Agenda of Ordinary Council Meeting

21 April 2020

10.1 Amendment to emergency committee following law change

File Number: A11372956

Author: Nick Swallow, Manager: Legal & Commercial

Authoriser: Paul Davidson, General Manager: Corporate Services

Purpose of the Report

1. This report is to amend the resolutions passed on 24 March 2020 that were put in place to establish an emergency committee and other measures necessary to enable Council to operate under Covid-19.

Recommendations

That the Council:

(a) In order to enable continuation of Council and Committee meetings under Covid-19 restrictions, modifies resolution CO4/20/9 passed on 24 March 2020 by:

(i) Revoking the suspension of all committees by amending resolution (e) as follows:

“(e) Activates the Emergency Committee from 24 March 2020 to operate during Alert Levels 3 and 4 of the COVID-19 Emergency ~~and suspends all other~~ ~~Committees, apart from the Civil Defence and Emergency Management~~ ~~Joint Committee~~.”

(ii) Deletes resolution (f) being the requirement for a quorum of two members to be physically present.

Executive Summary

2. A recent law change has allowed for more flexibility for Council meetings in response to the Covid-19 lock-down requirements, enabling them to be held remotely and online. This has necessitated two technical changes to the emergency measures put in place by Council prior to this law change to enable continued operation of Council meetings.

Background

3. In the week of 24 March 2020, the Government escalated measures to prevent the spread of Covid-19. However, the legislation regulating how Council meetings were required to operate were not affected by the response measures.

4. The continued operation of regular Council and Committees meetings in the usual way would have risked a breach of Government requirements to prevent the spread of the virus and generally have been counter-productive to efforts to contain this. Of relevance for this report, the attendance of all Councillors in person, and the continued operation of all Council Committees, would have necessitated a lot of travel and congregation.

5. It was not clear if Parliament would pass legislation to amend existing laws regulating Council meetings so that these aligned with the Covid-19 response measures. To avoid this problem, emergency measures were considered and passed by Council on 24 March 2020 (report titled Emergency Provisions for COVID-19). A copy of the resolution is set out below for ease of reference.

6. Again of relevance for this report, these included the establishment of an Emergency Committee which required a quorum of only two members to be physically present and also the suspension of all Council Committees.

7. However, on 25 March 2020 the COVID-19 Response (Urgent Management Measures) Legislation Act 2020 came into force (Covid legislation). This amended legal requirement for Council meetings to enable, among other things, meetings to be held without the public having to the right to attend physically, and also without a physical presence of Councillors to establish a quorum.

8. As such, it is now necessary to revoke some of the resolutions made on 24 March 2020 CO4/20/9 in order to allow Council and Committee meetings to be held under the new requirements set out in the Covid legislation.

9. These changes are:

(a) Revoking the suspension of all committees (resolution [e]). This is no longer needed since all committees can now meet on-line.

(b) Revoking the requirement for a quorum of two members to be physically present (resolution [f]). Again, this is no longer needed since quorum can be achieved remotely online

10. It is prudent to retain the remaining parts of resolution CO4/20/9 while the Covid-19 crisis continues.

Copy of emergency powers resolutions as passed on 24 March 2020

That the Council:

(a) Receives the report “Emergency Provisions for COVID-19”

(b) Establishes an Emergency Committee with a membership of three consisting of the Mayor Tenby Powell as the Chairperson, the Deputy Mayor Larry Baldock as the Deputy Chairperson and one other elected member selected in the following order:

· Councillors Kelvin Clout and Steve Morris (Standing Committee Chairpersons – with preference being given with the Chairperson whose portfolio aligns with the matter of urgency being considered)

· Councillors Tina Salisbury, Jako Abrie, Dawn Kiddie and Heidi Hughes (Standing Committee Deputy Chairpersons - with preference being given with the Deputy Chairperson whose portfolio aligns with the matter of urgency being considered)

· Councillors John Robson, Andrew Hollis and Bill Grainger

In the event that the Mayor or Deputy Mayor are unavailable three elected members in the order as stated above.

(c) Adopts the following Emergency Committee’s Terms of Reference:

(i) To determine matters within the authority of Tauranga City Council where the urgency of those matters precludes a full meeting of the Council, or its committees, or emergency legislation is enacted and the Council or its committees are unable to meet.

(ii) To exercise all Council functions that cannot be exercised by the Council or its committees using its standard processes and procedures due to a pandemic, other natural disaster or state of emergency, except for those that:

· have been delegated to staff; or

· cannot be delegated as set out in Clause 32 of Schedule 7 of the Local Government Act 2002 which are:

(a) the power to make a rate; or

(b) the power to make a bylaw; or

(c) the power to borrow money, or purchase or dispose of assets, other than in accordance with the long-term plan; or

(d) the power to adopt a long-term plan, annual plan, or annual report; or

(e) the power to appoint a chief executive; or

(f) the power to adopt policies required to be adopted and consulted on under this Act in association with the long-term plan or developed for the purpose of the local governance statement; or

(g) [Repealed]

(h) the power to adopt a remuneration and employment policy. or

· cannot be delegated by the Council as set out in any other legislation.

(iii) The Emergency Committee can only be activated by resolution of Council for specific emergency events, or where resolution by Council is not possible, on the joint authority of the Mayor and Deputy Mayor and the Chief Executive.

(iv) The Emergency Committee will report to the Council (at the next available full meeting of Council) summarising the Committee’s activities and any decisions made over the period.

(v) The quorum for the Emergency Committee will be two members.

(vi) The Emergency Committee will meet as required.

(vii) When an Emergency Committee meeting has been called, Councillors will be notified details by email and agendas and minutes will be circulated electronically. Public notice requirements as set out in the Local Government Official Information and Meetings Act 1987 will apply.

(d) Delegates to the Mayor, the Deputy Mayor and the Chief Executive, the authority to activate the Emergency Committee during the COVID-19 emergency when a resolution of Council is not possible.

(e) Activates the Emergency Committee from 24 March 2020 to operate during Alert Levels 3 and 4 of the COVID-19 Emergency and suspends all other Committees, apart from the Civil Defence and Emergency Management Joint Committee.

(f) Establishes that the quorum for the Council’s Standing Committees during the COVID-19 emergency will be two members to be physically present.

(g) For the purposes of the COVID-19 emergency, delegates to the Chief Executive all the Council’s powers, duties, and responsibilities that the Council can lawfully delegate to officers, including the ability to enter into any contract and/or to authorise any level of expenditure (“Emergency Delegation”). This Emergency Delegation does not include (or limit) the powers, duties, and responsibilities that the Council has already delegated to the Chief Executive under delegations in force at this time, or any authority to make any Council decisions under the Civil Defence Emergency Management Act 2002 (which shall be dealt with in accordance with that Act). This Emergency Delegation is subject to the following conditions:

(viii) It may be exercised only in circumstances where the Council and its committees are unable or unavailable to hold meetings that comply with the requirements of the Local Government Act 2002 and the Local Government Official Information and Meetings Act 1987;

(ix) The Chief Executive may only exercise the Emergency Delegation in consultation with the Mayor (or if the Mayor is unavailable, the Deputy Mayor, or if the Deputy Mayor is unavailable, the Chairperson of the relevant committee, or if the Chairperson of the relevant committee is unavailable, the Deputy Chairperson of the committee).

(x) Any decisions made and documents executed in exercising the Emergency Delegation must be reported to the next ordinary meeting of the Council.

(xi) This Emergency Delegation may be revoked at any time by the Council.

(xii) In the event there is any inconsistency between this Emergency Delegation and any other delegation made by the Council, this Emergency Delegation takes precedence. For the avoidance of doubt, this means that the contract value and other limits specified in the Chief Executive’s delegations under clause 6 of Council’s Procurement Policy (relating to approval of exemptions to open procurement and contract variations) will not apply while this Emergency Delegation is in effect, thus enabling the Chief Executive to approve these no matter the contract value or contract variation parameters during the effective period of this Emergency Delegation.

(h) Delegates the powers, duties and responsibilities of the Chief Executive to Christine Jones, General Manager: Strategy and Growth, as Acting Chief Executive in the event that the Chief Executive is unable to fulfil his duties due to COVID-19; and

(i) Agrees that where the Acting Chief Executive is unable to fulfil her duties due to COVID-19, the Chief Executive’s delegated powers, duties and responsibilities will be transferred to the next designated General Manager in the following order:

· Paul Davidson, General Manager: Corporate Services

· Barbara Dempsey, General Manager: Regulatory and Compliance

· Nic Johansson, General Manager: Infrastructure

· Gareth Wallis, General Manager: Community Services

· Susan Jamieson, General Manager: People and Engagement

Strategic / Statutory Context

11. This concerns technical requirements for Council meetings and is not of strategic significance. The statutory context is noted above.

Consultation / Engagement

12. No consultation or engagement is needed for this technical change.

Significance

13. This matter is of low significance.

Click here to view the TCC Significance and Engagement Policy

Next Steps

14. Council staff will monitor any further changes to Government policy or legislative requirements which may have a bearing on Council decision-making requirements.

Attachments

Nil

Ordinary Council Meeting Agenda

21 April 2020

10.2 Draft 2020/21 Annual Plan - COVID19 update

File Number: A11370384

Author: Jeremy Boase, Manager: Strategy and Corporate Planning

Kathryn Sharplin, Manager: Finance

Christine Jones, General Manager: Strategy & Growth

Authoriser: Paul Davidson, General Manager: Corporate Services

Purpose of the Report

1. To seek initial direction on Council’s core principles to be built into planning for the final 2020/21 Annual Plan and to identify a process for considering potential changes to levels of service and resource allocation in that Annual Plan.

Recommendations

That the Council:

(a) Recognises that the impacts of the COVID-19 pandemic on the nation, the city, and the council will require significant reconsideration of the draft 2020/21 Annual Plan prior to adoption by 30 June 2020.

(b) Recognises that the direct impact on Council of government stimulus package opportunities is currently unknown and that, depending on the outcome of those opportunities, further analysis and options beyond those covered by this report may need to be considered by Council prior to the adoption of the 2020/21 Annual Plan.

