added to the contributions policy as more information became available on the location and form of development.

145. The table below shows the capital expenditure for each activity area in the updated proposal in comparison to the 2022 consultation.

Drury Infrastructure types	2022 consultation			2023 final proposal for Variation A
The figures are in millions	2022 to 2031	Beyond 2031	Total investment	2022 to 2031	Beyond 2031	Total investment
Transport	$243	$1,882	$2,125	$246	$1,376	$1,622
Parks	$156	$403	$559	$171	$352	$524
Community facilities	$0	$185	$185	$0	$183	$183
Total	$399	$2,470	$2,869	$417	$1,911	$2,329

146. The table below shows the funding sources (51 per cent funding assumed from the National Land Transport Fund from Waka Kotahi for qualifying projects, developers through the contributions policy, and general rates) for the total capital expenditure for the investments in the table above. The additional contributions revenue requirement raises the DC price for Drury by an average of an additional $51,578, per household equivalent unit (HUE) to a total of on average $74,142 per HUE. Different charges apply to different geographical areas based on the relevant activity funding areas in the proposal.

Scenario

Reserve

Transport

Total

DC capital

Rates funded

2022

Consultation

$185m

$559 m

$2,125m

$2,869m

$974m

$1,370m

$525m

2023 final

Variation A proposal

$183m

$524m

$1,622m

$2,329m

$722m

$1,081m

$5260m

147. The following table sets out the prices for the revised funding areas showing the price under the Contributions Policy 2022, the prices consulted on, and the updated prices including the impact of the addition of projects beyond 2031.

Funding area	Current operative 2022 policy per HUE	2022 consultation per HUE	2023 final proposal per HUE				Change to 2022 consultation proposal per HUE	Change to current policy per HUE
Funding area	Current operative 2022 policy per HUE	2022 consultation per HUE	Change to charge for projects before 2032 per HUE	Total for projects before 2032 per HUE	Increase for projects after 2031 per HUE	2023 final proposal per HUE	Change to 2022 consultation proposal per HUE	Change to current policy per HUE
Drury East	$22,564	$99,298	$2,395	$24,959	$66,535	$91,494	-$7,804	$68,930
Drury West 1	$22,564	$75,849	-$3,028	$19,536	$51,222	$70,758	-$5,091	$48,194
Drury West 2	$22,564	$55,855	-$4,975	$17,589	$42,015	$59,604	$3,748	$37,040
Ōpaheke	$22,564	$101,632	-$4,027	$18,537	$48,608	$67,144	-$34,487	$44,580
Southern Growth Area 3 (Drury South)	$15,599	$20,021	$39	$15,638	$26,471	$42,109	$22,088	$26,510
Southern Growth Area 2 (Paerata/Pukekohe)	$17,183	$21,113	$204	$17,387	$2,381	$19,768	-$1,346	$2,585
Southern Growth Area 1 (Papakura/Takanini)	$41,647	$45,339	$93	$41,740	$283	$42,023	-$3,316	$376

Note to table – Only the northern part of Southern Growth Area 3 (Drury South) pays the community facilities and reserves charges shown in the figures in the table.

148. The methodology for calculating DCs for Drury in the proposed amendments to the Contributions Policy 2022 complies with the relevant provisions of the LGA. How the policy meets the purpose of development contributions in section 197AA, and how the development contribution principles in section 197AB have been taken into account in preparing the amendments to the Contributions Policy 2022, are set out in Attachment G to this report.

149. The policy must also comply with the various other LGA provisions, in particular sections 106, 201, 201A, 202, 202A and Schedule 13. Officers have reviewed the proposed amendments to the policy against the matters set out in these sections to ensure that the updated policy is compliant.

150. An analysis of the section 101(3) funding options considerations relating to this particular proposal is set out in Attachment C: Considerations of activity funding.

Conclusion and officers’ recommendations

151. The purpose of the development contributions set out in section 197AB of the LGA is to enable territorial authorities to recover from those persons undertaking development a fair, equitable, and proportionate portion of the total cost of capital expenditure necessary to service growth over the long term. Officers consider it fair that current and near-term developments creating the need for and benefiting from future infrastructure contribute an appropriate share of the costs of the infrastructure needed to support growth. Growth is able to proceed without plans in place for the funding and delivery of infrastructure. If current and near-term developers do not contribute to future capital investment from which they benefit, the shortfall will lead to higher costs and/or service level problems for future generations of residents and ratepayers.

152. At this point in time DCs are the appropriate tool to recover from developers the growth share of the long-term cost of infrastructure to support growth. Other tools like targeted rates and IFF levies are not the currently used method for funding growth related capital expenditure, involve some complications and are less obviously suitable than DCs.

153. In addition, officers do not recommend deferring a decision on Drury until the changes for the other IPAs have been implemented. While the rest of the city is facing lower charges, as are the other IPAs until the change is implemented in those areas, this reflects the more advanced state of the plans the council is making for investment in Drury. The potential diversion of some growth in Drury to other areas of the city is a short-term issue in the context of the long-term planning horizon for infrastructure with a life of 50 years plus that will serve growth over a similar period.

154. Officers have considered the overall impact of the proposal on the allocation of liability for revenue needs on the current and future social, economic, environmental, and cultural well-being of the community. Developers have expressed concern that the scale of the DC increase will mean that their plans for development are no longer viable. Officers are not familiar with the financial position of individual developers. However, the broad analysis of viability undertaken to support this advice shows that development will remain viable. In the event that some development is not viable, officers consider that the use of a subsidy from general ratepayers across Auckland to make the development viable would not be an appropriate policy response.

155. The higher prices may however, impact on some developers’ ability to make a profit. This will depend on when they purchased land and at what price. Developers are only required to pay DCs if they choose to develop. However, the higher DCs will be reflected in the price they can recover from the sale of their land if they decide to not to proceed with development.

156. As noted earlier the cost to general ratepayers across the city of not proceeding with the proposal, whilst spread over a much larger group, is a minimum of $238 million over time being the loss in contribution from early developers.

157. Officers consider that it is appropriate for the growth share of the cost of infrastructure to be met by developers and landowners rather than general ratepayers. The increased costs will impact on the viability of some development, and some developers and landowners, depending on when they purchased the land and at what price. However, it is appropriate they the bear the cost of these investments rather than general ratepayers across the city. General ratepayers receive little or no benefit from nor create the need for the growth component of the investment. General ratepayers are also facing affordability challenges in terms of likely short and medium term higher rates increases to fund in part historic infrastructure shortfalls and to fund their share of the costs of servicing future growth.

158. The approach to providing for infrastructure to respond to growth over the last 30 years has failed to deliver a city resilient to the demands of growth and a changing climate. The costs of growth have not been shared fairly between developing landowners, ratepayers, and residents. Ratepayers and residents are now bearing the risks of those choices that are manifesting themselves financially and in service delivery.

159. A movement towards a new approach that more fairly share the costs and risks between developing landowners, current ratepayers, future ratepayers, and future residents will lead to some disruption while the city’s land markets transition to a new equilibrium. However, this is a small element in the context of the longer time horizon now being planned over.

160. Officers have considered the overall impact of the costs of growth to be funded by DCs, and the DC charges, in light of matters such as fairness and affordability, and consider the proposed DC charges to be appropriate. However, elected members should stand back and make their own assessment.

161. Officers recommend that the council adopt the proposed amendments to the Contributions Policy 2022 as shown in Attachments A and B, as a step in the council’s wider strategy to address the long-term infrastructure challenge. As the remainder of the strategy is developed the council can amend the contributions policy to maintain alignment. Proceeding now with this step is important to provide certainty to developers and landowners in Drury and to send a signal to the developers and landowners in the other IPAs. It will also give the government confidence in the council’s planning to support growth in the IPA areas where they are also investing.

Next steps

162. The adoption of the proposed amendments recommended above is the first step in implementing the council’s decision to include projects planned for delivery beyond 2031 in the DC policy for the IPAs. This is part of the wider strategy to address the future infrastructure challenge facing a growing Auckland.

163. The next steps in that strategy are to:

· complete the analysis of the infrastructure requirements for the other IPA areas and develop a proposal to amend the contributions policy to include the required projects

· continue to work with the government on their investment program in Drury through the New Zealand Upgrade Programme and on the Housing Acceleration Fund in the wider Auckland region to support development in the IPAs.

Tauākī whakaaweawe āhuarangi

Climate impact statement

164. Greenfield development in Auckland is correlated with an increased use of private vehicles, potentially leading to an increase in vehicle kilometres travelled and higher transport emissions. This has been derived from mode share data from the 2018 census for journeys to work and education, with the commuting mode share from areas of greenfield development compared against the Auckland average. The findings show the use of sustainable modes of transport for travel to education and work is less in recent areas of greenfield development than the rest of Auckland. This finding is consistent with research from Australia which found proximity to the centre to be a stronger predictor of average household vehicles kilometres travelled than proximity to good public transport or density of urban development.

165. Development in Drury is expected to result in an increased use of private vehicles and higher overall vehicle kilometres travelled and a likely increase in transport emissions. Decisions on plan changes to permit development in Drury have already been made. The recommendations of this report relate only to the funding of the necessary infrastructure investment.

166. As discussed in a separate report on this agenda, planning now for the funding of investments will ensure that the council is better able to deliver the infrastructure required for development in Drury to connect to the rest of the city with a reduced climate impact. The proposal provides for early developers to meet a share of the costs of the infrastructure, they will benefit from and create the need for, to address the cumulative impacts of growth. Securing this revenue stream will ensure the council can meet its plans to make the investments required to deliver an enhanced transport network, which should reduce the negative climate impact of development in Drury through mitigating some of the expected additional transport emissions.

167. If plans for securing a share of funding with DCs from early developers aren’t made now greater demands will fall on future ratepayers to deliver this infrastructure. While adjustments can be made to the DC policy in the future these can’t retrospectively secure revenue from early developers. General rates are the only practical alternative funding source to make up this shortfall. Given the competing demands on general rates there is a real risk that all the funding required won’t be available in the future. This will mean the council won’t be able to deliver the level of investment required in Drury, leading to an even greater negative climate impact.

168. If a greater share of funding for infrastructure is not secured from early developers there would be an increased requirement for public funding and opportunity costs associated with the investment in terms of reduced public funding being available for investment in infrastructure upgrades in the existing urban area where it could be more effectively deployed to support and enable mode shift to sustainable transport.

Ngā whakaaweawe me ngā tirohanga a te rōpū Kaunihera

Council group impacts and views

169. The information presented on the projects included in the proposed amendments to the Contributions Policy 2022 was developed in conjunction with the following council-controlled organisations and council units:

· Finance

· Auckland Transport

· Community Facilities

· Community and Social Policy

· Development Programme Office

· Legal.

170. The Chief Economist Unit and Research Investigations and Monitoring Unit provided advice on the growth and economic forecasts and on the impact of higher development contributions on the pace of development, and on land and house prices.

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

Local impacts and local board views

171. The Drury funding area in the proposal is within the Franklin and Papakura local board areas. The recommendations in this report support a longer-term commitment horizon for infrastructure investment in the Drury area and sets a higher DC price accordingly.

172. Officers provided a briefing on the proposed amendments to the Contributions Policy 2022 and feedback received from consultation to local board members on 3 February 2023. At their February 2023 meetings, local boards were asked for their views on the proposed amendments to the policy.

173. The majority of local boards were in support of the changes proposed. Notably the Franklin and Papakura local boards supported the proposal. A summary of local board views and the full resolutions are set out in Attachment H: Local board views.

Tauākī whakaaweawe Māori

Māori impact statement

174. 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.

175. Eleven iwi authorities (with mana whenua interests) in the Drury area were contacted prior to the start of consultation to seek expressions of interest in discussing and providing feedback on the proposed changes. All iwi authorities were also notified when consultation opened, further advising of how they could have their say. The Mana Whenua forum, the Independent Māori Statutory Board and other council forums were advised of the consultation. One response supporting this proposal was received from Te Rūnanga o Ngāti Whātua who considered this was a fairer way to fund the required infrastructure.

Ngā ritenga ā-pūtea

Financial implications

176. The 10-year budget assumes total development contributions revenue of $2.7 billion over the 2021 to 2031 period. Analysis on updated assumptions for consultation on the draft Contributions Policy 2021 in September adjusted the forecast to $2.4 billion. The modifications to the proposals recommended by officers in this report would slightly reduce the development contributions revenue over the ten-year period to 2031 from $2.4 billion to $2.3 billion.

177. As set out in the body of the report, a key financial implication of not agreeing the recommendations of this report would be an additional impost on general ratepayers across Auckland of at least $238 million.

