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

 

Date:

Time:

Meeting Room:

Venue:

 

Thursday, 26 October 2023

10.00am

Reception Lounge
Auckland Town Hall
301-305 Queen Street
Auckland

 

Tira Hautū / Governing Body

 

OPEN AGENDA

 

 

 

 

MEMBERSHIP

 

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

 

 

(Quorum 11 members)

 

 

 

Sarndra O'Toole

Kaiarataki Kapa Tohutohu Mana Whakahaere / Team Leader Governance Advisors

 

20 October 2023

 

Contact Telephone: (09) 890 8152

Email: sarndra.otoole@aucklandcouncil.govt.nz

Website: www.aucklandcouncil.govt.nz

 

 


Governing Body

26 October 2023

 

 

ITEM   TABLE OF CONTENTS            PAGE

1          Ngā Tamōtanga | Apologies                                                   5

2          Te Whakapuaki i te Whai Pānga | Declaration of Interest                                                               5

3          Te Whakaū i ngā Āmiki | Confirmation of Minutes              5

4          Ngā Kōrero a te Marea | Public Input                 5

5          Ngā Kōrero a te Poari ā-Rohe Pātata | Local Board Input                                                            5

6          Ngā Pakihi Autaia | Extraordinary Business     5

7          Māori seats for Auckland Council – consultation feedback and next steps               7

8          Acting Chief Executive and Group Chief Financial Officer Update                                    19

9          Long-term Plan 2024-2034 - Deliberative Engagement Options                                         21

10        Ratepayer Assistance Scheme                         27

11        Auckland International Airport Limited share sale post execution report                                 37

12        Recovery Office Update                                     45

13        Recovery Office budget for the 2023/2024 financial year                                                       55

14        Making Space for Water                                     63

15        Forward Work Programmes of Committees of the Governing Body                                           75

16        Summary of Governing Body and Committee information memoranda and briefings (including the Forward Work Programme) - 26 October 2023                                                       77

17        Summary of Confidential Decisions and related information released into Open           79

18        Te Whakaaro ki ngā Take Pūtea e Autaia ana | Consideration of Extraordinary Items

PUBLIC EXCLUDED

19        Te Mōtini ā-Tukanga hei Kaupare i te Marea | Procedural Motion to Exclude the Public                                               81

C1       CONFIDENTIAL:  Council's role in the recovery of properties categorised as 2P (Covering report)                                                                  81


1          Ngā Tamōtanga | Apologies

 

 

 

2          Te Whakapuaki i te Whai Pānga | Declaration of Interest

 

 

 

3          Te Whakaū i ngā Āmiki | Confirmation of Minutes

 

            Click the meeting date below to access the minutes.

  

That the Governing Body:

a)          confirm the ordinary minutes of its meeting, held on Thursday, 28 September 2023 and the extraordinary minutes of its meeting, held on Friday, 6 October 2023, including the confidential section, as a true and correct record.

 

 

 

4          Ngā Kōrero a te Marea | Public Input

 

 

 

5          Ngā Kōrero a te Poari ā-Rohe Pātata | Local Board Input

 

 

 

6          Ngā Pakihi Autaia | Extraordinary Business

 

 

 

 


Governing Body

26 October 2023

 

 

Māori seats for Auckland Council – consultation feedback and next steps

File No.: CP2023/12618

 

  

 

Te take mō te pūrongo

Purpose of the report

1.       The report presents feedback received through consultation on Māori seats for Auckland Council and seeks a decision on whether to introduce Māori seats on Auckland Council’s Governing Body for the 2025 local government elections. 

Whakarāpopototanga matua

Executive summary

2.       Auckland Council’s current representative arrangements do not include any dedicated elected Māori seats. However, it does provide for enhanced Māori participation through the inclusion of two Independent Māori Statutory Board as members of council committees but not for the Governing Body. 

3.       In 2017, the Governing Body agreed in-principle support for establishing Māori representation, using the Parliamentary model, subject to the removal of the set number of councillors for Auckland Council [GB/2017/125]. The Parliamentary model is outlined in the Local Electoral Act 2001 and determines the number of elected Māori representatives based on the total number of ward councillors and the number of voters on the Māori electoral roll. This model allows for a range of options, from having no Māori wards to a maximum of two, depending on the number of councillors.

4.       In the previous council term, the Governing Body agreed to undertake preliminary engagement with mana whenua and mataawaka on Māori representation, including on the Parliamentary model, the Royal Commission model and any other model [GB/2021/164]. The Royal Commission model refers to the Royal Commission on Auckland Governance report in 2009, which recommended three seats dedicated for Māori (two elected and one appointed) in a 23-member Auckland Council.

5.       Since 2021, the Independent Māori Statutory Board have supported the Royal Commission model for Auckland Council.

6.       The only model of Māori representation that is available to Auckland Council under existing legislation is the Parliamentary model. Any other model would require legislative change.

7.       On 27 April 2023, the Governing Body agreed to seek the views and preferences of Māori and the wider public on Māori seats for Auckland Council [GB/2023/70]. The consultation documents were approved on 22 June 2023 [GB/2023/111].

8.       The consultation was open from 21 August to 24 September 2023. Council received feedback from 11,825 individuals, 43 organisations and 17 Māori entities, totalling 11,885 submissions. This report also includes local board views that have been sought for the consideration of Governing Body.

9.       At a high level, feedback from Māori entities (87 per cent), Māori individuals (54 per cent) and local boards (85 per cent) are supportive of introducing Māori seats. Feedback from the wider public is generally not in support of introducing Māori seats (organisations at 54 per cent and individuals at 68 per cent).

10.     Feedback from the consultation broadly fits into two overarching themes: ‘Equality / Equity’, and ‘Democracy’. Within each theme are those that either support or do not support Māori seats. The ‘analysis and advice’ section provides further coverage of the feedback received from Māori, the wider public, and local boards (Attachments A, B and C respectively).

11.     The recommendations in this report set out a range of options for the Governing Body to consider when making a decision about Māori seats.

·    Recommendation b) and f) provide for a straightforward yes and no (respectively) to Māori seats under existing legislation.

·    Recommendation c) provides for a pathway toward the Royal Commission model of Māori representation (two elected and one appointed seats) in a two-stage process i.e. pursuing elected seats now under current legislation and asking staff to report back on seeking legislative change to achieve the remaining elements.

·    Recommendation d) would require staff to report back on legislative change toward the Royal Commission model without putting elected seats in at this time.

·    Recommendation e) would require staff to report back on the process for developing a bespoke model of Māori representation for Tāmaki Makaurau

 

12.     If Auckland Council is to establish Māori wards for the 2025 elections, this decision must be made by no later than 23 November 2023 to inform the required representation review in 2024.

 

Ngā tūtohunga

Recommendation/s

That the Governing Body:

a)      whiwhi / receive the consultation feedback from Māori, the wider public and local boards on Māori seats for Auckland Council (Attachments A, B and C to this report).

b)      whakaae / agree to establish one or more Māori wards for electoral purposes under the Local Electoral Act 2001 and note that further work to determine the final number of wards will be undertaken as part of the representation review process by the Joint Governance Working Party.

OR

c)       whakaae / agree to endorse the Royal Commission model for Māori representation in Auckland and to implement this model through a two-stage process, and:

i)       whakaae / agree to establish one or more Māori wards for electoral purposes under the Local Electoral Act 2001, noting that the number of wards will be determined through the representation review, and

ii)       whakaae / agree to direct staff to report back on the required process of legislative change to achieve the remaining elements of the Royal Commission model.

OR

d)      whakaae/ agree in principle to the Royal Commission model and direct staff to report back on the required process of legislative change through a draft local bill.

OR

e)      whakaae/ agree in principle to support Māori seats on Auckland Council through another model and direct staff to report back the process for developing a bespoke model of Māori representation for Tāmaki Makaurau.

OR

f)       whakaae / agree that there will not be Māori seats for Auckland Council for the 2025 local elections.

 


 

 

Horopaki

Context

Previously expressed views and decisions on Māori seats for Auckland Council

13.     The Governing Body has previously agreed in-principle support for establishing a Māori ward, using the Parliamentary model, subject to the removal of the set number of councillors for Auckland Council [GB/2017/125].

14.     The Governing Body subsequently also agreed to undertake preliminary engagement with mana whenua and mataawaka on Māori representation, including on the Parliamentary model, the Royal Commission model and any other model [GB/2021/164]. The Independent Māori Statutory Board have supported the Royal Commission model for Auckland Council since 2021.

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

a)      The Parliamentary model is the current Māori ward model provided for in the Local Electoral Act 2001, 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.

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.

The formula ensures that elected Māori representation is proportional to the Māori electoral population of an area.

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.

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

 


 

 

2022 engagement with mana whenua and mataawaka

17.     Staff undertook preliminary engagement with mana whenua and mataawaka in 2022 on Māori seats for Auckland Council. There were six written submissions representing the voices of mana whenua and mataawaka entities in Tāmaki Makaurau. In summary, the feedback was 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.

18.     Feedback received indicated that the status quo (i.e., no dedicated Māori seats) is no longer an option, and that a bespoke model is required for Auckland Council. A request was made that the conversation continue between council, mana whenua and mataawaka. Attachment D provides a summary of the feedback given in pre-consultation engagement.

2023 consultation on Māori seats for Auckland Council

19.     On 27 April 2023, the Governing Body agreed to seek the views and preferences of Māori and the wider public on Māori seats on the Governing Body for Auckland Council [GB/2023/70].

20.     On 22 June 2023, Governing Body approved the materials to support consultation on Māori seats for Auckland Council (Attachments E, F and G). The summary document and feedback form were translated into te reo Māori, Samoan, Tongan, Hindi, Simplified Chinese, Traditional Chinese and Korean.

21.     The Māori seats for Auckland Council consultation was open from 21 August to 24 September 2023, though late submissions were accepted in response to an incident resulting in the online submission platform closing one day early. In response to this incident, submissions continued to be accepted beyond the initial closure date and time of midnight 24 September. Feedback received through consultation is available for viewing at akhaveyoursay.aucklandcouncil.govt.nz/maori-seats.

22.     As it is clear Māori are interested and affected by this decision and directly impacted, consultation consisted of a Māori engagement stream in addition to a wider public engagement stream, and feedback received from Māori entities and individuals has been set out separately so their views can be considered as well as those of the wider public.

23.     Consultation activity over the five-week period consisted of an online webinar, four sub-regional information drop-in sessions, and a marketing campaign rolled out across radio, social media and interviews. Community partnership engagement was led by nine community groups across Auckland with the focus on engagement with pasifika, asian, and youth demographics.

24.     Additionally, engagement targeting the Māori community included four invite-only online workshops for mana whenua and mataawaka, a specific marketing stream for Māori, and two community events held at Papakura Marae and Hoani Waititi Marae, which were also open to non-Māori. Support was available to Māori organisations for developing and submitting feedback.

25.     While initially three Have Your Say Events were scheduled, only one was held due to low uptake. Nine submitters presented at the Have Your Say event on this matter.  

26.     Council received feedback from 11,825 individuals, 43 organisations and 17 Māori entities, totalling 11,885 submissions. Local board views have also been sought for the consideration of Governing Body.

27.     The ‘analysis and advice’ section of this report provides further detail and analysis on the feedback received through consultation. 

Local Government Electoral Legislation Act 2023

28.     The Local Government Electoral Legislation Act 2023 (the Act) was introduced into Parliament on 26 July 2022 and received Royal Assent on 30 August 2023. The Act contained a suite of changes across electoral legislation.

29.     The two changes in the Act that are of particular significance to this report are:

         (a) Auckland Council membership restrictions. As previously reported to the Governing Body, unlike any other council in New Zealand, Auckland Council has had a fixed number of 20 councillors plus the mayor. The Act has now removed this fixed number, allowing Auckland Council to determine any number of councillors, which can range from 5 to 29, in line with every other council in New Zealand.

         (b) Māori wards and constituency process reforms. The Act delivers the second phase of reform to the processes prescribed within the Local Electoral Act 2001 for establishing a Māori ward or constituency.

In 2021, the Local Electoral (Māori Wards and Māori Constituencies) Amendment Act 2021 removed the poll provisions for any council that resolved to establish Māori wards or constituencies. The poll provisions were repealed to ensure consistency between the processes for establishing general and Māori wards and constituencies.

The Act introduces new requirements for councils who have not previously implemented any specific Māori representation in the past two elections. These councils must follow a two-step process: firstly, they are required to consider specific Māori representation, and secondly, they must make detailed decisions about the implementation of representation arrangements through the representation review. Community engagement and consultation are required in each step of decision-making. Specifically, council must engage with and have regard for the views expressed by both Māori and ‘other’ communities.

30.     The requirements in the Act for consultation with both Māori and the wider community recognises that a decision on Māori representation affects both communities but may have the most effect on the Māori community.

31.     The reforms to the Māori ward and constituency processes aimed to ensure that the Crown’s Te Tiriti o Waitangi obligations are upheld even through delegated responsibilities. The reforms intend to remove obstructions for councils that wish to establish guaranteed electoral representation for Māori communities.

32.     The Māori representation requirements have been deferred until after the 2025 local elections and as such will affect the next representation review that the council conducts. The council is required to conduct a review at least every six years and will be required to conduct a review for the 2031 elections if it does not conduct a review for the 2028 elections. 

33.     If the council, when it next conducts a representation review, has not had Māori representation for the two successive electoral terms preceding elections it will be required to consider this again, otherwise, if it has had Māori representation for two successive elections the council may choose to reconsider Māori representation, but is not required to reconsider Māori representation. 

Representation Review 2024

34.     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 no later than 23 November 2023 to inform the required representation review in 2024.

35.     There is an interdependence between a decision on elected Māori seats and the representation review that centres on the number of councillors on the Governing Body. The development of elected representation arrangements options for consideration of the Governing Body has been delegated to the Joint Governance Working Party (JGWP).


 

 

 

36.     Informed by a decision on whether council will establish Māori wards, the JGWP will report initial options for further consideration to the Governing Body on 14 December 2023.

37.     It is important to draw attention to the next steps in the process, should the Governing Body resolve to establish one or more Māori wards.

38.     A resolution today in favour of establishing Māori seats in accordance with the Parliamentary model (recommendation b)) would result in at least one Māori councillor but would not determine whether there were two, as this would depend on the total number of ward councillors agreed through the representation review. The development of representation review options for consideration of the Governing Body has been delegated to the Joint Governance Working Party (JGWP).

39.     A resolution today in favour of establishing Māori seats in accordance with the Royal Commission model through the two-stage process (recommendation c)) could confirm at least one Māori ward seat for Auckland Council for the 2025 local elections, with the remaining elements of the Royal Commission model to be progressed through a local bill.

40.     Alternatively, the Royal Commission model could be progressed in its entirety through a local bill (recommendation d)). The outcome and timeframes of a local bill would be in the hands of Parliament so there would be no guarantee it would be in place for the 2025 elections. 

41.     Once it is informed by a decision on whether council will establish Māori wards, the JGWP will report initial representation arrangement options for Auckland Council for the 2025 local elections for further consideration to the Governing Body in December 2023.

 

Tātaritanga me ngā tohutohu

Analysis and advice

42.     Consultation on Māori seats for Auckland Council received feedback from 11,825 individuals, 43 organisations and 17 Māori entities, totalling 11,885 submissions. Feedback received through consultation is available for viewing at akhaveyoursay.aucklandcouncil.govt.nz/maori-seats.

43.     As a general overview, feedback from Māori entities (87 per cent), Māori individuals (54 per cent) and local boards (85 per cent) are supportive of introducing Māori seats. Feedback from the wider public is generally not in support of introducing Māori seats (organisations at 54 per cent and individuals at 68 per cent).

 

Key themes from the feedback

44.     Key themes from feedback from Māori, the wider public and local boards broadly fit into two overarching themes: ‘Equality / Equity’, and ‘Democracy’ as provided in the below table.


 

 

45.     The below table also captures the key themes from verbal feedback provided through the Have Your Say event on 2 October 2023. In total, nine individuals / organisations presented verbal feedback on Māori seats for Auckland Council. Seven of these were in support of establishing Māori seats on Auckland Council and two were opposed. 

Theme

Oppose

Support

Equality / Equity

·   equality

·   oppose race-based politics

·   believe that everyone should have equal opportunities regardless of ethnicity

·   equity

·   need to honour / give effect to Te Tiriti o Waitangi / the Treaty of Waitangi

·   need to address Māori representation inequity

·   advocacy for decision-makers to prioritise feedback from Māori on this matter

Democracy

·   current model most democratic (linked to equality theme)

·   one person one vote – some consider Māori seats would contradict this

·   Māori wards delivers elected and proportionate representation of Māori

·   Democracy favours the majority

·   Māori representation required at local board level as well

 

46.     Generally, feedback that opposes Māori seats does so in the name of equality and with the view that the current system is the most democratic. Conversely, those that support Māori seats do so in the name of equity and believe that the parliamentary model is the most democratic mechanism through which to make provision for Māori representation.

47.     Consultation feedback summaries are outlined below and provided through the following attachments:

·    Attachment A: Summary of submissions from Māori

·    Attachment B: Summary of submissions from wider public

·    Attachment C: Summary of feedback from local boards

Summary of feedback received from Māori

48.     In total, 17 Māori organisations and 1,390 self-identified Māori individuals provided feedback.

Question One: Do you think Auckland Council should introduce Māori seats for the 2025 local elections?