(c) Requests the following prioritisation of key principles be included into all further work on the draft 2020/21 Annual Plan (“draft AP”)

(i) Provision of essential council services – more focus than draft AP / same focus as draft AP / less focus than draft AP (selection required)

(ii) Provision of Civil Defence and Emergency Management capability and capacity – more focus than draft AP / same focus as draft AP / less focus than draft AP

(iii) Council’s role in promoting or protecting employment in the city – more focus than draft AP / same focus as draft AP / less focus than draft AP

(iv) Council’s role in promoting or protecting social wellbeing in the city – more focus than draft AP / same focus as draft AP / less focus than draft AP

(v) Council’s role in providing planning and infrastructure for current and future residential and employment growth areas (including intensification) – more focus than draft AP / same focus as draft AP / less focus than draft AP

(vi) Council’s financial and project positioning for post-COVID operations – more focus than draft AP / same focus as draft AP / less focus than draft AP

(vii) Other specific core principles as identified by Council – with appropriate focus direction (to be completed if necessary)

(d) Notes that staff will conduct further work on planning scenarios relating to future disruption assumptions to be brought to a subsequent Council or Committee meeting for endorsement.

(e) Requests that level of service options be prepared that are consistent with the above direction, for consideration prior to deliberations on the draft 2020/21 Annual Plan.

Executive Summary

2. To help address medium-term issues with its debt-to-revenue ratios, Council initially prepared a draft 2020/21 Annual Plan including a 12.6% rates revenue increase. In response to the escalating COVID-19 crisis, Council eventually adopted its draft Annual Plan with a 7.6% rates increase.

3. Since that adoption, the impact of COVID-19 has become clearer. Among those impacts are financial models that show a significant reduction in Council’s expected revenue in 2020/21. This reduction, coupled with maximum prudent debt-to-revenue ratio levels, means that Council’s ability to deliver its expected capital expenditure programme in 2020/21 is in serious doubt.

4. In addition, balanced budget and financial prudence requirements in the Local Government Act 2002 mean that a significant reduction in budgeted revenue may require a reconsideration of plans for operating expenditure.

5. At the same time, central government has announced plans for economic stimulus packages. Council has made applications to various such initiatives but at the time of writing no direct feedback has been received on those. It is not certain how much clarity on such packages will be available before Council adopts its final 2020/21 Annual Plan.

6. All of this means that Council will need to have a more fundamental review of its final Annual Plan preparation than is normal in the period between the adoption of the draft document and the adoption of the final document.

7. This report sets out a staged process for Council to consider the various issues involved. That staged process includes considering core principles, agreeing on assumptions, and then considering the levels of service that different activities should be aiming to deliver in the 2020/21 year.

Background

Annual Plan process to date

8. Planning work for the draft 2020/21 Annual Plan commenced in the third quarter of 2019 and culminated in a Council decision-making process on 10 December 2019.

9. In response to concerns about the impact of that decision-making process on Council’s debt-to-revenue ratios, both for 2020/21 and future years, a revised round of decision-making occurred at the Policy Committee meeting of 4 March 2020. That meeting agreed, by majority, a total rates revenue increase of 12.6% for 2020/21. At this stage, New Zealand had two COVID-19 cases confirmed.

10. On 24 March, while adopting the draft Annual Plan for the purposes of public consultation, Council responded to the developing COVID-19 situation by unanimously agreeing to reduce the total proposed rates revenue increase to 7.6% while looking to reduce the capital expenditure budget prior to final adoption. At this stage, New Zealand had 155 confirmed and probable cases of COVID-19 and had announced, but had not yet commenced, the Level 4 lockdown.

11. The draft Annual Plan consultation document noted that, before the final Annual Plan is considered and adopted, further work would be undertaken to understand the impact of COVID-19 and Council’s appropriate response in that document.

12. Consultation on the draft Annual Plan commenced on Friday 3 April and will close on Sunday 3 May. Hearings and deliberations will follow, with adoption of the final Annual Plan scheduled for 30 June.

This report

13. Since the adoption of the draft Annual Plan, more information, analysis and opinions on the impact of COVID-19 on all aspects of society are being created and shared on a daily basis. This includes work done by central government and outside agencies, as well as work done within this organisation.

14. This report does not attempt to pull together all of that work.

15. This report instead attempts to identify the key issues that decision-makers will need to address as they relate to the finalisation of the 2020/21 Annual Plan.

16. Note that this report will not attempt to address or ‘solve’ those issues (though it does seek direction on Council’s underlying core principles). Separate processes will be put in place to enable discussion and decision-making on those issues on a staged basis between now and the adoption of the final Annual Plan. This report sets out initial ideas on a route map for those discussions.

Council’s financial framing

17. As was outlined to Council in late-2019 and through Annual Plan discussions in early 2020, Council’s financial situation entering the COVID-19 crisis was challenged. This was a direct result of carrying significant levels of debt to fund essential growth infrastructure. Several other ‘growth councils’ are in a similar situation.

18. The impact of COVID-19 has made that financial situation significantly worse.

19. Revenue modelling undertaken by staff indicates that the ongoing effects of the COVID-19 pandemic are likely to have a severe impact on revenue, and potentially on Council’s ability to carry-out vital infrastructure investment projects.

20. That modelling indicated potential revenue between $40 million and $77 million less than budgeted in the draft Annual Plan. With Council’s debt-to-revenue ratio capped by funding agencies at 250%, such reductions in revenue lead directly to a need to reduce debt and therefore to reduce the capital expenditure that creates that debt. The impact of the modelled reduction in revenue is a capital expenditure programme that is, at best, half that shown in the draft Annual Plan and, at worst, less than $50m, and with a debt to revenue ratio moving closer to the 250% limit than the 235% proposed in the annual plan. This will clearly affect Council’s ability to renew existing infrastructure and to invest in much-needed growth infrastructure.

21. That initial modelling was conducted at a very high-level and was based on different scenarios based on broad assumptions as to the length and depth of pandemic-related disruption. Scenarios and associated assumptions covered:

(a) the extent of disruption (from Alert Level 3 for 12 months as a worst case, down to Alert Level 2 or 3 for six months and then relaxing for the second six months)

(b) the impact on rates revenue (from the draft Annual Plan status quo as a best case, to reductions in the rates strike and increases in non-payment as a worst case)

(d) the impact on significant user fees revenue streams, such as the airport (both lease revenue and airport-related revenue), parking, building consenting, Baycourt, parks, events, cemetery, etc

(e) the impact on capital revenues (such as NZTA subsidies and development contributions) which are directly linked to the assumed extent of capital investment by Council and the private sector respectively

(f) the impact on Bay Venues Limited’s revenue stream (based on the limited ability to open venues and facilities during the modelled Alert Levels).

22. All scenarios also recognised the likelihood of:

(a) a significant underlying recession in the New Zealand economy

(b) New Zealand’s borders essentially remaining closed

(d) High unemployment affecting retail and entertainment activity and associated revenue streams for council such as from use of central city parking and facilities such as Baycourt and venues and events.

23. Further work will be conducted across the organisation over coming weeks to refine this initial high-level modelling. During that time, there may also be more clarity as to New Zealand’s potential route out of Alert Level 4 which will also be factored in.

24. While additional detail may be added to the modelling, it is not expected that the underlying message will change significantly. That is, the draft Annual Plan for 2020/21 will need significant revision before it is adopted as a final document.

The role of the Annual Plan

25. The Annual Plan is Council’s resource-allocation document for the year ahead.

26. Legally, the purpose of the Annual Plan is set out in section 95(5) of the Local Government Act 2002 (“the Act”) as being to:

(a) contain the proposed annual budget and funding impact statement for the year to which the annual plan relates; and

(b) identify any variation from the financial statements and funding impact statement included in the local authority’s long-term plan in respect of the year; and

(c) provide integrated decision making and co-ordination of the resources of the local authority; and

(d) contribute to the accountability of the local authority to the community.

27. The Act also requires, at section 95(6), that the Annual Plan be prepared in accordance with the principles and procedures that apply to the 2018/28 Long-term Plan.

28. This legal framing, and the impact of potentially significant changes from the Long-term Plan (and from the draft Annual Plan) caused by the COVID-19 pandemic, are matters that are being considered at a national sector level. Staff will update Council on the impact of that consideration as appropriate.

Other relevant legislative context

29. There are two key elements of the Act that need to be considered as Council prepares the final Annual Plan.

Prudent financial management

30. Section 101 of the Act addresses financial management and, at sub-section (1) explicitly refers to prudent financial management in relation to both the current and future communities.

‘A local authority must manage its revenues, expenses, assets, liabilities, investments, and general financial dealings prudently and in a manner that promotes the current and future interests of the community.’

31. This means that Council needs to find the balance between the short-term and long-term interests of its community when managing its finances.

Balanced budget

32. Section 100 of the Act requires that Council sets a balanced budget. This is explicitly stated in sub-section (1) thus:

‘A local authority must ensure that each year’s projected operating revenues are set at a level sufficient to meet that year’s projected operating expenses.’

33. Despite this requirement, sub-section (2) provides for Council to set a budget where projected operating revenues do not meet projected operating expenses if it considers it is financially prudent to do so. In setting an ‘unbalanced budget’ Council’s consideration of financial prudence needs to address four matters listed in the act and paraphrased as:

(a) The costs of desired service levels and of maintaining the capacity and integrity of assets throughout their useful lives

(b) The revenues available to maintain the capacity and integrity of assets throughout their useful lives

(d) Council’s own Revenue & Financing Policy and other financial policies.

34. This means that Council needs to give due consideration to the financial prudence of long-term cost and funding issues before adopting an unbalanced budget in its Annual Plan.

Issues to address

35. This section of the report identifies various issues that Council will need to address before the final Annual Plan can be prepared and adopted.

36. Some of these issues may be able to be addressed singly and once only, others will need to be addressed collectively and iteratively. The changing nature of the information available and forecasts about the future mean that some decisions may need to be made very late in the Annual Plan’s finalisation process.

Core principles

37. Given the financial framing and the high level of uncertainties the world, nation and city are experiencing, Council will need to consider the core principles it wishes to pursue when preparing the final Annual Plan.

38. These core principles will guide Council’s resource allocation decision-making.

39. The discussion on core principles will likely address Council’s role in its community in the 2020/21 year. Matters to be considered will include (but are not limited to):

· Council’s ‘essential services’ and which services those are

· Council’s role in protecting or promoting employment in the city

· Council’s role in protecting or promoting social wellbeing in the city

· Council’s role in providing planning and infrastructure for current and future growth areas (including intensification)

· Council’s financial and project positioning for post-COVID operations.

40. The consideration of core principles is urgent as it provides the foundation for many of the subsequent discussions. As such, further discussion is covered in the ‘Options’ section of this report below.

Opportunities

41. As has been widely publicised, the New Zealand government has initiated a number of workstreams intended to protect jobs, stimulate the economy, provide for housing, and enable good social and economic outcomes for all New Zealanders. These are in addition to the immediate response actions, such as wage subsidies, that the government implemented.

