Agenda of Governing Body - Thursday, 28 November 2024

Governing Body

28 November 2024

Plan to make the most of Auckland's Port and Waterfront

File No.: CP2024/13915

Te take mō te pūrongo

Purpose of the report

1. To:

a) endorse the objectives and strategic direction of the Plan to Make the Most of Auckland’s Port and Waterfront (the Plan); and

b) agree to participate in a High-Performance High Engagement (HPHE) process with Port of Auckland Limited (POAL) and the unions at the port to finalise a Tripartite Relationship Accord.

Whakarāpopototanga matua

Executive summary

2. During the 2024–2034 Long-term Plan (LTP) process, the Mayor worked with POAL and the unions, and proposed a plan aimed at making the most of Auckland's port and waterfront (the Plan is attached to this report as Attachment A).

3. A Heads of Agreement was signed between the Mayor, POAL and the Maritime Union of New Zealand (MUNZ) in which they endorsed the Plan in principle and committed to enter a new Tripartite Accord. The Heads of Agreement is attached to this report as Attachment B.

4. Auckland’s port is one of the city's most important investment assets and a significant economic contributor. As a critical infrastructure asset, the port plays a central role in supporting trade and generating economic activity. An overarching plan is needed to ensure that the port operates efficiently and sustainably, while also aligning with broader investment, urban development, environmental, and community objectives.

5. The Plan provides a cohesive framework for port and waterfront-related activities, integrating previously agreed ownership objectives, key decisions made during the LTP process, and ongoing initiatives such as the transfer of Captain Cook and Marsden Wharves to Auckland Council and long-term strategic planning for the future of the waterfront, port, and the Upper North Island supply chain.

6. A component of the Plan is the decision not to proceed with the proposal to lease the management of the port company. Instead, POAL has committed to delivering much improved financial returns, ensuring the port remains a strong and sustainable asset for Auckland.

7. Additionally, the Plan includes initiatives to reduce city centre congestion, promoting more sustainable transport alternatives like rail and coastal shipping and ensuring the health and safety of port workers.

8. This report is fulfilling a commitment made by the Mayor to bring the Plan back to the Governing Body for consideration and endorsement. The Governing Body is being asked to endorse the objectives and strategic direction of the Plan. The endorsement does not constitute approval of specific aspects that will require further formal decisions of the Governing Body, such as the transfer of Captain Cook and Marsden Wharves to the council or future decisions about the long-term future of the port.

9. The Plan also incorporates ongoing work to ensure greater collaboration between the council, POAL, and unions at the port, particularly through the development of a Tripartite Relationship Accord. The Accord would formalize the partnership between the key stakeholders and supports the shared goals in the Plan.

10. The Governing Body is asked to delegate authority to council representatives to participate in the HPHE process to finalise the Tripartite Accord, which will be presented back to the Governing Body for approval.

Ngā tūtohunga

Recommendation/s

That the Governing Body:

a) ohia / endorse the objectives and strategic direction proposed in the Plan to Make the Most of Auckland’s Port and Waterfront;

b) whakaae / agree to participate in a High-Performance High Engagement process with Port of Auckland Limited and the unions at the port to finalise the Tripartite Relationship Accord, which will be presented back to the Governing Body for formal approval; and

c) tautapa / delegate to council representatives to participate in that process on behalf of council.

Horopaki

Context

Historical Background: Lease Proposal & Ownership Objectives

11. In 2021, following an unsolicited bid to purchase the port company, the council explored options for separating the port company from the land it occupies and leasing the management functions of the port. This review provided the council with insights into the potential returns the council could expect from POAL and set the stage for the adoption of ownership objectives. These objectives have since guided the council’s approach to the port and its land, laying the groundwork for future decisions about the structure and operation of the port.

Long-Term Plan Consultation

12. As part of the LTP consultation process, council put forward proposals to lease the management of the port company and transfer key waterfront land from POAL to the council over the next two to five years for Captain Cook Wharf and Marsden Wharf, and within 15 years for the Bledisloe Terminal. This proposal signified a shift in how the port and waterfront would be managed and developed, setting out the council’s vision for more effective use of the waterfront and port assets.

Context for the Plan to Make the Most of Auckland’s Port and Waterfront

13. Building on the LTP consultation, the Mayor initiated a collaborative effort with POAL and the unions at the port to develop a new plan to make the most of Auckland’s port and waterfront. The Plan outlines a vision for future port operations, land use, and waterfront development, addressing the need for both economic growth and public good.

Tripartite Accord and Collaboration

14. Central to the success of the Plan is the collaboration between the council, POAL, and the unions at the port. To formalise this cooperation, the Mayor agreed a Heads of Agreement between the parties for a Tripartite Accord.

15. POAL and MUNZ have endorsed the Plan in principle and have committed to engaging in a HPHE process to finalise the Tripartite Accord before it is brought back to the Governing Body for final approval. This process will ensure that all stakeholders are aligned in their efforts to achieve the Plan's objectives.

Long-Term Plan Approval

16. The Governing Body approved the LTP which included key aspects of the Plan. This included increased profit projections from POAL, and providing for the transfer of Captain Cook and Marsden Wharves and the associated land from POAL to the council within two to five years, with any final decisions on the transfer subject to the relevant consents for work on Bledisloe North being granted and agreement on sale valuation of the wharves. Funding was also approved to commence master planning for the central wharves.

17. On 16 May 2024 the Governing Body agreed key decisions needed to finalise the LTP and in the resolution (GB/2024/45) noted that:

work has progressed on a Tripartite Relationship Accord between Auckland Council, Port of Auckland Limited and the unions representing port workers, and an associated Plan to Make the Most of Auckland’s port and waterfront, each of which will be reported to Governing Body for consideration and approval.

18. As per the above resolution, this report seeks Governing Body consideration and endorsement of the Plan and the delegation of council representatives to participate in the HPHE process to agree the Tripartite Accord with POAL and the unions before it is brought back to the Governing Body for final approval.

Tātaritanga me ngā tohutohu

Analysis and advice

19. The Plan is focused on maximising the value derived from the port asset, including securing better financial returns for the council than originally projected under the lease proposal.

20. The Plan encompasses both new and existing initiatives, providing a cohesive framework for port and waterfront-related activities. It integrates the previously agreed ownership objectives, key decisions made during the LTP process, and ongoing work such as wharf transfers and long-term planning for the port’s future.

Governing Body’s endorsement of the Plan

21. This report is fulfilling a commitment to bring the Plan back to the Governing Body for consideration and approval. Endorsement of the Plan reflects support for its objectives and strategic direction. For clarity, however, endorsement does not constitute approval of specific aspects that will require formal approval from the Governing Body, such as the transfer of Captain Cook and Marsden Wharves or decisions regarding the long-term future of the port. Nor does it amount to agreeing to every specific in the Plan.

22. Staff recommend that the Governing Body endorse the Plan in full for the reasons below, that set out why the Plan is needed and the benefits of the Plan.

Why the Plan is needed

23. Pages 7-9 of the Plan provide an explanation of why Auckland needs a new, overarching plan for its port and waterfront. In brief, the port is not only a key financial asset for the city but also a critical component of New Zealand's national supply chain making it essential to have a clear, strategic plan for its future.