·    Of the 1,390 Māori individual responses, 54 per cent support introducing Māori seats, 45 per cent do not support and one per cent don’t know.

·    Of the 17 Māori organisation responses, 87 per cent support introducing Māori seats for the 2025 local elections, six per cent do not support and another six per cent don’t know.


 

 

Question Two: If Auckland Council decides to introduce Māori seats, which model would you prefer?

·   Of the 1,390 Māori individual responses, there was a fairly even split across the four possible options. 29 per cent support the Parliamentary model, 23 per cent support the Royal Commission model, 24 per cent support a different model and 24 per cent have no preference.

·   Of the 17 Māori organisation responses, 89 percent support the Royal Commission Model and understood the time and legislative process would be needed before this could be introduced.  These organisations supported the Parliamentary Model as an interim step towards a more equitable governance model.

49.     Common themes in the responses to each question are covered in the body of the report on feedback from the wider public. However, below are some general themes found across all questions.

50.     For Māori individuals, those who do not support introducing Māori seats commonly raised an opposition to race-based politics and/or that it was not a fair/democratic proposal. Those in support of introducing Māori seats commonly felt Māori deserve proportionate representation in the decision-making processes and commitment to Te Tiriti o Waitangi/the Treaty of Waitangi.

51.     For Māori organisations, the status and mana of Māori as tangata whenua, indigenous to Aotearoa, was the overarching theme for Māori submissions in support of Māori seats.  Many of the themes cascade from this premise including the Te Tiriti o Waitangi as the constitutional basis for a partnership arrangement that has yet to be fulfilled. Māori seats are a tool to achieve this promise to right the wrongs and ensure the largest population of Māori have a voice.

Summary of feedback received from the wider public

52.     The following is a high-level summary of the results from this consultation:

Question One: Do you think Auckland Council should introduce Māori seats for the 2025 local elections?

·   Of the 11,731 individual responses, 68 per cent do not support introducing Māori seats for the 2025 local elections, 30 per cent did support it, and two per cent provided another response.

·   Of the 39 organisation responses, 54 per cent do not support introducing Māori seats, 44 per cent did support it, and three per cent provided another response.

Question Two: If Auckland Council decides to introduce Māori seats, which model would you prefer?

·   Of the 10,280 individual responses, 25 per cent prefer the Parliamentary model (Māori wards), 18 per cent prefer the Royal Commission model, 25 per cent prefer a different model, and 32 per cent have no preference.

·   Of the 36 organisation responses, 22 per cent prefer the Parliamentary model (Māori wards), 17 per cent prefer the Royal Commission model, 36 per cent prefer a different model, and 25 per cent have no preference.

53.     Common themes in the responses to each question are covered in the body of the report on feedback from the wider public. However, below are some general themes found across all questions.

54.     Those opposed to introducing Māori seats commonly raised an opposition to race-based politics and/or that it was not a fair/democratic proposal.

55.     Those in support of introducing Māori seats commonly felt Māori deserve proportionate representation in the decision-making processes and commitment to Te Tiriti o Waitangi.

 

 

Summary of feedback received from local boards

56.     Local board views have been sought for the consideration of the Governing Body by way of a staff report on local board agendas across August and September 2023. 20 of 21 local boards provided substantive feedback as summarised below. A report on local board feedback is attached to this agenda item and contains further theming and analysis (Attachment C).

57.     Overall, local boards support the introduction of Māori seats on Auckland Council, with 85 per cent in support, 10 per cent do not support and five per cent not providing any feedback.

58.     Of the 18 local boards who do support Māori seats, 52 per cent prefer the Parliamentary model, 33 per cent do not identify a preferred model, 10 per cent prefer the Royal Commission model and five per cent prefer a bespoke model.

59.     Those opposed to introducing Māori seats believe that the Independent Māori Statutory Board provides sufficient Māori representation for Auckland Council.

60.     Those in support of introducing Māori seats encouraged Governing Body to give significant weight to the preferences of mana whenua and Māori on this matter, and to pursue legislative change to enable Māori representation at the local board level.

Tauākī whakaaweawe āhuarangi

Climate impact statement

61.     While a decision about Māori representation does not in itself impact on climate, the introduction of Māori representatives as Auckland Council decision-makers would 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

62.     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

63.     Local board feedback has been provided in Attachment C and discussed in the ‘analysis and advice’ section of this report.

64.     Seven of the 20 local boards that provided feedback requested that Māori representation at the local board level was investigated.

65.     Māori representation at the local board level is outside of the Local Electoral Act 2001 provisions and legislative change would be required to introduce Māori seats on local boards. If the governing body wished to pursue this, it should direct staff to bring back a report on the process, timeline and costs to achieve legislative change of this nature.

Tauākī whakaaweawe Māori

Māori impact statement

66.     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 authorities 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 on government to consider Treaty principles, including partnership, rangatiratanga, active protection, and informed decision-making.

67.     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.

68.     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.

69.     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”.

70.     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

71.     Consultation on Māori seats for Auckland Council had a budget of $189,000 – 204,000. Final costs have been totalled at $169,520.

72.     Due to the range of options contained in this report, it is very difficult to provide costs at this stage. Recommendations a) and f) are the only two options that do not require further work. Recommendation b) would be progressed by the Joint Governance Working Party through the representation review process which would include future reporting on costs. Recommendations c), d) and e) would each require staff to report back to Governing Body on further work including costs.’

Ngā raru tūpono me ngā whakamaurutanga

Risks and mitigations

73.     Staff have previously reported two key risks associated with Māori seats on Auckland Council: ‘legal challenge’ and ‘legislative change not enacted’. The second risk relates to the Local Government Electoral Legislation Act 2023 and is no longer a risk.

74.     As noted earlier in the report, the online submission portal closed one day earlier than council had committed to accepting submissions. This incident was addressed when made aware to staff and submissions continued to be accepted beyond the initial closure date and time of midnight 24 September, as a result.

Ngā koringa ā-muri

Next steps

75.     Should the Governing Body resolve that the Auckland region will be divided into one or more Māori wards in accordance with the Parliamentary model (recommendation (b)), staff will report this decision to the Joint Governance Working Party (JGWP) for further discussion, as discussed under the ‘Representation Review 2024’ section of this report.

76.     Should the Governing Body agree in principle to Māori seats on Auckland Council in accordance with the Royal Commission model (recommendations c) or d)), staff will report this decision to the JGWP for further discussion and report back to the Governing Body as agreed.

77.     Should the Governing Body agree in principle to support Māori seats on Auckland Council through another model of representation (recommendation e)), staff will report back the process for developing a bespoke model of Māori representation for Tāmaki Makaurau.

78.     Should the Governing Body resolve that the Auckland region will not be divided into one or more Māori wards for electoral purposes (recommendation f)), the 2025 local elections will not include any specific Māori representation for Auckland Council. If the council, when it next conducts a representation review, has not had Māori representation for the two successive preceding elections it will be required to consider this again, otherwise, if it has had Māori representation for two successive elections the council may choose to reconsider Māori representation but is not required to reconsider Māori representation. 

79.     Informed by a decision on whether council will establish Māori wards, the JGWP will report initial options for further consideration to the Governing Body on 14 December 2023.

 

Ngā tāpirihanga

Attachments

No.

Title

Page

a

Summary of submissions from Māori

 

b

Summary of submissions from wider public

 

c

Summary of feedback from local boards

 

d

2022 Engagement Feedback

 

e

Māori seats consultation document

 

f

Māori seats summary document

 

g

Māori seats feedback form

 

      

Ngā kaihaina

Signatories

Author

Libby Orr - Advisor Governance Services

Authorisers

Rose Leonard - Manager Governance Services

Anna Bray - Acting Director - Governance and CCO Partnerships

Phil Wilson - Acting Chief Executive

 

 


Governing Body

26 October 2023

 

 

Acting Chief Executive and Group Chief Financial Officer Update

File No.: CP2023/15020

 

  

 

Te take mō te pūrongo

Purpose of the report

1.       To provide a monthly update to the Governing Body on key matters from the Auckland Council Interim Chief Executive and Group Chief Financial Officer as at 30 September 2023.

Whakarāpopototanga matua

Executive summary

Acting Chief Executive and Group Chief Financial Officer’s Update

2.       Phil Wilson, Acting Chief Executive and Peter Gudsell, Group Chief Financial Officer (GCFO) will provide a summary of highlights, key activities and updates for the following:

·    Service performance

·    S&P rating for the Auckland Council group affirmed

·    Long-term Plan (LTP) update

·    Financial performance for Auckland Council and the Auckland Council Group

·    Economic/ market update.

S&P Rating affirmed

3.       S&P have affirmed Auckland Council’s issuer credit rating of AA.

4.       The stable outlook reflects S&P’s expectation that Auckland Council will successfully manage the city's growth pressures and large capital expenditure requirements while maintaining elevated debt at a level consistent with the 'AA' rating.

5.       S&P noted that their assessment was supported by the council’s track record of actively managing financial risks, and sound debt and liquidity management. This supported their view that Auckland has a strong and experienced management team.

Long-term Plan process 2024 - 2034

6.       Work on the Long-term Plan 2024-2034 is progressing as we prepare information and facilitate workshops and briefings to support decision-making.

7.       We have completed a phase of direction and gathering inputs, which involved: sharing the direction to council from the Mayor and councillors and preparing responses for that, assessing existing programmes and unavoidable cost increases, preparing individual budget profiles for each department with financial and non-financial information, and outlining a range of specific options for which further investigation/scenario testing was required.

8.       We are progressing a phase of iterating investment options including building scenarios that test our business-as-usual position, developing new scenarios and service stop, start change options.

9.       The rigorous audit processes required for the LTP, as well as the broad scope of the options and scenarios needing to be prepared, means there is pressure across the group to meet constrained timelines. This includes the need for contingency planning for funding requirements related to potential central government changes.

Financial performance for Auckland Council and the Auckland Council Group

10.     The monthly financial dashboard for Auckland Council and the Auckland Council Group was not available at the time the agenda was due for release and will be made available prior to the meeting. A summary of the key highlights and results will be provided by the Group Chief Financial Officer at the meeting.

Economic/ market update

11.     Key economic/ market activity and updates are:

·        Annual inflation rate – Consumer Price Index was 5.6 per cent at end of September 2023 (updated quarterly, next due 24 January 2024).

·        Non-tradable inflation was at 6.3 percent for the year to September 2023. Non-tradables are goods and services that do not face foreign competition and are an indicator of domestic demand and supply conditions.

·        Unemployment rate – 3.6 per cent to the end of June 2023, an increase of 0.2 per cent on the previous quarter (updated quarterly, next due 1 November 2023).

·        Gross Domestic Product increased by 0.9 per cent in the June 2023 quarter, bringing annual growth to 3.2 per cent (next update is 14 December 2023)

·        Auckland new dwellings consented numbers – 18,003 for the year ended August 2023 (16 per cent lower than the year ended August 2022).

·        The Official Cash Rate (OCR) rate remained at 5.5 per cent on 16 August 2023 (next update is 29 November 2023)

·        International migration (national level) – net gain of 110,200 people for the 12 months to August 2023, comprising 225,400 arrivals and 115,100 departures (provisional estimates, subject to revision)

 

Ngā tūtohunga

Recommendation/s

That the Governing Body:

a)      whiwhi / receive the information provided in this report, in the monthly financial dashboard circulated prior to the meeting and the verbal updates by the Interim Chief Executive and Group Chief Financial Officer.

 

Ngā tāpirihanga

Attachments

There are no attachments for this report.     

Ngā kaihaina

Signatories

Authors

Karuna Dahya - Manager Group Performance Reporting

Tracy Gers - Group Accounting & Reporting Manager

Authorisers

Peter Gudsell - Group Chief Financial Officer

Phil Wilson - Acting Chief Executive

 

 


Governing Body

26 October 2023

 

 

Long-term Plan 2024-2034 - Deliberative Engagement Options

File No.: CP2023/15770

 

  

 

Te take mō te pūrongo

Purpose of the report

1.       To recommend to the Governing Body a range of deliberative democracy engagement approaches to supplement the communications and engagement plan for the Long-term Plan 2024-2034 (10-year budget) consultation.

 

Whakarāpopototanga matua

Executive summary

2.       In the ‘Direction to Council Group from the Mayor and Councillors’ document, elected members requested more options for engagement and consultation on the Long-term Plan 2024-2034 (LTP). As a result, a budget committee workshop was held on 13 September.

3.       In addition to the suite of engagement techniques and methodologies, a range of deliberative democracy options were provided for consideration at the September workshop. These were:

·    A budget balancing digital tool

·    Participatory Forums

·    Auckland Conversation on the topic of deliberative democracy

·    Citizens Assembly

4.       The techniques have been formed into Options A to F and are discussed more fully in Attachment A and in the ‘Analysis and Advice’ section below.

5.       This report will help determine the shape of the full communication and engagement plan for LTP.

6.       The LTP public consultation process will use the Special Consultative Procedure (SCP), with a provisional date for the consultation period being 28 February to 28 March 2024.

7.       The consultation will offer all the standard elements for Aucklanders to provide feedback to meet legislative requirements and best practice. This includes provision of clear, relevant, and accessible information, the opportunity to provide feedback in an appropriate manner/format and the opportunity to speak directly to decision makers.

8.       Decisions on the use of any deliberative democracy options need to be made ahead of the full communication and engagement plan due to a significant amount of planning and work that needs to be done ahead of the consultation period.

9.       Following consultation, feedback from deliberative democracy engagements will be provided to decision makers for their consideration alongside feedback from the public consultation process.


 

 

Ngā tūtohunga

Recommendation/s

That the Governing Body:

a)      kohuki / consider and agree to the deliberative democracy consultation Options A to F which will support:

i)       the Long-term Plan 2024-2034 process:

A)      Option A – an online participatory budgeting tool

B)      Option B - a physical participatory budgeting tool for use at events

C)      Option C - Participatory Forum (1) - general public

D)      Option D - Participatory Forum (2) – community leaders and Advisory Panel members,

E)      Option E - Auckland Conversation event about deliberative democracy

ii)       the Annual Budget 2025- 2026 process:

F)      Option F - Citizens Assembly – climate related topic

 

Tātaritanga me ngā tohutohu

Analysis and advice

Deliberative democracy

10.     Deliberative democracy is about placing people (citizens, residents, affected individuals) closer to decision makers. There is an emphasis on the provision of information and evidence from a range of viewpoints to allow participants to make sense of the data. They are then encouraged to critically evaluate potential options or solutions.

11.     Deliberative engagement processes are built around some key principles, which include participants having access (from different sources) to clear information about the topic to fully understand; a clear remit; participants are representative of the wider audience; they are given time to digest information and deliberate, they are given a high level of influence and they report back to decision makers with their recommendations.

The five options

12.     Five deliberative democracy options (Options A-E) are being proposed for the 10-year Budget 2024-2025 consultation, to supplement the legislatively required public consultation. Option F (Citizens Assembly) is recommended to be postponed until April 2024. Options A to F are summarised below, and a fuller comparison is provided in Appendix A.

a)      An online participatory budgeting tool to encourage people to learn more about trade-offs and priorities

b)      A physical participatory budgeting tool for use at events to educate people about trade-offs

c)      Participatory Forum (1) - general public, discussing the LTP topics in detail

d)      Participatory Forum (2) – community leaders and Advisory Panel members, discussing the LTP topics in detail

e)      Auckland Conversation event about deliberative democracy

f)       Citizens Assembly – one topic only (climate related) with a representative sample of Aucklanders.

 

 

13.     Options A to E are recommended for the LTP, whilst Option F is postponed until April 2024 and utilised in the early stages of the next Annual Budget workshop process.

14.     The Citizens Assembly topic that gained the most suggestions at the workshop on 13 September was climate focus.

15.     The key reason for the postponement of the Citizens Assembly is that significant preparation time is needed to plan and recruit for this type of engagement. A topic for discussion needs to be agreed on ahead of the assembly recruitment. Topics for the LTP consultation will not be finalized until the end of November 2023, which does not allow sufficient time for the process to take place.

Benefits of deliberative democracy

16.     The benefits of a deliberative democracy approach are well documented. They include:

a)      Increasing levels of knowledge about issues and challenges, which results in more informed and considered views being shared, and in turn better policy outcomes.

b)      Offering citizens the opportunity to gain an increased appreciation of challenges and prioritisations faced by decision makers.

c)      When citizens are given the opportunity to have meaningful involvement in decisions that affect them and their communities it leads to greater trust and confidence between council and the community.

d)      It is likely to increase civic engagement and participation in the political process.

Role of decision-makers in deliberative processes

17.     The role of decision-makers in a deliberative engagement activity is to listen and observe the deliberations and consider recommendations made by participants. Where possible, final reports and feedback from relevant activities will be presented by representatives of the participants directly to the Governing Body.

18.     Elected members are encouraged to acknowledge any deliberative process reports they receive, consider the feedback and take responsibility for decisions made based on the feedback received.

 Tauākī whakaaweawe āhuarangi

Climate impact statement

19.     The number of printed documents (including any reference copies of the larger documents) will be limited, with an online option being encouraged wherever possible.

Ngā whakaaweawe me ngā tirohanga a te rōpū Kaunihera

Council group impacts and views

20.     Subject matter experts from Finance and other departments (topic dependent) will be involved in providing information, answering questions, and developing materials to support the relevant deliberative democracy options.

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

Local impacts and local board views

21.     Local Board engagement advisors will be asked to assist in the recruitment of participants as appropriate to ensure geographical representation of participants.