42. These workstreams provide opportunities to leverage central government investment for the benefit of the city while (potentially) not compromising Council’s financial position. At the time of writing, the funding model for each of the government’s initiatives was uncertain. As such, the impact of these initiatives on Council’s financial position is equally uncertain. However, the opportunity to leverage funding remains just that, a great opportunity for the city.

43. There are several major initiatives that the government has created. Those that Council has been involved in, and the extent of that involvement, are listed below.

(a) Ministry of Housing and Urban Development (“MHUD”): growth councils workstream

Council provided initial information to MHUD on 20 March. Further updates provided 3 April, with the final information package submitted by the SmartGrowth partnership on 6 April 2020.

(b) Crown Infrastructure Partners (“CIP”): shovel-ready infrastructure projects

Council provided applications of over $1 billion to CIP on 14 April under two broad headings:

· Creating Communities and Housing for All

· Employing Our People.

Schedule of projects submitted 23 March

(d) Ministry for the Environment: identifying Resource Management Act and other constraints on opportunities

Submission on Maori land and other RMA issues, including resilience, submitted 25 March.

44. The impact of these opportunities, to the extent that those impacts are understood by June, will need to be factored into the consideration of the final Annual Plan.

Assumptions regarding disruption and the ‘new normal’

45. In preparing budgets and workplans for 2020/21, assumptions will need to be made regarding the extent of COVID-19 restrictions during the coming year i.e. the extent to which Level 1, 2, 3, or 4 restrictions will be applied nationally or to any sub-national region that includes Tauranga (i.e. North Island, upper North Island, Bay of Plenty, western Bay of Plenty, or just city-wide).

46. If assumptions are made that at some stage during 2020/21 there will be no COVID-19 restrictions in place (or only Alert Level 1 restrictions), further assumptions will need to be made regarding the impact of a ‘new normal’ on the community and Council’s activities. For instance, what (if any) will be the propensity for people to travel, or to gather indoors (or outdoors) even if there are no formal restrictions on such activities?

47. These assumptions will invariably prove to be wrong, but for planning purposes they need to be considered and then applied consistently to all activities. These assumptions should also be shared with Council’s council-controlled organisations (“CCOs”) to ensure further consistency of approaches.

48. Advice will be sought from central government regarding these assumptions, and it is likely that such advice may evolve over the period between now and adoption of the final Annual Plan. However, notwithstanding that evolving nature of that advice, early consideration of such assumptions is necessary as the knock-on impacts on activity-level (and CCO) planning are potentially significant.

49. Covid19 has impacted the economies of countries around the world and a significant recession or even depression is being talked about. The extent and duration of the economic recession is as yet unclear. This economic impact influences a number of assumptions for Council’s final Annual Plan, including demand for new houses, use of infrastructure, revenue to the council and the level of rates considered acceptable to Tauranga ratepayers – commercial and residential.

50. In the meantime, staff planning will continue to be based on a number of different potential scenarios.

Levels of service

51. As a consequence of discussions on core principles and then assumptions regarding disruption, Council will need to consider its desired levels of service for the 2020/21 year. These levels of service will then drive resource allocation decisions.

52. Depending on the assumptions around disruption there are a number of activities where anticipated levels of service for 2020/21 may be significantly different from those assumed in the 2018/28 Long-term Plan.

53. For some activities this may result in increased levels of service to address the impacts of the COVID-19 pandemic. For other activities it may result in a decrease in levels of service due to either the impracticalities of delivering the originally proposed level of service or the likely lack of customers to deliver that service to. For yet others it may involve similar outcomes for the community but delivered in a very different way to that originally planned.

54. There are a large number of ‘community facing’ activities where the impacts of the COVID-19 pandemic may give cause to reconsider Council’s intentions for the activity in 2020/21. These include (but are not limited to):

· the airport

· Baycourt

· Bay Venues Limited

· Community Development activities

· community engagement activities

· the Historic Village

· education activities, particularly school-based education such as library programmes, walking and cycling programmes, waste minimisation programmes, etc)

· events

· external agencies such as Priority One, Chamber of Commerce, Sport Bay of Plenty, etc

· libraries

· mainstreet organisations

· parking

· Places and Spaces (parks, sportsgrounds, etc)

· Tauranga Art Gallery

· Tourism Bay of Plenty.

55. This list is for illustrative purposes only, indicating the breadth of activities where service levels may or may not be affected by the COVID-19 pandemic, at least over the next 12 months. It is not intended to be exhaustive nor to indicate any potential changes in service levels in any or all activities.

56. Within the ‘essential services’ there may be limited scope (or need) for significant level of service discussions. However, given Council’s potential financial positioning noted above, any process to review levels of service would need to consider all services albeit potentially in different groupings commensurate the potential scope of change.

57. A process will be designed to enable Council to consider the potential impacts on service levels across all activities. Work has already commenced with activity managers to help facilitate this.

An example

58. The following is provided as an example only. It is not to be intended to be used for direction-setting or decision-making. Instead it is intended to allow Council to understand the depth and breadth of discussion that is likely to be brought to future Council meetings.

59. A level of service paper relating to the libraries may, under an assumption of extended Alert Level 2 or 3 restrictions, cover matters such as whether the Annual Plan 2020/21 should provide for:

· Full or partial opening of the city centre library

o And if partial, which parts and under what restrictions?

· Full or partial opening of the branch libraries

· The operation of the mobile library

· The operation of a ‘click and collect’ service for items issued from the lending collection

· The operation of a delivery service for items issued from the lending collections

· Education programmes, whether delivered in the library or virtually through digital delivery

· Access to the Nga Wahi Rangahau collections (New Zealand Room) whether or not the rest of the city centre library is open

· Whether fees and/or fines should be in place for the 2020/21 year (or under various Alert Level assumptions during the year).

60. Ideally, each of these discussions (and any other level of service discussions considered relevant) would be accompanied by full information on the advantages, disadvantages, cost and risks of the various options under consideration. They will also be informed by national and regional discussions and decision-making as relevant. For example, and relevant to the libraries example above, there are nation-wide discussions underway regarding what libraries can deliver under various Alert Level scenarios and how those services could be delivered. It is important that Council leverage off those wider conversations wherever they are occurring.

61. The extent to which that analysis will be possible (based on the disruption assumptions made) is likely to be somewhat compromised by the circumstances, particularly the unique nature of the post-COVID-19 world and the short timeframes to undertake the necessary analysis.

Other issues to address

62. Together with substantive discussions around principles, opportunities, disruption assumptions, and levels of service, a number of individually more minor issues will need to be addressed before the final Annual Plan is adopted.

63. These include:

(a) Population growth assumptions, and whether these should remain as per the 2018/28 Long-term Plan or whether they need to be amended to reflect the impacts of COVID-19 on construction activity and migration to Tauranga

(b) Procurement approaches and whether any changes to procurement policies may have a material impact on project costs

(d) Rating policies, including those relating to remission, postponement and penalties (this is in addition to the identified consultation topics relating to the level of the uniform annual general charge and the commercial differential). Some of these discussions are referred to in a separate paper on this agenda.

options – core principles

64. A clear understanding of Council’s guiding principles for the 2020/21 Annual Plan will help to guide more detailed subsequent decision-making, for example around levels of service for specific activities.

65. It is recognised that 2020/21 will at best be focused on the city’s recovery from the COVID-19 pandemic. At worst, the nation and the city may be experiencing repeat breakouts of infection clusters or widescale community infections.

66. It is unlikely in either scenario that Council will be able to provide support for all sectors of the economy, society and community that it would like to. Given Council’s financial positioning, there is simply not sufficient resources to provide such support. As such, direction is sought as to the core principles that Council wishes to apply to its 2020/21 Annual Plan.

67. The following options are not mutually exclusive in the traditional sense of considering different options. Council may choose a graduated response to any or all of them. What is important is that the direction provided is of sufficient clarity to be meaningfully applied to the further work that staff will undertake over the next two months on the 2020/21 Annual Plan. To aid this, it is suggested that a scale of ‘more / same / less’ than the focus in the draft Annual Plan is applied by Council to each potential focus or ‘core principle’.

68. For each option, narrative is provided together with example of what Council’s support may look like if this principle was prioritised. This information is by necessity vague at this stage. The feedback is intended to direct future thinking and modelling and is not intended to be conclusive. As noted earlier in this report, considerations and decision-making is likely to be iterative with these principles revisited as more detail is available regarding implications for activities.

Potential principle 1 – Provision of Council’s essential services

69. From the initial stages of the COVID-19 pandemic there has been a significant focus on continuing to provide Council’s essential services. This was supported by central government planning and pronouncements relating to the pandemic.

70. Council’s essential services during the COVID-19 pandemic have been:

· Water supply services and operations

· Wastewater services and operations

· Stormwater (urgent maintenance and flood management)

· Tauranga transport operations centre (TTOC)

· Transportation – urgent maintenance

· Customer call centre

· Digital services

· Communications

· Animal services

· Property services – contractor management, security and access

· Community development

· Cemeteries

· Tree maintenance (road corridor)

· Finance – transactional services

· Human resources – transactional services and health & safety support

71. It is assumed that this will continue to be a focus for the 2020/21 Annual Plan. Confirmation of that is sought through this report.

Potential principle 2 – Provision of Civil Defence and Emergency Management capability and capacity

72. It is a requirement of the Civil Defence Emergency Management Act 2002 that Council ‘must ensure that it is able to function to the fullest possible extent, even though this may be at a reduced level, during and after an emergency’ (sec 64(2)). Retaining a strong CDEM capability and capacity is critical to being able to discharge this responsibility. To that end, the Emergency Operations Centre has been operational for the Alert Level 4 lockdown.

73. Again, it is assumed that CDEM capability and capacity will continue to be a priority in planning for the 2020/21 Annual Plan. Confirmation of that is sought through this report.

Potential principle 3 – Council’s role in promoting or protecting employment in the city

74. That New Zealand, and the world, is headed for an economic recession[1] is by now considered a truism. On 14 April 2020, Treasury released modelling which showed the best case to be a fall in GDP of 13% in the year to 31 March 2021.

75. Central government’s initial response to the COVID-19 pandemic has been to attempt to protect jobs by injecting billions of dollars into the economy to subsidise wages and provide other support to allow people to remain in employment.

76. The question now is to what extent should Council’s own COVID-19 recovery efforts be focused on protecting or promoting employment in the city? Council’s current direct funding of economic development activities is approximately $5m per annum. Activities are delivered through contracts with Priority One, Tourism Bay of Plenty, the Chamber of Commerce, and the four mainstreet organisations. These activities are currently funded by a targeted rate on non-residential properties.