Ngā raru tūpono me ngā whakamaurutanga

Risks and mitigations

178. Forecasting the pace and scale of growth and hence the required infrastructure investment and DC charges over a long time period presents risks to the council and developers. There is also risk associated with the cost forecasts over such a long time-frame. This includes the impact that changes in the development status of land in the Slippery Creek floodplain may have to the cost of acquiring land. These can be managed through our triennial long-term plan and adjusting the investment plans. If investment plans change the DC policy can be amended accordingly, and if infrastructure is not provided then DCs can be refunded as provided for under the LGA. This is discussed in more detail in the relevant sections of the report.

179. 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.

180. The council is careful to ensure its contributions policy is compliant with legislation, taking into account guidance from court decisions. The recommendations in this report and the Contributions Policy 2022 and consultation document have been checked by Legal Services for legislative compliance. Nevertheless, given the level of increases in Drury DCs and based on previous experience there is a high risk of legal challenge to Council’s decision-making in relation to the proposed amendments to the Contributions Policy 2022.

Ngā koringa ā-muri

Next steps

181. If agreed, the amendments to the Contributions Policy 2022 will come into effect on 1 June 2023. Officers will write to all those who provided feedback advising them of the council’s decision. Further detail on the next steps is set out in the Next Steps section above.

Ngā tāpirihanga

Attachments

No.	Title	Page
a ⇨	Development Contributions Policy 2022 Variation A
b ⇨	Contributions Policy 2022 Variation A: Assets for which development contributions will be used
c ⇨	Considerations of activity funding
d ⇨	Analysis of feedback received
e ⇨	Methodology for Calculating development contributions
f ⇨	Funding area maps
g ⇨	Application of purpose and development contributions principles
h ⇨	Local board views

Ngā kaihaina

Signatories

Authors

Andrew Duncan - Manager Financial Policy

Melva Yee - Programme Manager and Data Analyst

Authorisers

Pramod Nair - Manager Group Financial Planning & Analysis

Peter Gudsell - Group Chief Financial Officer

Jim Stabback - Tumu Whakarae / Chief Executive

Governing Body

27 April 2023

Consideration of funding contributions to regional cultural and safety amenities 2023/2024

File No.: CP2022/17526

Te take mō te pūrongo

Purpose of the report

1. To consider Auckland Council funding contributions for:

i) Auckland War Memorial Museum (AWMM)

ii) Auckland Regional Amenities Funding Act amenities (ARAFA)

iii) Museum of Transport and Technology (MOTAT)

Whakarāpopototanga matua

Executive summary

Context

2. Three separate Acts enable these organisations to require a funding contribution (“levy”) from the council.

3. While superficially similar each of the funding systems have distinct differences. In summary:

i) AWMM is funded for both operational and capital expenditure

ii) ARAFA is a funding distribution system, and grants to the eight specified amenities under the Auckland Regional Amenities Funding Act 2008 (ARAFA Act) are only available for operational expenditure

iii) MOTAT is funded for both operational and capital expenditure and highlights in their annual plan where funding is requested for key capital projects.

4. The Auckland Regional Amenities Funding Board (ARAFA Funding Board) was established under the ARAFA Act, collect the levy from the council and distribute it as grants to the eight Specified Amenities named in the legislation.

Funding requests for 2023/2024

5. Over the last three years, the entities have responded to the council’s requests to moderate their levies, and this has been appreciated.

6. All three levies must be set by 30 April 2023, either through agreement or, failing that, arbitration.

7. The funding process for the entities has been complicated by the impacts of rising interest and inflation costs on the entities and the council. The financial position of the council and the challenges it is facing have been well communicated to each entity throughout the process. The entities have responded positively with moderated levy requests, which is welcome.

8. The combined levy amounts proposed by the three entities for financial year 2023/2024 is $69,714,429, with the breakdown shown below. This exceeds the budget provision in the 10-year Budget 2021-2031 (LTP) by $864,990.

i) AWMM: $33,840,000

ii) MOTAT: $18,527,250

iii) ARAFB: $17,347,179

9. Staff recommend the council to refuse the AWMM’s $33,840,000 levy request and approve a lev of $33,260,000 instead. As a result, the total combined levy amount recommended for approval for 2023/2024 is $69,134,429. This is a 2 per cent increase compared to the payment in 2022/2023 and $284,990 more than the original budget provision in the LTP.

10. A potential increase to the levy payment for 2023/2024 was identified as a cost pressure and included in the draft budget for consultation. Approving the recommended combined levy of $69,134,429 will not specifically add further pressure to the group budget position forecasted in the draft budget. However, it is worth noting that other factors such as recovery costs related to the storm events and any changes in economic conditions may make the budget gap more difficult to manage through the post-consultation phase of the annual budget process.

Auckland War Memorial Museum

11. AWMM is seeking $33,840,000 which is a 4.8 per cent increase on the previous levy and higher than the council budget provision. AWMM’s draft Annual Plan 2023/2024 and accompanying letter are at Attachments A and B.

12. AWMM initially proposed levy of $35,130,000 which is an increase of 8.8 per cent ($2,838,000) on the previous year and more than the levy amount budgeted by the council.

13. Council representatives led by the Deputy Mayor have had numerous conversations with AWMM board and staff to communicate the council’s very serious financial constraints. AWMM amended their ask to $33,840,000 (4.8 per cent increase). Council representatives have since had communications with AWMM and consider that a 3 per cent increase is appropriate.

14. Staff recommend that the council refuse the $33,840,000 levy request (4.8 per cent increase) and instead approve a levy of $33,260,000 (3 per cent increase). This amount provides AWMM with a needed levy increase without adding further pressure to the council's financial position, as forecasted in the draft annual plan for 2023/2024.

Auckland Regional Amenities Funding Board

15. The ARAFA Funding Board is seeking $17,347,179. This represents an overall increase of $436,700 compared to 2022/2023. The ARAFA Funding Plan for 2023/2024 and letter from the ARAFA Funding Board are at Attachments C and D.

16. The biggest increases are directed to the Auckland Philharmonia Orchestra ($150,000) and Auckland Theatre Company ($202,000). The increases have been signalled with the council over several years.

17. The ARAFA Funding Board note that the Specified Amenities return a proportion of the annual levy back to the council in the form of rent, hire charges, rates and regulatory charges. In 2023/2024 that amount is estimated to be $2,300,000 (or 13.5 per cent of the total levy).

18. Staff recommend the approval of the levy as it is in accordance with the funding principles in the ARAFA Act, as were the processes followed by the ARAFA Funding Board to reach its proposed funding plan.

Museum of Transport and Technology

19. MOTAT is seeking $18,527,250 for the 2023/2024 financial year. This is a decrease of $80,560 from its 2022/2023 levy and is within the MOTAT statutory cap. MOTAT’s draft Annual Plan 2023/2024 is at Attachment E.

20. MOTAT note that they have moderated their levy request to take into account the extreme financial pressure on the council while ensuring that they have sufficient funds to operate the Museum and progress the second year of the Covid-19 Recovery Plan and the projects outlined in the Annual Plan.

21. Under the Advisory and Management Agreement between Tataki Auckland Unlimited (TAU) and the council, TAU are required to make a submission on the MOTAT plan and asked to recommend to the council whether to approve or reject the levy requested by MOTAT. TAU has worked closely with staff as part of this process. The letter of advice from TAU at Attachment F includes their recommendation that the levy be approved. Staff advice is in line with the advice of TAU and recommend approval of MOTAT’s levy request as it is in accordance with the provisions of the MOTAT Act.

Ngā tūtohunga

Recommendation/s

That the Governing Body:

Auckland War Memorial Museum

a) Whakaae / agree to refuse the Auckland War Memorial Museum’s $33,840,000 levy request.

b) whakaae / approve an Auckland Council funding contribution for 2023/2024 of $33,260,000.

c) tuhi ā-taipitopito / note that the Auckland War Memorial Museum Trust Board will either decide to fix the $33,260,000 levy at their 28 April 2023 board meeting or initiate arbitration proceedings to fix the levy if they do not accept the funding contribution agreed by the Governing Body at today’s meeting.

Auckland Regional Amenities Funding Act Amenities

d) whakaae / approve the Auckland Regional Amenities Funding Board’s proposed Auckland Council funding contribution for 2023/2024 of $17,347,179.

Museum of Transport and Technology

e) whakaae / approve the Museum of Transport and Technology’s (MOTAT’s) levy request for 2023/2024 of $18,527,250.

Horopaki

Context

22. The table below summarises the different legislative arrangements for each organisation. Each Act introduced a levy to be imposed on the territorial local authorities of the Auckland region. This included seven councils at the time and is now limited to the council.

Table 1: Summary of legislation

	ARAFA	MOTAT	AWMM
Title of legislation	Auckland Regional Amenities Funding Act 2008	Museum Of Transport and Technology Act 2000	Auckland War Memorial Museum Act 1996
Levy recipient	Auckland Regional Amenities Funding Board	MOTAT Trust Board	AWMM Trust Board
Levy cap	2 per cent of rates (approximately $42m)	A proportion of rateable property value (approx. $25m)	A proportion of rateable property value (over $150m)
Council role in legislation	Appoint six board members of 10; agree the levy; set additional funding principles	Appoint six board members of 10; agree the levy	Appoint 5 board members of 10; agree the levy
What funding is to be used for	Last resort funding of the 10 Specified Amenities according to principles of the Act. Auckland region activities only Opex only	Allow board to meet its minimum obligations under the Act: including to adequately maintain, manage and develop the Museum according to the objectives in the Act	Allow board to meet its minimum obligations under the Act: including to adequately maintain, manage and develop the museum according to the objectives in the Act
Formal alignment with the council’s goals	Funding is for activities aligned with the Auckland Plan	None required. As the holder of the day-to-day relationship with MOTAT, TAU works with MOTAT in support of council’s goals.	None required
Other notes	Direct specific funding amounts to amenities	Practice: funding has been for opex + capex with key capital projects highlighted in the annual plan	Practice: funding has been for opex + capex (depreciation)
Current relationship	While independent, council staff work with ARAFA Funding Board to maintain open communication. This is especially important when larger requests are made (such as the orchestra move to salary model).	Independent organisation. TAU holds day-to-day relationship and provides advice on levy, and board appointments to the council. This is under terms of an agreement with the council.	Independent organisation. Direct working relationship with the council. Council staff provide advice on levy.

23. The ARAFA Funding Board was established in 2009 following the introduction of the ARAFA Act. The ARAFA Act introduced a levy to be imposed on the council. The levy is collected by the ARAFA Funding Board and distributed as grants to the Specified Amenities named in the legislation. The purpose of the ARAFA Act is to establish a mechanism that provides funding to support the on-going sustainability of the organisations named in the Act who deliver arts, culture, recreational, heritage, rescue services and other facilities and services to the wider population of the Auckland region.

Tātaritanga me ngā tohutohu

Analysis and advice

24. The council's 10-year Budget 2021-2031 includes a combined budget for the levies of AWMM, ARAFA, and MOTAT. This budget was originally based on historical levy payment levels, with projected inflationary growth for the outer years. Each year, as part of the annual budget process, the internal budget allocation among the three entities is updated to reflect the agreed-upon and indicative levy requests for future years.

25. Table 2 below illustrates the previous two years levy payments, the proposed 2023/2024 levy requests and indicative amounts for the following two financial years, based on the 2023/2024 Annual Plans of the three entities.

Table 2: Agreed, proposed and indicative levies 2021/2022 to 2025/2026

Entity	2021/2022	2022/2023	Proposed 2023/2024	Indicative draft annual plan 2024/2025	Indicative draft annual plan 2025/2026
ARAFB	$15,434,500	$16,910,479	$17,347,179	$19,216,984**	$19,952,942**
MOTAT	$15,635,107	$18,607,810	$18,527,250	$18,621,154	$18,815,144
AWMM	$32,290,000	$32,290,000	$33,840,000*	$35,360,000	$36,780,000

*In the case of AWMM, staff recommend that the council refuse the $33,840,000 levy request (4.8 per cent increase) and instead approve a levy of $33,260,000 (3 per cent increase).

**In the case of ARAFB, the indicative amount is simply the sum of the amenities’ requests, as required by section 25 of the Act, and not a projection by the Funding Board itself. The final amount is usually lower.

26. The total levy amounts proposed by the three entities for the financial year 2023/2024 is $69,714,429, which exceeds the provision in the LTP by $864,990.

27. For AWMM, staff recommend that the council refuse the $33,840,000 levy request (4.8 per cent increase compared to the previous levy) and instead approve a levy of $33,260,000 (3 per cent increase).