Tauākī whakaaweawe Māori

Māori impact statement

22.     Māori communities will be involved in the processes and staff will consider language needs and Treaty of Waitangi commitments.

Ngā ritenga ā-pūtea

Financial implications

23.     These options have been put together with some initial input from the council’s Finance team. Further work is on resourcing requirements and detailed costings will need to be undertaken as part of developing the full communication and engagement plan for the LTP.

24.     Where possible given existing resources and current LTP workloads, we will look to use in-house staff to plan, develop, run and analyse these tools and events to help minimise costs. External contractors may need to be engaged to supplement available internal resources in order to meet tight timeframes, or to ensure there is an appropriate degree of independence for some elements. For example, recruitment that ensures appropriate representation for option D, and facilitation for Options C, D and E.

Ngā raru tūpono me ngā whakamaurutanga

Risks and mitigations

25.     Should the Governing Body not support the deliberative democracy Options A to E, there is a risk that the engagement plan for the LTP offers nothing new or innovative to increase the involvement of Aucklanders.

26.     With the exception of Option F (Citizens Assembly) which is recommended to be postponed until April 2024 for use in the 2025/2026 annual plan process, all other options need approval by the end of October 2023. This will allow sufficient time for the recruitment, development, planning and resourcing to be scheduled and to meet the reporting deadline (April 2024).

27.     To maintain trust from participants and to manage expectations, council must make clear with participants how the feedback obtained will inform the council‘s decision-making.

28.     For the Citizens Assembly the topic must be agreed prior to recruitment in April 2024, with decision makers comfortable with the scope of the recommendations for decision making which are agreed with participants.

29.     There is a small risk that the underlying information for the budget balancing tool is inaccurate, outdated or not based on reasonable forecasting assumptions. This risk will be mitigated by working closely with the finance team and ensuring that the tool is based solely on audited budget data.

Ngā koringa ā-muri

Next steps

30.     If recommendations for Options A to F are adopted:

·    Option A and B will be procured and developed

·    Option C and D recruitment and planning will commence

·    Option E planning will start

·    Option F will be postponed with implementation in April 2024.

Ngā tāpirihanga

Attachments

No.

Title

Page

a

Deliberative Engagement Options for LTP 2024 Final

 

     

Ngā kaihaina

Signatories

Author

Wendy Filip - Principal CCE Specialist

Authorisers

Ross Tucker - General Manager, Financial Strategy and Planning

Kenneth Aiolupotea - General Manager Democracy and Engagement

Anna Bray - Acting Director - Governance and CCO Partnerships

Phil Wilson - Acting Chief Executive

 

 


Governing Body

26 October 2023

 

 

Ratepayer Assistance Scheme

File No.: CP2023/11451

 

  

 

Te take mō te pūrongo

Purpose of the report

1.       To seek Auckland Council’s in-principle support for establishment of the Ratepayer Assistance Scheme (RAS), subject to commitment from other key stakeholders, final development and due diligence, and approve Auckland Council’s contribution of up to $600,000 (including $100,000 initially) to fund the final development.

 

Whakarāpopototanga matua

Executive summary

2.       Auckland Council, a group of other metro councils, New Zealand Local Government Funding Agency (LGFA) and Local Government New Zealand (LGNZ) (the steering group) have developed a scheme (the RAS) that is able to provide very low-cost financing to ratepayers to support:

·    existing local government policies that involve the local authority effectively lending money to ratepayers (such as rates postponement and retrofit home insulation loans);

·    new, flexible funding products

·    new property improvement loans which provide public and private benefits.

3.       The RAS itself and the development process is based heavily on the LGFA, taking advantage of the benefits scale and specialisation. It would be:

·    off-balance sheet and be an operational organisation only with no discretion in what it could lend money for (which would be dictated by local authorities (LAs) and central government); and

·    a flexible omnibus platform with multiple applications possible. The focus has been on - rates postponement (RP); deferred development contributions (DCs) and property improvement loans (PILs).

4.       Significant work has been undertaken developing the RAS by the steering group supported by Cameron Partners (project leadership and commercial advice), Russell McVeagh (legal advice on structure and operating requirements) and PwC (accounting and tax advice). While there are complex issues to address no insurmountable red flags have been raised. Among other things, the RAS will require establishment capital estimated of up to $25 million from central government and LAs and enabling legislation.

5.       Final development of the RAS requires in-principle support from key stakeholders (Auckland Council and the other steering group governing bodies and central government), the enactment of enabling legislation from central government and the provision of development funding (estimated at $3 million in total and included in the $25 million estimate above).

6.       With appropriate support from central government and other LAs it is estimated that the RAS could be established in approximately 12 months.

 


 

 

Ngā tūtohunga

Recommendation/s

That the Governing Body:

a)      whakaae / approve up to $600,000 development funding to support final development of the Ratepayer Assistance Scheme subject to:

i)       total development funding $3 million (including Auckland Council’s contribution) being committed from other local authorities and / or central government; and

ii)       central government indicating its support for final development of the Ratepayer Assistance Scheme (including acknowledging the need for enabling legislation).

b)      whakaae / approve $100,000 to be available out of Auckland Council’s contribution to final development funding not subject to clauses a) i) and a) ii) above to enable the steering group to facilitate those conditions being satisfied. 

c)       tuhi ā-taipitopito / note that total Ratepayer Assistance Scheme establishment capital is estimated at up to $25 million and that Auckland Council’s contribution of Ratepayer Assistance Scheme could be up to $5 million (20 per cent of total capital), subject to final approval by the Governing Body.

d)      tuhi ā-taipitopito / note that total Auckland Council’s funding contribution to date and any further final development funding will count as establishment capital in the event it chooses to participate in the establishment of the Ratepayer Assistance Scheme.

 

Horopaki

Context

7.       New Zealand is facing a range of challenges including the cost of living crisis, changing demographics (in particular the growing cohort of elderly New Zealanders on fixed incomes), the infrastructure deficit, the quality and health / safety of homes, the housing deficit, climate change impacts and decarbonisation of the economy.

8.       Auckland Council and other LAs have a critical role to play in addressing these challenges:

·    as organisations delivering critical services and infrastructure;

·    by supporting ratepayers themselves to directly address the challenges that affect them; and

·    providing flexibility in the way ratepayers choose to pay LA charges to meet LAs’ funding requirements.

9.       In this regard, a group of metro councils (Auckland Council, Hamilton City Council, Tauranga City Council, Wellington City Council, Christchurch City Council), LGNZ and LGFA have formed a steering group to develop a scheme that is able to provide low-cost financing to ratepayers for approved purposes, including:

·    existing local government policies that involve the LA effectively lending money to ratepayers (such as rates postponement and retrofit home insulation loans), but doing it off-balance sheet;

·    new, flexible funding products; and

·    new property improvement loans which provide public and private benefits.

10.     LAs, including Auckland Council, individually lack the scale and capabilities to administer these ratepayer loans efficiently and effectively, and generally, do not have the financial capacity to do so, given their constrained balance sheets.

 

 

 

The Ratepayers Assistance Scheme (RAS)

11.     The RAS would be a national shared service available to all LAs.

12.     The RAS would be structured much like the LGFA to get the benefits of scale (see appendix for a diagram setting out its workings) – it would:

·    be a new entity, owned by LAs and central government (a council controlled organisation);

·    have the power to impose a ‘rate-like’ / levy charge ranking ahead of mortgages to ensure it gets repaid (enabling it to achieve a very high ‘government’ credit risk weighting – broadly in-line with the LGFA);

·    raise low-cost, long-term financing from the debt capital markets (through an out-sourcing arrangement with LGFA) and pass this on to ratepayers at interest rates expected to be 1 – 1.5 per cent below standard mortgage rates;

·    be off-balance sheet for LAs;

·    undertake all the operational requirements associated with the ratepayer loans through an “IT heavy” platform (to minimise costs and benefit from economies of scale); and

·    be an operational organisation only with no discretion in what it could lend money for which would be dictated by LAs and central government.

13.     The use of the RAS would be optional for qualifying ratepayers.

14.     The operations and processes of the RAS would be structured so that there is a seamless interface with LAs - ratepayers would access RAS loans through their LA. 

15.     It is likely that LAs would include the RAS levy as an item on their rates invoices and act as collection agent. It is also likely that the RAS levy would rank equally with LA rates so the RAS would piggy-back on the LAs default/arrears processes. LAs would likely cover the administration costs incurred with these processes (in exchange for the benefits of being able to offer these arrangements to our ratepayers).

16.     The RAS levy would be reflected as a charge on the property title (as per a mortgage). Any charge on the title would be dealt with during the conveyancing process when a property is sold.

Uses of the RAS

17.     The RAS would be a flexible omnibus platform and multiple applications are possible (essentially any loan to property owners that LAs / central government decide to make).

18.     To date the focus has been on three applications:

·    rates postponement (RP)

·    deferred development contributions (DCs)

·    property improvement loans (PILs)

19.     In principle, the RAS could also be applied to other property related taxes and imposts including Infrastructure Funding and Financing (IFF) levies and Value Capture Taxes (VCTs).

 


 

 

Rates Postponement

20.     RP provides flexibility regarding the timing of payments for LA charges and could be a valuable tool for LAs and option for ratepayers given: 

·    there is a major demographic change underway in New Zealand (increasing elderly population with fixed incomes);

·    New Zealanders are facing cost-of-living challenges;

·    LA rates are increasingly significant, 5 to 10 per cent per annum increases are not unusual; and

·    other charges (e.g. water levies, IFF levies and VCTs) are likely to increase over time.

21.     The RAS would make the equivalent payment to LAs upfront on behalf of the ratepayer and get repaid from the proceeds on sale of the property.

22.     RP operates like a reverse mortgage but at significantly lower cost (negligible fees and interest rates ~4-5 per cent lower). There are two reverse mortgage providers in the New Zealand market, Heartland Bank and Southland Building Society (SBS). Heartland Bank, the largest provider, currently has a reverse mortgage book of ~$800 million having grown at 14 per cent per annum over the last four years.

23.     The Productivity Commission has recommended a national RP scheme and Grey Power supports the establishment of the RAS.

24.     Central government’s rates rebate scheme (RRS) provides a direct subsidy of $60+ million per annum to 100,000+ ratepayers. We understand officials consider the scheme to be poorly targeted and that many users of the RRS could be candidates for RP, freeing the RRS for more appropriate beneficiaries.

25.     British Columbia (population c.5.2 million) in Canada has had a successful Property Tax Deferral Scheme for many years – with 83,000+ users, c.$2.4 billion in loans in 2023 (it has almost quadrupled in size from ~c.$670 million in 2016 and now includes ~3.9 per cent of British Columbia households).

26.     Many LAs already have RP policies in place with low uptake (although this is thought to be due to a combination of factors including low awareness, relatively high interest rates and “clunky” application processes).

Deferred Development Contributions

27.     There has been significant inbound inquiry to LAs regarding alternative funding mechanisms to upfront DCs.

28.     The RAS could provide an alternative to upfront DCs by making the one-off payment required to LAs and converting it into a rate like charge against the property. The targeted rate would be paid by the future property owner(s) to the RAS via an annual charge over ~30 years or alternatively fully repaid on sale of the property by the seller at the discretion of the buyer.

29.     It is expected that buyers will pay a lower price because of the rate they will have to pay over time. This is likely to have an impact on the developer that is equivalent to the cost of if the developer paid a DC. However, it will reduce the cashflow demands on the developer. It will be financed at lower cost than the interest a developer would get from a bank. Lower financing demands on developers could have a marginal positive impact on development.

30.     DCs in New Zealand total ~$600 million per annum (and it is expected that a large proportion of developers would take advantage of a DC offering).

Property Improvement Loans

31.     Current legislation facilitates LAs providing financing to ratepayers that can be repaid via voluntary targeted rates. Auckland Council previously offered “Retrofit Your Home” loans. However, due to concerns around regulatory compliance, and the associated costs due to the specialist capabilities required, Auckland Council ceased offering new loans in 2020.

32.     In principle, PILs could be utilised to support a wide range of policy goals including:

·    improving housing quality – e.g. insulation, heat pumps, double glazing

·    developing infrastructure that mitigates the impacts of climate change – e.g. community seawalls, flood protection

·    supporting de-carbonisation efforts – e.g. solar panels, EV chargers, home batteries

·    enhancing the health and safety of homes – seismic strengthening, chimney removal, septic tanks replacement, water storage tanks and waterway fencing.

Development to date

33.     Significant work has been undertaken developing the RAS by the steering group supported by Cameron Partners, Russell McVeagh and PwC.

34.     RAS development has been based on the establishment process for the LGFA which incorporates a number of stage gates - seeking to progressively identify key issues, confirm RAS viability and test interest from key stakeholders.

35.     The most recent stage completed has involved:

·    detailed financial analysis incorporating scenario analysis with assumptions based on objective data, precedents and expert input; and

·    legal, accounting and tax red flags review.

36.     To move forward requires support from Auckland Council, other key LAs and central government and funding commitment for the final development phase. While no firm commitment would be required at this stage (which would be subject to final due diligence), moving forward would be with an expectation of subscribing for shares in the RAS at its establishment.

37.     Given the level of development already completed it is thought that with appropriate support from LAs and central government that the RAS could be established within 12 – 18 months.

Tātaritanga me ngā tohutohu

Analysis and advice

Commercial analysis

38.     To provide insight, Cameron Partners has developed an operating model, detailed business case and built a comprehensive financial model analysing multiple scenarios based on objective data and input from steering group members (in particular LGFA), the British Columbia Property Tax Deferment Scheme team, and IT service providers (IT costs and system requirements).

39.     The scenarios analysed cover various combinations of RAS products and levels of uptake by ratepayers.

40.     The basic economics of the RAS are that it will generate a net interest margin of ~1 per cent (i.e. it will make loans to ratepayers at ~1 per cent above what it borrows at). Ultimately its net interest will need to cover its operating costs in order to breakeven (e.g. if operating costs are $5 million per annum the RAS requires a loan book of $500 million to breakeven).


 

 

41.     This can be achieved across all the products that the RAS offers and various data points support the RAS reaching breakeven in a relatively short timeframe (e.g. the British Columbia scheme has ~c.$2.4 billion in loans (growing at ~c.$300 million per annum); nationwide DCs total ~$600 million per annum; RRS supports >100,000 ratepayers).

42.     Based on the analysis reviewed, it is expected that the RAS will be able to generate a surplus and provide a strong return to its shareholders. The Base Case RP and Deferred DC scenario indicates breakeven after three years, initial equity fully paid back after six years, dividend yield on initial investment of 60 per cent + in year 10 and by year 15, 7x the initial investment would have been returned through dividends.

43.     Funding from both central government and LAs will be required to capitalise the RAS at establishment.

44.     It has been assumed that c.$25 million will be required from founding shareholders. The proposed $25 million (which includes ~$3 million for the final development before share capital is subscribed for):

·    is a “catch all” amount (covering all transaction / establishment costs and initial operating losses before scale is achieved) on the basis that it is better to be over-capitalised rather than under-capitalised and need to go back to LAs for additional capital; and

·    is based on a RP and deferred DC scenario and is considered to be conservative.

45.     Funding already provided and any further development funding provided by Auckland Council (and other LAs) would count as establishment capital.

46.     The steering group (as sponsors and original funders) will be able to set the terms of any establishment capital to compensate those LAs providing early funding for the development risk being taken and to mitigate the “free rider” risk of other LAs delaying their commitment.  For example:

·    $1 of funding provided at this stage to complete final development could equate to 2 shares at establishment whereas $1 contributed at establishment could equate to 1 share; and

·    the steering group members will be able to choose the number of shares they wish to take (up to the 20 per cent maximum) and the number of shares (if any) that might be available for LAs outside the steering group.

47.     Once breakeven is achieved, surplus capital could be distributed back to shareholders. Analysis also indicates that large surpluses could be achieved and used to either:

·    provide returns to shareholders (the return on investment is potentially very high); and / or

·    reduce the interest rate charged to ratepayers even further.

48.     The establishment capital will be provided by all shareholders at establishment. There is a constraint on the investment of any single investor at 20 per cent of total capital (otherwise there is a risk that the RAS will be on-balance sheet for that investor) - so individual shareholders can take up to $5 million of the proposed $25 million capital.

49.     The actual amount invested will depend on individual appetite and level of interest from other LAs (attached is a spreadsheet of LGFA shareholders at establishment – of the $25 million LGFA establishment capital, the Crown took $5 million, nine LAs took $2 million each and another eight LAs split the remaining $2 million between them).

50.     As with LGFA, there is merit in getting the widest shareholding spread possible to support uptake. Notwithstanding, some members of the steering group have indicated a preference to limit the shareholders given the high potential returns and the investment / risk capital already put in by the current group warranting a preferential position.

 

 

 

51.     In addition to share capital the RAS will benefit from additional funding support from central government in the form of preference shares that are subscribed for / repaid as the RAS balance sheet changes in size (in much the same way as borrower notes work for LGFA).

52.     LAs will also provide limited joint and several guarantees in proportion to their ratepayers’ use of the RAS (based on the limited joint and several guarantee that LAs provide to the LGFA).

Legal advice

53.     Legislation will be required to enable the RAS to have the powers to impose a “rate-like” levy and navigate Credit Contracts and Consumer Finance Act 2003 (CCCFA) issues.