24. The port is a vital financial asset for the council, generating essential non-rates revenue that helps fund city services and infrastructure. However, relatively recent challenges such as underperformance in financial returns, increasing capacity constraints, and tensions between the port’s operations and the city’s evolving waterfront ambitions underscore the need for a comprehensive, forward-looking strategy.

25. The Plan seeks to address these challenges by ensuring the port continues to play a central role in Auckland’s economy while enhancing its financial performance. It outlines a clear path for the port’s future, balancing the need for continued port operations with the city’s broader aspirations for waterfront development. This approach will allow Auckland to unlock the full potential of its strategic asset, securing the port’s ongoing contribution to both the city’s economic vitality and its long-term growth.

Sections of the Plan

26. The Plan includes:

A.	Port operation remains in council ownership, with enhanced oversight
B.	New tripartite relationship between Auckland Council, POAL and the Unions
C.	Much better financial returns to Auckland Council – over $1.1 billion in profits in next 10 years, exceeding projections from the lease
D.	Planning for the future of the Waterfront, Port and the Upper North Island supply chain – providing for long-term strategic alignment: i. Providing certainty for the Port, its users, and workers ii. No further expansion into the Harbour. iii. Progressing work on the appropriate commercial model for the Port to deliver maximum value to Auckland in line with the Council’s ownership objectives iv. Progressing a long-term initiative to develop a Comprehensive Waterfront Plan v. Progressing work on the long-term strategy for the Port and the Upper North Supply Chain. vi. Support for completion of existing infrastructure plans.
E.	Plan for the central wharves to deliver new public space, better ferries and cruise in the medium term i. Outstanding public waterfront spaces in the city’s heart ii. Better and more reliable ferry services iii. Major improvement in cruise
F.	Reduced contribution from Port to city centre congestion
G.	Boost to the Port’s economic contribution for Auckland.
H.	Reaffirmed commitments to meeting community expectations around environmental protection, health and safety and operational standards.

Plan details and progress

27. Below is a description of each part of the Plan, including progress made on aspects addressed in the LTP and POAL’s Statement of Corporate Intent for the period ending 30 June 2027 (SCI), as well as work that remains to be completed.

A. Port operation remains in council ownership, with enhanced oversight

28. Council's decision to not progress with the leasing proposal and to keep the port in its ownership was fundamental to the Plan and was affirmed through the LTP process.

29. The Tripartite Accord will develop enhanced council oversight of POAL’s strategic direction.

B. New tripartite relationship between Auckland Council, POAL and the Unions

30. A Tripartite Accord will be entered into based on shared commitments to work together on the goals set out in the Plan, and to make the most of the port and waterfront. See paragraphs 55 - 63 for more details on the Tripartite Accord and how it will be finalised.

C. Much better financial returns to Auckland Council

31. Making the Plan possible was POAL’s agreement to deliver significantly improved profits to the city compared to the leasing proposal. POAL are to improve its profit forecasts by $5 million in FY25, $15 million in FY26 and $20 million in FY27; at which point it will be contributing about $2 million a week to the city. These increased returns will require increased charges and improvements in productivity.

32. The improved numbers were included in POAL’s SCI and the council’s LTP. They will deliver more than $1.1 billion in profits over the LTP period: $200 million more than previously forecast under the “enhanced status quo” and $172 million more than the projected net returns from investing proceeds of the lease.

33. Council will monitor POAL’s financial performance through regular reporting processes including quarterly, half and full year reports to the CCO Direction and Oversight Committee.

D. Planning for the future of the Waterfront, Port and the upper North Island supply chain – providing for long-term strategic alignment

34. This part of the plan focuses on the long-term strategy for the future of the waterfront, port, and the Upper North Island supply chain, ensuring strategic alignment and forward planning. It acknowledges that while POAL’s container terminal currently has sufficient capacity for at least the next 30 years, decisions about future port capacity will need to be made with plenty of lead time, given the long planning and construction timelines required. Council has committed to supporting POAL as Auckland’s key import port for the foreseeable future—noting this may be at least 30 years—until a comprehensive long-term strategy for the port and the Upper North Island supply chain is developed.

35. The Plan also makes clear that there will be no further expansion of the port into the harbour beyond the current planned extensions. POAL has consulted with the community and reduced its the planned extension of Bledisloe North from 13 meters to 6.6 meters.

36. In terms of POAL's commercial model, under the Plan the council intends to explore the rationalisation of port ownership in the Upper North Island to improve long-term efficiency. This may include considering a split between POAL’s property and operational companies, with discussions ongoing with POAL and unions.

37. Looking ahead, the plan acknowledges that a new main import port outside of Auckland will be needed. The parties involved will collaborate to create a long-term strategy for the Upper North Island supply chain, including necessary infrastructure. The plan also emphasises the importance of a just transition for workers if port consolidation occurs in the city centre.

38. Lastly, the Plan outlines the development of a comprehensive Waterfront Plan, to be created in partnership with mana whenua, POAL, and other key stakeholders. This long-term project will focus on the optimal use of the port land and wharves. Council will continue working with POAL on these initiatives to support both the port and the broader waterfront development.

39. As a long-term plan, it is not intended that all these components are progressed at the same time. The first steps will be about establishing the right relationships.

E. Making better use of the central wharves to deliver new public space, better ferries and a boost to cruise in the medium term

40. The Plan proposes developing a Central Wharves Masterplan (Masterplan) to optimise the use of the central wharves for new public space. The Masterplan will be developed in collaboration with the public and key stakeholders, building on the Port Precinct Framework Plan already prepared by Eke Panuku (attached at Attachment C). It aims to deliver:

· The transfer of Captain Cook and Marsden Wharves to the council for transformation into public space.

· POAL’s development and extension of Bledisloe North and Ferguson Wharf.

41. The benefits of this proposal include:

· New waterfront public space for a variety of uses, including recreation, swimming, public events, art, hospitality, commercial activities, and maritime functions. The Breastwork would enhance east-west access along the waterfront, creating a new promenade for Auckland.

· Intergenerational infrastructure improvements for POAL, enabling efficient servicing of larger vessels and freeing up space in the ferry basin during cruise season.

· Improved ferry services, by reducing conflicts between cruise and ferry operations and enabling infrastructure for electric ferry charging. This would enhance the contribution of ferries to Auckland’s transport network.

· Economic boost from enhanced cruise activity, by accommodating larger cruise ships and providing new, purpose-built facilities, creating significant economic value for the cruise industry.

Work already completed

42. The work needed to complete the proposal will be carried out in stages, with progress already made in the following key areas. These initial steps are necessary to enable the project to continue but remain subject to final decisions and approvals.

43. Port Precinct Framework Plan: Eke Panuku led a cross-council working group to prepare the Port Precinct Framework Plan, which was delivered to the Governing Body in April 2024. This plan has served as the foundation for considering future possibilities if port activities were relocated or reduced in footprint. The Port Precinct Framework Plan now forms the basis for the next phase: developing a Masterplan for the central wharves.

44. LTP consultation: Council consulted on the transfer of Captain Cook and Marsden Wharves, along with the associated land, from POAL to the council within two to five years.

