MINUTES

Policy Committee Meeting

Wednesday, 19 February 2020

 


Policy Committee Meeting Minutes

19 February 2020

 

Order Of Business

1          Apologies. 3

2          Public Forum.. 3

3          Acceptance of Late Items. 3

4          Confidential Business to be Transferred into the Open. 3

5          Change to Order of Business. 3

6          Declaration of Conflicts of Interest 3

7          Business. 4

7.1            Bay Venues Limited - Capital and Renewals Expenditure and Pricing Review Proposals for the Draft Annual Plan 2020/2021. 4

7.2            Annual Plan 2020/21 Update. 6

7.3            Draft Fees for the 2020/21 Development Contributions Policy. 7

7.4            Draft user fees and charges. 8

8          Discussion of Late Items. 9

 

 


Policy Committee Meeting Minutes

19 February 2020

 

MINUTES OF Tauranga City Council
Policy Committee Meeting
HELD AT THE Tauranga City Council, Council Chambers, 91 Willow Street, Tauranga
ON Wednesday, 19 February 2020 AT 2pm

 

PRESENT:              Chairperson Cr Steve Morris, Deputy Chairperson Cr Dawn Kiddie, Mayor Tenby Powell, Deputy Mayor Cr Larry Baldock (via Skype video-link), Cr Jako Abrie, Cr Kelvin Clout, Cr Andrew Hollis, Cr Heidi Hughes, Cr John Robson, and Cr Tina Salisbury.

 

IN ATTENDANCE: Marty Grenfell (Chief Executive), Paul Davidson (General Manager: Corporate Services), Barbara Dempsey (General Manager: Regulatory & Compliance), Susan Jamieson (General Manager: People & Engagement), Nic Johansson (General Manager: Infrastructure), Gareth Wallis (General Manager: Community Services), Anne Blakeway (Manager: CCO Relationships and Governance), Joel Peters (Corporate Planner), Ana Blackwood (Development Contributions Policy Analyst), Tracey Hughes (Financial Insights & Reporting Manager), Kathryn Sharplin (Manager: Finance), Coral Hair (Manager: Democracy Services), Jenny Teeuwen (Committee Advisor), Robyn Garrett (Team Leader: Committee Support), Raj Naidu (Committee Advisor)

 

1            Apologies

Committee RESOLUTION PO4/20/1

Moved:       Cr Steve Morris

Seconded:  Cr Andrew Hollis

That the apology for absence received from Cr Bill Grainger and Dr Wayne Beilby be accepted.

Carried

 

2            Public Forum  

Nil

3            Acceptance of Late Items

Nil

4            Confidential Business to be Transferred into the Open

Nil

5            Change to Order of Business

Nil

6            Declaration of Conflicts of Interest

Nil

7            Business

7.1         Bay Venues Limited - Capital and Renewals Expenditure and Pricing Review Proposals for the Draft Annual Plan 2020/2021

Staff:         Anne Blakeway, Manager: CCO Relationships and Governance

 

External:    Gary Dawson, Chief Executive Officer Bay Venues Limited (BVL)

Adam Ellmers, BVL Chief Financial Officer

Justine Brennan, BVL Chief Operating Officer

Tina Harris-Ririnui, BVL Venues & Programmes Manager

 

A copy of the PowerPoint presentation for this item can be viewed on Tauranga City Council’s website in the Minutes Attachments document for this committee meeting.

 

 

Key points

·         Bay Venues Limited (BVL) was the steward of the Council’s properties and had a responsibility in enhancing their quality and standard.  

·         BVL provided services to the community on behalf of the Council and, while having a commercial focus, it was not a profit generating entity because it was different from a council controlled trading organisation.

·         By being self-sufficient, BVL had wanted to alleviate impacts on ratepayers and only sought an increase in funding from Council based on the current consumer price index increases.

·         The management model in partnership with Council was working and required Council’s support for new initiatives and for asset replacement or upgrades.

·         BVL required the Council’s approval for setting user fees, new capital, and replacing assets through a renewal program.

·         The Capital Request for financial year 2021 had included the University of Waikato’s Adams Centre for High Performance expansion to accommodate high profile clients such as NZ Rugby; the Greerton Aquatic Centre’s rejuvenation project because it was a forty year old asset that required urgent attention to the pool, cladding, and grandstand; the Operations Hub staff at Trustpower Baypark were working out of a storage facility which posed significant workplace health and safety issues and was a loss of space for machine storage; and, modernising Clubfit Baywave and Baypark Events centre.

·         There were significant costs involved in funding these projects so increasing user fees and exploring Council subsidies to minimise impact on rates were some options for revenue generation to fund the projects.

·         It was clarified that decisions on the proposed recommendations in the report were about accepting projects into the draft Annual plan so that significant due diligence and consultations could be carried out rather than approving or not approving projects per se.