77. If, as a core principle, Council were to prioritise the protection and promotion of employment in its 2020/21 Annual Plan then it would also need to consider whether that principle should apply to employment in general or whether specific targeted support should be provided to certain sectors or types of employment. For example, through its various stimulus package initiatives central government has shown a clear priority for the protection of construction industry capacity and capability. Other sectors to receive significant attention through the COVID-19 pandemic (though not necessarily directed funding) include tourism, the retail and service sector, and media.

78. Council’s response to the CIP ‘shovel-ready projects’ opportunity identified above included a tranche of projects under the priority heading of ‘employing our people’.

79. If an approach of targeted protection of employment is preferred, then clear direction on such specifics would enable staff to prepare level of service options that meet that direction for future Council consideration.

80. Note that Council is working with Priority One and the Chamber of Commerce to prepare a comprehensive economic response to COVID-19 and that any level of service options will draw on that work. A separate report on this work is included on this agenda.

81. Direction is sought as to the relative priority that protecting or promoting employment should have in planning for Council’s 2020/21 Annual Plan.

Potential principle 4 – Council’s role in protecting or promoting social wellbeing in the city

82. The COVID-19 pandemic is having, and will continue to have, significant negative social outcomes for people within the city. These encompass but are broader than the employment-related concerns covered in the item above.

83. Social wellbeing in a post-COVID-19 world may be difficult to define at this early juncture. However, as a guide, the five priority areas in Council’s draft 2018-21 Community Wellbeing Strategic Plan are illustrative:

· Social equity – ensuring Tauranga is a fair and just society where everyone has access to enough resources (including housing) to participate in their community

· Community pride and belonging – celebrating identity, heritage and cultural diversity, and feeling a sense of belonging and inclusion

· Healthy and active communities – supporting healthy living and physical activity, and having access to health services

· Safe and resilient communities – people are safe and feel safe in their homes, neighbourhoods and public places

· Engagement and partnership – collaboration with partners, including tangata whenua, and engaging in two-way conversations with our communities so we can better understand their needs.

84. There are a number of Council activities that contribute in different ways to the outcomes identified above. These include Community Development, Places and Spaces, Communication and Engagement, Bay Venues Limited, Libraries, Baycourt, Historic Village, Tauranga Art Gallery and others.

85. Council’s response to the CIP ‘shovel-ready projects’ opportunity identified above included a tranche of projects under both the ‘Creating Communities and Housing for All’ heading and under the ‘Employing Our People’ heading.

86. Direction is sought as to the relative priority that protecting or promoting social wellbeing should have in planning for Council’s 2020/21 Annual Plan.

Potential principle 5 – Council’s role in providing planning and infrastructure for current and future residential and employment growth areas (including intensification)

87. For several years pre-COVID, the key issues facing the city and Council have been related to responding to growth pressures. This involves both the planning for and delivery of core infrastructure to growth areas.

88. The 2018/28 Long-Term Plan identified four ‘biggest challenges’ for the city, two of which talk directly to the management of growth and the other two of which have strong links. The four challenges were listed as:

· Moving around the city

· Resilience

· Increased environmental standards

· Land supply and urban form.

89. As noted above, central government has a significant focus on economic stimulus as part of the COVID recovery approach. This council’s responses to these stimulus opportunities have been strongly focused on responding to growth pressures.

90. Council has been at the forefront of promoting the ‘growth councils’ case to central government for several years. That approach has continued and intensified through the COVID-19 pandemic and the emerging response to it.

91. Council’s response to the CIP ‘shovel-ready projects’ opportunity identified above included a tranche of projects under the priority heading of ‘Creating Communities and Housing for All’. In addition, the ‘Growth Councils Workstream’ opportunity being promoted by MHUD (and also identified above) is totally focused on projects that respond to growth pressures.

92. As such, Council’s positioning with central government is that responding to growth pressures is a key focus for this city. It would be expected that a degree of consistency of messaging would be applied through Council’s own 2020/21 Annual Plan.

93. Direction is sought as to the relative priority that providing planning and infrastructure for current and future residential and employment growth areas (including intensification) should have in planning for Council’s 2020/21 Annual Plan.

Potential principle 6 – Council’s financial and project positioning for post-COVID operations

94. As described earlier in this report, Council’s financial position, particularly its ability to remain within its defined debt-to-ratio limits while delivering necessary services and infrastructure, is not strong.

95. In considering its response to post-COVID-19 recovery activities, Council clearly needs to have a focus on its own financial capacity. This applies both in the short-term of the 2020/21 Annual Plan but also with regard to Council’s positioning for the medium-term of the 2021/31 Long-Term Plan.

96. Given the importance of retaining a stable financial base, it is recommended that this principle continue to be a focus when considering the final 2020/21 Annual Plan.

Other potential principles

97. The list of potential core principles listed above is not intended to be exhaustive. If there are other core principles that Council wishes to be prioritised in the planning for the 2020/21 Annual Plan, then they should be noted in the resolutions.

Significance

98. The matter of the 2020/21 Annual Plan and Council’s planning and budgeting response to the COVID-19 pandemic is significant. Engagement has already commenced on the draft Annual Plan and, depending on decisions to be made over the next two months, further engagement may be required.

99. The decisions recommended in this report are high-level and preparatory to more detailed decision-making to occur later in the Annual Plan process. Engagement on these early decisions is not anticipated.

Next Steps

100. Decisions made on this report will be incorporated into further papers to be considered prior to the adoption of the final 2020/21 Annual Plan. Among these will be a consideration of planning scenarios regarding disruption assumptions.

101. Levels of service papers relating to specific activities will be prepared for Council’s consideration during May and alongside submissions to the draft Annual Plan during the ‘Annual Plan deliberations’ meeting.

Attachments

Nil

Ordinary Council Meeting Agenda

21 April 2020

10.3 Dog Registration Fee Report

File Number: A11337885

Author: Sam Fellows, Manager: Environmental Regulation

Authoriser: Barbara Dempsey, General Manager: Regulatory & Compliance

Purpose of the Report

1. To set dog registration fees for 2020/2021.

Recommendations

That the Council:

(a) Receives the report; and

(b) Resolves to maintain Dog registration at $87.00 per dog and $130.00 for Dangerous Dogs

Executive Summary

2. Council is required to annually set dog registration fees resolution as outline in the Dog Control Act 1996 (the “Act”), in particular section 37 as stated below:

(a) The dog control fees payable to a territorial authority shall be those reasonable fees prescribed by resolution of that authority for the registration and control of dogs under this Act.

3. In setting fees, Council may also make provision for the establishment of a penalty fee for those dogs that are registered after the 31 July of each year, if that dog should have been registered by 1 July.

4. This penalty is applied at the beginning of August and must not exceed 50% of the standard fee. Council has previously set the penalty fee at 50% of the standard fee, this is normal practice for the majority of Councils.

5. A large portion of the Animal Services revenue is sourced from dog registration with the balance coming from fines and a rates subsidy which recognises the “public good” of the service. Currently 20% of Animal Services revenue comes from rates allocation.

6. Several Councillors have requested options for setting fees based on age.

7. Any decrease in fees for one sector would require an increase from the remaining dog owners or the rates contribution.

8. Any change to the fee structure, as outlined below, could likely require a compete change to the way we charge currently. Given the short time period before these fees need to be finalised, we propose setting out these types of options in a future paper for the 2021/2022 financial year, if Council wishes.

9. It is appreciated that given the current situation an increase in fees is likely to be seen as out of touch and although the 2021 budget is based off an increased registration fee, we recommend fees stay the same and staff will endeavour to work to reduce costs.

Background

10. There are currently 13973 dogs on the Tauranga City dog register. On Average approximately 8% of the dogs recorded in the “Dog Register” have not contributed toward dog registration fees for the current year. This is comprised of

(a) Disability assist dogs.

(b) Service dogs, such as Police.

(d) Unregistered dogs.

11. Apart from the categories of dog mentioned above all owners pay the same registration fee except those who own dogs classified as dangerous, who pay more.

Strategic / Statutory Context

12. As noted above, s37 of the Act requires Council to set dog registration fees. Section 37(2) states that in setting fees Council may set:

(a) Lower fees for neutered dogs;

(b) Lower fees for working dogs;

(d) Fees for dogs under 12 months of age;

(e) Lower fees for an owner that displays a specified level of competency for dog ownership (Selected owner);

(f) A penalty fee for late registration of a dog; and

(g) A fee for a replacement registration tag.

13. The Act is structured in such a way that it requires all dog owners to be good owners and makes penalty provisions for various offences including those that will not or do not register or control their dogs. Central government sets infringement fees for owners that do not comply with legislation or the Bylaw.

14. As mentioned above, Council has worked on the principals of the Act that all dog owners are “good” owners and if not, there are infringements for various offences. The current fees are as follows;

(a) All Dogs $87.00

(b) Dangerous Dogs $130.00

There are no reduced fees to encourage neutering of dogs, age of dogs or selected owners.

OPTIONS FOR LOWER FEES BASED ON AGE OF THE DOG OWNER

15. While the Act does not specifically allow for fees set based on the age of the owner a small number of Councils do offer reduced fees for those over 65.

16. They do this by classifying those over 65 as responsible dog owners (referred to as selected owners in the legislation), due to the low rate of issues from owners in this demographic, under s37(e).

17. These Councils also have a separate responsible owner discounted fee, which Tauranga currently does not have. This allows them to have over 65-year olds as a separate category of these responsible owners.

18. Factors regarding whether someone is a responsible owner include:

(a) Registering their dog on or before 1 July each year;

(b) Microchipping their dog;

(d) Having their property inspected to approve fencing, sleeping quarters and exercise space;

(e) Keeping their address current to allow for an inspection of new property; and

(f) Passing a responsible owner test.

19. In our communities those over 65 are not the only ones who have well behaved dogs and/or are on fixed income. There would be other groups that could put forward similar arguments that they should pay a lower fee than others. The fees are structured in a way that treats owners equally except for those who have dogs classified as dangerous. It uses infringement fees and penalty fees against owners who do not control their animals or comply with the legislation.

20. Any introduction of an over 65 responsible owner discounted fee would not be in line with the intent of the Act and would likely require an implementation of a general responsible owner discount including the costs associated with administering such a programme.

21. Based on current figures at 1 July 2020 (start of new registration year) we estimate there will be:

(a) 2000 owners who are 65 years of age or older and they will own 2258 dogs.

(b) This 16% of owners.

22. For every $10 reduction in dog registration for dogs owned by those over 65 year an equivalent increase in contribution from rates would be required or alternatively an increase of approximately $2.00 per dog for those owners under 65.