45. LTP provision: The LTP provided for the transfer of Captain Cook and Marsden Wharves and the associated land to the council within two to five years, contingent on securing relevant consents for the work at Bledisloe North and agreeing on the sale valuation of the wharves. This allows the council to decide on the transfer when necessary.

46. POAL’s progress: POAL has held approximately 140 public meetings with iwi and other stakeholders. The design work for the Bledisloe North and Ferguson North Wharf projects is progressing, and both projects have been included in Schedule 2 of the Government’s Fast-Track Approvals Bill.

Work yet to be done

47. Masterplan development: Following approval of the LTP, the next step is for the council and Eke Panuku, in collaboration with POAL, mana whenua, and other stakeholders, to develop a Masterplan for the first stage of land release at the central wharves. The Masterplan will include Queens Wharf, Captain Cook Wharf, Marsden Wharf, and Hobson Wharf Extension. It will also encompass the water space and associated breastworks adjacent to the red fence, including the Admiralty Steps Promenade.

48. Eke Panuku will work with a cross-council group that includes POAL to lead the development of the Central Wharves Masterplan. This process will involve:

· Partnering with mana whenua, following the approach used in the Te Ara Tukutuku (Wynyard Point) project.

· Engaging the public through a community consultation process, involving waterfront and city centre stakeholders to shape this city-shaping initiative.

49. POAL’s next steps: POAL will continue with the consenting and design process for the new wharf at Bledisloe North and the extension of the Ferguson North Berth. POAL will also begin the design work for a new cruise passenger terminal within the existing vehicle handling facility at Bledisloe Terminal.

50. Land transfer decision: The transfer of Captain Cook and Marsden Wharves has been consulted on and is provided for in the LTP. The final decision on purchasing these wharves at market valuation, in compliance with the Port Companies Act, will be made by the Governing Body following completion of the Masterplan and POAL’s receipt of consents for the construction of the new wharf at Bledisloe North and Ferguson North Berth Extension.

F. Reduced contribution from Port to city centre congestion

51. Under the Plan, POAL will continue implementing "time-of-use" charging to encourage trucks to visit the port during off-peak periods, a measure introduced in recent years to help alleviate port-related traffic congestion. This focus aligns with the council’s Letter of Expectation, which asks POAL to continue to prioritise congestion reduction efforts.

52. Council and POAL will also continue to explore ways to improve the competitiveness of rail and coastal shipping. POAL has committed, as outlined in its SCI, to identify options and trade-offs for improving the competitiveness of rail and coastal shipping relative to road transport, in collaboration with the council and other stakeholders, including cargo owners.

53. The Plan also encourages the growth of ferry patronage and aims to reduce cruise-related traffic at Princess Wharf and Queens Wharf.

G. Boost to the Port’s economic contribution to Auckland Council.

54. The Plan supports the port’s economic contribution by providing greater confidence and certainty required to invest in improved facilities, supporting the completion of its infrastructure plan and plans to boost the cruise industry.

H. Reaffirmed commitments to meeting community expectations around environmental protection, health and safety and operational standards.

55. The need for POAL to operate in alignment with community expectations is affirmed in the Plan, including adhering to operating, social, cultural, environmental and sustainability, health and safety and maintenance standards.

56. In response POAL made a commitment in their SCI to continue to balance caring for Aucklanders, improving the health of Waitematā Harbour, drive the development of a more circular economy, and implement meaningful climate action whilst supporting sustainable business across Auckland.

57. POAL have made excellent progress in Health and Safety and have confirmed that they will not stop striving to make improvements.

Tripartite Relationship Accord

58. During the LTP process the Mayor agreed a heads of agreement with POAL and MUNZ to establish a Tripartite Accord to give effect to the Plan.

59. POAL and MUNZ have endorsed the Plan in principle and have expressed their intention to follow a HPHE processes to establish the formal Accord.

60. The key parameters for the Accord are identified in the heads of agreement are as follows:

· Formal recognition of the tripartite relationship, including endorsement of the Plan and the importance of employees and unions, such as MUNZ, at the port.

· Commitment to collaboration between all parties to achieve the shared objectives outlined in the Plan.

· Good faith, transparency, and regular communication, with an ongoing focus on health and safety.

· Recognise the importance of aligning port services with community expectations.

· Align all stakeholders (including mana whenua) with the council’s port ownership objectives.

Process to Finalise the Accord

61. POAL and the unions at the port have successfully implemented HPHE processes to support collaborative decision-making through consensus. A key element of this process is fostering trust between the parties through structured and ongoing collaboration.

62. POAL and the unions have proposed utilising the principles and processes of HPHE to develop the Tripartite Accord as a “charter” that will govern the Tripartite Relationship, its purpose, and the ongoing interactions between the parties.

63. The first step in this process is to agree on a charter that defines collective goals and establishes a sustainable, adaptable framework for ongoing collaboration. This framework will include the ability to address new and emerging issues affecting the port. Continued collaboration will be essential to address both the issues identified in the Plan and any other challenges that arise.

64. The charter, developed through the HPHE process, will also specify the frequency of meetings for the Tripartite Relationship Group. It is expected that key issues arising from the Plan or identified by the parties will be discussed in these meetings. The charter will outline the process for addressing these issues collaboratively.

65. Under HPHE principles, issues raised by the Tripartite Relationship Group can be referred to working groups, which will be established and governed by the Tripartite Group. These working groups will operate under the principle that “those closest to the problem should define and resolve issues.” Any recommendations or decisions from the working groups will be subject to approval by the Tripartite Relationship Group and will be made by consensus.

66. The Governing Body is requested to delegate authority to council representatives to participate in the HPHE process to finalise the Tripartite Accord. The final Tripartite Accord will be presented back to the Governing Body for approval.

Climate impact statement

67. The Plan commits to reducing city centre congestion through measures like time-of-use charging for truck movements and the promotion of rail and coastal shipping as sustainable freight alternatives, thus lowering carbon emissions from transport. It also firmly rejects further land reclamation into the harbour, preserving the Hauraki Gulf's unique ecosystem and reducing environmental degradation.

Council group impacts and views

68. As part of the council group, POAL and Eke Panuku are key to delivering the objectives of the Plan. POAL’s commitment to improved financial returns will benefit the council group’s financial position and reduce reliance on ratepayer funding. Eke Panuku will manage the waterfront redevelopment, ensuring alignment with the council’s urban planning goals.

69. The Plan supports continued coordination between POAL, Eke Panuku, and the council, with future projects expected to deliver on both financial and urban development objectives.

Financial implications

70. The financial implications of the Plan are centered around POAL’s commitment to deliver better financial returns compared to the status quo and the leasing alternative previously considered.

71. Over the next 10 years, POAL has committed to significantly increased profits, with revised net profit projections of $70 million for FY25, $93 million for FY26, and $110 million for FY27. This revised financial outlook will result in a total of $1.1 billion in net profits over the LTP period (FY25-FY34), which is $200 million more than earlier forecasts. The improved financial performance will be supported by higher charges and increased productivity, ensuring that the Port continues to deliver substantial value to Auckland without the need for ratepayer subsidies.