28. The combined levy requests recommended for approval for 2023/2024 amount to $69,134,429, which is a 2 per cent increase compared to the total levy payment in 2022/2023 and $284,990 more than the LTP budget provision.

29. A potential increase to the total levy payment for 2023/2024 has been identified as a cost pressure and included in the financial projections when developing the draft annual plan for public consultation. Other things being equal, approving the combined levy amount of $69,134,429 will not specifically add further pressure to the forecast budget position for the council group.

30. Requests beyond 2023/2024 and the associated financial impact will be considered as part of the respective levy process and annual plan/long-term plan process each year. This is the case for all three entities.

AWMM

31. The levy paid to AWMM last year was $32,290,000. AWMM agreed to receive no levy increase over the last three years in recognition of the impact of Covid-19 on the council’s finances. The static levy equates to a significant cut in their levy over the last three years when inflationary factors are considered.

32. In April 2022 AWMM projected a levy ask of $33,260,000 which is a 3 per cent increase on the previous year’s levy.

33. In October 2022 AWMM released their Draft Annual Plan (DAP) for consultation. The DAP included a proposed levy of $35,130,000 which is an increase of 8.8 per cent ($2,838,000) on the previous year and is a $1,870,000 increase over the previously indicated $33,260,000. The proposed increase reflects the impact of higher inflation forecast and necessary capital works delayed in recent financial years.

34. Over numerous meetings council representatives lead by the Deputy Mayor sought to understand AWMM’s financial position and to convey the council’s very serious financial constraints. At the December AWMM Trust Board meeting the council Chief Financial Officer and the Deputy Mayor asked the board to reconsider the 8.8 per cent levy increase given the council’s $295 million budget shortfall. It was suggested that a reasonable levy ask would be the originally indicated 3 per cent increase which is within the council’s budget provision. Council representatives noted that any increase in funding could be considered generous when the council is facing significant funding reductions in many areas.

35. Through Covid the Museum’s revenue was severely reduced by the loss of self-generated income, particularly from the absence of international tourists and a forced inability to derive income from commercial operations. The Museum reduced expenditure, significantly reduced staff numbers, and refocused on core activities. In the absence of self-generated revenue and increased public funding support, continuing to provide core activities necessitated running deficits. The Museum advises that without a moderate correction to the levy now, this operational debt will become unsustainable. The Museum is also facing similar inflation issues to the council for core costs. The Museum has indicated that it understands and appreciates the council’s financial circumstances. It has reduced its levy request by further reducing and delaying important asset renewal expenditure. It has also stated its willingness to seek savings through shared services with other sector organisations, and combined purchasing with the council, where appropriate.

36. After the board meeting AWMM sent a letter to the council with a revised levy request of $33,840,000 which is a 4.8 per cent increase on the previous levy but still more than the budget council has allowed for.

37. The Mayor and Deputy Mayor met with AWMM at the beginning of March to discuss the levy request and to communicate the council’s difficult financial position once again. The Mayor subsequently wrote to AWMM seek answers to various questions and indicated that given the current financial situation the levy should not be increased over last year.

38. Considering the difficult financial position of both AWMM and the council, staff recommend a $33,260,000 levy (3 per cent increase) as a reasonable compromise. This levy recognises the previous static levy increases and provides AWMM with an increase to address some of their rising costs without adding further pressure to the council group's budget position forecast in the draft annual plan 2023/2024.

39. The AWMM board has a meeting scheduled for 28 April 2023 to consider the coucnil’s decision and either fix the $33,260,000 levy or failing that initiate arbitration proceedings to fix the levy. Staff consider that arbitration is not in the best interests of either party and is likely to cost more than the amount being disputed.

ARAFA

40. The ARAFA Funding Board has written to the council seeking a levy of $17,347,179. This represents an overall increase of $436,700 compared to 2022/2023.

41. The biggest increases are directed to the Auckland Philharmonia Orchestra ($150,000) and Auckland Theatre Company ($202,000). The Philharmonia grant is the final part of the transition to a salary model for the orchestra’s players. This new model was initiated three years ago, with the support of the Funding Board. Council agreed the first and second part of this model when it agreed the ARAFA levy for 2021/2022 and 2022/2023.

42. The 2023/2024 funding application for the Auckland Theatre Company indicated that prior year’s grant allocations have been insufficient to ensure the sustainability of the organisation. The Auckland Theatre Company and the Funding Board have agreed to undertake a review of the operations of the Auckland Theatre Company to determine the optimal operation of both the artistic development and property management aspects of the business.

43. The Specified Amenities return a proportion of the annual levy back to the council in the form of rent, hire charges, rates and regulatory charges. In 2023/2024 that amount is estimated to be $2,300,000 (or 13.5 per cent of the total levy). These transactions are recorded to reflect the true costs of providing these services for the enjoyment and benefit of Aucklanders.

44. The below table sets out the proposed grant allocations to each of the eight Specified Amenities.

Specified Amenity	Grant Allocation 2022/2023	Amenity Funding Application 2023/2024	Grant Allocation 2023/2024	Year on Year Change 2022/2023 to 2023/2024
Auckland Festival Trust	$4,187,000	$4,475,000	$4,187,000	0
Auckland Philharmonia Trust	$4,591,729	$4,915,911	$4,741,729	+$150,000
Auckland Rescue Helicopter Trust	$450,000	$600,000	$450,000	0
Auckland Theatre Company Ltd	$2,020,000	$2,222,000	$2,222,000	+$202,000
Drowning Prevention Auckland -WaterSafe Auckland Incorporated	$1,128,750	$1,248,750	$1,178,750	+$50,000
New Zealand Opera Limited	$1,295,000	$1,475,000	$1,260,000	-$35,000
Stardome - Auckland Observatory and Planetarium Trust Board	$1,488,000	$1,636,800	$1,488,000	0
Surf Life Saving Northern Region Inc	$1,390,000	$1,991,089	$1,447,450	+$57,450
Total Grants Payable	$16,550,479	$18,564,550	$16,794,929	+$424,450
Funding Board Administration Budget	$360,000	$372,250	$372,250	+$12,250
Total Grants and Administration Costs	$16,910,479	$18,936,800	$17,347,179	+$436,700
Less Paid from Funding Board Retained Earnings
Total Levy Payable by Auckland Council	$16,910,479	$18,936,800	$17,347,179	+$436,700

45. The funding plan in some cases notes conditions the ARAFA Funding Board has placed on grants it intends to make. These relate often to special purposes towards which funding must be directed, or that certain reporting is required. The 2023/2024 Funding Plan and a letter from the ARAFB Chair are provided at Attachments A and B.

46. Overall, the levy is around 40 per cent of the total possible levy (which is a maximum of 2 per cent of the council’s rates income).

47. Staff recommend the approval of the levy as it is in accordance with the funding principles in the ARAFA Act, as were the processes followed by the ARAFA Funding Board to reach its proposed funding plan. The alternative option is to not agree the proposed levy. If the levy is not approved, an arbitrator must be appointed to resolve the levy.

48. Not approving the levy is not recommended by staff, because we consider that the ARAFA Funding Board has undertaken its processes appropriately, in terms of the legislation. Given that the council funds the ARAFA Funding Board’s administrative costs, arbitration would result in the council paying for both sides of such a dispute.

49. Council’s role is not to dispute individual allocations, and in cases where larger allocations have been signalled by the ARAFA Funding Board, it has discussed those with the council ahead of time (Auckland Philharmonia, and previously, the annualisation of the Auckland Festival).

MOTAT

50. Under the Advisory and Management Agreement between Tātaki Auckland Unlimited (TAU) and the council, TAU are asked to recommend to the council whether to approve or reject the levy requested by MOTAT. Attachment F is TAU’s letter recommending that the council accept MOTAT’s levy request.

Response to Council’s Financial Position

51. TAU met with the Chair of MOTAT prior to the publishing of the 2023/2024 Draft Annual Plan. At this meeting TAU outlined the financial challenges the council was facing. MOTAT responded to this positively, and reduced their levy request to take into account the extreme financial pressure on the council while ensuring that they have sufficient funds to operate the museum, address several legacy issues and progress the second year of the Covid-19 Recovery Plan and the projects outlined in the Annual Plan.

52. MOTAT were planning to increase Board Member remuneration for the first time in 10 years in recognition of the significant time commitment and to align the remuneration to that paid to the board members and trustees of similar organisations. The proposed increase from $136,000 to $216,000 has however been deferred to the 2024/2025 financial year in order to reduce the levy request on the council.

53. This approach is in line with MOTAT’s previous effort to proactively reduce its levy request from the council in 2020/2021 to assist with the COVID-19 related budget issues the council was facing. In doing this, MOTAT has demonstrated a collaborative approach, despite the ageing nature of its buildings and facilities, and the challenges it is facing.

Proposed Levy Request

54. MOTAT’s levy request is $18,527,250 for 2023/2024. This is a decrease of $80,560 from last year’s $18,607,810.

55. The components of the proposed levy are:

· a base operational portion of the levy of $16,397,250

· $2,130,000 to cover additional operating and capital requirements including:

o Continued funding of Approach 2 Projects and the SciTech funding totaling $1,400,000.

o Site lighting and signage to improve visitor, employee, volunteer and contractor safety on site - $180,000.

o Remediating the asphalt surfaces at MOTAT Great North Road - $50,000.

o Providing a one-off funding for alternative staff offices as several of the existing ones are coming to end of their effective life - $500,000.

Approach 2 and SciTech Commitments

56. Prior to the 2020/2021 Emergency Budget, Regional Facilities Auckland (now TAU) had worked through and had agreed with the council and MOTAT, a pragmatic and carefully calibrated approach via the levy process to help MOTAT address some issues (identified as the Approach 2 projects in the Museum’s Annual Plans and Annual Reports). This was to be supported by a borrowing regime by MOTAT, that had no impact on the council’s credit rating or borrowings.

57. Approach 2 projects include:

Underway:

· Environmental and roofing upgrades to main exhibition hall at Great North Road – started in April 2023

· Upgrade of entrance to the Great North Road (MOTAT1) site – progressing

Completed:

· Car park at Motions Road site - Stage 1 - completed in August 2022

· Upgrade of the entrance to the Aviation Hall - completed in August 2022

· Environmental and roofing upgrades to Building 6 (Pink Building)

· Café upgrade

· Upgrade of MOTAT2 entrance – completed in August 2022

58. This involved ring fencing $1,000,000 of the levy per annum for 10 years, starting in 2019/2020 so that MOTAT could borrow circa $12.5 million from its bank, on very favourable terms, to undertake and complete the Approach 2 projects.

59. This arrangement was effectively put on hold by MOTAT agreeing to significantly reduce its levy request to assist the council with its 2020/2021 Emergency Budget. To progress these core projects, MOTAT sought to reinstate this in last year’s Annual Plan. This was agreed by the Governing Body and this approach continues for this Annual Plan.

60. The levy request for 2020/2021 also included $800,000 a year for two years, for the development of a SciTech Centre in the main exhibition hall, but that was removed from the 2020/2021 and 2021/2022 Annual Plans in order to assist with the Emergency Budget.

61. Funding for the SciTech Centre was reinstated in the 2022/23 levy and MOTAT has ring fenced $400,000 in the 2023/2024 and $400,000 in 2024/2025 in its draft annual plan to cover the cost of developing the SciTech Centre.

62. The SciTech Centre is a core educational experience aimed at cross-generational families, which account for 86 per cent of MOTAT’s visitors. The SciTech Centre will also provide the “cornerstone” for the development of the Western Springs Precinct as a science, technology, and ecological precinct with a cultural overlay. The SciTech Centre is to be developed in conjunction with the refurbishment of the exhibition hall, which urgently required a new roof and refurbishment.

Analysis

63. MOTAT typically comes to the council (through the levy process) for specific project funding when required. MOTAT has been open and transparent with TAU and the council about this, and what is proposed is consistent with MOTAT’s objectives under the Act and its vision.

64. TAU and the council Finance and CCO Governance and External Partnerships staff have worked closely with MOTAT during the development of its 2023/2024 draft Annual Plan and its levy request.

65. TAU and council staff’s recommendation is that MOTAT’s proposed 2023/2024 levy be agreed. The other alternative is to reject the levy amount and enter arbitration. This is not recommended because the request is clearly aligned with the purposes in the Act, does not exceed a level beyond the board meeting its minimum obligations, and supports compliance with health, safety and wellbeing requirements.