 

In response to questions

·         NZ Rugby tenancy could not be taken for granted because it was a high-end user with significant expectations in terms of requirements so there was a chance that, if these were not fulfilled, it could explore other high performance centres in the country so the expansion work at the Adam’s Centre was important.

·         The Centre was untenable in its current form due to the lack of space and this was impacting on NZ Rugby’s business as usual operations despite them attempting to make it work by conducting meetings in cafes; this was a privacy concern with sportspeople. 

·         Whilst securing another tenant was not an issue if NZ Rugby left, the difficulty lay in securing a sporting entity of national standing for what was a purpose built space.  

·         Futureproofing plans for the Centre had taken four years to finetune and involved developing a purpose built office and training site.

·         In response to a question regarding wages, it was clarified that a high percentage of the staff were paid below the living wage.

·         The impacts of deferment would include the Operations Hub continuing to work in a temporary office space co-sharing with machine storage.

·         Greerton Aquatic Centre and Adams Centre were top priorities which is why they were chosen in terms of prioritisation.

·         Based on demands and the market, appetite for conference venues, concept and feasibility studies had been done which were then fed into the proposal.

·         There was confidence in the figures presented based on the demand for space, the advantage of existing tenants wanting to take up more space if it became available, and new potential tenants such as NZ Cricket looking for space.

·         There were opportunities for cost savings in the project because the Veros report had acknowledged that the business case was potentially under budget and the Cosmopolitan Club project previously was completed under budget as well.

·         Even though the current tenants were specialist or dedicated sports organisations, should they vacate, the nature of the business and space was based on the sports industry in general so other sporting businesses or organisations would take up tenancy.

 

Committee RESOLUTION PO4/20/2

Moved:       Cr Jako Abrie

Seconded:  Cr Larry Baldock

That the Policy Committee:

(a)     Receives Bay Venues Limited’s submission to the draft Annual Plan 2020/2021;

(b)     Agrees to incorporate Option 1b into the capital list for prioritisation in the draft Annual Plan 2020/2021 going to Council in March, prior to community consultation.

This option incorporates some elements of Bay Venues Limited’s capital programme – in addition to other minor new capital projects totalling $346,757 – and their associated budgets, namely:

(i)      the Greerton rejuvenation project ($1,103,666); and

(ii)     the Adams Centre expansion project ($5,351,412).

(c)     Defers the following proposal for consideration in the Long Term Plan 2021-2031:

(i)      Operations Hub at Trustpower Baypark ($2,264,589)

(ii)     Expansion of Clubfit Baywave ($2,403,000); and

(iii)     Baypark Events Centre ($4,900,000).

(d)     If Council approves the capital funding for (b)(i) and/or (b)(ii) above, delegates authority to the Chief Executive to approve an amendment of Bay Venues Limited’s existing loan agreement to reflect the approved capital budget;

(e)     Approves Bay Venues Limited’s total renewals budget of $5,822,826 into the draft Annual Plan 2020/2021 and include for community consultation;

(f)      In relation to Bay Venues Limited’s operating revenue, agrees to incorporate into the draft Annual Plan 2020/2021 and include for community consultation:

 (ii)    Option 2c – the hybrid model proposed by Bay Venues Limited (BVL), along with BVL’s proposed pricing schedule included in Attachment 3. This would enable some increase in user fees and charges ($400,000), with the remainder of the shortfall to be provided through an increase to the rates-funded operating subsidy ($150,000 plus CPI).

Carried

Attachments

1        Bay Venues Ltd Presentation - TCC Annual Plan 2021 - Feb 2020

 

7.2         Annual Plan 2020/21 Update

Staff:         Joel Peters, Corporate Planner

Kathryn Sharplin, Manager Finance

Tracy Hughes, Financial Insights and Reporting Manager

 

A copy of the staff PowerPoint presentation for this item can be viewed on Tauranga City Council’s website in the Minutes Attachments document for this committee meeting.

 

Key points

·         The report summarised changes that had happened to the timeline since December.

·         Staff would come back to Council on March 4th to discuss the refined budget, the expenditure funding issues, options analysis, and to consider the revised capital programme.

 

In response to questions

·         From March 24th, consultation would begin and proceed into April.

·         A session had been scheduled for councillors regarding involvement in the consultation process to provide detailed information on the consultation plan and updated budget.

·         The full collateral document would be compiled and written concurrently during the consultation period.

·         The Oropi upgrade would be an increase in abstraction and capacity of intake to utilise the additional capacity on the consent. The increase in capacity would assist in alleviating the water restrictions significantly.

·         The original proposed wharf was not going to deliver what was required in terms of demand or services and the offloading wharf was a product of collaborative work done via an advisory group and the design had the support of stakeholders.

 

Committee Resolution  PO4/20/3

Moved:       Cr Kelvin Clout

Seconded:  Cr Dawn Kiddie

That the Policy Committee:

(a)     Receives the report.