54.     Russell McVeagh has advised that there are strong precedents for the required legislation provided by the LGFA and IFF respectively and consequently this won’t involve “breaking new ground” and that there is a strong case for CCCFA exemptions in regard to RP and deferred DCs (which is simply changing the timing of payment of LA charges). 

Accounting and tax advice

55.     PWC has identified accounting and tax issues that will need to be addressed / confirmed including off-balance sheet treatment, guarantees being recognised as liabilities, income tax exemption and potential technical RAS insolvency from an inability to recognise multi-year levies.

56.     PWC notes that none of the issues identified are considered insurmountable and would be resolved through an iterative process in final design / development.

Tauākī whakaaweawe āhuarangi

Climate impact statement

57.     PILs would be approved for purposes that have both private and public benefits and could include climate change related policy initiatives (e.g. solar panels, home EV chargers, home insulation and window double glazing) and initiatives to mitigate the impacts of climate change (e.g. seawalls, retaining walls and other required infrastructure).

Ngā whakaaweawe me ngā tirohanga a te rōpū Kaunihera

Council group impacts and views

58.     The RAS scheme is applicable at the council parent level and as such there has not been any consultation with other group entities.

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

Local impacts and local board views

59.     The RAS scheme is a region-wide issue that falls under the Governing Body’s decision-making responsibility and is not specific to a particular local board. Accordingly, there has not been any consultation undertaken directly with local boards.

Tauākī whakaaweawe Māori

Māori impact statement

60.     The RAS scheme has general applicability and accordingly there has not been any consultation undertaken directly with Māori.

 


 

 

Ngā ritenga ā-pūtea

Financial implications

61.     The RAS will be off-balance sheet and off-credit so there will be no balance sheet implications for Auckland Council from its ratepayers using RAS products.

62.     In principle, Auckland Council could transfer existing RP and Retrofit Home Insulation loan assets and liabilities to the RAS, potentially releasing ~$20 million for debt reduction and improving council’s debt to revenue ratio.

63.     Auckland Council would no longer require “in-house” capacity and capabilities to administer RP and PILs.

64.     Additional funding from Auckland Council will be required to support the further development and establishment of the RAS. In total ~$3 million across all funders is estimated to be required to complete development before a final decision to proceed with establishment is made. Total establishment capital is conservatively estimated to be $25 million across all shareholders and could be structured so that this amount is repaid from any RAS surpluses and / or to provide an ongoing return on investment.  

65.     The maximum quantum for an individual shareholder is limited to $5 million and the amount will depend on the level of interest from other shareholders and Auckland Council’s investment appetite. 

66.     Funding for the RAS is currently unbudgeted and would need to be funded from budget reprioritisation or additional debt.

Ngā raru tūpono me ngā whakamaurutanga

Risks and mitigations

67.     The current stage gate in the RAS development process involves confirmation of central government and sufficient LA support to move to final development.

68.     It is estimated that a further $3 million will be required to undertake the final development phase of the RAS prior to a final decision being made to proceed to full establishment.

69.     Confirmation of sufficient support is expected to be an iterative process as LAs look for leadership from central government and the larger metro councils.

70.     It would be possible for Auckland Council to commit to a proportion of the $3 million funding required for final development on certain conditions – e.g., central government support for legislation and sufficient funding being obtained from other LAs.  

Lack of demand

71.     To be economically successful and sustainable the RAS will require ratepayers to use it.

72.     Launching the RAS with both RP and deferred DCs as core products will maximise the likelihood of the RAS achieving breakeven in a reasonable timeframe.

73.     Central government and LAs will be able to influence demand through policy support and raising awareness of RAS products through websites, invoices etc. In this regard a wide spread of LA supporters is preferable. Longer term, word of mouth is expected to underpin awareness and normalise use of RAS products.

Loan defaults

74.     As with all financing arrangements there is risk of loan defaults.

75.     Notwithstanding, full recovery of ratepayer loans is almost certain due to minimum equity requirements, property insurance requirements and the “super senior” ranking of RAS levy charges.

76.     In addition, there are multiple safeguards in the RAS’s proposed capital structure and guarantee and liquidity arrangements to protect the RAS from default (in a similar manner to how the LGFA operates).

Operating costs higher than forecast

77.     The most material cost item over which there is the greatest uncertainty is IT.

78.     Significant independent IT input has been received during the detailed development stage.

79.     IT procurement confirmation will be a key workstream during the next final development phase.

Legislation

80.     Central government’s willingness to support the required legislation will be implicit in its support for the RAS in general. This is a critical stage gate before further development of the RAS would occur and funding would be required from Auckland Council. 

Ngā koringa ā-muri

Next steps

81.     Should the Governing Body approve the recommendations in this report, next steps are:

·        steering group LAs confirm their support and funding for final development of the RAS on similar terms as approved by Auckland Council (although the amount of contributions could vary).

·        steering group LAs approach central government (via the steering group) seeking to confirm its in-principle support for the RAS including a willingness to support the required legislation

82.     Assuming central government support is obtained:

the steering group commences final development of the RAS

central government commences (amongst other things) preparation of legislation required to enable the RAS.

Ngā tāpirihanga

Attachments

No.

Title

Page

a

RAS diagram

 

b

LGFA shareholding at establishment

 

     

Ngā kaihaina

Signatories

Author

John Bishop - Group Treasurer

Authorisers

Peter Gudsell - Group Chief Financial Officer

Phil Wilson - Acting Chief Executive

 

 


Governing Body

26 October 2023

 

 

Auckland International Airport Limited share sale post execution report

File No.: CP2023/15940

 

  

 

Te take mō te pūrongo

Purpose of the report

1.       To provide the Governing Body with a report on the process followed by Auckland Council to sell 7 per cent of Auckland International Airport Limited shares and the final outcome of the sale.

Whakarāpopototanga matua

Executive summary

2.       The Governing Body at its meeting across 8 and 9 June 2023 resolved to amend the Auckland International Airport Limited (AIAL) Shareholding Policy and partially sell the council’s shareholding in AIAL.  (Resolution GB/2023/100 a) i))

3.       Staff were required to report back to the Governing Body once the sell down was completed. This report is to provide the Governing Body with an outline of the process followed by Auckland Council to sell 7 per cent of Auckland International Airport Limited shares (the Shares) and the final outcome of the sell down of the Shares in AIAL.

4.       Council’s approval process, as required by legislation, meant that council’s intention to sell the shares was widely anticipated by the market. A well-structured process was designed in response to this market knowledge. The process was designed to optimise competitive tension between investors, remove investor uncertainty and ensure the broadest pool of buyers by allowing time for investors to digest AIAL’s price sensitive information. Time was also allowed to provide mana whenua of Tāmaki Makaurau an opportunity to participate.

5.       On 31 August 2023, the council implemented the partial sell down of its shareholding in AIAL, equivalent to 7 per cent of AIAL shares on issue, to domestic and international institutional and New Zealand retail investors, realising gross proceeds to council of NZ$836 million.

6.       The council sold 103.1 million shares via the combination of a strategic sale process and a block trade at a blended price of NZ$8.11 per share, a 3.8 per cent premium to the last trading price on the NZX prior to the sale of $7.81. The transaction was the only block trade executed at a premium to the last sale price in NZ or Australia since at least March 2015.

7.       The sale price represents 21.5 times the earnings of AIAL (this figure is known as the earnings multiple). A higher earnings multiple means better value for the shares. The earnings multiple for the AIAL share sale reflects a premium against valuations of comparable global listed airport companies (typically multiples of 10 to 13 times earnings) and AIAL’s 5-year pre-covid average valuation multiple of 19 times earnings.

 

Ngā tūtohunga

Recommendation/s

That the Governing Body:

a)      tuhi ā-taipitopito / note the process followed by the council for the partial sale of council’s shares in Auckland International Airport Limited and the outcome achieved.

 

Horopaki

Context

8.       The Governing Body at its meeting across 8 and 9 June 2023 resolved to amend the Auckland International Airport Limited (AIAL) Shareholding Policy and partially sell the council’s shareholding in AIAL. 

9.       At the same Governing Body meeting there was a confidential item C1 titled “Auckland International Airport Share sale process”. This report presented information on the valuation of the shares, timing of sale, target investors and execution strategy, the execution process, Overseas Investment Office considerations and legal issues, communication and engagement strategies and confidentiality and assurance matters.

10.     This report also stated that “Staff will report back to the Governing Body once the sell down is completed.” This report is to provide the Governing Body with an outline of the process followed by Auckland Council to sell 7 per cent of Auckland International Airport Limited shares (the Shares) and the final outcome of the sell down of the Shares in AIAL.

11.     Council’s sale objectives in the Governing Body report approving the share sale were:

a)   maximise value received

b)   minimise execution risk

c)   manage public perception of the process through confidentiality and probity requirements and ensuring the process undertaken is commercial, prudent, and defendable

d)   retain flexibility and adapt to any consideration that may arise throughout the execution process.

12.     The Governing Body also added that “one of council’s sale objectives is to consider opportunities for mana whenua of Tāmaki Makaurau to participate in the share sale process”.

13.     Council’s Treasury and legal teams implemented a process intended to deliver to these objectives and realise the best available price for the shares given market conditions, including:

i)       contested Request for Proposal processes to ensure council received balanced advice from independent financial advisors and appropriately incentivised brokers

ii)       appropriate market risk positioning in line with comparable transactions of this size and importance, including the evaluation of sale windows, and the design of appropriate sale methodologies including strategic and block trade options.

Tātaritanga me ngā tohutohu

Analysis and advice

Delegation and authority to sell

14.     The Governing Body at its meeting on Thursday 8 June 2023 and reconvened on Friday 9 June 2023 resolved to sell 103,097,466 shares in AIAL (Resolution number GB/2023/100 a) i)) as per the minute below:

Sale of Auckland International Airport Limited Shares

iii)      agreeing to adopt the audited long-term plan amendment as tabled to enable a partial sell-down to a target minimum of 10% shareholding and agree to sell down around 7 per cent of the council’s 18.09% shareholding (that is 103,097,466 of council’s current shareholding of 266,328,912 shares) in Auckland International Airport Limited to pay down debt as provided for in the amended long-term plan, to save an estimated net $23million in 2023/24 and $115million over the remaining term of the 2021-2031 long-term plan;

 

15.     At this same Governing Body meeting, confidential item C1 on the AIAL share sale process resolution (d), delegated the decision to sell the shares to the Chief Executive and Group Chief Financial Officer, as per the minute below.

“(d)         delegate to the Chief Executive and Group Chief Financial Officer the authority to sell the shares in Auckland International Airport Limited, and take all required actions and steps to effect the sale in a manner that in their judgment is most likely to facilitate council’s sale objectives.”

External financial and execution advice

16.     Following a competitive RFP process, on 2 May 2023 the council appointed Flagstaff Partners Pty Ltd (Flagstaff) as independent financial advisors to Auckland Council on options regarding any potential future sell down of its shareholding in AIAL. Flagstaff were engaged to provide council with independent advice on the transaction execution process and provide analysis as required to ensure that any potential future execution is completed efficiently, cost effectively and successfully.”

17.     Advice from Flagstaff on options for the sale of council’s AIAL shares included[1]:

a)   Strategic sale - off market sale to a one or more parties interested in a substantial shareholding in AIAL

b)   Block trade - sale of council’s shareholding to eligible institutional and retail investors

c)   Combined strategic and block trade processes.

18.     Each of the sale options required key decisions at several points during the sales processes as well as signing documentation to execute the sale. Decisions to proceed with the sale process were made by the Chief Executive and Group Chief Financial Officer based on advice from council’s financial and legal advisors.

19.     Council appointed UBS as the financial advisor only for the strategic sale of the Shares. A competitive process was run by Flagstaff on council’s behalf for the selection of the financial advisor. Three prospective investment banks were shortlisted and interviewed by representatives from the council and Flagstaff. Following that process UBS was selected and formally engaged on 1 July 2023.

20.     Following the appointment of the advisors, a working group was set up comprised of representatives from council, Flagstaff, UBS and council’s external legal advisors, Simpson Grierson that met weekly to discuss all matters relating to the strategic sale of the shares in AIAL.

21.     A steering group was also set up comprising of representatives from council, Flagstaff, and council’s external legal advisors, Simpson Grierson (excluding UBS) that met weekly to discuss all matters relating to the sale of the shares in AIAL including the potential for moving to a block trade process or a combined strategic and block trade process.

22.     UBS provided the working group with discussion material on the strategic sale execution strategy covering the sales process (including timetable considerations, bidder engagement, information memorandum and financial model), mana whenua engagement, legal documentation, and communications strategy. The execution strategy broadly reflected market practice for the sale of listed equity securities of a similar nature.


 

 

External legal advice

23.     Council engaged Simpson Grierson in November 2022 to assist with the consultation process on the potential sale of the Shares. In June 2023 council engaged Simpson Grierson to advise on the sale process and to assist with execution of the sale of the Shares. Simpson Grierson is on the council’s legal panel and is routinely used for advice. The council’s general engagement with Simpson Grierson is under a Legal Services Agreement between Auckland Council and Simpson Grierson dated 12 July 2021.

24.     Simpson Grierson have been advising council on the legal implications of the share sale process and have provided a legal opinion, confirming that:

a)      the sale of Shares whether effected via the strategic sale or the block trade as authorised by the Governing Body resolutions complies with the LGA requirements;

b)      in context, the processes adopted by council for selling the Shares and the Shares sale documents broadly reflect market norms or are otherwise conducted and documented in a manner which is at least as comprehensive and conservative as such norms; and

c)      the Shares sale documents reflect council’s instructions to Simpson Grierson and are in a form which are reasonable for council to sign.

Mana whenua participation

25.     The Governing Body also resolved, that one of council’s sale objectives is to consider opportunities for mana whenua of Tāmaki Makaurau to participate in the share sale process. See below minute from the meeting of 8 June 2023 and reconvened on 9 June 2023 confidential item C1 on the AIAL share sale process resolution (b).

“one of council’s sale objectives is to consider opportunities for mana whenua of Tāmaki Makaurau to participate in the share sale process.”

26.     The steering group considered how the council could best deliver on this resolution in the context of council’s primary objectives of maximising value within an appropriate timeframe. The steering group formed the view that the resolution applied to the 19 hapū and iwi authorities represented on the Mana Whenua Kaitiaki Forum and established a process comprised of the following:

a)      Preliminary engagement to advise mana whenua of the opportunity to participate, key details of the proposed sale and AIAL (public sources), information on how to participate and the requirements for participation and seeking expressions of interest for further engagement.

b)      (As required), on-boarding by the council’s broker of mana whenua who have lodged an expression of interest.

c)      Bid process for interested parties.

d)      Ngā Mātārae provided contact details of all mana whenua groups of Tāmaki Makaurau and letters on how they could participate in the process were sent on 4 July 2023.

e)      On 21 August 2023 follow up correspondence was sent by Flagstaff to mana whenua groups who had not responded to the letter of 4 July 2023 to confirm that no registration of interest to participate in the process has been received.

f)       The process required mana whenua to register their interest as a potential purchaser with UBS. Following the letters, two parties registered their interest as a potential purchaser.

g)      No bids were received from mana whenua in either of the strategic or block trade processes.

Execution dynamics

27.     The Governing Body paper confidential item C1 dated 8 June 2023, identified that the objectives in executing on any sell down of its AIAL shares were to:

a)      maximise value received

b)      minimise execution risk

c)      manage public perception of the process through confidentiality and probity requirements and ensuring the process undertaken is commercial, prudent, and defendable

d)      retain flexibility and adapt to any consideration that may arise throughout the execution process.

28.     Council’s approval process as required by legislation meant that council’s intention to sell the shares was widely anticipated by the market. A well-structured process was designed in response to optimise competitive tension between investors, remove investor uncertainty and ensure the broadest pool of buyers by allowing time for investors to digest AIAL’s price setting disclosures (PSE4)[2] and year end results. Time was also required to provide mana whenua of Tāmaki Makaurau an opportunity to participate.

29.     The key event timeline for the sale of the Shares is set out in the table below:

Date

$ Share price (last)

Event

9 June 2023

8.75

Auckland Council AIAL Shareholding Policy changed to allow partial sale of 7 per cent of shares

14 June 2023

8.29

AIAL revises dividend policy

29 June 2023

8.50

Auckland Council approves Annual Budget 2023/2024

4 July 2023

8.58

Engagement with strategic parties commence

5-17 July 2023

8.42-8.31

Manu whenua interest registration period

18 July 2023

8.27

Strategic sale process launched

20 July 2023

8.15

Earliest pre AIAL annual results launch window[3]

3-23 August 2023

8.37-8.18

AIAL annual results blackout period[4]

17 August 2023

8.20

Release of AIAL PSE4 price setting

24 August 2023

8.03

FY23 AIAL annual results released

29-30 August 2023

7.95-7.89

AIAL NZ investor meetings

31 August 2023

7.81

Council executes strategic sale and block trade sale

5 September 2023

7.79

Funds received from Auckland Council’s sale of AIAL shares

18 October 2023

7.91

Date approximately when this report was finalised

 

 

The outcome

30.     On 31 August 2023, the council implemented the partial sell down of its shareholding in AIAL, equivalent to 7 per cent of AIAL shares on issue, to domestic and international institutional and New Zealand retail investors, realising gross proceeds to council of NZ$836 million.

31.     The council sold 103.1 million shares via the combination of a strategic sale process and a block trade at a blended price of NZ$8.11 per share, a 3.8 per cent premium to the last trading price on the NZX prior to the sale of $7.81. The transaction was the only block trade executed at a premium to the last sale price in New Zealand or Australia since March 2015.