Tauākī whakaaweawe āhuarangi

Climate impact statement

66. The ARAFA Funding Board is a statutorily independent organisation and the council is unable to direct it on climate change issues. However, ARAFA Funding Board is required to ensure that amenities align their activities with Auckland Plan objectives, which include Auckland’s response to climate change.

67. MOTAT is a statutorily independent organisation and the council is unable to direct it on climate change issues. However, despite operating heritage machinery that relies on fossil fuels, MOTAT has implemented various initiatives aimed at reducing its carbon footprint and impact on the environment.

68. MOTAT’s budget includes funds for replacing the lights with more energy-efficient lights.

69. MOTAT will continue recycling and water harvesting and the monitoring of carbon emissions by Toitū Envirocare.

70. AWMM is a statutorily independent organisation and the council is unable to direct it on climate change issues. However, the Museum includes a focus on climate change for financial year 2023/2024. Being responsive to the sustainability goals of the city, the Museum recognises the role they have to play in educating Aucklanders and visitors to the city. It has set a long-term goal of net zero carbon emissions by 2050 and has aligned is Sustainability Action Plan with Auckland Council’s Auckland Plan and Te Tāruke-ā-Tāwhiri: Auckland’s Climate Plan. The Museum’s research efforts also build a base of evidence that informs the understanding of climate change and biodiversity.

Ngā whakaaweawe me ngā tirohanga a te rōpū Kaunihera

Council group impacts and views

71. MOTAT has been undertaking discussions with TAU about its future relationship to the council group. This is consistent with the council’s endorsement of the CCO review recommendation number three.

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

Local impacts and local board views

72. The relationship with AWMM, the ARAFA Funding Board and MOTAT is a regional one, and as such decisions about funding contributions are made by the Governing Body or its committees.

Tauākī whakaaweawe Māori

Māori impact statement

73. Under the provisions of the ARAFA Act, the council has appointed a director whose specific role is to overview the interests of Māori in the wider Auckland region when the board engages with the eight Specified Amenities. Through the actions of this position, the Specified Amenities have all increased their awareness of the role of Māori in the Auckland region. They have also created specific programmes that interact with Māori or seek Māori input into the varying outputs and outcomes each Specified Amenity is delivering into the Auckland region. Specific examples can be found in the narratives for each amenity in the attached draft Funding Plan 2023/2024.

74. MOTAT’s Annual Plan notes the steps taken to develop a bicultural approach, He Aratakina Māori, and continuing its journey of becoming a responsible partner under te Tiriti o Waitangi.

75. MOTAT’s SciTech Centre will incorporate te ao, mātauranga and tikanga Māori knowledge and concepts as well as Western STEAM (Science, Technology, Engineering, Arts and Maths) knowledge, concepts and experiences for those under the age of six, and their whānau.

76. AWMM is a statutorily independent organisation, and the council cannot direct it on any operational matters, including how it responds to iwi Māori. However, its draft Annual Plan notes that the Museum contributes to the Auckland Plan objective relating to Māori identity and wellbeing and sets out how it plans to advance Māori wellbeing; promote Māori success, innovation, and enterprise; recognise and provide for te Tiriti o Waitangi outcomes; and showcase Auckland’s Māori identity and vibrant Māori culture.

77. AWMM’s draft Annual Plan also notes that the Māori committee known as the Taumata-ā-Iwi serves an important role as both advisor and partner to the AWMM Trust Board and is strategically important to the cultural fabric of Tāmaki Makaurau. Mana whenua represented on the Taumata are from Ngāti Whātua, Ngāti Pāoa and Tainui.

Ngā ritenga ā-pūtea

Financial implications

78. The analysis in this report was undertaken with finance staff and their advice is incorporated at the beginning of the analysis and advice section so that it is read together with the main part of the advice on the levies.

Ngā raru tūpono me ngā whakamaurutanga

Risks and mitigations

79. There are three main risks for approving the levy requests considered in this report.

80. The first key risk is that the levies will materially exceed the council budget allocations. This has been mitigated by the council and TAU staff working with the entities to communicate the council’s financial challenges.

81. The second key risk is the possibility that the activities of the organisations will not meet the stated goals of the annual plans and that those annual plans do not align with the council goals. For the eight Specified Amenities, this risk is minimised because a requirement of funding is to demonstrate alignment with the Auckland Plan. MOTAT works closely with TAU to ensure its long-term goals are aligned with those of the council. AWMM endeavours to demonstrate this in its Annual Plan. However, ultimately the legislative schemes for MOTAT and AWMM does not guarantee the council any role in assessing the performance of these organisations or ensuring that their activities align with the council priorities.

82. The final risk is of arbitration if the levies are not agreed by 30 April. This risk is mitigated by maintaining a good relationship with the entities and a mutual understanding of the financial pressures. This report recommends that the council approve a funding contribution for AWMM that is below the amount asked for in their DAP. This could lead the AWMM Trust Board to initiate arbitration proceedings to fix the levy. This risk is mitigated by approving a levy amount that includes an increase over the previous year. Good communication between the council and AWMM is important to understand that arbitration is not in the best interests of either party and is likely to cost more than the amount being disputed.

Ngā koringa ā-muri

Next steps

84. If agreed, the MOTAT Board and ARAFA Funding Board will adopt their final 2023/2024 Annual Plans and the Auckland War Memorial Museum Trust Board will either decide to fix the $33,260,000 levy at their 28 April 2023 board meeting or initiate arbitration proceedings to fix the levy if they do not accept the funding contribution agreed by the Governing Body at today’s meeting.

85. The agreed levies will be paid within the appropriate statutory timeframe.

Ngā tāpirihanga

Attachments

No.	Title	Page
a ⇨	AWMM draft annual plan 2023/2024
b ⇨	Letter re AWMM draft annual plan 2023/2024
c ⇨	ARAFA Funding Plan 2023/2024
d ⇨	Letter from ARAFA Funding Board
e ⇨	MOTAT Final Draft Annual Plan
f ⇨	Letter from TAU re MOTAT levy

Ngā kaihaina

Signatories

Authors

Chris Levet - Principal Advisor

Sarah Johnstone-Smith - Principal Advisor

Tracy Xu - Principal Advisor CCO Financial Planning

Authorisers

Alastair Cameron - Manager - CCO Governance & External Partnerships

Herewini Te Koha - Director Māori Outcomes

Jim Stabback - Tumu Whakarae / Chief Executive

Governing Body

27 April 2023

Bayswater Boating Club - Legislation Change

File No.: CP2023/03793

Te take mō te pūrongo

Purpose of the report

1. To inform the Governing Body of the issues relating to the Takapuna Boating Club building at 17 Sir Peter Blake Parade, Bayswater.

2. To inform the Governing Body of options and to recommend the promotion of a local bill to amend the Auckland Harbour Board and Takapuna Borough Council Empowering Act 1923 subject to consultation with the local community and interested stakeholders.

Whakarāpopototanga matua

Executive summary

3. The Takapuna Boating Club (TBC) owns the land and boat club building at 17 Sir Peter Blake Parade, Bayswater (Figure 1).

4. The land is subject to a local act of Parliament, the Auckland Harbour Board and Takapuna Borough Council Empowering Act 1923 (the Act). A full copy of the Act is provided as Attachment A to this report.

5. The Act requires that the land be used for the purposes of boating sheds, public swimming baths, social hall, or for any similar or incidental purpose, but requires that the land or any part of it, or any building on it must not be used for private gain.

6. The uses permitted by the Act have over time become redundant with the swimming baths ceasing operation in the 1950s and the club moving to new premises in the 1960s. The stipulation that the use of the building may not be for private gain means TBC is unable to enter into commercial leases with tenants who could provide the club with the income necessary to upgrade and maintain the building.

7. TBC wishes to retain and restore the building, but the restrictions of the Act prevent TBC from securing the commercial income necessary to fund restoration and, more importantly, provide an income necessary for the club to maintain the building into the future. The building, which is a Category A* Heritage listed building, currently sits in disrepair.

8. TBC is seeking an amendment to the legislation that would allow the club to use a portion of the building for commercial purposes (for example, to lease part of the building to a commercial party), while continuing to use the remainder of the site for boating and community use.

9. Only the council can promote a local bill to amend a local Act. Therefore, TBC is seeking council support to amend the Act. Staff have identified and assessed the relevant options which include doing nothing, council acquisition of the property, council supporting an amendment of the Act or advocating for full repeal of the legislation. The recommended option is for council to promote a local bill to amend the Act to allow TBC’s proposal to lease some of the property to a commercial party.

10. The council’s powers under the Act are considered to be akin to a property right, and as such the consideration of options sits with the Governing Body, as it is responsible for decisions that involve the disposal of a property right.

11. Both use and development of the TBC building are managed through the Auckland Unitary Plan (AUP). Approval from the Governing Body to promote amendment of the local bill, subject to consultation, does not circumvent the need for AUP compliance or signal endorsement of any future resource consent applications.

12. The AUP provisions relating to the site are understood to be significant and complex. The TBC has acknowledged that any future resource consent process and risk is theirs. This will include consideration of AUP provisions to determine what nature and extent of commercial activity could be granted resource consent.

13. This report recommends that council promote a local bill to amend the Act to remove the restriction on commercial uses of a part of the building, subject to consultation with the local community and interested stakeholders.

Ngā tūtohunga

Recommendation/s

That the Governing Body:

a) whakaae / agree, subject to consultation, to promote a local bill to amend the Auckland Harbour Board and Takapuna Borough Council Empowering Act 1923 (the Act) to facilitate the Takapuna Boating Club’s proposal to lease part of the building on a commercial basis as follows:

suggested amended section 5 of the Act:

i) the Auckland Council or any body or person claiming through or under it shall use the land described in Schedule 1 hereto as a site of and for the principal purposes of boat sheds, public swimming baths, social hall or any similar community purpose.

ii) nothing in subsection (i) shall prevent the use of part of the land described in Schedule 1 for commercial purposes as long as the land and any buildings on it are principally used for community purposes.

iii) Where any part of the land described in Schedule 1 is subject to a lease or other arrangement for use in accordance with subsection (ii), any proceeds received under any such lease or other arrangement must be used towards the maintenance of the land and any building or other capital improvements situated thereon, and/or for community purposes.

b) tuhi ā-taipitopito / note that its agreement to (a) above is not an endorsement of any specific proposal of the Takapuna Boating Club in respect of future uses of the land or building at 17 Sir Peter Blake Parade, Bayswater, and that the Takapuna Boating Club will be responsible for obtaining any regulatory approvals, including from Auckland Council, as necessary.

c) tono / request staff consult on the preferred option expressed in clause a) above to ascertain the views and preferences of persons likely to be affected by (or who may have an interest in) a change to the Auckland Harbour Board and Takapuna Borough Council Empowering Act 1923.

d) tautapa / delegate to the Chief Executive the authority to receive and consider views obtained through public consultation, and decide whether to proceed with promoting a local bill to amend the Auckland Harbour Board and Takapuna Borough Council Empowering Act 1923 on the basis set out in clause (a) above, including with any minor changes as necessary.

Horopaki

Context

14. The TBC building is located on a parcel of land at 17 Sir Peter Blake Parade Bayswater. Adjacent to the TBC building are the remains of saltwater swimming baths which were originally owned and managed by the Takapuna Borough Council up until the 1950’s.

15. The area of land comprising the boat club building and the swimming baths is subject to a local Act of Parliament. The Act requires that the land only be used for the purposes of boating sheds, public swimming baths, social hall, or for any similar or incidental purpose, and requires that the land, any part of the land, or any building on the land must not be used for private gain.

16. The land was originally owned by the Auckland Harbour Board and vested in the Takapuna Borough Council in 1923. The land on which the boat club building sits on was sold to TBC in 1926 for a nominal amount with the current title (NA455/236) (Attachment B) issued in 1927. The council held title to the swimming baths until the introduction of the Marine and Coastal Area (Takutai Moana) Act 2011 then, in accordance with Section 11(3) of that act, the land became part of the common marine and coastal area and council was divested of title.

17. In the 1920’s TBC purchased and disassembled the Ireland’s Tannery building in Panmure, barging it to Bayswater where it currently sits and was transformed into a three-storey clubhouse using TBC funds. The clubhouse building is now recognised as a Category A* Heritage building in the Schedule of Historic Heritage in the Auckland Unitary Plan.

18. Saltwater swimming baths were constructed and managed by the Takapuna Borough Council in 1923/24 and were in use up until the 1950’s. The clubhouse was used for changing and toilet facilities for the baths and this use right is recorded in the transfer of the land to the TBC.