72. The Plan also includes the transfer of Captain Cook and Marsden wharves to the council at market value, which is scheduled to occur within the next two to five years. POAL has confirmed that this land transfer will not impact its ability to meet the promised financial returns. Detailed financial assessments of specific projects outlined in the Plan, such as the development of Bledisloe North Wharf, will be addressed in future planning stages. However, POAL has committed to funding these infrastructure improvements within its existing debt facilities, ensuring long-term value creation while maintaining profitability.

Risks and mitigations

73. The Plan relies on POAL achieving improved financial returns, projected at over $1.1 billion over the LTP period. If unforeseen challenges impact POAL’s financial performance, it could affect funding for infrastructure upgrades. Regular financial monitoring and the tripartite collaboration with unions will help ensure targets remain achievable and allow for early identification of any issues.

Tauākī whakaaweawe Māori

Māori impact statement

74. The Plan aims to actively involve mana whenua through a collaborative approach in the development of public spaces and the future use of waterfront land. As part of the broader Tripartite Accord, the plan commits all parties—including the council, POAL, and the unions—to work together transparently and in good faith, ensuring that mana whenua are engaged and their interests are considered, particularly in relation to environmental sustainability and cultural heritage.

75. The creation of a Comprehensive Waterfront Plan will involve mana whenua in the decision-making process, allowing them to contribute to the design and staged release of the waterfront land and wharves.

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

Local impacts and local board views

76. The overarching strategy for the port and waterfront development is the responsibility of the Governing Body, and as such, local board views have not been specifically sought in the development of this report. Local boards may be engaged on matters relating to public space usage and community outcomes as the projects within the Plan progress.

Ngā koringa ā-muri

Next steps

77. Subject to Governing Body endorsement, the intention is to hold an initial meeting with POAL and the unions in December 2024 to start the process to finalise the Tripartite Accord.

Ngā tāpirihanga

Attachments

No.	Title	Page
a	Plan to Make the Most of Auckland's Port and Waterfront
b	Heads of Agreement for Tripartite Accord
c	Port Precinct Framework Plan

Ngā kaihaina

Signatories

Author

Chris Levet - Principal Advisor

Authorisers

Alastair Cameron - Manager CCO/External Partnerships team

Max Hardy - Director Group Strategy and Chief Executive Office

Phil Wilson - Chief Executive

Governing Body

28 November 2024

Watercare Treasury Transition

File No.: CP2024/17002

Te take mō te pūrongo

Purpose of the report

1. To;

a) provide an update on the transition of treasury services from Auckland Council to Watercare Services Limited (Watercare) and

b) delegate authority to the Group Chief Financial Officer and Chief Executive to agree final terms of a Transitional Debt Facility Agreement to achieve the balance sheet separation required by the government’s water reforms.

Whakarāpopototanga matua

Executive summary

2. In May 2024 the Governing Body considered options for delivering two water solutions. The Governing Body recommended option 2 “enhanced Watercare” to the government for adoption. A key component of the “enhanced Watercare” solution was the achievement of balance sheet separation. This option was legislated by the government in September 2024 as the first of a suite of water reform legislation.

3. Balance sheet separation, within this context, refers to separation from a credit rating perspective. This is achieved if a rating agency will remove the financials of a water entity from an assessment of the wider council group. The water entity would then need to obtain its own credit ratings, and finance investment in its own name, in a manner more appropriate to an infrastructure entity.

4. Under the Local Government (Water Services Preliminary Arrangements) Act 2024 (the Act) Auckland Council will no longer be able to fund Watercare or provide financial support from 1 July 2025. Watercare will be required to raise debt in their own name from that date and is also required to fully repay all debt due to Auckland Council (estimated to be at least $4 billion) within 5 years.

5. Auckland Council and Watercare are documenting a loan agreement (the Transitional Debt Facility Agreement). It is proposed to be at a fixed rate (reflecting Auckland Council’s estimated cost of funds) adjusted for credit risk and different debt profiles. It will also have features to give Watercare some flexibility in the quantum and timing of their debt repayments within the five-year timeframe.

6. It is proposed that Auckland Council provide treasury services to Watercare on an arm’s-length basis. This is to avoid Watercare having to duplicate the treasury function that Auckland Council currently has and ensures that the service arrangement complies with the legislative prohibition on providing financial support to Watercare. This is a cost effective and efficient solution for the group.

7. Council treasury staff are assisting Watercare with establishing independent treasury services. This includes staff assisting Watercare to engage with credit rating agencies to obtain a credit rating, engage with banks and debt investors, set up a treasury policy, establish bank facilities, set up independent borrowing documentation and establish middle and back-office functions.

Ngā tūtohunga

Recommendation/s

That the Governing Body:

a) whakaae / approve the general terms of the Transitional Debt Facility Agreement related to Watercare‘s repayment of debt to Auckland Council within five years (from 1 July 2025), as described in paragraphs 0 to 0 of the report and including the following matters;

i) interest rate

ii) credit margin

iii) term margin

iv) loan terms

v) ranking of Watercare debt

b) tautapa / delegate authority to the Group Chief Financial Officer to agree final terms of the Transitional Debt Facility Agreement and for the Chief Executive to sign the agreement; and

c) tuhi ā-taipitopito / note the intention for Auckland Council to provide Watercare with treasury services on an arms-length basis in a way that ensures any arrangement complies with the legislative prohibition on providing financial support to Watercare.

Horopaki

Context

8. In May 2024 the Governing Body considered options for delivering two water solutions. The Governing Body recommended option 2 “enhanced Watercare” to the government for adoption.

9. This option was legislated by the government in September 2024 as the first of a suite of water reform legislation. The Local Government (Water Services Preliminary Arrangements) Act 2024 provides:

i) mechanisms to enable the financial sustainability of Watercare including,

- prohibition on Auckland Council providing financial support of Watercare;

- separation of treasury functions; and,

- repayment of historical debt balances to Auckland Council

ii) interim economic regulation of Watercare including revenue and price path, as well as levels of service

iii) consequential changes to other Acts, such as Local Government (Auckland Council) Act 2009, as required to give effect to the above policy amendments, and

iv) the requirement for Auckland Council to provide a one-off Auckland Stormwater Delivery Plan by September 2025 outlining levels of service, and details of the financial sustainability of stormwater delivery operations.

Tātaritanga me ngā tohutohu

Analysis and advice

Update on the Transition of Treasury Services to Watercare

10. A key component of the “enhanced Watercare” solution was the achievement of balance sheet separation set out in i) above. Balance sheet separation, within this context, refers to separation from a credit rating perspective. This is achieved if a rating agency will remove the financials of a water entity from an assessment of the wider council group. The water entity would then need to obtain its own credit ratings, and finance investment in its own name, in a manner more appropriate to an infrastructure entity.

11. Under the Local Government (Water Services Preliminary Arrangements) Act 2024 Auckland Council will no longer be able to fund Watercare or provide financial support from 1 July 2025. As a result, Watercare will be required to raise debt in their own name from that date and is also required to fully repay all debt due to Auckland Council within 5 years.