23. It is not recommended that Council adopt a lower fee based on age demographics at this stage.

24. It is recommended that if Council wishes to have a different fee structure, staff look at different fee structures based on a number of factors that can include neutering of dogs, age of dogs or selected owners.

Options Analysis

Option 1: Retain Current Dog Registration Fees at $87.00 for 2020/2021

25. The current registration fee is $87.00 together with a penalty fee of $130.00 (total fee) for dogs registered after 31 July. Maintaining this fee will increase a budget deficit and may require a review of the level of service provided by Animal Services.

Advantages

Disadvantages

Little impact on voluntary compliance in paying registration.

Will increase budget deficit.

Will impact on ability to maintain the current level of service without further rates contribution.

26. Key risks:

(a) If we retain the current dog registration fees at $87.00, we will need to increase the rates contribution to off-set the reduction in income or alternatively reduce the level of service from Animal Services

Option 2: Increase the Standard Dog Registration Fees by $5.00 to $92.00 per dog for 2020/2021.

27. To meet current budget requirements an increase in dog registration of $5 per dog is required. This would increase the standard registration fee to $92.00, together with a penalty fee of 50% of the standard fee for registration payments received after 31 July 2020.

Advantages

Disadvantages

Increased income to maintain budget.

Maintain current level of service.

Increased price may create small reduction in voluntary compliance

28. Key risks:

(a) Any increase in dog registration fee may create a negative response from dog owners. This may lead to a small increase in non-compliance but is not expected to be significant.

(b) Failure to increase dog registration will create a deficit in operation budget for Animal Services unless the rates contribution is increased to cover this or alternatively, we would need to consider a reduction in the level of service from Animal Services.

29. An increase in fee had originally been thought to be the best option to ensure that there was no budget deficit, however, given the post COVID19 environment it is recommended that the current fee remain.

Financial Considerations

30. Below is a table of dog registration revenue budget vs actual. As you can see up until the current year we have been generally achieving or exceeding our revenue targets, but there is a big jump in the current year budget due to the budgeted amount incorrectly including GST in the Long Term Plan.

31. The budget should have been $1,097,988.70 for the 2020 year and $950,280.00 for the 2019 year. Staff have ensured expenditure meets the GST exclusive level and internal submissions on the annual plan will look to rectify this. This would have meant the 2019 budget was exceeded and the 2020 budget likely to be slightly missed.

Dog Registration Revenue
	Budget	Actual
2015	$692,181	$836,142
2016	$703,256	$893,346
2017	$873,540	$849,664
2018	$908,303	$931,124
2019	$1,092,822	$1,030,782
2020	$1,262,687	$1,050,000 (projected)

32. The 2021 budgeted dog registration revenue is $1,224,344.

33. As noted above maintaining current dog registration fees will require additional rates revenue or a reduction in current services. Given the current situation staff will work to ensure the revenue deficit is as small as possible while trying to maintain services to our community.

COMPARISON of Other Council Fees (2019/2020 including GST)

	Tauranga	Western Bay	Hamilton
Registration Fee	$87	$88 ($70 De-sexed)	$165 ($95 responsible owner)
Late	$130	$132 ($105 De-sexed)	$247.00 ($142 responsible owner)
Dangerous Dog	$131	$132 ($105 De-sexed)	$247.50 ($142.50 responsible owner)
Late Dangerous	$196.50	$198 ($157.50 De-sexed)	$370.50 ($213 responsible owner)

Legal Implications / Risks

34. Risk of legal challenge if over 65 receive a responsible owner discount and there is not one for other owners.

Significance

35. Under the TCC Significance and Engagement Policy the decision to consider dog registration fees is of medium significance.

Attachments

Nil

Ordinary Council Meeting Agenda

21 April 2020

10.5 CCO Half Yearly Reports, Draft Statements of Intent and Increase to BVL's Two Way Loan Agreement

File Number: A11362221

Author: Anne Blakeway, Manager: CCO Relationships and Governance

Authoriser: Gareth Wallis, General Manager: Community Services

Purpose of the Report

1. This cover report brings together the executive summaries of three separate reports (attached), and the resolutions required of Council, in relation to the reporting and monitoring of its council controlled organisations (CCOs).

Recommendations

That the Council:

(a) Receives the CCO half yearly reports, draft statements of intent and increase to BVL’s two-way loan agreement cover report, noting that further information is provided in the attached reports.

(b) Receives the half yearly reports to 31 December 2019 report (Attachment 1):

(i) Receives Bay Venues Limited’s report on its performance for the six months to 31 December 2019 as required by the 2019-2020 Statement of Intent.

(ii) Receives Bay of Plenty Local Authority Shared Services Limited’s report on its performance for the six months to 31 December 2019 as required by the 2019-2020 Statement of Intent.

(iii) Receives Tauranga Art Gallery Trust’s report on its performance for the six months to 31 December 2019 as required by the 2019-2020 Statement of Intent.

(iv) Receives Tourism Bay of Plenty’s report on its performance for the six months to 31 December 2019 as required by the 2019-2020 Statement of Intent.

(v) Receives the Local Government Funding Agency’s report on its performance for the six months to 31 December 2019 as required by the 2019-2020 Statement of Intent.

(i) Receives the draft Statements of Intent (SOIs) for Tauranga City Council’s CCOs; Bay of Plenty Local Authority Shared Services Limited, Bay Venues Limited, Tauranga Art Gallery Trust, Tourism Bay of Plenty, and the Local Government Funding Agency for 2020/21 to 2022/23.

(ii) Approves the shareholder comments on those draft SOIs, while expecting that it will be necessary for the CCOs to revise their SOIs and financial and non-financial targets prior to 30 June 2020, in response to the COVID-19 pandemic.

(iii) Notes that as joint shareholder of TBOP, Western Bay of Plenty District Council (WBOPDC) will be asked at their next Council meeting to approve the shareholder comments on the draft Statement of Intent for TBOP.

(d) Approves an increase to the Intra-Group Two-Way Loan Agreement between Tauranga City Council and Bay Venues Limited, from $20.1 million to $25 million (Attachment 3):

(i) Noting that this is subject to Bay Venues Limited continuing to work with council staff in monitoring their cashflow position.

(ii) Delegates to Tauranga City Council’s Emergency Committee the authority to provide further increases to the Intra-Group Two-Way Loan Agreement with Bay Venues Limited during the COVID-19 pandemic, when a resolution of Council is not possible.

(iii) Noting that this is subject to Tauranga City Council being able to remain within its Treasury Policy limits.

Executive Summary

Half Yearly Reports

2. Bay Venues Limited (BVL), Bay of Plenty Local Authority Shared Services Limited (BOPLASS), Tauranga Art Gallery Trust (TAGT), Tourism Bay of Plenty (TBOP) and Local Government Funding Agency (LGFA) are council controlled organisations (CCOs) of Tauranga City Council (TCC).

3. In accordance with the SOI and the Local Government Act (LGA) 2002, they are required to report to Council on their financial and non-financial performance six monthly and annually. All the CCOs provided their reports by the end of February as required.

4. Each CCO’s report for the six months to 31 December 2019 is provided as Attachments 1 to 5 in the separate report (attached). The reports summarise the financial performance for the period ended 31 December 2019, and service performance against objectives/targets.

CCO Draft Statements of Intent

5. BOPLASS, BVL, TAGT, TBOP and LGFA are CCOs and as such are required to prepare a draft SOI and provide a copy to their shareholder, Tauranga City Council (TCC), by 1 March each year.

6. Council has an opportunity to comment on the draft SOIs before they are finalised by the CCOs. Shareholder comments must be provided to the CCOs by 1 May 2020, in accordance with the LGA 2002.

7. There have been a number of discussions and informal briefings in relation to the CCOs’ draft SOIs. The majority of feedback is of a technical and process nature, and the CCOs will be asked to reflect it in their final SOIs.*

8. The draft SOIs are provided in the separate report (as Attachments 1 to 5) and have been assessed against the Letters of Expectation for BVL, TAGT and TBOP, which outline Council’s expectations of these CCOs for 2020/21 (Attachments 6 to 8 in the separate report).

*Note: While this report outlines shareholder feedback to the draft SOIs provided by the CCOs on 1 March as required by the LGA, it is expected that the CCOs will need to revise their SOIs and financial and non-financial targets in response to the COVID-19 pandemic.

Increase to the Intra-Group Two-Way Loan Agreement

9. Following the closure of all community facilities on 23 March 2020 as a result of the COVID-19 pandemic, BVL has provided a revised cash forecast, which indicates that their current loan balance would reach $21.3 million by 30 June 2020. This includes taking into consideration $1.5 million of funding from the central government wage subsidy scheme.

10. In preparation for the financial impact of the COVID-19 pandemic and to enable BVL to have the necessary flexibility to manage the timing of cashflows, they have formally requested an increase in the Intra-Group Two-Way Loan Agreement between TCC and BVL from the current $20.1 million to a proposed $25 million.

11. It is also proposed that TCC’s COVID-19 Emergency Committee is delegated the authority to provide further increases to the Intra-Group Two-Way Loan Agreement with BVL during the COVID-19 pandemic, when a resolution of Council is not possible.

12. This would be subject to TCC being able to remain within its Treasury Policy limits and to BVL continuing to work with council staff in monitoring their cashflow position.

13. This loan agreement would need to be reviewed again following the approval of the Annual Plan 2020/2021.

Background

14. As outlined in the detailed reports (Attachments 1,2 and 3).

Strategic / Statutory Context

15. In accordance with the SOI and the LGA 2002, CCOs are required to report to Council on their financial and non-financial performance six monthly and annually.

16. The SOI is one of the CCO’s key governance and planning documents. Engaging with the CCOs throughout the development of the annual SOIs is one of the main ways Council can influence the CCOs, while ensuring they are aligned with Council’s strategic outcomes.

17. As Council develops its strategic priorities and works with CCOs on how they can help us successfully deliver our community outcomes, the Letters of Expectation (LOEs) and SOIs will become more aligned with our strategic outcomes.

18. An increase to the Intra-Group Two-Way Loan Agreement between TCC and BVL, from $20.1 million to $25 million will ensure a maturity date of greater than one year is maintained for the loan agreement at any time, to enable disclosure as ‘non-current debt’ for the Annual Report.

Options Analysis

19. As this report, and the half yearly reports received from the CCOs are for receipt only, there are no options.

20. Options for the draft SOIs and the two-way loan agreement are outlined in the separate reports (Attachments 2 and 3).

Financial Considerations

21. The financial implications are outlined in the separate reports and attachments.

Legal Implications / Risks

22. There are no legal implications.

23. The half yearly reports outline CCO performance against SOI measures for the first half of the year. However, with the ever-changing economic climate as a result of the global pandemic of COVID-19, there is a high risk that the CCOs will not meet all their SOI measures for the remainder of the 2019/2020 financial year.