19. TBC utilised the whole building as clubrooms before relocating to new premises at Takapuna in the 1960’s but has continued to utilise the boat club building for small boat regattas, wind surfing, kayaking and gear storage.

20. In 2002 TBC commissioned a conservation plan to ensure the long-term preservation of the building. In more recent times it has spent over $600,000 renewing the roof and foundations of the building but does not have the ongoing financial means to restore the building any further and it has fallen into disrepair.

21. The restrictions in the Act around not using the land or any buildings on it for private gain prevent TBC from securing a commercial lease over any part of the building. Currently the top two floors of the building are vacant, and in their current state, cannot be used. Consequently, TBC receives no income from the building which would, under normal circumstances, fund maintenance and upkeep. A portion of the ground floor is currently used for boating, windsurfing and equipment storage but is well below a condition acceptable for ongoing occupation.

22. TBC has sought support from council in exploring and evaluating options that might allow sale or lease of the property. TBC’s preference is to retain ownership of the land and building and to see the building restored and jointly utilised by a commercial party and the club. The lease proposal would remove a significant financial burden from TBC.

23. To proceed with the leasing proposal, the restrictive uses and the “not to be used for private gain” requirements of the Act will need to be amended. The Act is a local Act and any amendment to it must be introduced as a local bill promoted by a local authority.

24. If an amendment is proposed, the wording of the bill will need to be approved by the Parliamentary Counsel Office as part of the legislative process, but the proposed amendment wording is suggested below.

25. Current Section 5 of the Act:

“The Auckland Council or any body or person claiming through or under it shall use the land described in Schedule 1 hereto as a site of and for the purposes of boating sheds, public swimming baths, social hall, or for any similar or incidental purpose, but so that the said parcel of land or any part thereof or any building thereon shall not be used for private gain…”

26. Suggested amended Section 5 of the Act:

i) The Auckland Council or any body or person claiming through or under it shall use the land described in Schedule1 hereto as a site of and for the principal purposes of boat sheds, public swimming baths, social hall, or any similar community purpose.

ii) Nothing in subsection (1) shall prevent the use of part of the land described in Schedule 1 for commercial purposes as long as the land and any buildings on it are principally used for community purposes.

iii) Where any part of the land described in Schedule 1 is subject to a lease or other arrangement for use in accordance with subsection (2), any proceeds received under any such lease or other arrangement must be used towards the maintenance of the land and any building or other capital improvements situated thereon, and/or for community purposes.

27. The intention of the amendment would be to allow TBC to lease a portion of the property to a private (commercial) party but the restrictions in the Act will continue to apply to the club’s use of the balance of the land and building. Any commercial activity would need to be compliant with the relevant provisions of the AUP.

28. Staff have identified and assessed three other options available to the council and set out the advantages and disadvantages in the table below. Options 1, 2 and 4 are not recommended for various reasons, primarily due to the council not having the financial resources or need to acquire the boat club building and land.

29. The recommended option (Option 3) is for the council to promote a local bill to amend the Act to allow TBC the option of leasing a portion of the property to a commercial party.

Tātaritanga me ngā tohutohu

Analysis and advice

Heritage issues

30. The TBC building falls within the Coastal Marina Zone and is part of the 'Bayswater Marina sub-precinct E’ under the Auckland Unitary Plan.

“The sub-precinct provides for the development and operation of established marinas including both land and water components and covers the land and coastal marine area to promote integrated management of activities and effects that cross mean high-water springs. The Bayswater sub-precinct zone specifically refers to the TBC building in ensuring that activities do not detract from the character of the “scheduled historic heritage Takapuna Boating Club”.

31. The building is further identified under the Historic Heritage overlay as Category A* (of outstanding significance well beyond the immediate environs). “Heritage values” are categorised in the Unitary Plan as.

i) A- Historical

ii) B- Social

iii) C- Mana Whenua

iv) D- Knowledge

v) E- Technology

vi) F- Physical Attributes

vii) G- Aesthetics

viii) H- Context

32. The TBC building is identified as having Heritage values A (Historical), B (social),
F (Physical Attributes), and G (Aesthetics).

33. The TBC building is not recorded in the Historic Places Trust Register. The marina sub-precinct zone noted above, and the heritage values of the building highlight the need for the building to remain as an integrated part of the future Bayswater Marina development.

34. The built heritage team have reviewed the proposal in light of the heritage status and do not have any concerns in relation to the legislation change proposal.

35. All regulatory matters and assessments will be addressed if TBC seeks to modify the exterior of the building in the future.

Figure 1 and 2: The Takapuna Boating Club

Planning considerations

36. The AUP considerations for the site are significant and complex. Any resource consent application for considering commercial use for part or all of the floor plate of the TBC building will need to consider a range of effects and issues. Broadly, these include:

· The TBC building is located in the Coastal Marina Zone.

· The Bayswater Marina Sub-Precinct E applies to the TBC building.

· The TBC building has a Category A Historic Heritage overlay classification.

· The adjacent coastal water to the TBC building is affected in part by SEA Marine 2 ecological protection.

· The site is subject to the future coastal hazards plan change. Sea level rise and coastal inundation will need to be addressed.

· A volcanic view shaft and height sensitive area overlay applies to the site.

· The building straddles Mean High Water Springs.

37. Should an amendment be made to the Act that enables a level of commercial activity to occur on site, any future activity will require compliance with AUP provisions. No assessment on the level and nature of commercial activity that may be permissive has been undertaken, in lieu of a formal consent application. Promoting an amendment to the Act does not signal endorsement from council on any future consenting applications.

Options review

38. In addition to the proposal from TBC to promote a local bill to amend the Act (Option 3 below), staff have identified and assessed three other options for consideration and set out the advantages and disadvantages of all relevant options in the table below.

Option	Advantages	Disadvantages
1. Do nothing Council declines to support TBC in promoting a local bill to amend the Act or to assist by any other means in dealing with the issues with the building.	No cost to Council	Possible community backlash at lack of support – potential loss of heritage building. The building will continue to sit in a state of disrepair as TBC does not have funding to upgrade and maintain.
2. Council acquires the property from TBC	Council secures land and building	Council inherits the same legislative restrictions. No known requirement for an additional community facility in this area. No funding available for restoration or maintenance. No funding available for acquisition. Heritage status of building also restricts potential development.
3. Promote a local bill to amend the Act to allow TBC to lease a portion of the building for commercial activities	Enables TBC to enter into a commercial leasing activity while retaining community use and activities of the facility. Supports restoration and preservation of a heritage building and enables a funding source for its ongoing maintenance. Does not limit future sale of the land by the Club but any new owner would be subject to the Act.	Commercial operations might overshadow any potential community uses if not carefully balanced with community uses. Reputational - council seen as supporting private control of part of what was intended to be a club-owned community facility.
4. Advocate for full repeal of the Act	Property is unencumbered and can be sold/leased and developed by TBC as of right.	Potential sale and loss of heritage building. Not in keeping with the original intention of the Act to ensure community use of the land and building.

39. Option 1 does not allow TBC to secure an income from the property that would enable redevelopment and restoration. The building will remain unusable and continue to deteriorate.

40. Option 2 involves a substantial cost to council in purchasing and restoring the building. The council would also inherit the same legislative restrictions that apply to the site under the Act.

41. Option 3 is the recommended option as it removes potential costs for council and enables TBC to secure a commercial rental which might ultimately enable restoration of the building and provide boating amenities to the community. There will be minor administrative and staff costs for Public Law to initiate the legislative change to parliament.

42. Option 4 is not supported as while it would remove all legislative restrictions, repeal of the legislation in its entirety is not in keeping with the original intention of the Act to ensure the ongoing provision of boating and recreational facilities for the community. The property could be lost to private development.

43. Three out of the four options considered involve either disposing or acquiring a property right. In terms of the Act, the council is able to acquire the land back if the club breaches the Act and this is deemed a property right. Consideration of the options include the potential disposal of council’s property right in relation to the building (e.g. Option 4 outlined above). Therefore, the consideration of options sits with the Governing Body, as it is responsible for decisions that involve the disposal of a property right.

Tauākī whakaaweawe āhuarangi

Climate impact statement

44. Te Tāruke-ā-Tāwhiri: Auckland’s Climate Plan sets out two core goals to reduce greenhouse gas emissions to reach net zero emissions by 2050 and to prepare the region for the adverse impacts of climate change.

45. In this instance, the council is not the property owner.

46. This is an administrative report and the recommended option of promoting a local bill and undertaking consultation does not have any direct impact on greenhouse gas emissions.

47. The proposal outlined in this report, if it succeeds will enable changes in the use of the land and activity on the land. A change in legislation reduces the risk of the building being demolished (and going to landfill) or further deteriorating (noting the site is on the coastline).

48. Climate change may impact this property given its proximity to the sea. The owner is responsible for matters arising from climate impacts.

49. Any potential repairs to the building or further use may result in greenhouse gas emissions, however these have not been assessed for the purposes of this report.

Ngā whakaaweawe me ngā tirohanga a te rōpū Kaunihera

Council group impacts and views

50. The proposal has no identified impacts on other parts of the council group and there is currently no requirement for additional community facilities in this location. Council’s public law team have been closely involved in the suggested amendments to the current Act and the engagement team have been involved in advice and plans for consultation.

51. The views of council-controlled organisations were not required for the preparation of this report.

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

Local impacts and local board views

52. At a business meeting on 21 June 2022 the Devonport-Takapuna Local Board supported promotion of the legislation change and consultation with persons likely to be affected (DT/2022/84).

53. The board’s resolutions also noted:

· Concerns that the proposed change may not adequately protect the building from being sold in future.

· That the Bayswater Peninsula is expected to undergo rapid growth and that the availability of community facilities at the TBC site would be welcomed, particularly where the facility provides community activity but is not owned or managed by council.

54. The concern with regard to future sale of the building is addressed in Option 3 of the options table above.

Tauākī whakaaweawe Māori

Māori impact statement

55. Auckland Council is committed to meeting its responsibilities under Te Tiriti o Waitangi and its broader obligations to Māori

56. These commitments are articulated in the council’s key strategic planning documents, the Auckland Plan, the Long-term Plan 2021-2031, the Auckland Unitary Plan, Whiria Te Muka Tangata – the Māori Responsiveness Framework, Kia Ora Tamaki Makaurau – Māori Outcomes Performance Measurement Framework, and local board plans.

57. The council is not the property owner, but consultation will be undertaken with local mana whenua.

Ngā ritenga ā-pūtea

Financial implications

58. Costs in respect to Option 2 - Actual purchase and restoration of the building, have not been quantified as this is not the recommended option. Conservative estimates for restoration work alone provided by the TBC are in the order of $3-5 million.

59. Options 3 and 4 require council to bear the cost of promoting a local bill which includes a $2,000 filing fee. Any initial legal work will be completed by council’s in-house legal team and costs met from existing operational budget. If an amendment proceeds, the wording of the bill will be finalised in consultation with the Parliamentary Counsel Office as part of the legislative process and council’s in-house legal team will assist as needed. Within these options, council is not responsible for the cost of the repairs and maintenance of the building.

60. Any initial administrative legal work will be completed by council’s in-house legal team (Public Law) as usual business, and costs for this met from existing staff operational budget.

61. Community engagement costs will be covered within existing budgets.

62. If an amendment proceeds, the wording of the bill will be finalised in consultation with the Parliamentary Counsel Office as part of the legislative process and council’s in-house legal team will assist as needed. Within these options, council is not responsible for the cost of the repairs and maintenance of the building.

Ngā raru tūpono me ngā whakamaurutanga

Risks and mitigations

63. Option 1 has no financial risk for the council but offers some reputational risk in that council is perceived to be preventing TBC from being able to manage and restore the building.

64. Option 2 has significant financial risk for the council both in restoration costs and ongoing maintenance. Legislative change would also likely be required here as council would still be bound by the restrictions on use set out in the Act.

65. Option 3 has minimal risk for council. It would enable the TBC to secure a commercial tenant which would provide the TBC with an income that could be used towards restoration of the building. Liability for the building, whether the change is promoted or accepted, or not, remains with the owner.

66. Option 4 has no financial risk for council but frees the property for sale and potentially loss of a heritage building.

Ngā koringa ā-muri

Next steps

67. If the Governing Body agree with the recommended option of promoting a local bill to amend the Act, council will consult with the local community, mana whenua and any identified stakeholders.

68. Consultation recommended by the Citizen and Customer Engagement Team includes:

· two-week consultation period

· consultation published on AK Have Your Say

· feedback form and all supporting documents available as printable PDF’s on akhaveyoursay.nz.