12. Watercare’s current loan from Auckland Council is $3.642 billion as at 30 September 2024 and is expected to be at least $4 billion by 30 June 2025.

Progress on water reform

13. The Act provides that interim economic regulation of Watercare will be established by the development of a charter stating target levels of service and price-quality path settings, and a ten-year business plan outlining Watercare’s sources and intended approach to funding, revenue and pricing, financial strategy, efficiency improvement targets and investment priorities for infrastructure.

14. An update on the development of the Watercare charter and business was provided to the Transport and Infrastructure Committee on 7 November 2024 and delegations were provided to progress feedback on Watercare’s charter and business plan. Bill Three of the water reform is expected to be introduced to Parliament prior to Christmas 2024 and staff will advise of the content and timeframes for submissions when that information becomes available.

Tātaritanga me ngā tohutohu

Analysis and advice

Update on the transition of treasury services to Watercare

15. Auckland Council staff are assisting Watercare to ensure it is in a position from 1 July 2025 to access the funding required to meet its capital programme and repay debt owed to Auckland Council within 5 years. The benefit of this period is that it: (a) gives Watercare sufficient time to establish a presence in the debt capital markets; (b) is a sufficiently short period of time that the credit rating agencies will effectively “look-through” the council’s loan to Watercare and not count it as council debt in their assessment of the council’s credit.

16. Council treasury staff are assisting Watercare with the transition of treasury services. This includes staff assisting Watercare to engage with credit rating agencies to obtain a credit rating, engage with banks and debt investors, set up a treasury policy, establish bank facilities, set up independent borrowing documentation and establish middle and back-office functions. Watercare has established a Capital Finance Committee to oversee this work.

Transitional Debt Facility Agreement

17. To comply with the Act’s requirement for Watercare to repay all debt due to the council within 5 years, staff recommend that Watercare and Auckland Council enter into a new transitional debt facility agreement with the following key terms:

18. Interest rate: charged to Watercare as a fixed rate based on: (a) Auckland Council’s estimated cost of funds over the 5-year repayment period; (b) an additional margin (credit margin) to reflect the (most likely) lower credit rating of Watercare; and (c) a reduction in the margin (term margin) to reflect that Watercare are borrowing for an average term of around 2 ½ years and Auckland Council typically borrows for an average term of around 7 years.

19. Credit margin: reflects that Auckland Council is taking credit risk on Watercare.

20. Term margin: reflects that borrowing costs for 7 year debt is higher than borrowing costs for 2 ½ year debt.

21. The credit margin and term margin are likely to largely offset each other. The sum of the credit margin and the term margin must be at least zero to avoid the loan to Watercare being less than Auckland Council’s estimated cost of funds (which could be interpreted as Auckland Council providing financial support to Watercare).

22. Terms of the loan: allows flexible repayments to Auckland Council (with the proviso that all amounts are repaid within 5 years of 1 July 2025). The loan will have minimum and maximum repayment amounts for each 6-month period, with the minimum amount assumed to be repaid unless 3 months’ notice is given of a higher amount (not to exceed the maximum amount). The rationale for this is that it gives Watercare flexibility in its debt capital market activities (for example, benefiting from the pricing benefits of benchmark sized issuances); and Watercare can have reduced standby facilities levels due to lower fixed repayment amounts. With a notice period of 3-months applying, the repayment uncertainty does not unduly hinder Auckland Council’s debt capital markets activities.

23. Ranking of Watercare debt: the loan from Auckland Council to Watercare will rank equally with other external debt providers of Watercare. However, it is proposed that Auckland Council will not have voting rights in the event of a debt credit event. This is to alleviate concerns from external debt lenders to Watercare that Auckland Council may vote on such decisions in its capacity as shareholder rather than debt holder. Council staff consider this reasonable in the circumstances, as a debt credit event is considered a very unlikely to occur, and the council’s voting rights will not be a factor in 2-3 years when Auckland Council is no longer the majority debt provider.

24. Given the exact amount of the loan and the interest rate (including credit and term margins) to apply cannot be set until closer to 1 July 2025 it is proposed that the Group Chief Financial Officer is delegated the authority to agree the final loan transaction terms and that the Chief Executive is delegated the authority to sign the facility agreement on behalf of Auckland Council.

Treasury services

25. Council staff have engaged with Watercare and recommend that council provide treasury services to Watercare on an arm’s-length basis with a cost-sharing arrangement. This ensures that the service arrangement complies with the legislative prohibition on providing financial support to Watercare but avoids Watercare having to duplicate the treasury function that Auckland Council currently has.

26. This is a cost effective and efficient solution for the group. Council staff and Watercare are in the process of finalising the terms of a service agreement, including cost sharing arrangements.

27. It is proposed that the agreement can be terminated by either party giving 6 months’ notice.

28. Watercare will retain decision rights regarding its treasury and financing operations (for example, approving their treasury policy, financing strategy and risk management strategy)

29. Council treasury staff are assisting Watercare with putting in place the necessary up-front documentation and infrastructure to support their treasury operation.

Tauākī whakaaweawe āhuarangi

Climate impact statement

30. This report does not seek any decisions that would impact climate or be impacted by climate change.

31. Watercare, like Auckland Council, is likely to explore opportunities to issue green bonds and consider other sustainable financing opportunities in the future.

Ngā whakaaweawe me ngā tirohanga a te rōpū Kaunihera

Council group impacts and views

32. These arrangements solely impact Auckland Council and Watercare. Auckland Council and Watercare staff and directors are working closely together to ensure a smooth transition of services and responsibilities.

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

Local impacts and local board views

33. The proposed decisions have no identified local impacts and are required in response to government legislation. Accordingly, the views of local boards have not been sought.

34. Local board engagement is expected as part of Auckland Council’s submissions on the further water reform legislation.

Tauākī whakaaweawe Māori

Māori impact statement

35. Water is a taonga to Māori and the nature of water reform is of critical importance to Māori.

36. The Mayor led engagement with Tāmaki Makaurau iwi on water reform including hui with iwi leaders on 24 April 2024 and 1 May 2024, leading up to the government’s decision on the Local Water Done Well – Auckland Solution.

37. The decisions in this paper are restricted to general treasury matters and no decision is sought in this paper that has a direct impact on Māori. Accordingly, the views of mana whenua have not been sought.

38. Further engagement with Māori is expected as part of Auckland Council’s submissions on the further water reform legislation.

Ngā ritenga ā-pūtea

Financial implications

39. The Transitional Debt Facility Agreement is based on arm’s-length commercial terms to ensure there is no value transfer that could be deemed financial support. There will not be any material impact to council from providing Watercare with a flexible repayment profile.

40. The Long-term Plan 2024-2034 included assumptions around the loan and its payment terms. This included an assumed margin on the loan of 50 basis points. Recent analysis on the impact of possible credit and term margins are likely to result in a lower outright margin (but not be less than zero). This does not have flow on impacts to other financial settings.

41. A treasury services agreement between Auckland Council and Watercare will be based on a cost sharing arrangement that will benefit both parties (and therefore the group) and will ensure that no value transfer will occur that could be deemed financial support.