(b)     Approves the inclusion in the capital programme prioritisation expenditure to:

(i)      increase the capacity of the Oropi water treatment plant ($2.6 million 2020/21 and $4.4 million 2021/22),

(ii)     construct an offloading wharf at the Marine Precinct ($1.4 million).

(c)     Approves a continuation of funding for Destination Management from the Airport Activity surplus.

(d)     Notes additional requests for funding are being prepared for:

(i)      Tauranga Art Gallery

(ii)     Future engagement costs

Carried

Attachments

1        Presentation - Joel Peters - Annual Plan

 

7.3         Draft Fees for the 2020/21 Development Contributions Policy

Staff:         Ana Blackwood, Development Contributions Policy Analyst

Jeremy Boase, Manager: Strategy & Corporate Planning

 

A copy of the Tabled document for this item can be viewed on Tauranga City Council’s website in the Minutes Attachments document for this committee meeting.

 

Key points

·         Development contributions are a cost recovery tool and fluid in terms of figures so numbers cannot be changed at the time of discovery as would affect the entire report.  

·         The recommendations in the report were to note the above and took into account the potential for future change.

 

In response to questions

·         The development contributions process did not fully recover costs because some future costs and unforeseen circumstances could not be forecasted or due to legislative requirements.

·         For example, if a project was budgeted at $10million over a ten year period but after completion had cost $12 million, then it was difficult to recover the overrun of $2million; however if the project was completed at  $8million, then the $2million would have to be returned as per legislative requirements.

·         In calculation with developers, project budgets had a built in 10% contingency in an attempt to mitigate any unforeseen costs or circumstances in the project cycle.

·         The significant increases in the Welcome Bay and Waiari projects were because the scope of the projects had changed significantly due to resilience factoring, futureproofing, increase in population growth, and other impacting costs that were identified by the quality audit process.

·         Granted that resilience factors and issues such as geotechnical ones were not something that could be easily identified or controlled; but a project cost increase four times over the original budget meant that Council had to become better at project management and cost planning. 

·         Tendering, risk management, and budgetary controls had tightened and been given extra resourcing so that project management was not carried out in silo, and there was a stringent robust costing regime being followed to get better project estimates in the early stages.

·         These were not only issues of cost fluctuations but of good governance as well and Council was investing more on specialist staff and tools so that it could work prudently in this complex environment.

 

Committee RESOLUTION PO4/20/4

Moved:       Cr John Robson

Seconded:  Cr Tina Salisbury

That the Policy Committee:

(a)     Notes the contents of the report and the expected changes to Development Contribution  policy which will be consulted on through the Draft 2020/21 Development Contribution Policy

(b)     Notes that staff will be engaging with the building community with the purpose of providing early notice of a signficant increase to the Citywide Development Contribution levy in the 2021/22 financial year.

Carried

Attachments

1        Tabled Item - Summary of amendment to Draft Fees for the 2020-21 Development Contributions Policy

 

7.4         Draft user fees and charges

Staff:         Tracey Hughes, Financial Insights & Reporting Manager

Joel Peters, Corporate Planner

Kathryn Sharplin, Manager: Finance

 

Key points

·         The report summarised the proposed fees and charges to be set for the next financial year.

·         The recommended user fees and charges constituted approximately 30% of the operating revenue for Council.

·         The figures were incorporated in the draft budget subject to change after community consultations and deliberations by elected members.

·         User fees and charges were based on consumer price index movements, cost recoveries, and reasonable rates.

·         Not all activities were chosen for a fee or charge increase because a 1.9% increase was not practical given the business model of certain activities.

 

In response to questions

·         User fees and charges were generally modest and the scope to increase them depended on legislative or policy constraints such as the Building Act or the Revenue and Financing policy framework, cost recovery requirements, and comparable or reasonable charges comparisons to other similar sized local authorities.  

·         Airport landing charges for non-regular light aircraft were reviewed in the last Long Term Plan and the bulk of the charges were collected from the national carrier.

·         The airport and airport parking were undergoing major expansion works and once completed would potentially provide an opportunity to increase fees and charges due to increased capacity and higher levels of service.

 

Committee RESOLUTION PO4/20/5

Moved:       Cr Jako Abrie

Seconded:  Cr Andrew Hollis

That the Policy Committee:

(a)       Approves the proposed schedule of user fees and charges for 2020/21, outlined in Attachment 1, for future consultation with communities.

 

In Favour:       Crs Steve Morris, Dawn Kiddie, Tenby Powell, Jako Abrie, Larry Baldock, Kelvin Clout, Andrew Hollis, Heidi Hughes and Tina Salisbury

Against:           Nil

Abstained:       Cr John Robson

Carried 9/0

 


 

 

8            Discussion of Late Items

Nil

 

The meeting closed at 3:32pm.

 

The minutes of this meeting were confirmed at the Policy Committee meeting held on 16 June 2020.

 

 

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CHAIRPERSON