· hardcopy feedback forms available in local library (in both Takapuna and Devonport)

· one-to-two in person drop-in sessions at local library (one in Takapuna and one in Devonport)

69. The TBC has already commenced its own consultation with iwi, local residents and user groups and intends to feed back the results to council.

70. Following consultation and any objections to the proposal being resolved, staff will work with Parliamentary Counsel Office finalise the wording of the bill to be introduced to Parliament. The legislation change is supported by Simon Watts, National Member of Parliament for the North Shore who has indicated that he will introduce the bill. If, following consultation, council decides to proceed with promoting a local bill to amend the Act, staff will consult with the Parliamentary Counsel Office on the final wording of the amendment and work with Simon Watts MP to progress the introduction of the bill.

Ngā tāpirihanga

Attachments

No.	Title	Page
a ⇨	Empowering Act

Ngā kaihaina

Signatories

Authors

Allan Christensen - Manager Land Advisory Services

Authorisers

Taryn Crewe - General Manager Parks and Community Facilities

Claudia Wyss - Director Customer and Community Services

Jim Stabback - Tumu Whakarae / Chief Executive

Governing Body

27 April 2023

Evaluation of 2022 Auckland Council Elections and other representation matters

File No.: CP2022/17023

Te take mō te pūrongo

Purpose of the report

1. To report an evaluation of the 2022 Auckland Council elections.

2. To seek support for investigating a combination of booth and postal voting for the 2025 elections.

3. To agree the process for developing the council’s proposed representation arrangements for the 2025 elections.

Whakarāpopototanga matua

Executive summary

4. An evaluation of the Auckland Council 2022 elections is provided as Attachment A.

5. This follows a submission to Parliament’s Justice Committee Inquiry into the 2022 Local Elections. That submission had a focus on whether legislative changes were required. This current evaluation repeats some of the content in that submission but its focus is on Auckland Council’s own elections.

6. One of the suggestions in the report is that for the 2025 elections the council considers moving from postal voting to a combination of postal and booth voting whereby booths are staffed on election day and do not close until 7 pm. Postal voting would be available as has been past practice, closing at 12 noon on election day. This responds to some criticism, particularly in social media, that it was difficult to cast a special vote on election day for those who left doing so until the final day.

7. This would incur a cost of more than $20,000 and could delay the announcement of election results until the following day.

8. Compared to a total turnout of 405,149 electors, the number of electors having difficulties voting on the final day was small. The total number of special votes cast over the whole election period was 6,992 (1.7 per cent of total votes). Nevertheless, participating in the democratic process is important and no voter should find the experience difficult.

9. Changing from postal voting to booth voting or a combination of both requires a resolution of the council. If the meeting supports further examination of a combined approach staff will provide a further report in due course in order to pass the appropriate resolution.

10. Staff consider that one of the underlying challenges is the maintenance of the electoral roll. When voters need to cast special votes it is often because they do not receive their voting documents by post. The reason they do not receive their voting documents is often because they have shifted residence and have not updated their details on the electoral roll. The Electoral Commission updates the roll prior to the election. If the process for updating the roll could be improved, then the issue of electors seeking special votes on election day might be reduced. Staff have raised this with the Electoral Commission.

11. Nevertheless, the prospect of making election day itself more significant with voting not closing until 7pm might assist with turnout.

12. Local board feedback on the election evaluation is in Attachment B.

13. Staff propose a process for the Representation Review ahead of the 2025 elections based on the process for the 2019 review which worked well; that is to use the Joint Governance Working Party to develop a proposal and make recommendations to the Governing Body. The Governing Body would then make a decision on the initial proposal that would be publicly notified.

Ngā tūtohunga

Recommendation/s

That the Governing Body:

a) whiwhi / receive the “Evaluation of Auckland Council’s 2022 elections” in Attachment A

b) whiwhi / receive the feedback from local boards in Attachment B

c) tuhi ā-taipitopito / note that lessons learnt from the 2022 elections, along with feedback from local boards and any comments from this meeting, will form part of the planning for the 2025 elections

d) whakaae / agree to support staff continuing to investigate having a combination of postal and booth voting for the 2025 elections

e) whakaae / agree that the council’s initial proposal for representation arrangements for the 2025 elections is developed by the Joint Governance Working Party as follows:

i) the Joint Governance Working Party will develop Auckland Council’s initial review of representation arrangements after seeking feedback on issues and options from the Governing Body and local boards, then make recommendations to the Governing Body for the Governing Body to formally resolve its proposal for public notification for submissions.

ii) the Joint Governance Working Party will conduct the hearing of submissions and report its findings to local boards and the Governing Body before the Governing Body makes the final statutory resolution on any representation changes, which will then be publicly notified for objections and appeals.

Horopaki

Context

Decisions leading up to the 2022 elections

14. The Local Electoral Act 2001 states that responsibility for the conduct of the election lies with the Electoral Officer who is not subject to the directions of any local authority or local board. Although elected members are to be at arm’s length from the operation of an election a council makes certain decisions leading up to an election.

15. On 25 March 2015 the Governing Body appointed Dale Ofsoske as Auckland Council’s Electoral Officer. Dale Ofsoske is the managing director of Election Services and has been Electoral Officer for the 2016, 2019, 2022 elections and all by-elections. A staff person was appointed Electoral Officer for the 2013 elections but the experience from that was that the role of Electoral Officer for Auckland is too large for internal staff to undertake in addition to business-as-usual responsibilities.

16. On 27 February 2020 the Governing Body:

i) resolved to continue the First Past the Post electoral system (rather than changing to the Single Transferable Vote voting system)

ii) resolved to take no further action in relation to establishing a Māori ward (because the Governing Body preferred that a member elected from a Māori ward be an additional member and legislation had not been passed to allow the Governing Body to change the number of members)

iii) noted the opportunity to conduct another review of representation arrangement but that it was not required to do so and resolved to take no further action.

17. On 24 February 2022 the Governing Body resolved for the order of names on voting papers to be alphabetical (rather than random or pseudo-random).

18. A council may also change the voting method. The default voting method is postal voting but other options are booth voting or a combination. The Governing Body has not previously considered a change from postal voting.

19. Related to an election are the rules applying to election signs. On 26 May 2022 the Governing Body approved the new Signs Bylaw 2022 made jointly by both Auckland Council and Auckland Transport. This bylaw includes the rules for election signs.

Decisions leading up to the 2025 elections

20. The following are the deadlines for decisions that affect the 2025 elections:

· Electoral system: if the council wishes to change to the Single Transferable Vote electoral system it must pass a resolution by 12 September 2023.

· Māori representation: if the council wishes to have Māori representation by way of members elected by electors in Māori wards, under current legislation, it must pass a resolution by 23 November 2023.

· Review of representation arrangements: the council must conduct a review of representation arrangements for the 2025 elections and must notify its initial proposal by 31 July 2024. As well as reviewing councillor representation arrangements, a representation review includes reviewing the number of members on each local board and whether they are elected by subdivision.

A representation review does not include reviewing the number of local boards. This would be a reorganisation of local boards.

· Order of names on voting documents: if the council wishes to change the order of names on voting documents from alphabetical to random or pseudo-random it must do so before the electoral officer gives public notice of the election following the close of nominations.

· Voting method: the default voting method is postal voting but the council can resolve to use either postal voting, booth voting or a combination. There is not a legislative deadline for this decision.

Tātaritanga me ngā tohutohu

Analysis and advice

Combined postal and booth voting

21. The local government voting process is straightforward using the postal voting method:

· residential voters do not have to register separately for the residential roll – the Parliamentary electoral roll is used

· a ratepayer roll is compiled by the Electoral Officer

· voting documents are posted to each elector’s address as provided on the Parliamentary electoral roll and ratepayer roll

· a voter completes their voting document and either posts it back or deposits it in a ballot box; at the last election 136 ballot boxes were located at Countdown supermarkets, train stations and other council facilities. Voters have almost three weeks to do this.

22. Nevertheless, there was some criticism on social media about difficulties casting special votes on election day itself (there were queues at some special voting centres).

23. Staff believe that the main reason for people needing to cast special votes is that they did not receive their voting documents in the mail, for example where their residential address on the electoral roll was not up to date. There is liaison with NZ Post who are responsible for the delivery of voting documents to voters’ residential addresses. New Zealand Post reported there were no issues that they were aware of with the delivery of voting documents in New Zealand despite there being several reports of people not receiving their voting papers in the mail. However, there was an acknowledged backlog with an Australian mail centre which resulted in some voting papers being distributed very late and in some cases after the election.

24. It is the responsibility of the Electoral Commission to maintain the electoral roll. There is a period, prior to nominations being called, for the roll to be updated. This includes the Electoral Commission mailing each elector’s registered address with a request to update their details if they are not correct. However, if the elector has moved, they will not receive this notice unless it is forwarded. The Electoral Commission may remove the elector from the roll.

25. Improving the process for reminding electors to update their address details on the electoral roll lies with the Electoral Commission.

26. Another solution is to provide more time for voting on election day itself so that those who need to cast a special vote, and who leave it until election day, have more time to do so. The Local Electoral Act and Regulations provide three authorised voting methods:

· postal voting

· booth voting

· a combination of booth voting and postal voting.

27. If the council resolved to adopt a combination of booth voting and postal voting, voting would close at 12 noon for those using the postal and ballot box options but would not close until 7 pm for those wishing to visit a voting booth in order to cast their vote on election day.

28. There would be an additional cost. A sufficient number of voting booths would need to be staffed on election day. The cost of staff for each booth would be approximately $1,000 (based on 4 staff working a 10-hour day being paid the current living wage of $23.65 per hour). One booth in each local board area would have a total staff cost of over $20,000. It might be necessary to provide more than one booth in the rural local board areas. Venue costs could be minimised if council facilities are used. Booths would only be available on election day itself to limit costs, and the cancelling of council facility bookings by other users.

Māori representation

29. There is a separate report on this agenda that deals with Māori representation.

Single Transferable Vote (STV)

30. A resolution to change to STV must be made by 12 September 2023. A further report will be presented following local board feedback prior to this date.

31. For the 2019 elections, of 78 local authorities, 67 used FPP and 11 used STV.

32. The First Past the Post (FPP) electoral system requires candidates to the get more votes than other candidates in order to be elected but not necessarily a majority of votes (and is sometimes referred to as a plurality electoral system). The outcome reflects the wishes of the majority. An argument against FPP is that, almost by definition, it is hard for minority groups to be represented.

33. STV is a proportional electoral system. Proportional representation has the feature that those who are elected better reflect, or are in proportion to, the makeup of the community. Key features of STV include:

· A threshold (‘quota’) is mathematically defined. Any candidate who gets more votes than the quota is elected. A minority group which can muster enough votes for the group’s preferred candidate has a better probability of being represented.

· Votes are not wasted. Voters rank their preferred candidates in order. If a voter’s first preference is not elected, then their vote is transferred to the voter’s second preference. Under FPP there is a disincentive to vote for a candidate who might not be a winning candidate. This was demonstrated with the 2022 mayoral election where candidates withdrew to guard against wasted votes.

· Auckland Council has decided against STV in the past on the basis that it makes the voting experience more difficult for voters. Furthermore, STV works better for multi-member vacancies (the more vacancies the lower the quota) and there is an argument that it is more important to retain single and double member wards in order to spread representation geographically.

Representation review

34. The council is required to conduct a review of its representation arrangements for the 2025 elections.

35. The previous review was conducted for the 2019 elections and was developed on the basis that Auckland Council’s arrangements as decided by the Local Government Commission for 2010 were basically still sound in 2019. Adjustments had to be made to the Waitematā and Gulf ward, because of population changes.

36. With the passage of the Local Government Electoral Legislation Bill it will be possible for the council to change the number of councillors. There may also be the creation of one or more Māori wards to take into account depending on the council’s decision on this matter. The Bill brings the date for notifying the council’s initial proposal forward by one month. The possible complexity of future representation and the earlier time frame for publicly notifying the council’s initial proposal indicate the council should commence a process for developing its initial proposal sooner rather than later.

37. The matters for consideration include:

· the number of councillors

· whether councillors are elected at large or by ward or by a combination

· if by ward, then the boundaries and names of wards and how many to be elected in each

· the number of members in each local board

· whether, for each local board, members are elected at large or by subdivision

· if by subdivision then the boundaries and names of subdivisions and how many to be elected in each

· the names of local boards.

38. The review impacts the governing body and each local board. For the review for the 2019 elections the council’s initial proposal was developed by the Joint Governance Working Party (JGWP), which comprises councillors and local board members and is now chaired by Councillor Julie Fairey.