32.     The sale price represents 21.5 times the earnings of AIAL (this figure is known as the earnings multiple). A higher earnings multiple means better value for the shares. The earnings multiple for the AIAL share sale reflects a premium against valuations of comparable global listed airport companies (typically multiples of 10 to 13 times earnings) and AIAL’s 5-year pre-covid average valuation multiple of 19 times earnings. (Appendix A - UBS AIAL Sell-down by Auckland Council - Case Study)

 

Tauākī whakaaweawe āhuarangi

Climate impact statement

33.     There are no direct climate impacts or implications for delivering climate actions because of this report, as it concerns the mechanics of the sale process followed for currently listed shares.

 

Ngā whakaaweawe me ngā tirohanga a te rōpū Kaunihera

Council group impacts and views

34.     Decisions on how the share sale was implemented will not have wider implications at a group level.

 

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

Local impacts and local board views

35.     Decisions on how the share sale was implemented did not have implications for local boards.

 

Tauākī whakaaweawe Māori

Māori impact statement

36.     Decisions on how the share sale was implemented will not have any specific implications for Māori. The sale process incorporated a process for mana whenua participation as required under the Governing Body resolution.

 


 

 

Ngā ritenga ā-pūtea

Financial implications

37.     The net funding impact on the council’s financial position from the final sale outcome versus what it would have been when the Annual Budget 2023/2024 was set is presented in the table below. This summarises the total financial impact on the Annual Budget 2023/2024 and current Long-term Plan 2021-2031.

Budget (FY24)

Actual outcome

Sale price ($)

$8.66

$8.11

Sales proceeds (debt reduction $m’s)

893

836

Net Funding benefit (FY2024-2031) $m’s

 

 

Interest cost savings

332

322

Estimated dividends foregone

(207)

(172)

Net funding impact

125

150


38.     The total transaction cost including external independent financial advice and execution fees (Flagstaff and UBS) and legal fees (Simpson Grierson) were 0.51 per cent of the sales proceeds ($4.3 million).

39.     With respect to the remaining shareholding, the reduction in the AIAL dividend payout ratio announcement by AIAL and the increase in forecast interest cost will result in a higher holding cost of the shares.

Ngā raru tūpono me ngā whakamaurutanga

Risks and mitigations

40.     The principal risk to be managed by the council from the partial sale of the AIAL shareholding was ensuring that council obtained the best possible value it could from any sale, and that public confidence is maintained in the processes and controls used by council to manage the sale.

41.     Specialist advisors were engaged to advise council on the execution process and minimise the risk around this process. With the advice of the advisors, a structured sale process was implemented with the appropriate controls to ensure the council staff executing the sale delegation did so correctly. The final decision to sell the shares was with the Chief Executive and Group Chief Financial Officer, not third party advisors.

42.     To mitigate any compliance risk or any breach of confidentiality by staff or councillors with knowledge of how and when the sale would occur, involvement in the decision-making process on any sale was very tightly controlled, and limited to senior council staff and advisors on an absolute need-to-know basis.

43.     A report on the process and controls used by council to manage the Shares sale will also be considered by the Audit and Risk Committee.

Ngā koringa ā-muri

Next steps

44.     A report on the processes and controls used by council to manage the Shares sale will be provided to the Audit and Risk Committee.

 


 

 

 

Ngā tāpirihanga

Attachments

No.

Title

Page

a

UBS AIAL Sell-down by Auckland Council - Case Study

 

     

Ngā kaihaina

Signatories

Author

Andrew John – Head of Group Treasury

Authorisers

John Bishop - Group Treasurer

Peter Gudsell - Group Chief Financial Officer

Phil Wilson - Acting Chief Executive

 

 


Governing Body

26 October 2023

 

 

Recovery Office Update

File No.: CP2023/15021

 

  

 

Te take mō te pūrongo

Purpose of the report  

1.       To provide an update on progress with Tāmaki Makaurau recovery efforts.

2.       To seek approval of the outcomes, objectives, and principles of the Tāmaki Makaurau Recovery Plan.  

Whakarāpopototanga matua

Executive summary  

3.       Recovery efforts are continuing, with progress being made on infrastructure repairs, mechanisms for community support, and arrangements for implementation of the agreed co-funded storm recovery package, including the Voluntary Buy-out Support Scheme. Key recovery data is provided in Attachment A.

4.       The interim Tāmaki Makaurau Recovery Plan was provided to the Governing Body on 22 June 2023. Further progress has been made and the final Tāmaki Makaurau Recovery Plan will be provided for approval by the Governing Body at the 14 December 2023 meeting.

5.       Tāmaki Makaurau Recovery Plan outcomes, objectives, and principles are proposed in this report for approval by the Governing Body. The draft structure is shown in Attachment C. The remaining contents of the plan will be refined through engagement with mana whenua, stakeholders and local boards during November.

 

Ngā tūtohunga

Recommendation

That the Governing Body:

a)      tuhi-ā-taipitopito / note progress with the Tāmaki Makaurau recovery efforts.

b)      tuhi-ā-taipitopito / note progress on the development of the Tāmaki Makaurau Recovery Plan based on the structure Attachment C.

c)       Wwakaae / approve the outcomes, objectives and principles of the Tāmaki Makaurau Recovery Plan.

d)      tuhi-ā-taipitopito / note that the Tāmaki Makaurau Recovery Plan includes both regional and local considerations for recovery and that detailed plans for local areas that have been severely impacted will follow.

Horopaki

Context

Recovery efforts are a significant and necessary commitment

4.       After the devastating storms of January and February 2023, the Recovery Office was established to coordinate the region’s recovery efforts across Auckland Council group, New Zealand Government, and other partners.

5.       Recovery from such significant events is complex and multi-faceted, with responses needing to cater for communities and individuals, infrastructure and homes. To give a sense of the scale of the challenge, more than 4,500 households have needed storm-related assistance to date this year. Access to around 3,000 homes has been restricted or prohibited, with many still under investigation.

 

 

6.       For the Auckland Council Group, coordinating the recovery is a significant commitment, requiring unplanned expenditure and generating a significant additional workload for some parts of its operations. It requires the coordination of resources across the council group and oversight from the Governing Body.

A Recovery Plan is needed to guide efforts

6.       The interim Tāmaki Makaurau Recovery Plan (TMRP) was provided to the Governing Body on 22 June 2023. The interim plan established four whenu (strands) for recovery: community and social wellbeing, Māori partnership and participation, economic growth, and natural and built environment. The Governing Body noted progress with the interim plan’s development (GB/2023/107).

7.       Joint consultation was carried out on the TMRP and Making Space for Water during August, and reported to the Governing Body on 28 September 2023. 2051 submissions were received from the public. Eight regional stakeholder groups presented to elected members on 31 August 2023 at a Have Your Say event for regional organisations.

8.       Seven mana whenua groups and one group of Māori community representatives provided feedback. A summary report is attached at Attachment B. Overarching feedback contained in the report includes drafting the TMRP from a Te Ao Māori perspective, making the scope for recovery efforts more aspirational, and identifying workstreams and activities specific to Māori throughout all outcome areas. Further mana whenua feedback has been themed as follows:

a)      Partnership – the TMRP should identify and support genuine partnership opportunities.

b)      Kaitiakitanga me te taiao – the TMRP should place more emphasis on environmental wellbeing and supporting kaitiakitanga activities to achieve this.

c)      Monitoring and measurement – monitoring and measurement mechanisms should be identified to assist with determining implementation success.

d)      Hauora – A more holistic and aspirational focus to improving health outcomes should be reflected in the TMRP.

e)      Whai rawa – Identify clear economic and procurement opportunities which can be leveraged to positively impact mana whenua and Māori communities.

f)       Streamlining efforts – There are existing initiatives which mana whenua have supported that can and should be leveraged.

9.       Local boards passed resolutions supporting the proposed principles and structure of the TMRP. Three local boards provided additional comment on the principles which has informed the drafting, including:

i)       not to make assumptions about individuals’ and business owners’ financial situation, preparedness and ability to recover

ii)       the need for a fair and equitable approach that delivers the greatest positive impact for the greatest number of people

iii)      the importance of encouraging greater collaboration in the recovery with partners and stakeholders

iv)      the need for inclusiveness of all community affected by severe weather events.

Tātaritanga me ngā tohutohu

Analysis and advice

Recent Recovery Office activity

10.     Key monthly recovery data is provided in Attachment A. Recovery Office activities of note since the 28 September 2023 Governing Body update report include:

i)       The consultation for the proposed co-funded storm recovery package (‘Funding Storm Recovery and Resilience’) ran from 11- 24 September 2023 and received 2,461 submissions. Feedback from the consultation was reported to the 6 October 2023 Extraordinary Governing Body meeting.

ii)       On 6 October 2023, the Governing Body agreed to co-fund storm recovery costs for affected properties and infrastructure as set out in the offer made by the Crown on 24 August 2023 (GB/2023/160). Staff are now finalising the Voluntary Buy-Out Support Scheme documentation and rules in accordance with Auckland Council’s policies and resolutions and preparing to begin conversations with the first category 3 property owners at the end of October.

iii)      Around 3,900 placards have been removed from homes, as of 10 October 2023. 280 red and 1,197 yellow placards are still in place.  

iv)      Around a quarter of desktop assessments for known flood- and landslide-impacted properties are now complete. Sites assessments are underway, with around 500 completed so far.

v)      The Storm Recovery Navigation Service is actively assisting impacted homeowners going through the categorisation and buy-out process.  There are 17 dedicated Storm Recovery Navigators currently in place.

vi)      The Ministry of Social Development (MSD) has provided the Storm Recovery Navigation Service with $2.39 million from the Iwi and Community Fund to contract a further 20 Storm Recovery Navigators. An Expression of Interest (EOI) has gone out to community organisations including those who contracted a Community Connector through MSD’s Covid response. Mana Whenua have also been provided details of the opportunity to host a Navigator. All EOIs will be assessed prior to offering a Service Agreement.

vii)     The Community and Social Recovery Roadmap is being prepared to guide agencies, organisations and community groups in their efforts to develop, target and coordinate their activities for the community and social recovery of Tāmaki Makaurau communities. Engagement with key mana whenua and iwi, community partners and stakeholders is planned from 25 October 2023 to 8 November 2023. This will include:

A)      Six community-based hui with community groups and organisations, and social service providers

B)      One key regional stakeholder hui with national and regional agencies and groups

C)      One Auckland Council stakeholder hui with key Auckland Council teams who have an interest in community/social outcomes.

Development of the Tāmaki Makaurau Recovery Plan

11.     The TMRP will be a “living document” with sections released progressively to address recovery in specific local areas that have been impacted.

12.     There will be six main sections to the TMRP:

ii)       Executive summary

iii)      Context and scene setting: includes a statement of purpose, the policy context for the TMRP, vision, outcomes, objectives and principles.

iv)      Whenu: sets out the objectives, programmes, and key relationships and partnerships of each of the four whenu. It will also identify the connections between whenu, demonstrating where recovery work in one area may have benefits across other programmes.

v)      Governance: sets out the governance structure to ensure effective delivery of the TMRP.

vi)      Performance and measurement: describes how progress will be tracked to ensure accountability.

vii)     Appendices: contains a detailed breakdown of activities, including delivery agent, funding and timeframes. 

13.     The draft structure of the TMRP is shown in more detail in Attachment C.

Strategic direction from existing plans

14.     At a regional level, there is existing strategic direction that influences how we manage flood risks and build community, business, and infrastructure resilience over the short, medium and long-term, e.g., Te Tāruke-ā-Tāwhiri. There is also work underway to strengthen the management of risk from natural hazards through the Auckland Unitary Plan. These and others will be referenced in the TMRP, recognising the role they play in supporting detailed actions that sit under the four whenu.

15.     There is new central government policy direction and reform that will have a region-wide impact. This includes the transitional National Planning Framework which is intended to bring all existing (and some new) government direction into a single framework including on natural hazards and climate change, infrastructure, and green spaces. The Environment Select Committee’s inquiry into climate adaptation is exploring how communities could be enabled to relocate from areas at high risk from climate change and how the costs of adapting to climate change could be met. These matters all form part of the broader picture of enabling greater resilience for Tāmaki Makaurau.

Outcomes, objectives, and principles for the Tāmaki Makaurau Recovery Plan

16.     The TMRP will include a set of outcomes and objectives for each whenu and a set of principles to guide our recovery. These have been informed by the interim Recovery Plan and by public and stakeholder feedback. This included the need for a fundamental objective to work in genuine partnership with mana whenua, and that community support is key to recovery.

17.     The proposed outcomes and objectives are:

Māori partnership and participation

Outcome

As Te Tiriti o Waitangi partners and regional leaders, mana whenua and Māori are active partners and participants in the recovery of Tāmaki Makaurau.

Objectives

·   Mana whenua and Māori communities determine Recovery outcomes that matter most for Māori in Tāmaki Makaurau.

·   Mana whenua, marae and Māori organisations identify opportunities to partner and lead in the Recovery effort.

·   Take opportunities through the Recovery to build capacity and advance positive outcomes for Māori.

 


 

 

 

Community and social recovery

Outcome

Affected communities are reconnected and resilient and feel positive about their future.

 

Objectives

·    Ensure affected Aucklanders have equitable access to the information services and support they need to navigate their recovery.

·    Support and enable individuals, whānau, families, communities, and mana whenua to shape and lead their own recoveries.

·    Strengthen sense of connection and belonging in affected communities.

·    Apply an equity lens across all Community and Social whenu mahi.

 

Economic growth

Outcome

Businesses are resilient and sustained economic activity contributes to improved economic prosperity.

 

Objectives

·    Support businesses in high-risk areas to understand their risk and improve their ability to cope with disruption, enabling greater business and employment continuity.

·    Identify and implement economic opportunities in the Recovery effort that support equitable prosperity in respect of Māori businesses.

·    Identify and Implement opportunities in the Recovery effort to support business development and upskilling of individuals.

 

Natural and built environment

Outcome

Land, housing and our infrastructure networks are resilient and safe and our natural environment is regenerated.

 

Objectives

·    Invest in the resilience of our infrastructure networks to future events

·    Support residential property owners to repair and rebuild impacted homes where practicable and to exit from situations that pose an intolerable risk to their lives.

·    Replace and, where feasible, improve infrastructure and facilities that have been damaged and regenerate damaged native taonga.

·    Reduce risks to people, property, natural environment, and infrastructure from floods and land instability and improve resilience to adverse weather events.

·    Support mana whenua to undertake their kaitiakitanga responsibilities in the Recovery effort.

·    Advocate for policy and legislation needed to improve the resilience of Tāmaki Makaurau.

 

18.     The proposed principles for the TMRP are:

i)       Put people and their communities first.

ii)       Consider the impacts for those most in need.

iii)      Take opportunities to reduce greenhouse gas emissions.

iv)      Minimise future harm by preparing Tāmaki Makaurau for the impacts of climate change.

v)      Integrate Recovery projects and initiatives to maximise the benefits and mitigate or manage disruption to communities.

vi)      Projects, initiatives and activities are funded or have funding secured and are open to cross-agency, NGO and community collaboration.

vii)     The plan is a living document: changes can be accommodated if consistent with the plan’s outcomes.

Tauākī whakaaweawe āhuarangi

Climate impact statement

19.     Te Tāruke-ā-Tāwhiri: Auckland’s Climate Plan sets out two core goals: achieving net-zero greenhouse gas emissions by 2050 and adapting to the impacts of climate change. The risk of more frequent and extreme weather events is rising with the effects of climate change. The impacts of individual events compound – making communities more vulnerable to crises and undermines resilience building efforts. This compound risk puts our communities, natural environment, infrastructure, utilities, and services under further pressure. Responding and recovering from extreme weather events becomes harder if communities are still coping with the impacts of the last event.

20.     In addition to setting out specific actions, the TMRP will describe work at a regional level that will contribute to Auckland’s ability to adapt to the impacts of climate change. This includes elements of the Resilient Auckland programme which will help to ensure Auckland’s resilience in the long-term and also prioritise adaptation planning for communities that have less adaptive capacity.

Ngā whakaaweawe me ngā tirohanga a te rōpū Kaunihera

Council group impacts and views

21.     The Recovery Office is working with and across the council group to ensure alignment with council policy and priorities. This includes the development and implementation of the Tāmaki Makaurau Recovery Plan. Actions will be assigned to individual departments and CCOs and they will be responsible for reporting on progress. 

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

Local impacts and local board views

22.     The impacts of the extreme weather events of January and February 2023 have not been felt equally across Auckland. While the TMRP is a region-wide plan, it contains actions which are focusing at the local level on the most impacted areas. Recovery plans specific to each impacted area will follow as need and appropriate timing dictates.

23.     Local boards have provided their feedback on the TMRP through resolutions at their August business meetings. This feedback was reported to the Governing Body on 28 September 2023 (GB/2023/174). Further engagement with local boards includes an online briefing on 20 November 2023.

24.     Local boards have also provided their feedback on the Funding Storm Recovery and Resilience consultation. The input was reported to the 6 October 2023 Extraordinary Governing Body Meeting (GB/2023/187).

Tauākī whakaaweawe Māori

Māori impact statement

25.     Mana whenua and mataawaka living in Auckland were impacted by the January Floods and Cyclone Gabrielle as individuals and whānau and through impacts on marae and sites of cultural significance. Many marae acted as community hubs providing support to those impacted by the weather event.