24. While the draft SOI report outlines shareholder feedback as required by the LGA, it is expected that the CCOs will need to revise their SOIs and financial and non-financial targets for the 2020/2021 financial year in response to the COVID-19 pandemic.

25. The increase to the two-way loan agreement would be subject to TCC being able to remain within its Treasury Policy limits and subject to BVL continuing to work with council staff in monitoring their cashflow position.

26. If Council does not approve the increase, the financial impact of COVID-19 on BVL will likely fall on Council.

Consultation / Engagement

27. No community consultation or engagement is required.

Significance

28. Under TCC’s Significance and Engagement Policy, the half yearly reports are of low significance as they are a report of actual performance against objectives previously agreed in the adopted SOIs.

29. The CCOs’ activities have an impact on a sub group of people within the city and it is likely the shareholder feedback to the draft SOIs and the increase to the two way loan agreement will be of moderate public interest.

Next Steps

30. A copy of this report and the resolutions will be provided to each CCO by 30 April 2020.

31. Any shareholder feedback provided in this report should be given consideration by the CCO boards when producing their final SOIs, although it is expected that the CCOs will need to revise their SOIs and financial and non-financial targets in response to the COVID-19 pandemic.

32. The final SOIs are to be delivered to Council by 30 June 2020. Staff will review the final SOIs and present a report to Council for approval in July.

33. Following TCC approval of the $4.9 million increase, a variation of the Intra-Group Two-Way Loan Agreement would be drafted by TCC’s Legal team, for sign off from the Mayor, Chief Executive and Chair of BVL.

34. This loan agreement would need to be reviewed again following the approval of the Annual Plan 2020/2021.

Attachments

1. CCO Half Yearly Reports to 31 December 2019 - A11321702 ⇩

2. CCO Draft Statements of Intent 2020/21 to 2022/2023 - A11354713 ⇩

3. Bay Venues Limited Increase to Two Way Loan - A11342301 ⇩

Ordinary Council Meeting Agenda

21 April 2020

0.0 CCO Half Yearly Reports to 31 December 2019

File Number: A11321702

Author: Anne Blakeway, Manager: CCO Relationships and Governance

Authoriser: Gareth Wallis, General Manager: Community Services

Purpose of the Report

1. To present the half yearly reports to 31 December 2019 of Tauranga City Council’s five council-controlled organisations.

Recommendations

That the Council:

(a) Receives the council controlled organisations’ half yearly reports to 31 December 2019 report.

(b) Receives Bay Venues Limited’s report on its performance for the six months to 31 December 2019 as required by the 2019-2020 Statement of Intent.

(c) Receives Bay of Plenty Local Authority Shared Services Limited’s report on its performance for the six months to 31 December 2019 as required by the 2019-2020 Statement of Intent.

(d) Receives Tauranga Art Gallery Trust’s report on its performance for the six months to 31 December 2019 as required by the 2019-2020 Statement of Intent.

(e) Receives Tourism Bay of Plenty’s report on its performance for the six months to 31 December 2019 as required by the 2019-2020 Statement of Intent.

(f) Receives the Local Government Funding Agency’s report on its performance for the six months to 31 December 2019 as required by the 2019-2020 Statement of Intent.

Executive Summary

2. Bay Venues Limited (BVL), Bay of Plenty Local Authority Shared Services Limited (BOPLASS), Tauranga Art Gallery Trust (TAGT), Tourism Bay of Plenty (TBOP) and Local Government Funding Agency (LGFA) are council-controlled organisations (CCOs) of Tauranga City Council (TCC).

3. In accordance with the Statement of Intent (SOI) and the Local Government Act 2002 (LGA), they are required to report to Council on their financial and non-financial performance six monthly and annually. All the CCOs provided their reports by the end of February as required.

4. Each CCO’s report for the six months to 31 December 2019 is provided as Attachments 1 to 5, with a brief summary in the main body of this report. The reports summarise the financial performance for the period ended 31 December 2019, and service performance against objectives/targets.

Background

Bay Venues Limited (BVL)

5. BVL’s report for the six months to 31 December 2019 was received by Council on 5 February 2020 and is included as Attachment 1.

6. BVL is well underway in reviewing and refreshing its strategic plan for 2021 onwards, to align with the expectations of the shareholder and the community. This includes strategic planning around the facilities within the current network and whether these facilities remain fit for purpose and able to cater for the demand of a growing population. Some of the ageing facilities within the network, such as the community halls, remain a challenge in terms of viability, for example Greerton Hall.

7. The Baywave Aquatic and Leisure facility underwent a significant remediation and rejuvenation project during July/August 2019, and has since received positive feedback from the community on how the facility looks, especially the new improved waterplay features.

8. BVL’s OSCAR childcare business was sold to PlayTime in August 2019, who have a license to occupy four of BVL’s facilities where the OSCAR programme was run previously.

9. The Adams Academy currently has 80 athletes within their high-performance sport programme at the University of Waikato Adams Centre for High Performance. The Centre has now reached capacity.

10. Trustpower Baypark continues to be a pivotal facility within the network, with the number of visitors to sporting, community and recreational events growing over the first six months. Bay Dreams was a sell-out event, drawing over 35,000 people to the Baypark site over two days in early January. Three other significant concerts in December provided the city with a variety of entertainment options.

11. The 2019/2020 Speedway season is now running under Springs Promotions Limited, with crowd numbers low for the first rounds of the season but expected to increase.

12. A number of BVL business units continue to perform strongly in a competitive market, including ClubFit and Bay Catering, with all strategic branding and marketing management now brought in-house.

13. A balanced scorecard on Page 5 of the attached six-monthly report shows BVL’s performance against the SOI measures. Two SOI targets have been achieved, three targets are on-track to be achieved by the end of the financial year and one target relating to financial performance, is off track and needs further monitoring.

14. Financial performance for the year shows that BVL has achieved operating revenue for the first six months of $9.7 million (against a budget of $10.1 million), with operating expenditure of $10.1 million. Year to date EBITDA is currently under budget, sitting at a deficit of $412,000 against a budgeted deficit of $60,000.

15. BVL forecast that the continuing hot dry summer will impact revenue for the second six months of the 2019/2020 financial year. In spite of this and other challenges expected, BVL remain confident of achieving the majority of the full year key performance targets set under the SOI.

Bay of Plenty Local Authority Shared Services Limited (BOPLASS)

16. BOPLASS’s report for the six months to 31 December 2019 was received by Council on 21 February 2020 and is included as Attachment 2.

17. Financial performance for the year to date shows an operational surplus of $44,149. Although total operating revenue of $762,775 was under the budgeted $989,258 (23%), total operating expenditure of $718,626 was also under the budgeted expenditure of $1,011,410 (30%). Project expenses, and conversely project recoveries, are reporting lower than budget due to the timing of additional projects being undertaken by BOPLASS.

18. Of particular interest to TCC are the following projects or initiatives:

· The first six months of the successful completion of the $1 million Provincial Growth Fund co-funding application, in conjunction with LINZ, for the capture of 3D LiDAR mapping for the entire Bay of Plenty region over the next five years. This provides an opportunity for the BOPLASS councils to benefit by up to $790,000.

· Securing appropriate and competitively-priced insurance brokerage services, postal services and courier services for a collective group of councils.

· Further development of the Collaboration Portal to enable and encourage a higher level of sharing by councils.

Tauranga Art Gallery Trust (TAGT)

19. TAGT’s report for the six months to 31 December 2019 was received by Council on 28 February 2020 and is included as Attachment 3.

20. Visitor numbers totalled 36,788 for the six-month period, up on last year’s total of 32,821 for the same six-month period, and 61% of the full year target of 60,000 visitors, which TAGT expect to reach by year end. 11 exhibition projects against a targeted 12 have been delivered, including two shows touring.

21. Visitor satisfaction remains high, with 80% indicating an above average experience satisfaction rate, although only 1,854 visitors completed the visitor survey compared to 3,198 over the same period last year.

22. Although the Ministry of Education’s contract for learning experiences outside the classroom (LEOTC) was not renewed this financial year, with 6,007 students participating in programmes over the six-month period (compared to 4,657 last year) the Art Gallery expect to exceed the target of 7,500 by year end.

23. The TAGT report states that all SOI performance measures are being achieved or are on-track to be achieved (Pages 8-12 of the attached six-monthly report), with the exception of budgeted gross revenue and expenditure targets.

24. While the Art Gallery has been successful in raising 34% of its operating revenue from external sources, against a goal of 20%, operating revenue is under budget by $53,946 (6.6%). Operating expenditure before depreciation and finance cost also under budget by $198,733 (24%).

25. Overall financial performance for the six months shows a net surplus of $69,969 (including depreciation and finance costs) against a budgeted deficit of $77,451. While this is a pleasing result, the Art Gallery has signalled a return to a deficit of $48,000 for the year end – an improvement on the budgeted deficit of $75,000 – and deficits for the foreseeable future.

Tourism Bay of Plenty (TBOP)

26. TBOP’s report for the six months to 31 December 2019 was received by Council on 28 February 2020 and is included as Attachment 4.

27. TBOP has commenced implementation of year two of the Visitor Economy Strategy 2018-28, the ‘lay the foundations’ phase. Te Hā Tāpoi | The Love of Tourism outlines TBOP’s continued commitment to its role as a Destination Management Organisation. Destination management means to consider the balance of economic growth of the visitor sector with the social, cultural and environmental well-being of the community.

28. The first six months concluded with the tragic eruption of Whakaari White Island on 9 December 2019 and TBOP have since played an active role in supporting visitors, tourism operators and the Whakatāne community.

29. The visitor economy in the Coastal Bay of Plenty experienced above target growth for the six-month period, with total visitor spend of $547 million, representing growth of 8% compared to the same period in 2018. This makes the Bay of Plenty the second highest performing market in terms of growth, after Destination Wairarapa at 10%.

30. Spend by international visitors saw growth of 21%, reaching $118 million, compared to 9% nationally. The domestic visitor market showed solid growth of 5% to reach $428 million, ahead of 2% growth nationally.

31. Financial performance for the year shows that TBOP is in a sound financial position, with an overall positive result of $270,764 before tax compared to budget of $261,951, with TBOP expecting to be on budget at year end.

32. Operating revenue is $1,767,456 (3.7%) under budget due to reduced retail sales from the new, smaller i-SITE location and a reduction in commission income from the Tauranga i-SITE and the Port. Operating expenditure is $1,496,692 (4.9%) under budget, mainly due to a continued approach to prudent expenditure, as well as trustee and employee vacancies for part of the year.