39. A terms of reference will be developed for this work.

40. The following process is proposed:

i) the Joint Governance Working Party develops Auckland Council’s initial review of representation arrangements and presents it to local boards and the Governing Body for comments before the Governing Body makes the statutory resolution for public notification for submissions.

41. At the meeting of the Governing Body on 17 December 2020 the Northern Rodney Action Group, through a notice of motion by Councillor Greg Sayers, proposed revised arrangements for the Rodney Local Board for the 2022 elections. The Governing Body did not agree to undertake a review for the 2022 elections as the council was not required to. Nevertheless, this proposal is noted for consideration for the 2025 elections.

42. It is not possible to review the boundaries or number of local boards; a reorganisation process is required to do this. This is a separate process under the Local Government Act 2002.

Tauākī whakaaweawe āhuarangi

Climate impact statement

43. This report proposes the provision of booth voting on election day, in addition to postal voting, to make it easier to cast special votes. The climate impact of people travelling to a booth is likely to be mixed, depending on where they are located.

Ngā whakaaweawe me ngā tirohanga a te rōpū Kaunihera

Council group impacts and views

44. There are no impacts on the group.

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

Local impacts and local board views

45. At the time this report was being finalised feedback from ten local boards had been received. Some local boards gave very comprehensive feedback covering a range of issues. The common themes included:

· eight local boards supported the proposal to have combined postal and booth voting

· five local boards stated their support for local elections being conducted by the Electoral Commission

· seven local boards said it is important to have civics education, better public understanding of Auckland’s governance and better public understanding of the role of councillors and local board members

· five local boards request the provision of more voting boxes given the decline in postal services.

Tauākī whakaaweawe Māori

Māori impact statement

46. A technical report conducted by Auckland Council’s Research and Evaluation Unit (RIMU) about the demographic characteristics of candidates and elected members shows that 16 per cent of the 466 candidates for this election were Māori vs 9.5 per cent of the Auckland population^{^[14]}.

47. Demographic data shows that turnout for electors of Māori descent was lower than the average turnout. Further analysis conducted by RIMU about who voted in the 2022 local elections suggested that a range of interrelated factors may be contributing to these discrepancies, including:

· differences in the perceived relevance of local government to the everyday life of different communities

· differences in family and work commitments and an ability to pay attention to local politics in light of other life priorities

· the complexity of the local government system and voting process, along with differences in knowledge about local government across communities in Auckland

· for some communities, a lack of identification with and ability to see one’s identity reflected in the local governance system

· a distrust of and disengagement from the local government system, particularly amongst Māori

· the existence of a social norm of non-voting in some families, neighbourhoods and communities.

48. The issue of Māori representation is being considered by the Governing Body. The Local Government Electoral Legislation Bill, currently proceeding through Parliament, will require the council to make a decision on Māori representation by 20 December 2023.

Ngā ritenga ā-pūtea

Financial implications

49. The chief executive of a council is required to facilitate and foster representative and substantial elector participation in elections and polls held under the Local Electoral Act 2001 (Local Government Act 2002, s42(2)(da)). In Auckland that translates to reaching out to over 1.14 million eligible voters to encourage them to stand as candidates, and to vote.

50. The total net cost of the triennial Auckland Council election in 2022 was over $7.23 million broken down as follows:

Item	Cost
Salaries of 5 temporary full-time staff (staggered on over an 18 month period. All were internal secondments)	491,501
Internal time charges (creation of online civic education learning resources))	106,529
Consultancy expense	217,821
Outsourced works and services (including Independent Elections Services)	5,282,609
Mail	915,661
Marketing and advertising	320,101
Other (community engagement etc)	338,131

51. The budget for the 2022 election was $7.14 million. The overspend was mainly due to significant cost increases from New Zealand Post, and the number of electors increased more than was estimated. Revenue (cost recovery) was also down considerably, because District Health Boards were disestablished and no elections to their boards was necessary.

52. Moving from postal voting to a combination of postal voting and booth voting would incur additional costs. These are not quantified but based on likely costs of staffing booths on election day additional costs would be more than $20,000. Staff recommend carrying out further investigation on this before a decision is made.

Ngā raru tūpono me ngā whakamaurutanga

Risks and mitigations

53. Voter turnout has been steadily low over the last couple of elections, however, there is the risk that if the council does not improve the voting experience, where there has been criticism, that voter turnout will decrease further.

54. Staff will take all findings from the evaluations conducted and the feedback from the public into consideration when planning and delivering the 2025 election which will mitigate the risks outlined to the extent that council is able and responsible. Staff will also continue to work with the Electoral Commission and others responsible for the conduct of elections.

Ngā koringa ā-muri

Next steps

55. Following approval of the process for developing the council’s initial proposal for its review of representation arrangements staff will start working with the Joint Governance Working Party to develop recommendations.

Ngā tāpirihanga

Attachments

No.	Title	Page
a ⇨	Evaluation of Auckland's 2022 local elections
b ⇨	Local Board Feedback

Ngā kaihaina

Signatories

Author

Warwick McNaughton - Principal Advisor

Authorisers

Rose Leonard - Manager Governance Services

Phil Wilson - Director, Governance & CCO Partnerships

Jim Stabback - Tumu Whakarae / Chief Executive

Governing Body

27 April 2023

Māori seats for Auckland Council

File No.: CP2022/16487

Te take mō te pūrongo

Purpose of the report

1. To agree the next steps on Māori seats for Auckland Council in time for the 2025 local election.

2. To provide an update on the Local Government Electoral Legislation Bill (the Bill), which had its second reading on 4 April 2023.

Whakarāpopototanga matua

Executive summary

3. The Local Government Electoral Legislation Bill (the Bill) was introduced into Parliament on 26 July 2022 and had its second reading on 4 April 2023. Among other changes, the Bill will remove the set number of councillors for Auckland Council, making it easier to introduce one or more Māori ward seats.

4. Previously, Governing Body has agreed in-principle support for establishing a Māori ward, using the existing ‘Parliamentary’ model, subject to the removal of the set number of councillors for Auckland Council. This position remains the Governing Body’s preference on record to date. The Independent Māori Statutory Board have supported the ‘Royal Commission’ model for Auckland Council since 2021.

5. The only model of Māori representation that is available under existing legislation is the ‘Parliamentary’ model. Any other model would require legislative change.

6. Staff undertook some preliminary engagement with mana whenua and mataawaka in 2022 on Māori seats for Auckland Council. While noting there were limited written submissions, council received feedback that neither the ‘Parliamentary’ nor the ‘Royal Commission’ model were suitable for Tāmaki Makaurau, however the ‘Royal Commission’ model received slightly stronger support for its inclusion of an appointed mana whenua seat.

7. Feedback signalled that the status quo (i.e., no specific Māori representation) is no longer an option, and that a bespoke model is required for Auckland Council. A strong request was made that the conversation continue between council, mana whenua and mataawaka. Attachment A provides a summary of the feedback given.

8. In preparation for the 2025 local government elections, Auckland Council must undertake a representation review. If the Governing Body is supportive of establishing one or more Māori wards for the 2025 local elections, this decision must be made by 23 November 2023 to inform the required representation review in 2024. Staff recommend consulting with Māori and wider public on this matter in 2023 to enable decision making for the 2025 local elections.

9. Auckland Council faces a reputational risk if it chooses not to seek the views and preferences of Māori and the wider public on Māori seats for Auckland Council in time for the 2025 local elections. 35 of 78 councils in Aotearoa New Zealand have Māori seats as a component of their representation arrangements. If Māori representation is to be introduced in time for the 2025 local elections, then Auckland Council must make this decision in 2023.

10. A decision of this significance requires consultation with Māori and the wider public under the councils’ Significance and Engagement Policy and an approximate cost of $100k for this consultation is not currently budgeted for.

Ngā tūtohunga

Recommendation/s

That the Governing Body:

a) tuhi ā-taipitopito / note the summary of feedback provided through 2022 engagement on Māori seats for Auckland Council (Attachment A)

b) whakaae / agree to seek the views and preferences of Māori and the wider public on Māori seats for Auckland Council, noting that there is currently no legislative requirement to do so.

c) whakaae / agree to consult by no later than 1 August 2023 in order to meet the 23 November 2023 Local Electoral Act 2001 deadline, noting that the consultation material and timeline will be reported to Governing Body for approval at a future Governing Body meeting.

d) whakaae / agree that the consultation will seek feedback on options for the 2025 local elections as follows:

i) support the status quo - no Māori seats for Auckland Council

ii) support for ‘Parliamentary’ model noting that this is the model that is available under existing legislation

iii) support for ‘Royal Commission’ model or any other model of Māori representation, noting that this would require legislative change.

Horopaki

Context

Local Government Electoral Legislation Bill

11. The Bill contains a suite of legislative changes to the Local Electoral Act, Local Government Act, and the Local Government (Auckland Council) Act. Proposed changes in the Bill relating to Māori representation on Auckland Council include:

· removal of the current set number of Auckland councillors to align with other councils allowing any number between 5 and 29 councillors.

· a requirement for council to make a decision on Māori representation (Māori wards / seats) by 20 December 2023.

· a requirement for council to engage with Māori and other communities before making that decision.

12. The Bill had its second reading on 4 April 2023. Local Government Minister Kieran McAnulty indicated he intends to introduce a Supplementary Order Paper (SOP) that will delay the commencement of the requirements relating to Māori representation until after the 2025 local government elections, citing the impacts of the North Island severe weather events on councils.

Preparing for 2025 local elections

13. In preparation for the 2025 local government elections, Auckland Council must undertake a representation review in 2024 and may choose to undertake a reorganisation application at the same time. There is a report on the agenda for this meeting titled ‘Evaluation of 2022 Auckland Council Elections and other representation matters’, within which the various matters to be resolved ahead of the elections are outlined.

14. There is an interdependence between the decision on Māori seats and the representation review that centres on the number of councillors on the Governing Body A representation review determines the total number of councillors, whether councillors are elected by ward or at-large and the subsequent ward boundaries, ward names and number of councillors elected in each.

15. Although not required to make a decision on Māori wards, Auckland Council may still choose to do so under the Local Electoral Act by 23 November 2023. A decision on Māori representation for Auckland Council is significant in terms of Auckland Council’s Significance and Engagement Policy and would require consultation with Māori and the wider public to inform decision-making. This consultation is not a ‘referendum’ however. Having sought the views of Aucklanders, council must give those views due consideration but is not bound to a certain outcome based on those results.

16. The below flowchart steps out a high-level overview of the possible timeline ahead of the 2025 elections.

Tātaritanga me ngā tohutohu

Analysis and advice

Māori seats in local government

17. In 2021, the Local Electoral (Māori wards and Māori constituencies) Amendment Act removed the binding poll provision for any council that had resolved to establish Māori wards or constituencies. Following this, 32 councils established Māori seats for the 2022 local elections, resulting in 60 Māori seats. In total, 35 of the 78 councils in Aotearoa New Zealand include Māori representation in their representation arrangements. This Act was intended as the first of two stages to enable more councils to enable Māori wards, the second of which being introduced through the Local Government Electoral Legislation Bill (the Bill).

18. As stated in the explanatory notes of the Bill, one of the intentions of the Bill is to encourage equitable representation for Māori in local government. Auckland Council has a unique governance structure in the New Zealand local government setting that consists of a Governing Body and 21 local boards. The Independent Māori Statutory Board has a statutory purpose to ensure council acts in accordance with its Te Tiriti o Waitangi obligations and to promote issues of significance for Māori. It does so by advising and collaborating with the council and through participation in decision-making at the committee level.

19. The Independent Māori Statutory Board (IMSB) is unique to Auckland Council. Key Cabinet papers and minutes (provided in Attachment B and C) relating to the development of the IMSB conceptualise the statutory board as a means to enhance mana whenua and Māori participation in the governance of Auckland, and as a mechanism to assist the Auckland Council to meet its statutory responsibilities to Māori.

20. The Cabinet paper outlines a clear differentiation between enhancing the participatory role of Māori in governance through a statutory board, and direct representation on the Governing Body.

21. It would appear that the IMSB was not conceived of as an alternative to Māori seats, and as such, the intention in 2009 was that the opportunity for direct Māori representation in some form would be retained in addition to a mechanism to enhance Māori participation in governance such as a statutory board.

Previously expressed decisions and views on Māori seats for Auckland Council

22. Since 2017, Governing Body has agreed in-principle support for establishing a Māori ward under the ‘Parliamentary’ model following the removal of the set number of councillors for Auckland Council [GB/2017/124, GB/2020/13].