26.     The recovery is an opportunity to partner with iwi, mataawaka, marae and Māori businesses. Regular contact from Auckland Council will be important moving forwards to strengthen relationships with mana whenua, and ensure they are able to meaningfully participate in the recovery effort.

Ngā ritenga ā-pūtea

Financial implications

26.     A budget update is reported to this meeting under separate cover. While the cost of developing the TRMP has been planned for, additional funding is required to ensure meaningful engagement with mana whenua and Māori. Additional funding has been requested as part of a separate Budget update report.  The funding covers engagement with Māori to develop the TMRP and progress actions identified.

27.     The actions in the TMRP will be funded either through the Recovery Office budget, the Storm Response Fund, or considered as part of the LTP.  Not all actions are council-led and may be funded through government or other agencies, including through the National Resilience Fund as agreed through the co-funded storm recovery funding package.

Ngā raru tūpono me ngā whakamaurutanga

Risks and mitigations

28.     The risks and mitigations for the recovery effort are identified in Table 1. These risks are being considered in the development of the Tāmaki Makaurau Recovery Plan.

Risk

Mitigation

Vulnerable Communities: risk of inadequate service provision to prevent further hardship.

Undertaking community needs assessments to inform approach (scale and scope) required for Tāmaki Makaurau Recovery Plan development.

Working with Government to agree how funding for the Government’s Social Sector Recovery Plan will be allocated to Auckland to deliver on the Tāmaki Makaurau Recovery Plan.

Reputational: risk of losing social license to operate and deliver Recovery outcomes

Tāmaki Makaurau Recovery Plan developed to define recovery activities and ensure coordination and integration within council teams and across the council group.

Utilising community groups to convey key messages and information, and to understand from the community what the communication and engagement needs are.

Resourcing recovery communications function to enable proactive media and communication across all key stakeholders.

 

Funding: risk of funding sources (local and central govt) and levels of funding being inadequate.

Recovery leadership team have monthly commercial forecasting and expenditure meetings with finance to track costs and forecasts. Dedicated Recovery finance business partner commencing in October 23. There is a good faith provision in the co-funding agreement with government to re-enter discussions if it proves the funding for the Voluntary Buy-out Support Scheme is insufficient.

Māori partnership and participation: risk of losing endorsement, trust, and confidence from mana whenua and Māori communities.

Dedicated resourcing for Māori engagement implemented and engagement underway.

Governance, decision-making, mandate, and scope: risk of changes to or incorrect scope for Recovery, unclear decision-making processes, ambiguity of owners and influencers, unclear mandate

Being clear about what is in and out of the council’s scope to address and the anticipated timeframes for resolution.

Developing tailored solutions for affected communities with dedicated liaison officers for priority communities.

 

Ngā koringa ā-muri

Next steps

29.     The Recovery Office will continue to progress recovery efforts including the technical assessments of impacted properties and support for impacted communities. Offers under the Voluntary Buy-out Support Scheme will commence in late October 2023.

30.     Targeted engagement and local board briefings for the TMRP will take place in November. The final proposed plan will be brought to the Governing Body for approval on 14 December 2023.

 


 

 

 

Ngā tāpirihanga

Attachments

No.

Title

Page

a

Key Recovery Office data October 2023

 

b

Mana whenua engagement report

 

c

Tāmaki Makaurau Recovery Plan - proposed outline

 

     

Ngā kaihaina

Signatories

Authors

Mace Ward - Deputy Group Recovery Manager

Tanya Stocks - Recovery Office Strategic Support

Authorisers

Mat Tucker - Group Recovery Manager

Phil Wilson - Acting Chief Executive

 

 


Governing Body

26 October 2023

 

 

Recovery Office budget for the 2023/2024 financial year

File No.: CP2023/15370

 

  

 

Te take mō te pūrongo

Purpose of the report

1.       To seek approval for an increase to the Recovery Office budget for the 2023/2024 financial year that includes:

·    an operational budget increase of $9 million

·    category 3 properties deconstruction costs of up to $7.5 million

Whakarāpopototanga matua

Executive summary

2.       An operational budget of $14 million was approved for the Recovery Office in the 2023/2024 financial year. Several aspects of the Recovery Office programme require more resource than originally anticipated, particularly the direct community support and technical property assessments.

3.       The scale of recovery activities is such that the operational budget for the current financial year needs to be increased by $9 million. The activities that are not able to be funded within the current budget include:

·    Additional staff costs of $6.8 million for additional temporary contractors to provide direct community support and technical expertise. The cost will be partially offset by $4.7 million funding from the Department of Prime Minister and Cabinet, and the Ministry for Social Development.

·    Categorisation and geotechnical assessments for landslide affected properties outside Muriwai and Karekare.

·    Ongoing security for damaged vacant properties and traffic management for road closures in Piha, Karekare and Muriwai.

·    Additional public consultation required due to the scale of decisions related to the Crown funding package, in particular the proposal to buy-out Category 3 properties.

·    Customer Relationship Management (CRM) system to consolidate information at a property level to support the categorisation process and understand individual needs assessments for social and community recovery.

·    Engagement with mana whenua.

4.       If approved, the additional $9 million would bring the total budget for the Recovery Office for the 2023/2024 financial year to $23 million.

5.       The purchase of Category 3 properties could result in demolition / deconstruction costs of up to $7.5 million in the 2023/2024 financial year. This report also seeks an in principle decision for an operational budget allocation of up to $7.5 million for Category 3 properties purchased in the 2023/2024 financial year

6.       Costs associated with recovery efforts after June 2024, including the Recovery Office, will be considered through the Long-term Plan 2024-2034.

 


 

 

Ngā tūtohunga

Recommendation/s

That the Governing Body:

a)      whakaae / approve an operational budget increase of $9 million for the Recovery Office, to be funded by additional debt in the 2023/2024 financial year.

b)      tuhi ā-taipitopito / note that additional council debt of $9 million would incur an estimated $495,000 of interest expense per annum which would need to be funded through future operational revenue or reduced costs.

c)       whakaae / approve in principle an operational budget allocation of up to $7.5 million for demolition / deconstruction of Category 3 properties that are purchased in the 2023/2024 financial year, subject to more detailed reporting once volumes and timeframes are better understood.

d)      whakaae / approve in principle additional debt of up to $7.5 million to fund the cost of demolition and deconstruction of Category 3 purchased properties in the 2023/2024 financial year.

e)      tuhi ā-taipitopito / note that if the additional debt of $7.5 million for deconstruction of Category 3 purchased properties is required, the ongoing interest costs associated would be around $412,500 per annum which would require additional operating funding in subsequent financial years.

f)       tuhi ā-taipitopito / note that the demolition and deconstruction of Category 3 purchased properties may incur unfunded consequential costs which will need to be considered in future budgets.

 

Horopaki

Context

7.       The Recovery Office was established to respond to the storm events of early 2023 in accordance with the Civil Defence Emergency Management Act 2002. Its function is to coordinate regional recovery efforts across the Auckland Council Group, New Zealand Government, and other partners. Recovery is complex and requires significant engagement with impacted Auckland communities and consultation with Aucklanders.

8.       Initial funding of $3 million for the operation of the Recovery Office was approved in March 2023, as unbudgeted costs for the 2022/2023 financial year (resolution GB/2023/35).

9.       The annual budget approved $14 million for the 2023/2024 financial year to go towards the Recovery Office and its work programme which was funded from additional borrowings (Resolution GB/2023/100). This funding was allocated to establish a core operations team, program and projects communication activities, security, as well as geotechnical and engineering activities to assess impacted areas.

 

Tātaritanga me ngā tohutohu

Analysis and advice

10.     Efforts to support recovery are proving to be more complex and labour-intensive than originally anticipated. This is particularly the case for the technical assessment of impacted properties and providing support for affected Aucklanders.  The scale of recovery activities is such that the budget needs to be increased by $9 million for the 2023/2024 financial year, bringing the total to $23 million. The updated forecast budget is outlined in Table A.

 

Table A: Updated Recovery Office budget forecast for FY2023/2024 ($’000)

Description

Current Budget

Forecast FY24

Shortfall

Staff costs

2,362

2,300

 

Temporary staff costs

3,827

10,700

 

Funding from Department of PM & Cabinet (DPMC)

 

(1,835)

 

MSD funding for navigator support

 

(2,900)

 

 

6,189

8,265

(2,076)

 

 

 

 

Grants, community-led activities

780

780

 

Iwi & community funding for navigator support

 

2,400

 

Communications & stakeholder engagement

1,242

1,242

 

Geotechnical & engineering

3,447

6,447

 

Security & traffic management

1,844

2,500

 

Additional public consultation

 

250

 

CRM costs

 

500

 

Mana whenua engagement

 

150

 

Other unavoidable expenses

520

650

 

 

7,833

14,919

(7,086)

 

 

 

 

Total

14,022

23,184

(9,162)

 

11.     The proposed budget increase of $9 million would cover the activities described in the following paragraphs.

12.     Staff costs. Additional temporary contractors are needed to provide direct community support and technical expertise. The cost of $6.8 million will be partially offset by funding of $4.7 million from the Department of Prime Minister and Cabinet, and the Ministry for Social Development, leaving a shortfall of $2.1 million for staff costs. This includes:

a)   Up to 14 Storm Recovery Navigators to support a shift from a centralised advisory service to a place-based case management approach.  An additional 24 navigators will be funded by grants provided by the Ministry for Social Development. 

Navigators will support every individual and family affected by the extreme weather events to plan their recovery and be connected to the information and services they may need. Navigators will conduct assessments of individual households, identify their needs, and develop a comprehensive recovery plan with the individual householder that ensures maximum access to quality services. Each navigator is expected to support up to 30 households.

b)   Additional team leads and coordinators to support the community and social recovery function, including the storm recovery navigation service, funding arrangements, housing assistance, community led recovery and wellbeing. 

 

 

c)   Eight additional, communications, community and stakeholder engagement and customer resolution contractors. These people respond to ˜1,600 inbound emails/requests/phone calls per month to the Recovery Office inbox. They organise and support community meetings and communicate with individual property owners on risk assessments and categorisation.

d)   10 short-term Rapid Building Assessment case workers (required earlier this year, but unfunded).

e)   Six additional technical experts to undertake geotechnical assessments.

f)    Four contractors to support Māori and iwi engagement.

13.     Categorisation for landslide affected properties outside Muriwai and Karekare. Geotechnical assessments for approximately 250 properties had to begin with urgency. Because more than 300 properties have red placards related to landslides, and more than 1,300 have yellow placards, there is a risk that some of these properties will also need geotechnical assessment by the council. These numbers will increase if impacted homeowners that are not currently part of the voluntary process decide to opt-in now that the council has confirmed there will be a buyout process.

14.     Security and traffic management. Ongoing security for damaged vacant properties and traffic management for road closures in Piha, Karekare and Muriwai. These costs have been higher than expected due to the length of time security has been required and the scope of the work being more significant.

15.     Additional public consultation. The scale of decisions related to the Crown funding package meant that an additional public consultation process was needed (Governing Body resolution GB/2023/160). 

16.     Customer Relationship Management (CRM). There is no current CRM system in operation across council that can facilitate management of customer information relating to both ratepayers and non-ratepayers.  An improved CRM system is necessary to consolidate information at a property level to support the categorisation process and understand individual needs assessments for social and community recovery. The CRM system is critical to ensure the quality and efficiency of customer interactions, manage documentation effectively, record council actions and minimise associated risk.

17.     Mana whenua engagement. The Tāmaki Makaurau Interim Recovery Plan recognises the need for mana whenua and Māori to be active partners and participants in recovery efforts. Specialist contractors have been commissioned to undertake the mana whenua engagement with the Recovery Office.

18.     Other unavoidable expenses. This includes legal fees, software support, work to define the customer experience for categorisation and contingency for unexpected costs.

Deconstruction costs also need to be met

19.     As the purchase of Category 3 properties proceeds, Auckland Council will need to meet much or all of the costs of deconstructing and/or demolishing these properties. This includes provision of security measures until the houses can be removed and made safe, for example providing further security patrols and making properties physically secure with fencing and boarding up of access points. This demolition/deconstruction activity was not previously considered in the Recovery Office budget, until it was excluded by the Crown from the funding agreement.   

20.     Depending on progress with the buyout process, we expect to commence deconstruction and demolition works for some properties this financial year. This cost is not provided for in existing budgets.

 

 

 

21.     A firm costing for this activity is not yet possible, as it depends on implementation of the buyout scheme methodology being finalised, including actual timeframes to move from offer to settlement and the volume of Category 3 properties.  It is anticipated that between 80-200 properties may need to be demolished or deconstructed in this financial year.  At approximately $50k per property, the estimated cost is between $4 million and $10 million.

22.     Given the uncertainty on volumes and timing at this stage, this report seeks an in-principle agreement for additional unbudgeted expenditure of up to $7.5 million for deconstruction, demolition and associated activities for the 2023/2024 financial year.

23.     Monthly updates will be provided to the Governing Body should the demolition funding be required. Demolition activities in the 2024/2025 financial year, and later years if applicable, will be addressed within the Long-term Plan.

Beyond the 2023/2024 financial year

24.     Costs associated with recovery efforts after June 2024, including the Recovery Office, will be considered through the Long-term Plan 2024-2034 process.

Tauākī whakaaweawe āhuarangi

Climate impact statement

25.     Te Tāruke-ā-Tāwhiri: Auckland’s Climate Plan sets out two core goals: achieving net-zero greenhouse gas emissions by 2050 and adapting to the impacts of climate change. The risk of more frequent and extreme weather events is rising with the effects of climate change. The impacts of individual events compound – making communities more vulnerable to crises and undermines resilience building efforts. This compound risk puts our communities, natural environment, infrastructure, utilities, and services under further pressure. Responding and recovering from extreme weather events becomes harder if communities are still coping with the impacts of the last event.

26.     The activities described in this report will support communities to be more resilient to severe weather events. Storm Recovery Navigators will support individuals, whanau and communities to define their pathways to recovery. The technical assessments of impacted properties are a necessary step in removing natural hazard risks that will continue to be vulnerable to the impacts of climate change. 

27.     Where possible, relocation or deconstruction and re-use of materials from Category 3 properties will help to lower the carbon impact and reduce the waste to landfill from the buy-out process.

Ngā whakaaweawe me ngā tirohanga a te rōpū Kaunihera

Council group impacts and views

28.     The Recovery Office is working across the council group to ensure alignment with council policy and priorities.

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

Local impacts and local board views

29.     The funding proposed in this report will support more community-based activities. Staff will continue to work with local boards to respond to local issues through business as usual and development of storm recovery and resilience projects.

 


 

 

Tauākī whakaaweawe Māori

Māori impact statement

30.     The additional funding specified in this report will support better engagement and communication between mana whenua and Auckland Council.

31.     The Recovery Office has begun specific engagement with Māori to gather insights to inform the development of the Tāmaki Makaurau Recovery Plan. The focus is on deliberate kanohi ki te kanohi (face to face) discussions with mana whenua, rather than a broad approach. This enables staff and mana whenua to build relationships that will be necessary to deliver the mahi required for recovery and future resilience.

32.     Feedback from one-on-one meetings with mana whenua representatives was included in the Storm Resilience and Recovery consultation feedback report, reported to the Governing Body on 28 September 2023. Further insights will be gathered as mana whenua engagement continues.

 

Ngā ritenga ā-pūtea

Financial implications

33.     As part of the Annual Budget 2023/2024, the Governing Body approved $20 million of additional borrowings to fund one-off storm-related operating costs. $14 million was allocated for the establishment of the Recovery Office to coordinate recovery efforts and processes in accordance with the Civil Defence Emergency Management Act 2002 and give support to our most impacted communities.

34.     All else being equal, the increase in funding requested for the Recovery Office in 2023/2024 will require $9 million of additional debt, with associated ongoing interest costs of around $495,000 per annum. This additional cost will need to be funded by additional operating revenue or reduced costs in future years.

35.     The in-principle request for the deconstruction, demolition and associated activities of Category 3 properties for the 2023/2024 financial year would add a further $7.5 million of debt and ongoing interest costs of $412,500 per annum which would also need to be funded from future operating revenue or reduced costs.

36.     Any future development of the land purchased, ongoing maintenance or other consequential costs are not funded and would require separate consideration and prioritisation through the Long-Term Plan 2024-2034.

37.     The Recovery Office work programme and activities could extend beyond the next financial year. Council staff have indicated additional budget requirements for 2024/2025 which is being considered as part of the Long-term Plan 2024-2034.

 

Ngā raru tūpono me ngā whakamaurutanga

Risks and mitigations

38.     The Recovery Office’s function, role and responsibilities as the Portfolio Management Office include risk management.


 

39.     The risks and mitigations associated with the Recovery Office budget are set out in Table B.

Table B: Key risks and mitigations

Risk

Mitigation

Additional Recovery Office budget is not approved.

Reduce Recovery Office activity. This could include:

·    Cutting back on the community team and providing a lower standard of support for communities than the precedents set in other similar events such as the Christchurch earthquakes. There could be impacts on community mental wellbeing.

·    Cutting back on technical resources, with the risk that the recovery takes longer and some high-risk homeowners may be in danger for longer than necessary.

·    Not paying for individual geotechnical investigations outside of areas already completed (e.g. Muriwai). This would arguably create an inequity of approach.

Recovery Office expenditure exceeds budgets.