33. As per key performance indicators in the SOI, TBOP has maintained a working capital ratio of not less than 1 (actual 1.8) and equity ratio above 0.5 (actual 0.54).

34. The TBOP report states that five SOI performance measures have already been achieved and 53 are on track to be achieved (Pages 18-27 of the attached six-monthly report). Seven measures have not yet been achieved, including the alternative destination management funding mechanisms, the residents’ satisfaction survey and measurement of visitor satisfaction and visitor experience. Two planned activities have been deferred until next year due to the Whakaari White Island eruption.

Local Government Funding Agency (LGFA)

35. The LGFA half year report to 31 December 2019 was received by Council on 27 February 2020 and is included as Attachment 5.

36. LGFA’s net operating profit for the six months ended 31 December 2018 was $6.1 million, as compared to the previous year of $6.1 million.

37. Total bonds of $1.1 million were issued over the six months period. Total bonds and bills on issue now at $10.9 million.

38. Interest cost saving to Council are estimated at $1.4 million for the current financial year.

39. There have been no events of review in respect of any participating Council.

CCO Annual Reports 2017/18

40. Annual reports, for the year ended 30 June 2019 for BVL, TBOP, TAGT and BOPLASS are publicly available here on the TCC website.

Strategic / Statutory Context

41. In accordance with the SOI and the LGA 2002, CCOs are required to report to Council on their financial and non-financial performance six monthly and annually.

42. Council’s partnerships with its CCOs help us successfully deliver our community outcomes and be a city that attracts businesses, people and visitors, is well planned, with a variety of successful and thriving compact centres, and is inclusive, safe, resilient and healthy.

43. As Council develops its strategic priorities and works with CCOs on how they can help achieve these, the Letters of Expectation (LOEs) and SOIs will become more aligned with our strategic outcomes.

Options Analysis

44. As this report, and the half yearly reports received from the CCOs are for receipt only, there are no options.

Financial Considerations

45. The financial implications are outlined in the above report and attachments.

Legal Implications / Risks

46. There are no legal implications.

47. While this report outlines CCO performance against SOI measures for the first half of the year, with the ever-changing economic climate as a result of the global pandemic of COVID-19, there is a high risk that the CCOs will not meet all their SOI measures for the remainder of the year.

Consultation / Engagement

48. No community consultation or engagement is required.

Significance

49. Under TCC’s Significance and Engagement Policy, this matter is of low significance as it is a report of actual performance against objectives previously agreed in the adopted SOIs.

Next Steps

50. A copy of this report and the resolutions will be sent to each of the CCOs.

Attachments

1. BVL Half Yearly Report to 31 Dec 2019 - A11333511

2. BOPLASS Half Yearly Report to 31 Dec 2019 - A11333684

3. TAGT Half Yearly Report to 31 Dec 2019 - A11333644

4. TBOP Half Yearly Report to 31 Dec 2019 - A11333672

5. LGFA Half Yearly Report to 31 Dec 2019 - A11333973

Ordinary Council Meeting Agenda

21 April 2020

0.0 CCO Draft Statements of Intent 2020/21 to 2022/2023

File Number: A11354713

Author: Anne Blakeway, Manager: CCO Relationships and Governance

Authoriser: Gareth Wallis, General Manager: Community Services

Purpose of the Report

1. The purpose of this report is to provide shareholder feedback on the draft Statements of Intent for Tauranga City Council’s five council-controlled organisations (CCOs) by 1 May 2020, as required by the Local Government Act (2002).

Recommendations

That the Council:

(a) Receives the CCO Draft Statements of Intent 2020/21 to 2022/23 report.

(b) Receives the draft Statements of Intent (SOIs) for Tauranga City Council’s council-controlled organisations (CCOs); Bay of Plenty Local Authority Shared Services Limited (BOPLASS), Bay Venues Limited (BVL), Tauranga Art Gallery Trust (TAGT), Tourism Bay of Plenty (TBOP), and the Local Government Funding Agency (LGFA) for 2020/21 to 2022/23.

(c) Approves the shareholder comments on those draft SOIs, while expecting that it will be necessary for the CCOs to revise their SOIs and financial and non-financial targets in response to the COVID-19 pandemic.

(d) Notes that as joint shareholder of TBOP, Western Bay of Plenty District Council (WBOPDC) will be asked to approve the shareholder comments on the draft Statement of Intent for TBOP at their April Council meeting.

Executive Summary

2. BOPLASS, BVL, TAGT, TBOP and LGFA are CCOs and as such are required to prepare a draft SOI and provide a copy to their shareholder, Tauranga City Council (TCC), by 1 March each year.

3. Council has an opportunity to comment on the draft SOIs before they are finalised by the CCOs. Shareholder comments must be provided to the CCOs by 1 May 2020, in accordance with the Local Government Act 2002 (LGA).

4. There have been a number of discussions and informal briefings in relation to the CCOs’ draft SOIs. The majority of feedback is of a technical and process nature, and the CCOs have agreed to reflect it in their final SOIs.*

5. The draft SOIs are attached to this report (Attachments 1 to 5) and have been assessed against the Letters of Expectation for BVL, TAGT and TBOP, which outline Council’s expectations of these CCOs for 2020/21 (Attachments 6 to 8).

Background

6. In accordance with the LGA 2002, CCOs are required to provide their draft SOIs to Council by 1 March each year. This document is intended to cover the next three financial years.

7. BOPLASS, BVL, TAGT, TBOP and LGFA have all submitted their draft SOIs, which are attached to this report (Attachments 1 to 5). Under the LGA, Council has until 1 May to respond to the draft SOI with comments.

8. All five CCOs’ SOIs meet the statutory requirements as outlined in schedule 8, section 9 of the LGA.

9. As part of the consideration of the draft SOIs, Council assessed those against the Letters of Expectation (LOEs) sent to BVL, TAGT and TBOP in December 2019 (Attachments 6 to 8.)

10. Council staff from the Spaces and Places, Community Development, City Events, Growth and Strategy, Finance, and Sustainability and Waste teams all provided feedback to the draft SOIs of BVL, TAGT and TBOP.

11. On 19 March 2020, Deputy Mayor Larry Baldock (former member of the CCO working group), Councillors Steve Morris and Dawn Kiddie (Chair and Deputy Chair of the Policy Committee respectively) met with Anne Blakeway, Manager: CCO Relationships and Governance to discuss feedback to each of the draft SOIs.

12. David Pearce, Community Manager at WBOPDC, represented WBOPDC as joint shareholder at the meeting to discuss TBOP’s draft SOI.

Bay of Plenty Local Authority Shared Services Limited (BOPLASS)

13. As TCC is one of nine shareholding councils, there was no LOE provided to BOPLASS.

14. There was general agreement with the draft SOI submitted (Attachment 1).

15. The draft SOI is very similar to previous years’ document, reflecting a consistency of approach. This provides a good basis for the accountability relationship between BOPLASS and Council, and an ability to reflect back on previous years when monitoring performance.

16. BOPLASS was asked to include some more specific goals for the reporting period, as the joint procurement initiatives are quite generic.

17. BOPLASS has also been asked to update the lists of identified and completed Joint Procurement Projects, so that only the most recently completed projects are included.

Bay Venues Limited (BVL)

18. There was general agreement with the draft SOI content (Attachment 2), and the elected members noted BVL’s specific reference to matters included in this year’s LOE (Attachment 6). A few minor amendments were noted, as set out below, which BVL will be asked to amend in preparing their final SOI.

19. The purpose of BVL (outlined in the Strategic Vision and Objectives diagram on page 4) is consistent with that in the revised Enduring Statement of Expectations (ESE) with BVL, namely “we are the kaitiaki of community facilities. Our facilities and the experiences we provide enhance the quality of life for the residents and visitors of Tauranga city.”

20. Overall, the Objectives (page 4) and Key areas of focus (pages 12-14) in BVL’s SOI are consistent with the key focus areas 1 to 6 set out in TCC’s LOE to BVL.

21. Under Nature and Scope of Activities (page 5), it was suggested that the table might be more consistent with that of the Funded and Non-Funded Network outlined in the ESE.

22. An additional project has been included in Objective 7 (page 12), “to participate in Tauranga City Council’s strategic processes to create one strategy for the city”. It should be noted that the findings and recommendations of the recent Pedersen CCO Review will help guide the creation of better strategic alignment between TCC and BVL.

23. BVL has addressed TCC’s LOE request (key focus area 3) for support “with the development of an agreed plan for the investment and maintenance of facilities across the city, aligned with the recommendations from the community facilities needs assessment” in Objective 12 (page 14).

We would expect that implementation of the recommendations of previous accessibility audits would form a component of the community facilities investment plan. Likewise, surveys of need/demand (including from non-current users) as they pertain to capital projects, should be an input to future iterations of the plan. They should also influence BVL’s development of future programmes and services.

24. The LOE key focus area 4, asking for BVL’s support with the development of a “city-wide events strategy which clearly articulates our event investment priorities and strengthens Tauranga’s reputation as a premier events destination” does not appear to have been addressed in BVL’s draft SOI.

25. The LOE key focus area 5, asking BVL to “manage operations in a way that maximises energy efficiency, reduces negative impacts on the natural environment (including carbon) and is cost effective” has been partially addressed in Objective 15 of BVL’s draft SOI (page 14). However, we would expect to see a wider commitment to identifying opportunities and developing a plan to reduce impacts, along with targets for reducing GHGs from energy use, (e.g. fuel-switching to low-GHG alternatives) as well as just cost-effective energy efficiency measures (which could be seen as BAU).

26. Similarly, BVL have not fully addressed LOE key focus area 6, the requirement to “assess and understand the levels of waste going to landfill and to create an improvement plan to show measured decreases in relevant areas of waste to the business”.

27. In the Financial Forecast (page 16), BVL advise that budget forecasts for the next three years are still under development through the Annual Plan 2020/21 consultation process.

28. It was also suggested that, for the avoidance of doubt and to align with other CCOs, BVL should be reporting on Net Profit After Tax (NPAT) and not EBITDA.

29. Section 9.5 of the ESE provides that board performance reviews are to be undertaken every 18 months, which means that it would be appropriate for a BVL-led board review to be undertaken in July 2021 (not July 2022 as outlined in page 18 of the draft SOI). It is expected that this would follow up on the recommendations of the recent TCC-led board review.

Tauranga Art Gallery Trust (TAGT)

30. There was general agreement with the draft SOI content (Attachment 3), and the elected members noted TAGT’s specific reference to matters included in this year’s LOE (Attachment 7). A few minor amendments were noted, as set out below, which TAGT will be asked to include in preparation of their final SOI.