Ngā raru tūpono me ngā whakamaurutanga

Risks and mitigations

42. The Auckland Council Transitional Debt Facility Agreement has been reviewed by Mayne Wetherall and the Auckland Council Treasury Management Steering Group to ensure the agreement is appropriate for council.

43. Auckland Council will need to ensure its Treasury function is appropriately resourced to meet the requirements of servicing both the Auckland Council and Watercare treasury requirements.

Ngā koringa ā-muri

Next steps

44. Auckland Council and Watercare staff will continue to work together to put in place the Transitional Debt Facility Agreement and the Treasury Services Agreement.

45. Auckland Council treasury staff will continue to provide other assistance to Watercare to ensure a smooth transition to separate funding from 1 July 2025.

Ngā tāpirihanga

Attachments

There are no attachments for this report.

Ngā kaihaina

Signatories

Author

John Bishop - Group Treasurer

Authorisers

Ross Tucker - Group Chief Financial Officer

Phil Wilson - Chief Executive

Governing Body

28 November 2024

Chief Executive and Group Chief Financial Officer Update

File No.: CP2024/13080

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 Chief Executive and Group Chief Financial Officer.

Whakarāpopototanga matua

Executive summary

Chief Executive and Group Chief Financial Officer’s Update

2. Phil Wilson, Chief Executive and Ross Tucker, Group Chief Financial Officer will provide a summary of highlights and key activities and updates for the following:

· Annual Plan 2025/2026

· Savings update

· Financial performance for Auckland Council and the Auckland Council Group

· Service performance

· Economic/market update.

Annual Plan 2025/2026

3. This Annual Plan 2025/2026 relates to year two of the Long-Term Plan 2024-2034. Development of the Annual Plan continues following the two facilitated sessions with the Mayor and Councillors in September 2024. The output of these sessions was detailed in the Mayor and Councillor Direction to Council Group document, which included the following areas of focus:

· funding major events, destination marketing and visitor attraction

· council controlled organisation (CCO) reform; and

· planning and paying for growth.

4. A programme of workshops and briefings was held during October and November to respond to the direction document and provide staff advice for the Mayoral Proposal for decision-making in December 2024.

5. An update on budgets, potential financial risks and a refresh of the budget projections was presented to Councillors on 30 October. Key messages for the Annual Plan 2025/2026 were also covered, as well as the process undertaken to update budgets and a detailed look at what is driving projected budget changes across the group. Unlike prior years, Auckland Council is not currently facing a significant unresolved operating budget gap that needs to be addressed through the annual plan. However, there are a number of potential cost pressures that will require careful consideration and management, and staff recommend building flexibility into consultation on the annual plan.

Savings Update

6. This financial year Auckland Council will be reporting on a combined savings target of $66 million from the annual plan and Long-term Plan 2024 - 2034.

7. By the end of the first quarter which concluded on 30 September 2024, $31.9 million or 48 per cent of this target had been achieved.

8. These savings build on top of ongoing savings of $90 million per year which have already been achieved and locked into the council’s budget. The $337 million of achieved savings over the past three financial years is forecast to grow to just under half a billion dollars by the end of the 2024/2025 year.

9. A detailed report on the savings progress for the first quarter was provided to the Revenue, Expenditure and Value Committee at the 12 November 2024 meeting.

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. The dashboard 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 2.2 per cent at the end of September 2024 (updated quarterly, next due 22 January 2025).

· Non-tradable inflation was at 4.9 per cent for the year to September 2024. Non-tradables are goods and services that do not face foreign competition and are an indicator of domestic demand and supply conditions. (updated quarterly, next due 22 January 2025).

· Unemployment rate – 4.8 per cent to the end of June 2024, an increase of 0.2 per cent on the previous quarter. Updated November 2024. (updated quarterly, next due 5 February 2025).

· Gross Domestic Product decreased by 0.2 per cent in the June 2024 quarter, bringing annual decrease to 0.2 per cent (updated quarterly, next due 19 December 2024).

· The Official Cash Rate (OCR) rate was reduced from 5.25 per cent to 4.75 per cent on 9 October 2024 (next update is 27 November 2024).

· Auckland new dwellings consented numbers – 13,821 for the 12 months to September 2024 (19 per cent lower than the 12 months to September 2023).

· International migration (national level) – net gain of 44,900 people for the 12 months to September 2024, comprising 178,000 arrivals and 133,000 departures (provisional estimates, subject to revision).

· Retail spend data for Auckland in September 2024 was down 5.8 per cent compared to September 2023.

· City centre pedestrian counts for October 2024 were down 3.2 per cent compared to October 2023.

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 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

Helen Aksiuta - Project Manager

Authorisers

Ross Tucker - Group Chief Financial Officer

Phil Wilson - Chief Executive

Governing Body

28 November 2024

Auckland Council Group, Auckland Council, Eke Panuku, Tātaki Auckland Unlimited, Watercare and Port of Auckland Quarterly Performance Reports for the three months ending 30 September 2024

File No.: CP2024/17653

Te take mō te pūrongo

Purpose of the report

1. To provide a quarterly performance update for the Auckland Council Group, Auckland Council, Eke Panuku, Tātaki Auckland Unlimited, Watercare and Port of Auckland for the first quarter of the 2024/2025 financial year.

Whakarāpopototanga matua

Executive summary

2. This is the first quarter report for the first year of the 2024-2034 Long-term Plan (LTP), which aims to strengthen the financial and physical resilience of Auckland, while investing where it is needed most to manage growth.

3. Our first quarter results show progress against these aims, with several key physical resilience projects completed, progressed or initiated, and key financial metrics better than budget. This includes group expenditure being lower than budget, with revenue ahead of budget.

4. The new report format is shorter and gives a clearer overview of performance. It replaces the old strategic focus areas, with updates on initiatives by investment area as outlined in the Long-term Plan 2024-2034.The seven investment areas are:

· Transport

· Water

· Built environment.

· Natural environment

· Community

· Economic and cultural development

· Well-managed local government

5. The Group’s quarterly performance report is included in Attachment A which has two appendices:

a. Appendix A - Group financials

b. Appendix B – Performance measures.

6. A summary report on the first quarter performance of the substantive CCOs and Port of Auckland that would have been provided to the CCO Direction and Oversight Committee in December is included in Attachment D. This report provides information on performance against the agreed key performance indicators.

7. Eke Panuku, Tātaki Auckland Unlimited, Watercare and Port of Auckland’s quarterly performance reports are included as attachments E – H.

8. Auckland Transport provided its quarterly performance report to the Transport, Resilience and Infrastructure Committee on 7 November.

Group performance

9. Capital investment for the year-to-date was $881 million against a budget of $992 million. This was partially driven by the need to take a cautious approach to capital spend, given the recent funding announcements from the National Land Transport Programme 2024 – 2027 (NLTP). Watercare was also below budget due to a slower start on renewals and slower than anticipated start of certain water projects.

10. Capital delivery highlights for this quarter:

· Three-quarter milestone reached for the Central Interceptor Tunnel with the Tunnel Boring Machine having broken through into a shaft in Western Springs.

· Final connection on the East Coast Bays Link Sewer at Windsor Park was completed.