The Recovery leadership team have monthly commercial forecasting and expenditure meetings with finance to track costs and forecasts. Dedicated Recovery finance business partner commencing on 23 October.

Privacy of impacted Aucklanders is compromised

Implementing an appropriate CRM system is critical to effectively managing customer interactions and related data.  If the additional budget is not approved, other Recovery Office activity would need to be reduced to ensure the CRM system is implemented.

 

Ngā koringa ā-muri

Next steps

40.     A decision to proceed with the central-local government storm recovery funding package was made on 6 October 2023. This decision confirmed that severely affected properties will be purchased and provided key parameters for the methodology for those purchases. The next steps to finalise the scheme documentation and rules will enable better estimates on the volume and timing of deconstruction and demolition works.

41.      The Recovery Office will continue to provide a monthly update to the Governing Body setting out progress on recovery efforts. Further updates on deconstruction and demolition costs and timing will be provided in this monthly report.

Ngā tāpirihanga

Attachments

There are no attachments for this report.    

Ngā kaihaina

Signatories

Authors

Tanya Stocks - Recovery Office Strategic Support

Pramod Nair - Manager Group Financial Planning & Analysis

Authorisers

Mat Tucker - Group Recovery Manager

Peter Gudsell - Group Chief Financial Officer

Phil Wilson - Acting Chief Executive

 

 


Governing Body

26 October 2023

 

 

Making Space for Water

File No.: CP2023/03095

 

  

 

Te take mō te pūrongo

Purpose of the report

1.       To present the Making Space for Water programme for approval in principle subject to Long-term Plan 2024-2034 decisions.

Whakarāpopototanga matua

Executive summary

2.       The Making Space for Water programme identifies a range of initiatives that respond to and reduce flood risk across Tāmaki Makaurau / Auckland. Making Space for Water is an operational aspect of Tāmaki Makaurau Recovery Plan, which will set out how the region will recover from the extreme weather events that have affected the region through 2023.

3.       Public consultation on Making Space for Water was carried out in August 2023 alongside consultation on the Tāmaki Makaurau Recovery Plan. The council has also engaged with local boards and mana whenua on development of the programme.

4.       Consultation feedback was reported to the Governing Body in September 2023 (GB/2023/174). Members of the public, mana whenua, and local boards generally supported the programme’s principles and provided feedback on proposed initiatives through consultation.

5.       The programme scope and prioritisation have been refined based on this feedback and further technical analysis, to better meet the public needs and expectations for flood management across Tāmaki Makaurau. An overview of the proposed programme is provided in Attachment A.

6.       Nine initiatives were originally proposed. Since public consultation concluded, two initiatives have been removed – high-risk properties and culvert and bridge upgrades. This work will be managed instead by the government Voluntary Buy-out Support Scheme or is being funded through other work programmes. Seven of the nine originally proposed initiatives are included in the updated work programme.

7.       Alternative options to the Making Space for Water programme are, Option 1 - retain the status quo, Option 2 - an enhanced level of service which would only invest in maintenance and flood intelligence. These options, along with Option 3 - the full Making Space for Water programme, have been assessed against objectives for reducing flood risk. Based on this assessment, as well as community, local board and mana whenua feedback, staff recommend that the Governing Body approve Option 3 - the full Making Space for Water programme, subject to Long-term Plan 2024-2034 decisions.

8.       Now that a co-funded package for storm recovery has been agreed with central government (GB/2023/187), approval in principle of the programme would enable business case development, which will help inform prioritisation in the Long-term Plan 2024-2034.

9.       Further development of the initiatives has also enabled staff to refine budgets. The current expected programme cost is $1.003 billion ($707 million capital expenditure, $296 million operational expenditure). The cost of the programme will be shared between Auckland Council and central government.

10.     Each initiative will have individual deliverables, however the overall measure of success for the programme will be the reduction of modelled habitable floor area flooding in 10-year and 100-year events.

11.     If the programme is approved in principle, staff will continue planning and design work. Future budget requirements will be included in Long-term Plan 2024-2034 discussions in preparation for adoption in 2024.

Ngā tūtohunga

Recommendations

That the Governing Body:

a)      whakaae / approve, in principle, the Making Space for Water programme (Option 3) for delivery, subject to Long-term Plan 2024-2034 decisions.

b)      tuhi ā-taipitopito / note that there will be consultation on funding impacts according to legislative requirements.

Horopaki

Context

12.     The Making Space for Water programme responds to the extreme weather events that impacted Tāmaki Makaurau / Auckland in the first half of 2023. As the department responsible for managing the stormwater network in Tāmaki Makaurau, Healthy Waters has a crucial role to play in the recovery process ensuring that a programme of works is developed to mitigate future flood risk.

13.     The programme has been designed to prioritise flood readiness in stormwater operations, and support communities, households, and businesses to build their resilience to the impacts of increased rainfall and extreme weather events. The aim of the programme is to reduce the modelled number of habitable floors at risk of flooding in 10-year and 100-year events. Making significant reductions to this will require all initiatives to be implemented.

14.     In addition to the projects that will be delivered through Making Space for Water, Auckland Council has substantial work underway to identify the policy, planning, and regulatory settings needed to further reduce flood risk. These are identified in the Making Space for Water programme plan attached (Attachment A).

15.     The Transport and Infrastructure Committee first approved development of a flood recovery programme for three waters operations in March 2023 (TICCC/2023/34). The programme supports wider recovery outcomes identified through the Tāmaki Makaurau Recovery Plan’s Natural and Built Environment outcome area. Therefore, the two documents were consulted on together through August 2023 to enable a full understanding of the needs and aspirations of Aucklanders for recovery and long-term resilience.

16.     The consultation document and supporting material were approved on 27 July 2023 (GB/2023/138). This consultation feedback was received by the Governing Body on 28 September 2023 (GB/2023/174).

17.     During consultation, 46 per cent of submitters supported the programme’s principles and proposed initiatives. A further 19 per cent of submitters were somewhat supportive.

18.     Feedback received during the August 2023 consultation advocated for funding to be sought from a range of sources, not just rates. A combination of rates funding and contributions from central government will be required. The council consulted on the proposed co-funded storm recovery package in early September 2023, following negotiations with central government.

19.     On 6 October, the Governing Body agreed to enter a co-funding arrangement of $1.984 billion with central government (GB/2023/187) as part of the National Resilience Plan. Of this, $774 million is allocated for the Voluntary Buy-out Support Scheme and $820 million is allocated to risk mitigation projects. A further $390 million is allocated for transport network repairs.

 

 

 

20.     The funding for risk mitigation projects (including Making Space for Water) provides for central government to fund $380 million from the National Resilience Plan funding. Funding will be offered for 62 per cent of capital expenditure, subject to business case approvals. To access this funding, the council will need to provide matched funding of 38 per cent capital expenditure plus operational expenditure.

Tātaritanga me ngā tohutohu

Analysis and advice

21.     In preparing the wider storm response efforts and content for the Long-term Plan 2024-2034, staff have provided advice on investment options, based on the objectives for flood resilience. This includes retaining the status quo, only investing in maintenance and flood intelligence, and delivering the full programme. These options are outlined in Table 1.

Table 1. Options for reducing flood risk

 

Option 1: Status quo 

Option 2: Enhanced maintenance level of service 

Option 3: Making Space for Water 

 

Estimated cost

$1.747 billion

$227 million

plus status quo

$1.003 billion

plus status quo

$1.084 billion capex

$662 million opex

$56.8 million capex

$170.2 million opex

$707 million capex

$296 million opex

Objective 1: Reduce flood risk 

ü

üü

üüü

Objective 2: Avoid creating new flood risks 

ü

ü

üüü

Objective 3: Raise people’s awareness of flood risks 

ü

ü

üüü

Objective 4: Be prepared for flood events 

ü

üü

üüü

 

Key:    same as current (ü)    improvement (üü)      most improvement (üüü)

 

Option 1: Status quo

22.     Flood management is a core responsibility for the Healthy Waters department, in addition to responding to growth, asset renewal, and improving water quality. Therefore, the majority of the department’s projects deliver some flood management benefit. To reflect this, the status quo should be considered as the whole department budget of $1.747 billion for 2021 to 2031.

23.     Retaining the status quo would continue current planned flood investment and maintenance level of service.

 

 

 

 

24.     This option includes for a continued commitment to supporting regulatory controls around development in flood plains and other areas where flood hazard exists. Working with the Chief Planning Office, Regulatory department and other council agencies, Healthy Waters will increase efforts to strengthen the controls around development in areas prone to flood hazard by providing expert advice and other resources, where this is appropriate.

25.     The existing level of enforcement of the Stormwater Bylaw and Auckland Unitary Plan for flood mitigation and overland flow path management is included in this option. Increased compliance activity through the regulatory department is expected to be achieved through funding from the council’s Storm Response Fund. Other regulatory options depend on land use planning and are already being considered by the council.

26.     This option would include continued reprioritisation and deferral of critical renewal, growth and water quality projects to fund flood response and resilience projects.

Option 2: Enhanced maintenance level of service

27.     The enhanced maintenance level of service option provides for increased investment in maintenance and flood intelligence above the current asset management plan. More maintenance along with increased minor capital works will reduce some risks caused by blocked or broken stormwater infrastructure. This would help to better accommodate flood events and reduce some risks, particularly road flooding, and create an opportunity for to be better prepared for future events. Increased flood intelligence would enable targeted maintenance in the most vulnerable areas, and proactive maintenance prior to severe weather events. The approximate budget for this (including the status quo budget) would be $468 million over 10 years.

28.     This option includes a continued commitment to supporting regulatory controls around development in flood plains and other areas where flood hazard exists, as outlined in the Option 1 above. The existing level of enforcement discussed in Option 1 would be delivered for this option as well.

29.     This level of investment does not include any significant physical works to reduce flood risk in known high-risk areas. It would not manage any risks in private or public natural waterways, nor would it support communities to build their resilience beyond what is being funded through the council’s Storm Response Fund and other existing funding streams. Benefits would primarily be in urban areas, with no specific investment for rural or Māori communities.

30.     This option will not take full advantage of the $820 million for Making Space for Water and other resilience projects proposed under the Storm Recovery Funding Package agreement with the Crown. That agreement assumes most of that funding will be used for capital expenditure in the Making Space for Water programme and relies on that funding to convert those high-risk properties purchased into spaces with value to the community (flood risk reduction and recreational use).

Option 3: Making Space for Water

31.     Of the 2051 submissions provided through recent storm recovery and resilience public consultation, 1541 made comments on the Making Space for Water. There was wide support for the programme, but concerns were raised about funding. Further detail on feedback received through the consultation was reported to the Governing Body on 28 September 2023 (GB/2023/174).

32.     Many of the written submissions focused on improving maintenance and upgrading existing infrastructure. Feedback received through in-person meetings was more focused on the need for catchment wide project planning that engages the community, particularly around identifying at-risk areas and understanding the impact of development on flood risk. Following public feedback, some budget reallocations have been made to reflect the strong advocacy from local boards, residents, and mana whenua that council enable communities to contribute meaningfully to flood risk mitigation.

33.     Nine initiatives were originally proposed for the Making Space for Water programme. Since public consultation concluded, two initiatives have been removed:

·        high-risk properties: this work will be delivered separately through the Voluntary Buy-out Support Scheme

·        culvert and bridge upgrades: this work will be delivered through the Blue-green Networks initiative.

34.     Additional budget has also been allocated to community-led resilience to reflect public feedback. The scope of the stream rehabilitation initiative has been expanded to accommodate improvements to natural streams and modified watercourses, and therefore this initiative has been renamed stream and waterway resilience.

35.     The Making Space for Water programme will be delivered collaboratively with the wider the council group, local boards, mana whenua, communities, and external agencies (such as Waka Kotahi) as appropriate.

Making Space for Water initiatives

Blue-green networks

36.     A blue-green network is a system of interconnected green spaces and water bodies that work together to manage stormwater in urban areas. In heavy storms, rainfall diverts into these areas to reduce flood risk to people and property.

37.     Individual blue-green initiatives will be developed alongside the property categorisation work currently being undertaken by the Recovery Office. Catchments will need to be assessed holistically while individual properties still need to be assessed individually.

38.     If the intolerable risk to life identified for a property can be removed through investment in a blue-green network, then the property will be classified “Category 2C” rather than “Category 3” and will not be part of the voluntary buy-out scheme. Where the intolerable risk to life cannot feasibly be eliminated, and a property is purchased through the voluntary buy-out scheme, the purchased property may become part of a blue-green network and, therefore, be leveraged to provide risk reduction to other properties in the catchment.

39.     This initiative identified 12 areas as potential areas for blue-green networks, however consultation, further feasibility assessments and catchment investigations have identified other potential options for blue-green networks. As business cases are further developed and property acquisitions are confirmed, it is possible that this initiative will deliver more small scale naturalisation projects based on property clusters.

40.     Work under this initiative includes feasibility assessments, iwi partnership and stakeholder engagement through design, detailed design, property acquisition, deconstruction or upgrade, and physical works.

41.     Success of this investment will primarily be measured through the reduction in risk to life and property within a catchment area. Potential funding from the Storm Recovery Package will largely be dependent on the number of properties where an intolerable risk to life has been eliminated (and the properties classified as 2C).

42.     Blue-green networks will deliver a range of benefits for wider catchments, in addition to flood mitigation. They foster community engagement and strengthen social cohesion and recovery. Social procurement practices will be used to work with local and Māori contractors, providing economic and social benefits. The initiative will also deliver environmental benefits through greater biodiversity and improved water quality.

43.     Key partners for delivering this work will be Recovery Office, Auckland Transport, Eke Panuku Development Auckland, Watercare, local boards, mana whenua and community groups.

44.     The total budget needed for this initiative is $520 million. This initiative could receive substantial co-funding through the Storm Recovery Package.

Stream and waterway resilience

45.     This initiative aims to make natural streams and constructed waterways more resilient to accommodate heavy rainfall, slow down or absorb water, and reduce risk of collapse.

46.     This initiative requires a range of projects involving vegetation planting, erosion control, slope stabilisation, bank battering, stream channel modification, invasive weed removal, riparian zone restoration, de-lining of concrete channels, re-naturalising streams, water quality management and habitat enhancement.

47.     Streams and waterways will be prioritised based on catchment impact, local board and mana whenua input, known risks, and feasibility.

48.     Unlike the blue-green networks initiative, this work focuses on the resilience of council-owned assets and is not expected to require property acquisition. It supports category 2C properties under the government’s framework. These are properties requiring community investment to reduce intolerable risk.

49.     Success of this initiative will be measured based on the reduction of risk to properties and the length of waterways that have been restored or improved.

50.     The total budget needed for this initiative is $87 million and could be partially funded by the Storm Recovery Package.

Increased maintenance and minor capex

51.     Public feedback has consistently referred to a need to better maintain and renew our existing assets so they can handle heavy rain and are less likely to fail in extreme weather events. This includes built and natural assets on public land. Although maintenance will not manage all risks, it is an essential part of stormwater management.

52.     Additional maintenance budget has been provided for increased maintenance in the current financial year (2023/2024) through the council’s Storm Response Fund. This is over and above existing maintenance budgets and includes $1.5 million per year for Auckland Transport to increase network maintenance and proactive monitoring, including doubling the frequency of sump cleaning. The Storm Response Fund also includes funding for proactive maintenance of almost $19 million over the next eight years, including $3.5 million in the current year.

53.     This initiative would further increase maintenance on catchpits, streams, street sweeping, public overland flow paths, pipes, inlets and outfalls.

54.     Proactive maintenance to enhance drainage capacity and prevent blockages helps mitigate flood risks, safeguarding properties, infrastructure, and critical facilities. It also supports water quality by removing contaminants from waterways.

55.     Success of this initiative will be measured based on the observed performance of assets in high rainfall events.

56.     The total additional budget needed for this initiative is $154 million over 10 years.

Flood intelligence

57.     This initiative involves investing in planning, monitoring, and modelling tools to understand flood patterns and assess future risk to help respond to storm events as they happen and provide sound information about flood risk to residents.

58.     Some quick wins have already been achieved, such as crowd-sourcing real flood impacts to validate models and launching the regional flood viewer.

59.     More investment from the current year, funded from the Storm Response Fund, has included early warning systems in both Auckland Transport and Healthy Waters, and hydrology/meteorology/shallow groundwater expertise in our Research Investigations and Monitoring Unit.

60.     Further investment in flood intelligence will enable development of better models to predict flood risk and help staff to prioritise projects or maintenance in high-risk areas and communicate risks to residents in an accessible way.

61.     Success of this initiative will be measured based on the number of flood events that are accurately predicted, and the level of public engagement with flood intelligence tools.

62.     The total budget needed for this initiative is $73 million over 10 years.

Overland flow path management

63.     Overland flow paths act as a secondary conveyance route for water when the piped stormwater network has reached capacity. The flow path acts like a natural stream, collecting and moving rainwater towards flood plains, streams and eventually the coast.

64.     Five thousand buildings are vulnerable to some degree of flooding due to overland flow in current conditions and will continue to flood without better management of overland flow paths.

65.     This programme uses the council’s education and regulatory functions, rather than direct capital investment. In some areas, a catchment-wide issue may be found that needs a wider infrastructure solution.

66.     A compliance team has already been set up to respond to overland flow path breaches. This work is currently funded through the council’s Storm Response Fund and is led by the Regulatory Services department, with technical support from Healthy Waters.