23. The Joint Governing Body / Independent Māori Statutory Board meeting on 21 June 2021 agreed to establish a Joint Group to consider Māori representation on Auckland Council.

24. The Joint Group reported back to the Governing Body / Independent Māori Statutory Board meeting on 6 December 2021, supporting the Māori representation model recommended by the Royal Commission on Auckland Governance and sought for this model to be considered at the next individual meetings.

25. The Independent Māori Statutory Board have, since December 2021, supported the ‘Royal Commission’ model for Auckland Council and their views have been provided in Attachment D which includes the 14 April 2023 Memo from the Board on Māori representation and the Boards’ Māori Representation Position Paper.

26. At the 16 December 2021 Governing Body meeting, the existing in-principle support for the ‘Parliamentary’ model was noted as the Governing Body’s current preference at that time [GB/2021/164]. This position remains the Governing Body’s preference on record to date. At the same 16 December 2021 meeting, Governing Body resolved to seek the views of mana whenua and mataawaka on Māori representation.

27. During the 2022 engagement process, staff canvassed five models of Māori representation that had been discussed between the Governing Body and the Independent Māori Statutory Board. The primary focus of the engagement materials was however, the ‘Parliamentary’ model and the ‘Royal Commission’ model.

28. The Parliamentary and Royal Commission models are briefly explained below.

a) The ‘Parliamentary’ model is the current Māori ward model provided for in legislation, which includes a formula for determining the number of elected members representing Māori based:

· on the number of voters on the Māori electoral roll, and

· the total number of ward councillors.

For Tāmaki Makaurau, this model would result in one or two elected Māori representatives depending on the total number of councillors. The table below shows the effect of differing numbers of councillors only.

Number of ward councillors	Number of these elected by Māori ward
0 - 7	0
8 - 22	1
23 - 29	2

The effect of a change in the number of electors on the Māori roll is not yet modelled but will be as part of the upcoming representation review.

b) The ‘Royal Commission’ model was developed through extensive enquiry by the Royal Commission on Auckland Governance in 2009. It proposed 23 total Governing Body seats with three safeguarded Māori seats including two elected Māori ward councillors and one appointed mana whenua councillor to be appointed by a mana whenua forum. This model would require legislative change to introduce the three safeguarded Māori seats as they were proposed by the Royal Commission.

2022 engagement feedback

29. In total, council met with 18 mana whenua and seven mataawaka representatives from April to August 2022. Six pieces of written feedback were received following this engagement. The written feedback has previously been reported to the Joint Governing Body and Independent Māori Statutory Board meeting on 3 April 2023 and a summary is provided in Attachment A.

30. In summary, the majority of feedback did not support the ‘Parliamentary’ model for Tāmaki Makaurau. The ‘Royal Commission’ model received stronger support than the ‘Parliamentary’ model, however there was not unanimous support for it.

31. A strong theme through the feedback requests that the conversation continues between Auckland Council, mana whenua and mataawaka on a model of Māori representation for Tāmaki Makaurau. The feedback also included further commentary on:

· the decision-making process

· Te Tiriti o Waitangi and tikanga Māori being breached

· 50/50 Partnership and ‘He Puapua’ models

· alternative models

· election and appointment processes

· resourcing and capacity as problematic for mana whenua

· timing matters.

Options analysis for models

32. Recommendation b) seeks agreement for consultation on Māori seats for Auckland Council with the wider public of Auckland as well as Māori. Options analysis on this decision are as follows:

Option

Description

Requirements

A. Support the status quo (i.e., no specific Māori representation)

No specific Māori representation on Auckland Council.

· Currently no consultation requirements for 2023 – 2025.

· If this option was chosen then council would be required to make a decision by 20 December 2026 on whether or not to establish Māori wards in time for the 2028 elections.

· That would require consultation with Māori and the wider public in 2026 to inform decision (approx. $100k).

· If council decides to establish Māori wards in 2026, it must then undertake a representation review in 2027 to determine the representation arrangements inclusive of one or more Māori wards.

B. Seek the views and preferences of Māori and the wider public on Māori seats for Auckland Council

Consultation material will include the three options for 2025 covered in the body of this report

· Consultation with Māori and the wider public in 2023 to inform decision (approx. $100k).

· Consultation must occur between June and September 2023 with a formal resolution on Māori seats for Auckland Council on 26 October 2023.

Tauākī whakaaweawe āhuarangi

Climate impact statement

33. While a decision about Māori representation does not in itself impact on climate, the introduction of Māori ward representatives as Auckland Council decision-makers will improve consideration of te ao Māori views on climate change and council led responses.

Ngā whakaaweawe me ngā tirohanga a te rōpū Kaunihera

Council group impacts and views

34. This matter affects the composition of the Governing Body and does not impact the group.

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

Local impacts and local board views

35. Māori representation at the local board level is outside of the Local Electoral Act and legislative change would be required to introduce Māori seats on local boards. In the process of seeking local board views on the Local Government Electoral Legislation Bill, 13 of the 19 local boards that provided feedback requested that Māori representation at the local board level was investigated.

36. As outlined in Attachment A, engagement participants support Māori representation at the local board level, expressing the need for a te ao Māori voice at all decision-making tables in Auckland Council.

Tauākī whakaaweawe Māori

Māori impact statement

37. Auckland Council has legal obligations to seek and consider Māori views on matters that Māori will be particularly affected by or interested in. The Local Government Act 2002 requires local governments to maintain and improve opportunities for Māori to contribute to decision-making processes and to consider the views and preferences of the persons likely to be affected by or have an interest a matter. There are also common law obligations to consider Treaty principles, including partnership, rangatiratanga, active protection, and informed decision-making.

38. The Local Government (Auckland Council) Act 2009 requires the council to take into account the Independent Māori Statutory Board’s advice on matters. The Independent Māori Statutory Boards’ Schedule of Issues of Significance to Māori in Tāmaki Makaurau recognises that increasing Māori representation is a priority action for enhancing Māori leadership and participation in local government decision making. The Issues of Significance advocates for council to ensure that Māori are enabled to contribute to the long-term future of Auckland actively and meaningfully through representation on council.

39. Kia Ora Tāmaki Makaurau – the Auckland Council Group’s Māori Outcomes Performance Measurement Framework includes ten priority outcomes areas to direct Council group investment and resource towards delivering Māori Outcomes in Tāmaki Makaurau.

40. The Framework includes Kia Ora Te Hononga (effective Māori participation) and is underpinned by the mana outcome objective to ensure that “mana whenua and Māori are active partners, decision makers and participants alongside the Auckland Council Group”.

41. The Auckland Plan 2050, includes the outcome area of ‘Māori Identity and Wellbeing’ Council is committed to recognising and providing for te Tiriti o Waitangi outcomes, enabling Māori to exercise rangatiratanga in decisions that matter to and affect them.

Ngā ritenga ā-pūtea

Financial implications

42. There will be budgetary implications for consultation on Māori seats for Auckland Council as discussed in the body of this report. The estimate of approximately $100k for public consultation is yet to be confirmed and was not budgeted for.

43. However, there is headroom within the Māori Outcome Fund for FY2022-2023 to meet, on a one-off basis, the estimated $100k cost of public consultation should Governing Body support recommendation (b) to seek the views and preferences of Māori and the wider public on Māori seats for Auckland Council.

44. Council staff are currently considering whether this can be combined with another consultation process to reduce the cost.The marginal costs, if any, arising from consultation on additional items are expected to be met by their lead departments.

45. This consultation would have the benefit of being able to test, at a high level, views on other representation matters such as the number of elected members ahead of the 2024 representation review.

Ngā raru tūpono me ngā whakamaurutanga

Risks and mitigations

46. There is a reputational risk for Auckland Council in the event that the status quo (i.e., no specific Māori representation) is maintained.

· 35 of 78 councils in Aotearoa New Zealand have established Māori wards. 32 of which did so in time for the 2022 local government elections, resulting in 60 newly established Māori ward seats.

· In feedback provided through 2022 engagement, mana whenua and mataawaka agree unanimously that the status quo is no longer an option and the Independent Māori Statutory Board have identified Māori representation in local government as an Issue of Significance.

47. There is a risk of failing to achieve any form of Māori seats for Auckland Council in time for the 2025 local elections if any other model than the ‘Parliamentary’ model is supported, as this is the only model of Māori representation that is available under existing legislation. Any other model would require legislative change and while it is possible to achieve in the timeframe, there is a risk that this would not be enacted in time for the 2025 local government elections.

Ngā koringa ā-muri

Next steps

48. If the Governing Body decides on option A (support the status quo), council will need to close the loop with mana whenua and mataawaka on this decision and outline the reasons for doing so. The decision and rationale not to include Māori representation would be included in the 2024 representation review process, noting that Auckland Council will be required to consider this matter again in 2026.

49. If the Governing Body decide on option B, staff will report to the Governing Body at the earliest possible opportunity with draft consultation material and the process and timeline for engagement. Consultation must occur between June and September 2023, with a formal resolution on Māori seats for Auckland Council by Governing Body on 26 October 2023. Depending on this resolution, further work will be required to enable the preferred model of Māori seats for Auckland Council, or the matter will be revisited in 2026 once required under the Bill.

Ngā tāpirihanga

Attachments

No.	Title	Page
a ⇨	Summary of 2022 feedback from mana whenua and mataawaka on Māori representation
b ⇨	2009 Cabinet paper on options for Māori representation
c ⇨	2009 Cabinet minutes on options for Māori representation
d ⇨	14 April 2023 Independent Māori Statutory Board Memo and Position Paper

Ngā kaihaina

Signatories

Author

Libby Orr - Advisor Governance Services

Authorisers

Rose Leonard - Manager Governance Services

Phil Wilson - Director, Governance & CCO Partnerships

Jim Stabback - Tumu Whakarae / Chief Executive

[1] Hon Kieran McAnulty, 13 April 2023, Major shakeup will see affordable water reforms led and delivered regionally.

[2] Auckland Plan 2012, page 50, paragraph 136

[5] The growth charts y-axis begins at 0 in year 2022 as the graphs show cumulative growth from 2022 to 2060. This does not reflect the actual population, household and employee numbers in Drury at 2022.

[7] The total does not include water and wastewater as this is separately funded by Watercare’s infrastructure growth charges.

[8] Auckland Council 10-year Budget 2021-2031, Volume Two, page 42

[10] A standard residential dwelling of between 100m²and 249m²is referred to as a household unit equivalent (HUE).

[13] Note that all community space facilities are assumed to be located in a single multi-purpose facility.

Mayor	Wayne Brown
Deputy Mayor	Cr Desley Simpson, JP
Councillors	Cr Andrew Baker	Cr Mike Lee
	Cr Josephine Bartley	Cr Kerrin Leoni
	Cr Angela Dalton	Cr Daniel Newman, JP
	Cr Chris Darby	Cr Greg Sayers
	Cr Julie Fairey	Cr Sharon Stewart, QSM
	Cr Alf Filipaina, MNZM	Cr Ken Turner
	Cr Christine Fletcher, QSO	Cr Wayne Walker
	Cr Lotu Fuli	Cr John Watson
	Cr Shane Henderson	Cr Maurice Williamson
	Cr Richard Hills

Committees of the Whole	Reporting and Other Committees
Planning, Environment and Parks	Audit and Risk
Transport and Infrastructure	Council-controlled Organisations Direction and Oversight
	Expenditure Control and Procurement
	Performance and Appointments
	Regulatory and Safety

Date	Subject
27.3.23	Action from Waitakere Ranges Local Board of 23 March 2023 relating to Waitipu Park Service Outcomes Plan
19.4.23	Auckland Council's Ownership of Ports of Auckland Limited CONFIDENTIAL (No Attachment)

Date	Subject
22.3.23	City Rail Link Limited CONFIDENTIAL (No Attachment)
22.3.23	Valuation of City Rail Link Limited Land – Maungawhau and Karanga a Hape CONFIDENTIAL (No Attachment)
5.4.23	Chief Executive Recruitment CONFIDENTIAL (No Attachment)
12.4.23	Māori Seats for Auckland Council CONFIDENTIAL (No Attachment)
19.4.23	Annual Budget 2023/2024 – Rates Policy / Fees and Charges
19.4.23	Annual Budget 2023/2024 – Contributions Policy 2022 Variation A CONFIDENTIAL (No Attachment)

Author	Sarndra O'Toole - Kaiarataki Kapa Tohutohu Mana Whakahaere / Team Leader Governance Advisors
Authoriser	Jim Stabback - Tumu Whakarae / Chief Executive

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

[1] Hon Kieran McAnulty, 13 April 2023, Major shakeup will see affordable water reforms led and delivered regionally.