· Renewal and resilience works complete at Orapiu Road (Cowes Bay, Waiheke Island), Bethells Road and Glenesk Road (Piha).

· Completion of construction work on College Road/Stonefields.

· Links to Glen Innes Cycleways: Construction work on College Road/Stonefields Avenue completed.

· Weranui Road: Slip repair completed and road re-opened.

11. Group net debt increased by $228 million to $12.5 billion since 1 July 2024 mainly due to working capital movements and capital project spending. Net debt is projected in the LTP to increase to $14 billion this financial year. The council’s credit rating from S&P Global Ratings and Moody’s Investor Services were unchanged at AA and Aa2 respectively, both are on a ‘Stable’ outlook.

12. Overall net direct expenditure (direct expenditure less direct revenue) was $254 million ($72 million favourable to budget). Net direct expenditure generally includes operating revenue and costs that each business unit is responsible for managing such as fees and user charges, revenue, employee costs and repairs and maintenance expenses.

13. Direct revenue was $756 million which was $13 million higher than the year-to-date budget due to fees and user charges from increased consenting activities, strong performance at the port and higher than anticipated water consumption and wastewater volumes.

14. Direct expenditure was $1,010 million and was $59 million favourable to budget. Higher than anticipated vacancies due to slower recruitment and a focus on hiring for critical roles across the group contributed to employee benefits being below budget. Less repairs and maintenance expenses were incurred for public transport facilities and IT equipment. There was also less operating spend on the Making Space for Water programme. This was mainly due to timing differences. Outsourced works were lower than budget as less maintenance of roading assets has been required. Timing of capital projects has resulted in lower consultancy and professional services expense, however, this is expected to catch up as the capital programme accelerates.

15. There was a total increase of 149 full time equivalent (FTE) employees across the group from the previous quarter. Auckland Council increased by 75 FTE due to filling vacant permanent frontline roles in libraries, the new animal shelters and services, and to meet increased demand in resource consenting and contact centres. The Auckland Council FTE increase is still within the FY25 budgeted FTE. Auckland Transport increased by 48 FTE attributable to recruitment of contact centre staff to improve customer services, public transport officers to enhance public transport network security and support staff to accelerate parking revenue initiatives.

16. At the end of September, the Māori outcomes fund had delivered $2.2 million (approximately 53 per cent) of its year-to-date budget ($4.3 million). Progress was made on several projects including the Marae Infrastructure Programme, Te Whakaoranga o te Puhinui (Puhinui Regeneration project) and the Resilient Marae programme.

17. As part of the Climate Action programme solar water pumps have been installed at the Anawhata and Pae o te Rangi Farms. Lloyd Elsmore Pool had a 263kWp solar system installed. Whatipu Lodge and Campground had a solar panel array installed.

Auckland Council performance

18. Capital expenditure for the first three months was $111 million against a budget of $128 million (excluding Category 3 property buy-outs). $160 million was spent buying back Category 3 properties. Including Category 3 property buy-outs, $271 million was spent against a budget of $252 million.

19. Capital delivery highlights for this quarter:

· Te Pae o Kura – Kelston Community Centre refurbishment completed and reopened.

· Windmill Park: park building renewal complete.

· Victoria Road Devonport: emergency stormwater pipe renewals complete.

· Piha Domain water treatment plant upgrade completed.

20. Year-to-date net direct expenditure of $340 million was $35 million favourable to budget.

21. Direct revenue of $137 million was $17 million higher than year-to-date budget, particularly from higher consenting, licensing and compliance activities (building consents, inspections, licenses and permits).

22. Direct expenditure was $477 million which was $18 million lower than budget. Outsourced works and services were lower compared to budget and there was also lower spend than budgeted for repairs and maintenance, mainly due to delays in the Making Space for Water programme delivery.

23. $31.9 million (48 per cent) of the FY25 $66 million savings target has been achieved as at the end of quarter one 2024/2025. Of the savings achieved, $3.4 million were from one-off spend reductions. Auckland Council savings progress for the quarter ended 30 September 2024 was shared at the 12 November 2024 Revenue, Expenditure and Value Committee meeting.

24. For our non-financial performance measures, 21 measures were updated this quarter. We achieved 81 per cent (17), substantially achieved 5 per cent (1) and did not achieve 14 per cent (3).

25. Two measures in the Community Investment Area achieved their highest recorded results: 92 per cent of licensees are satisfied with the food and alcohol licensing service, and the number of library items checked out (including e-items) reaching 4.27million. These results are attributed to positive staff interactions that delivered notable service to the community and successful promotions (We Read Auckland and Bestie Collection). Building consent processing times also improved which was attributed to improved processing efficiency.

26. Not achieved: High-risk alcohol premises visited were at 18 per cent this quarter. While the target is to reach 100 per cent by the end of the financial year, this is 14 percentage points lower than the 32 per cent visited in quarter one of the previous financial year. This is attributed to staff focusing on the implementation of the Local Alcohol Policy which came into effect in September 2024. Proactive inspections will become a priority again later in the financial year.

Eke Panuku performance

27. Eke Panuku operating financial results, including activities managed on behalf of the council, were favourable for the first quarter. Direct revenue exceeded budget by $4 million driven by unbudgeted revenue from a property lease of $3.2 million and continued tenancy of properties initially planned for sale or vacancy of $0.7 million.

28. Direct expenditure was $3 million below budget due to timing differences in rates costs, staff vacancies, and other minor delays across some projects.

29. Capital programme delivery has been progressing well, with capital spend of $18.8 million for the first quarter, largely in alignment with the budget.

30. Highlights for the quarter include:

· The deconstruction of the first building in Northcote Town Centre and the deconstruction of a building on Racecourse Parade in Avondale for the Avondale Central development.

· A double intersection upgrade in Pukekohe was completed which will support the development of the Edinburgh superblock and several public realm upgrades in Papatoetoe were progressing well.

31. Eke Panuku continue to note that it is taking a longer to attract development partners with capacity to meet outcomes set by Eke Panuku, especially for town centre developments. If this continues to be the case, this risk could affect the achievement of asset sale targets, regeneration outcomes and new dwelling units for 2024/2025.

32. Eke Panuku have also noted that condition of the Wynyard Crossing Bridge, which is currently undergoing an extensive refit, is worse than expected and therefore costs to finalise repair will increase. The work is, however, on track to be completed in December on schedule.

Tātaki Auckland Unlimited performance

33. Direct revenue exceeded the budget by $0.3 million, driven by higher-than-expected visitation revenue, reflecting increased admissions driving shop sales and better-than-expected revenue in Performing Arts and Auckland Stadiums.

34. Direct expenditure was largely in line with the quarter 1 budget. However, staff costs were slightly over budget due to the need for additional casual and temporary staff to support revenue-generating events.

35. Capital expenditure was $17.9 million for the quarter, with variances primarily due to budget phasing. The full year forecast is currently estimated to reach $78 million, which is about 92 per cent of the total approved capital funding.

36. Highlights for the quarter include:

· The 13th World Choir Games event took place in July 2024 with more than 11,000 singers from 42 countries generating $10.5 million in GDP and 61,590 visitor nights for the region.