67.     Success of this initiative will be measured based on the number of private property owners who undertake work on their property to improve overland flow path function, and the number of compliance notices issued.

68.     The total budget required for this initiative is $22 million.

Community-led flood resilience

69.     Following the early 2023 weather events, communities across the region came together to clean up debris, help each other, and share their experiences. During consultation, we heard that this has been important for communities’ practical and psychosocial recovery. The council has a role in supporting continued recovery by empowering communities.

70.     The Making Space for Water programme takes steps to deliver physical works on council assets, but this will not completely remove flood risk. Communities need to be supported to build their own resilience to remaining risks.

71.     Through the community-led flood resilience initiative, the council will work with community groups to undertake work in local waterways, provide information about flood risks, and support community planning. There is significant education, communications and engagement work in this initiative that will need to be reliably resourced.

72.     Healthy Waters staff have been working with communities in rural northern, urban western, and urban southern catchments to undertake stream clearance by coordinating expertise and arranging equipment or removal of debris.

73.     Success of this initiative will be measured by the number of community groups carrying out stream works or local flood risk assessments, and the number of catchments where this work is being undertaken.

74.     The total budget required for this initiative is $68 million.

Rural settlements

75.     This initiative delivers some parts of other initiatives, but in a way that reflects the diverse needs of rural communities and settlements. Its primary focus is on targeted engagement, supporting community resilience planning, and identifying upgrades or repairs to water assets that would have a public benefit. The initiative will help rural communities to develop resilience plans, and will identify vulnerable areas, implement flood-resistant infrastructure, and set up rural recovery strategies.

 

 

76.     This initiative will work with marae and papakāinga to build capacity to support their communities in emergencies, aligning with work already underway through the Marae Resilience Fund and by Auckland Emergency Management.

77.     Success of this initiative will be measured by the number water assets supporting communities and marae that are upgraded or made more resilient in high-risk rural areas.

78.     The total budget requires for this initiative is $39 million.

Delivery and funding mechanisms are being confirmed

79.     On 6 October 2023, the Governing Body agreed to a shared funding package for storm recovery with central government (GB/2023/187), summarised in Table 2.

Table 2. Composition of the co-funded storm recovery package

 

Government funding

Auckland Council funding

Total

Transport network recovery

$309 million

$81 million

$390 million

Category 3 home buy-outs

$387 million

$387 million

$774 million

Risk reduction programmes

$380 million

$440 million

$820 million

Total

$1,076 million

$908 million

$1,984 million

 

80.     The co-funding package gives certainty to the council group that funding support is available, however the full delivery of the programme as currently planned will require substantial council contributions. These will be decided as part of the Long-term Plan 2024-2034.

Tauākī whakaaweawe āhuarangi

Climate impact statement

81.     Modelling shows that storm and flooding events will be both more extreme and more frequent as the climate continues to warm. The Making Space for Water programme responds directly to existing and predicted future flood risks, and contributes to delivering actions in Te Tāruke-ā-Tāwhiri: Auckland’s Climate Plan. The programme responds directly to events worsened by climate change.

82.     Vulnerable communities, who have less ability to build resilience or move from high-risk areas, are expected to experience more pronounced negative impacts on their health, well-being and economic stability due to climate change. With that in mind, the Making Space for Water programme considers a wide range of projects to support community resilience where risks cannot be eliminated.

83.     Capital projects will prioritise carbon reduction and enhanced carbon sequestration, with a strong focus on nature-based solutions that provide multiple climate benefits. Designs will maximise the resilience of assets to withstand future climate impacts. Contractors will be supported to minimise their climate impact as much as possible.

Ngā whakaaweawe me ngā tirohanga a te rōpū Kaunihera

Council group impacts and views

84.     Auckland Transport, Watercare and Eke Panuku Development Auckland will be delivery partners for some of the projects in the Making Space for Water programme. Engagement across the council group will take place at the project level to inform project scope and align goals.

 

 

85.     Delivery partners within Auckland Council will include Auckland Emergency Management, Parks and Community Facilities, Regulatory Services, Communications, Finance, Legal Services and the Chief Planning Office. They have been consulted on the content of the Making Space for Water programme and will be involved through project design as needed.

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

Local impacts and local board views

Local impacts

86.     The diversity of communities, catchments, and built environments across Tāmaki Makaurau means that the needs and impacts of this programme will not be uniform across all local areas. While there are vulnerable areas across Tāmaki Makaurau, the response will need to be adapted to specific local areas.

87.     For example, most of the previously identified areas for blue-green networks were in the Auckland isthmus. This reflects the level of development around a higher number of streams and the clusters of severely affected properties. These areas will see more physical projects in parks and streams. More industrial or built-up areas may have more overland flow path risks, and therefore need more property-level support or specific projects to resolve wider catchment issues. There are rural areas that have limited formal stormwater infrastructure but will see upgrades to their community wastewater and water supplies and will be highly involved in planning for greater local flood resilience.

88.     While some benefits may be more place-based, most initiatives will deliver benefits to wider community areas or across the region.

Local board views

89.     The feedback received from local boards through workshops and business meeting resolutions has been considered in the programme development and incorporated where possible. All local boards supported, to varying degrees, the programme principles and proposed initiatives. Detailed local board feedback was provided to the Governing Body in September 2023.

90.     Through their feedback, local boards have identified streets, streams and infrastructure assets that are of particular concern. This feedback will be incorporated into planning and individual project scopes where possible.

91.     All local boards will be engaged as specific projects in their local areas are developed. They will also be essential partners in delivering projects that involve working directly with the community, enabling connection with local community groups, key catchments, and hot spots.

Tauākī whakaaweawe Māori

Māori impact statement

92.     Feedback from Māori has emphasised the higher likelihood of Māori living in areas vulnerable to flooding and the reduced ability in many cases to build property resilience. There is a deeper impact as well for those who need to move from high-risk homes in places that whānau have connection to. This displacement disconnects whānau from whenua and awa.

93.     He Ara, a Māori engagement pathway, has been developed to support a cohesive approach to working with Māori, centred around meaningful exploration of opportunities for Māori across the Making Space for Water initiatives, and their role and expectations to work together moving forward.

94.     He Ara ensures Māori aspirations can be met and embedded into the programme through timely resourcing and reducing barriers to participation. It will also enable the development of specific partnership projects that are designed, developed and delivered alongside Māori in Tāmaki Makaurau.

95.     He Ara lays the foundation for mahi tahi (working together), Māori engagement, and embedding Māori outcomes into the Making Space for Water Programme. Mahi tahi enables a joined-up approach for Māori engagement. It also maximises opportunities for mana whenua and Māori to provide input on the programme, including on programme design and delivery.

96.     He Ara identifies opportunities for partnership and co-delivery of the programme. This provides a range of benefits to Māori, from economic prosperity, exercise of kaitiakitanga, and re-building connection to whenua and awa.

97.     Opportunities to date include providing mātauranga and cultural advice to council on design of new capital assets, setting up local contracts to deliver some maintenance functions and internship opportunities to boost Māori participation in the water sector.

98.     There are direct benefits to be delivered by the initiatives as well, such as investment in water resilience for rural marae.

Ngā ritenga ā-pūtea

Financial implications

99.     Throughout programme development and consultation, staff have highlighted the financial risks and uncertainties associated with delivering Making Space for Water.

100.   At the end of the August 2023 consultation period, the Crown and Auckland Council concluded negotiations for a co-funded Storm Recovery Package, including funding for risk mitigation projects including Making Space for Water. On 6 October 2023, the Governing Body agreed to sign this co-funding agreement.

101.   Final decisions on investment levels and funding options will be considered through the Long-term Plan 2024-2034. If the council were to commit to the full investment in Option 3 (Making Space for Water), received the maximum level of government contribution, and funded the balance from rates, modelling suggests additional rates equivalent to a 2 per cent increase in general rates would be required.

102.   The total costs for Option 3 across the 2024-2034 Asset Management Plan (AMP) period are identified in Table 3 below. These costs are inclusive of ongoing and consequential operational costs.

Table 3. Estimated cost of Option 3: Making Space for Water initiatives

Initiative

Cost estimate

 

Capex

Opex

Total

1.         Blue-green network projects

$493 million

$27 million

$520 million

2.         Stream and waterway resilience

$79 million

$8 million

$87 million

3.         Increased maintenance

$27 million

$127 million

$154 million

4.         Flood intelligence

$30 million

$43 million

$73 million

5.         Overland flow path management

$6 million

$16 million

$22 million

6.         Community-led flood resilience 

$39 million

$29 million

$68 million

7.         Rural settlements

$33 million

$6 million

$39 million

8.         Consequential operational expenditure

 

$40 million

$40 million

TOTAL: 

$707 million

$296 million

$1.003 billion 

 

Ngā raru tūpono me ngā whakamaurutanga

Risks and mitigations

103.   There are risks associated with each initiative regarding access to sufficient funding and staff capacity. These are to be worked through in the business case process and internal planning.

104.   The blue-green networks programme carries the most risks, due to the dependence on successful property acquisition in the identified areas. To date, the areas identified for possible blue-green networks have clusters of properties where residents have self-identified a high level of flood risk. Attachment A includes constraints, dependencies, and risks associated with the blue-green networks initiative.

105.   Risks associated with the timing for transition of water services management responsibilities from councils under central government’s Water Services Reform. As a result of the October 2023 general election, it is expected that this programme will be delivered by the Auckland Council group.

106.   Funding for the programme will require funding provisions to be included in the Long-term Plan 2024-2034 to match government contributions, as outlined in paragraph 19. This funding will not be confirmed until the Long-term Plan 2024-2034 is adopted.

107.   Approving the work programme in principle at this stage gives staff, central government, and Aucklanders clear direction on how we expect to respond to and mitigate flood risks.

Ngā koringa ā-muri

Next steps

108.   If the Making Space for Water programme is approved in principle, the programme will move into business case development, detailed planning and delivery, subject to confirmation of funding through the Long-term Plan 2024-2034. Feasibility assessments for proposed blue-green networks will be prioritised.

109.   While significant investment cannot begin until after the Long-term Plan 2024-2034 is adopted, staff will be able to commit to planning work and associated staff resources. By continuing detailed planning, we can refine the information needed for Long-term Plan decisions in early 2024.

110.   Staff will report Making Space for Water progress to the Governing Body quarterly to advise on key achievements, risks or changes, and overall programme progress.

 

Ngā tāpirihanga

Attachments

No.

Title

Page

a

Making Space for Water programme overview

 

     

Ngā kaihaina

Signatories

Authors

Nicholas Vigar – Head of Planning, Healthy Waters

Elizabeth Johnson – Principal, Wai Ora Strategic Programmes, Healthy Waters

Authorisers

Barry Potter - Director Infrastructure and Environmental Services

Mace Ward - Deputy Group Recovery Manager

Phil Wilson - Acting Chief Executive

 

 


Governing Body

26 October 2023

 

 

Forward Work Programmes of Committees of the Governing Body

File No.: CP2023/09077

 

  

 

Te take mō te pūrongo

Purpose of the report

1.       To whakarite / provide oversight of the forward work programmes of all committees of the Governing Body.

Whakarāpopototanga matua

Executive summary

2.       Under the terms of reference, the Governing Body retains the responsibility for oversight of work programmes of all committees.

3.       All committees of the Governing Body have approved forward work programmes which are reviewed on a six-monthly basis.

4.       This is a six-monthly update report which provides openness and transparency to the Governing Body and is in line with the terms of reference.  Normal reporting will be in October and April each year.

5.       Governing Body adopted the Annual Budget in June 2023 and committee forward work programmes should now reflect those decisions.

6.       All committees were requested to review their forward work programme, by the end of September.

7.       Following this meeting, the next report to the Governing Body, for oversight of the committee forward work programmes, is scheduled for April 2024.

8.       To view the approved forward work programmes, click on the name of the committee to access the most recent version:

Committees of the Whole

Reporting and Other Committees

Planning, Environment and Parks

Auckland Domain

Transport and Infrastructure

Audit and Risk

 

Council-controlled Organisations Direction and Oversight

 

Performance and Appointments

 

Regulatory and Community Safety

 

Revenue, Expenditure and Value

 

9.       Every committee has its forward work programme reported to it at each regular meeting.

10.     Tuhi ā-taipitopito / note that, unlike an agenda report, staff will not be present to answer questions about the items referred to in this summary.  Governing Body members should direct any questions to the relevant chair of the committee.

 


 

 

Ngā tūtohunga

Recommendation/s

That the Governing Body:

a)      tuhi ā-taipitopito / note the approved forward work programmes for all committees of the Governing Body.

 

Ngā tāpirihanga

Attachments

There are no attachments for this report.     

Ngā kaihaina

Signatories

Author

Sarndra O'Toole - Kaiarataki Kapa Tohutohu Mana Whakahaere / Team Leader Governance Advisors

Authoriser

Phil Wilson - Acting Chief Executive

 

 


Governing Body

26 October 2023

 

 

Summary of Governing Body and Committee information memoranda and briefings (including the Forward Work Programme) - 26 October 2023

File No.: CP2023/12037

 

  

 

Te take mō te pūrongo

Purpose of the report

1.       To receive a summary and provide a public record of memoranda or briefing papers that may have been distributed to the Governing Body or its committees.

Whakarāpopototanga matua

Executive summary

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

3.       The following memos or information were circulated to members of the Governing Body:

Date

Subject

26.9.23

Memorandum:  Acting Chair of Auckland Transport

11.10.23

Memorandum:  Recovery Office Update

 

4.       The following workshops/briefings have taken place for the Governing Body:

Date

Subject

27.9.23

CONFIDENTIAL Workshop:  Future redevelopment of the Ports Land (no attachment)

2.10.23

Māori seats: Mana Whenua and Mataawaka/ Regional Organisations / Interest Groups – Have Your Say Event

4.10.23

CONFIDENTIAL Workshop:  Consultation Feedback for storm affected properties (no attachment)

17.10.23

CONFIDENTIAL:  Category 3 Storm Recovery Political Advisory Group (no attachment)

18.10.23

CONFIDENTIAL Workshop:  Category 3 and Category 2PStorm Recovery (no attachment)

 

5.       This document can be found on the Auckland Council website, at the following link:

http://infocouncil.aucklandcouncil.govt.nz/

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

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

 

 

 

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

 

Ngā tūtohunga

Recommendation/s

That the Governing Body:

a)      whiwhi / receive the Summary of Governing Body information memoranda and briefings (including the Forward Work Programme) – 26 October 2023.

 

Ngā tāpirihanga

Attachments

No.

Title

Page

a

Forward Work Programme

 

b

Memorandum:  Acting Chair of Auckland Transport (Under Separate Cover)

 

c

Memorandum:  Recovery Office Update (Under Separate Cover)

 

d

Māori seats: Mana Whenua and Mataawaka/ Regional Organisations / Interest Groups – Have Your Say Event (Under Separate Cover)

 

     

Ngā kaihaina

Signatories

Author

Sarndra O'Toole - Kaiarataki Kapa Tohutohu Mana Whakahaere / Team Leader Governance Advisors

Authoriser

Phil Wilson - Acting Chief Executive

 

 


Governing Body

26 October 2023

 

 

Summary of Confidential Decisions and related information released into Open

File No.: CP2023/15360

 

  

 

Te take mō te pūrongo

Purpose of the report

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

Whakarāpopototanga matua

Executive summary

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

3.       Some decisions released here may be for committees other than the Governing Body due to those committees having already held their last meeting for the 2019-2022 political term.

4.       The following decisions/documents are now publicly available:

Date of Decision

Subject

6.10.23

Governing Body decision on Category 3

A Mayoral media release dated 10 October 2023 can be found here:

https://ourauckland.aucklandcouncil.govt.nz/news/2023/10/auckland-council-and-crown-agree-to-cost-sharing-agreement-for-storm-recovery-and-resilience-work/

 

OurAuckland story dated 11 October 2023 can be found here:

https://ourauckland.aucklandcouncil.govt.nz/news/2023/10/governing-body-decision-on-category-3/

 

 

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

 

Ngā tūtohunga

Recommendation/s

That the Governing Body:

a)      tuhi ā-taipitopito / note the confidential decision and related information that is now publicly available:

i)       Governing Body decision on Category 3

 

 


 

 

 

 

Ngā tāpirihanga

Attachments

There are no attachments for this report.     

Ngā kaihaina

Signatories

Author

Sarndra O'Toole - Kaiarataki Kapa Tohutohu Mana Whakahaere / Team Leader Governance Advisors

Authoriser

Phil Wilson - Acting Chief Executive

 

 


Governing Body

26 October 2023

 

 

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

That the Governing Body

a)      whakaae / agree to exclude the public from the following part(s) of the proceedings of this meeting.

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

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

 

C1       CONFIDENTIAL:  Council's role in the recovery of properties categorised as 2P (Covering report)

Reason for passing this resolution in relation to each matter

Particular interest(s) protected (where applicable)

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

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

s7(2)(g) - The withholding of the information is necessary to maintain legal professional privilege.

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

In particular, the report contains advice regarding negotiations with the Crown.

s48(1)(a)

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

 



[1] Refer to Governing Body confidential item C1 on the AIAL share sale process of 8 June 2023 for detailed information on these options.

[2] Price Setting Event Four - Auckland Airport reset its aeronautical charges for the five-year period spanning the 2023 to 2027 financial years as these revenues are regulated.

[3] Considered but determined not ideal as further engagement with investors required.

[4] Note it is unlikely that investors will engage in a substantial equity transaction with results from the company due imminently.