· Tāmaki Makaurau was announced as the main shooting location for Amazon MGM Studio’s production, The Wrecking Crew which is expected to contribute significantly to the local economy.

37. The Auckland Zoo is taking a lead role in preparing the Zoo, and key stakeholders, for the anticipated arrival of the Highly Pathogenic Avian Influenza in New Zealand. This includes, collaboration with, and advice to Tātaki Auckland Unlimited, the council and Department of Conservation colleagues.

Watercare

38. Direct revenue was $20 million favourable to plan, driven by higher-than-expected water and wastewater charges, Infrastructure Growth Charges (IGCs), and developer revenues, which offset lower contract revenue from Waikato District Council (WDC).

39. Direct expenditure was $13 million below plan, reflecting lower WDC related costs, delays in project spending, and timing differences in tankering and technical costs.

40. Capital expenditure totalled $237 million for Q1, $73 million unfavourable to the YTD budget of $310 million, primarily due to budget phasing differences. Plans are underway to recover the variance in the coming months.

41. Development controls have been put in place in areas where treatment plants are reaching capacity. Total water storage was low target during September 2024 but rainfall in early October, combined with an increase in Waikato production has led to an improvement in this position.

42. The timeframes to complete the legislative requirements of the Local Government (Water Services Preliminary Arrangements) Act 2024, including the preparation of all elements necessary for the interim regulator (Commerce Commission) and external lenders are extremely tight but work is underway to meet deadlines.

Port of Auckland

43. Port of Auckland report that revenue is favourable for quarter 1 with strong container terminal volumes and slightly above budgeted customer price increases. Cruise and passenger numbers were tracking above budget.

44. Overall costs are managed within budget, and on track to achieve the $26.8 million net profit after tax target for the first half of the financial year.

45. Port of Auckland are progressing resource consent applications for the New Bledisloe North Wharf and the Fergusson North Wharf extension. These are listed in Fast-track legislation Schedule 2. Stakeholder engagement is essentially complete with feedback being supportive or neutral.

46. Port of Auckland provided a ‘deep dive’ into its performance to the CCO Direction and Oversight Committee in October 2024.

Ngā tūtohunga

Recommendation/s

That the Governing Body:

a) whiwhi / receive the Auckland Council Group and Auckland Council, Eke Panuku, Tātaki Auckland Unlimited, Watercare and Port of Auckland quarterly performance report for quarter one of 2024/2025.

Ngā tāpirihanga

Attachments

No.	Title	Page
a	Auckland Council Group and Auckland Council Quarterly Performance Report 30 September 2024
b	Auckland Council Group Statutory Financial Report 30 September 2024
c	Auckland Council Group reconciliation of management to statutory results 30 September 2024
d	Substantive CCOs and Port of Auckland Quarter One Performance Report 30 September 2024
e	Eke Panuku Quarter One report 2024/2025
f	Tātaki Auckland Unlimited Quarter One report 2024/2025
g	Watercare Quarter One report 2024/2025
h	Port of Auckland Limited Quarter One report 2024/2025

Ngā kaihaina

Signatories

Authors

Karuna Dahya - Manager Group Performance Reporting

Kent Annear - Senior Group Performance Advisor

Chimka Gantumur - Senior Group Reporting Technical Account

Yvonne Teo - Financial Accounting Manager

Rose Leonard - Principal Advisor

Authorisers

Brian Chan - General Manager Financial Advisory

Alastair Cameron - Manager CCO/External Partnerships team

Michael Burns - General Manager Financial Strategy

Ross Tucker - Group Chief Financial Officer

Phil Wilson - Chief Executive

No.	Title	Page
a	Letter from Hon Simeon Brown
b	Regional Deal Initial Registration Form
c	Regional Deal Proposal Template
d	Regional Deal Q&A
e	Regional Deals Strategic Framework

Governing Body

28 November 2024

Summary of Governing Body and Committee information memoranda and briefings (including the Forward Work Programme) - 28 November 2024

File No.: CP2024/13077

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
17.09.24	Letter to Hon Eric Stanford relating to Waiheke Local Board and Governing Body resolutions
24.10.24	Action Memorandum from Franklin Local Board: Proposed amendments to the Biosecurity Act
24.10.24	Memorandum - Update on the process for ‘Fix and Finish’ fund
29.10.24	Letter from Hon Eric Stanford relating to Waiheke Local Board and Governing Body resolutions
19.11.24	Memorandum – Update on Māori representation on Auckland Council
22.11.24	Memorandum - Tāmaki Makaurau Recovery Office monthly update

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

Date	Subject
23.10.24	Workshop: Waikaraka Park Documents available on the Auckland Council website here Recording of the workshop available here
14.11.24	Have Your Say Event: Development Contributions, notes
20.11.24	Workshop: Port of Auckland Plan and Tripartite Agreement Documents available on the Auckland Council website here Recording of the workshop available here

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

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

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

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) whiwhi / receive the Summary of Governing Body information memoranda and briefings (including the Forward Work Programme) – 28 November 2024.

Ngā tāpirihanga

Attachments

No.	Title	Page
a	Forward Work Programme
b	Letter to Hon Eric Stanford relating to Waiheke Local Board and Governing Body resolutions, 17 September 2024 (Under Separate Cover)
c	Action Memorandum from Franklin Local Board: Proposed amendments to the Biosecurity Act (Under Separate Cover)
d	Letter from Hon Eric Stanford relating to Waiheke Local Board and Governing Body resolutions, 29 October 2024 (Under Separate Cover)
e	Memorandum - Update on the process for ‘Fix and Finish’ fund, 24 October 2024 (Under Separate Cover)
f	Memorandum – Update on Māori representation on Auckland Council, 19 November 2024 (Under Separate Cover)
g	Memorandum - Tāmaki Makaurau Recovery Office monthly update, 22 November 2024 (Under Separate Cover)
h	Have Your Say Event: Development Contributions, notes, 14 November 2024 (Under Separate Cover)

Ngā kaihaina

Signatories

Author	Sarndra O'Toole - Kaiarataki Kapa Tohutohu Mana Whakahaere / Team Leader Governance Advisors
Authoriser	Phil Wilson - Chief Executive

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

Resolution Number	Item	Status
GB/2024/150	National Land Transport Programme – Funding Implications	Council staff will soon commence work with Auckland Transport to develop an appropriate monitoring and reporting framework for fully funded local share projects.
GB/2024/151	Referred from Regulatory and Safety Committee – Proposed Joint Traffic-related Bylaw for Auckland	Proposal open for public feedback from Monday 4 November to Monday 9 December 2024. Public feedback received from 63 people to date.
GB/2024/153	Auckland Future Fund establishment update and statement of intent 2024-2027 approval	Work continues on the establishment of the Auckland Future Fund. The board adopted the statement of intent at their meeting on 31 October 2024.
GB/2024/154	Disposals Recommendations	The properties have been handed to the transactions team, which is preparing them for marketing.
GB/2024/162	Transfer of budget to enable consolidation of speedway at Waikaraka Park	Budget codes and corresponding approvals have now been set up within the Parks and Community Facilities department to enable delivery of the works at Waikaraka Park for the Maungakiekie-Tāmaki Local Board.