31. In Performance Measures (page 7), it would be good to see a specific measure for no deficit. This would align with the expectation in Council’s LOE (Attachment 7) that TAGT “demonstrate a commitment towards being financially sustainable”.

32. There is also a requirement that TAGT “explor[es] alternative funding mechanisms and increase[es] the level of income generated by the TAGT from sources other than Council”. With this in mind, it would be useful to see the inclusion of a measure to develop a TAGT funding strategy again this year, as in last year’s SOI.

33. While TAGT has included a strategy to “maintain good working relationships with TCC staff and elected members”, it should be noted that the findings and recommendations of the recent Pedersen CCO Review will help guide the creation of better strategic alignment between TCC and the Art Gallery.

34. The non-financial performance measures (pages 6 to 9) of the SOI (e.g. visitor numbers, visitor response ratings etc.), are the same as last year’s SOI. It would be good to see some more progressive targets.

35. It should be noted that extra funding requests from TCC for $250,000 and $100,000, which have been included in TAGT’s financial forecasts (page 12) have not been approved as part of the draft Annual Plan 2020/21 prioritisation process.

36. There are some serious concerns with regard to the deficits that have been forecast for the next three financial years, which need to be addressed by TAGT in their final SOI.

Tourism Bay of Plenty (TBOP)

37. TCC staff and the three elected members were pleased with the content of the TBOP draft SOI (Attachment 4) and how it addressed all matters in the LOE (Attachment 8). However, it is important again to acknowledge that TBOP’s growing role in Destination Management is subject to them working with the Councils to support an investigation of alternative funding mechanisms in 2020/21.

38. It is interesting to note the new definition of destination management from the Ministry of Business, Innovation and Employment (2020), which has been included in Paragraph 3.4 on page 6 of the SOI. The last paragraph of this section is a repeat of the first paragraph and might be removed.

39. It is noted that Governance (section 4, page 8), Funding Principles (section 8, page 15) and Significant Decisions (section 9, page 17) have all been updated to align with TBOP’s recently revised ESE. TBOP’s two new trustees will be included in the final SOI (section 4.2, page 9).

40. In TBOP’s draft strategic priorities and associated measures, it is pleasing to see that performance is not just based on tourism growth, spend and GDP, but also on environmental regeneration (section 5.1 on page 11).

41. It is also interesting to note that the Tourism Sentiment Index™ from Destination Think will provide a new data source for measurement of global sentiment of the coastal Bay of Plenty (section 5.2, page 12).

42. It is noted that TBOP plan to use TCC and WBOPDC residents’ satisfaction surveys as a measure of connecting with residents (section 5.3, page 13). However, there is potentially more data source available from the Vital Updates survey, which this year had a sample size of ~5000. TBOP might investigate the opportunity to have one or two questions included in the next survey.

43. It would be good to see some specific targets in the Visitor Information Services customer satisfaction survey (section 5.4, page 13). It would also be good to include cruise passengers and the hop-on-hop-off cruise shuttle bus passengers in the data source.

44. WBOPDC will be asked to confirm the joint shareholder feedback at their April Council meeting.

Local Government Funding Agency (LGFA)

45. LGFA is owned by 30 councils and the Crown. As TCC is one of 30 shareholding councils, LGFA has been provided with a Shareholder Expectation letter from the Shareholders’ Council (Attachment 9).

46. A copy of the draft SOI 2020/21, together with the cover letter to the LGFA Chief Executive, is included as Attachment 8.

47. LGFA’s profitability remains strong and retained earnings are forecast to increase by approximately $34 million after dividends over the three-year period of the SOI.

48. Profitability for 2020/21 is $10.8 million - slightly better than the previous SOI, mainly as a result of lower interest rates.

49. Dividend Policy is unchanged at LGFA’s cost of funds plus 2%.

50. Lending to councils forecast at $11,027 million by 30 June 2021.

51. The Shareholders’ Council is comfortable with the draft Statement of Intent 2020/21.

Strategic / Statutory Context

52. The SOI is one of the CCO’s key governance and planning documents. Engaging with the CCOs throughout the development of the annual SOIs is one of the main ways Council can influence the CCOs, while ensuring they are aligned with Council’s strategic outcomes.

Options Analysis

Option 1: Receive the draft SOIs and approve the feedback to be provided to the CCOs

53. Receive the draft SOIs from BOPLASS, BVL, TAGT, TBOP and LGFA. Agree with the suggested shareholder comments outlined in this report, noting that WBOPDC will confirm shareholder feedback to TBOP at their April Council meeting.

Advantages

Disadvantages

· The CCOs will receive useful information to ensure their final SOIs meet Council’s expectations.

· Council meets its legislative requirements under the LGA by formally receiving the draft SOIs and providing feedback within the required timeframe.

· Final SOIs aligned with Council’s strategic direction.

· None

Option 2: Receive the draft SOIs and do not approve the feedback to be provided to the CCOs

54. Receive the draft SOIs from BOPLASS, BVL, TAGT, TBOP and LGFA. Do not agree with the suggested shareholder comments outlined in this report, noting that WBOPDC will confirm shareholder feedback to TBOP at their April Council meeting.

Advantages

Disadvantages

· Council meets its legislative requirements under the LGA by formally receiving the draft SOIs and deciding not to provide feedback within the required timeframe.

· The CCOs do not receive any useful information on Council’s expectations about the content of their final SOIs.

· The final SOIs may contain inaccurate information or be misaligned with Council’s strategic direction.

Financial Considerations

55. Budgets for all CCOs, including Council’s contributions are included in the draft SOIs.

Legal Implications / Risks

56. If Council does not approve the provision of the suggested feedback to the CCOs, the final SOIs may not be consistent with Council’s strategic direction and may contain inaccuracies (financial and governance risk).

Consultation / Engagement

57. It is not required or expected to consult on an SOI under the LGA.

Significance

58. Under TCC’s Significance and Engagement Policy this matter is of medium significance as the CCOs’ activities have an impact on a sub group of people within the city and it is likely these documents will be of moderate public interest.

Next Steps

59. A copy of this report and the resolutions will be provided to each CCO by 30 April 2020, together with report and resolutions from the April WBOPDC meeting for TBOP.

60. Any feedback provided in this report should be given consideration by the CCO boards when producing their final SOIs.

61. The final SOIs are to be delivered to Council by 30 June 2020. Staff will review the final SOIs and present a report to Council for approval in July.

Attachments

1. BOPLASS Draft Statement of Intent 2020-2023 - A11362108

2. BVL Draft Statement of Intent 2020-2023 - A11362109

3. TAGT Draft Statement of Intent 2020-2023 - A11362111

4. TBOP Draft Statement of Intent 2020-2023 - A11362114

5. LGFA Draft Statement of Intent 2020-2023 & Letter to Shareholders - A11362124

6. BVL Letter of Expectation 2020 - A11362118

7. TAGT Letter of Expectation 2020 - A11362117

8. TBOP Letter of Expectation 2020 - A11362115

9. LGFA Letter of Expectation 2020 - A11334009

Ordinary Council Meeting Agenda

21 April 2020

0.0 Bay Venues Limited Increase to Two Way Loan

File Number: A11342301

Author: Anne Blakeway, Manager: CCO Relationships and Governance

Authoriser: Gareth Wallis, General Manager: Community Services

Purpose of the Report

1. The purpose of this report is to request, on behalf of Bay Venues Limited, an increase of $4.9 million to the Intra-Group Two-Way Loan Agreement between Tauranga City Council and Bay Venues Limited. This is in preparation for the financial impact of the COVID-19 pandemic.

Recommendations

That the Council:

(a) Approves an increase to the Intra-Group Two-Way Loan Agreement between Tauranga City Council and Bay Venues Limited, from $20.1 million to $25 million.

Noting that this is subject to Bay Venues Limited continuing to work with council staff in monitoring their cashflow position.

(b) Delegates to Tauranga City Council’s Emergency Committee the authority to provide further increases to the Intra-Group Two-Way Loan Agreement with Bay Venues Limited during the COVID-19 pandemic, when a resolution of Council is not possible.

Noting that this is subject to Tauranga City Council being able to remain within its Treasury Policy limits.

Executive Summary

2. Following the closure of all community facilities on 23 March 2020 as a result of the COVID-19 pandemic, Bay Venues Limited (BVL) has provided a revised cash forecast, which indicates that their current loan balance would reach $21.3 million by 30 June 2020. This includes $1.5 million of funding from the central government wage subsidy scheme.

3. In preparation for the financial impact of the COVID-19 pandemic and to enable BVL to have the necessary flexibility to manage the timing of cashflows, they have formally requested an increase in the Intra-Group Two-Way Loan Agreement between Tauranga City Council (TCC) and BVL from the current $20.1 million to a proposed $25 million.

4. It is also proposed that TCC’s COVID-19 Emergency Committee is delegated the authority to provide further increases to the Intra-Group Two-Way Loan Agreement with BVL during the COVID-19 pandemic, when a resolution of Council is not possible.

5. This would be subject to TCC being able to remain within its Treasury Policy limits and to BVL continuing to work with council staff in monitoring their cashflow position.

6. This loan agreement would need to be reviewed again following the approval of the Annual Plan 2020/2021.

Background

7. On 20 November 2018, as part of the review of the Enduring Statement of Expectations (DC345), the loan agreement with BVL was updated to $20.1 million, to reflect BVL’s capital spend of $5.0 million over the next three years as approved in the 2018-28 Long Term Plan. It also ensured a maturity date of greater than one year was maintained for the loan agreement at any time, to enable disclosure as ‘non-current debt’ for the Annual Report.

8. Following the closure of all community facilities on 23 March 2020 as a result of the COVID-19 pandemic, BVL has provided TCC with a revised cash forecast to 30 June 2020 (see Attachment 1), which indicates that the loan balance would reach $21.3 million by 30 June.

9. BVL has therefore requested a short-term increase of $4.9 million to the Intra-Group Two-Way Loan Agreement, bringing the total loan agreement to $25 million.

10. BVL has provided assurance that they will continue to closely monitor their cashflow position in the following ways:

(a) Salaries and wages

BVL has accessed $1.5 million from the central government wage subsidy scheme. This will enable BVL to retain all permanent staff for the duration of the current four-week closure, which means that they will be well placed to quickly resume full operation as soon as a decision is made to re-open facilities.

BVL has committed that all permanent staff will be paid 100% of their regular salaries and wages for the initial four-week lockdown period. The ‘top-up’ cost to BVL after applying the wage subsidy is $265,000 for those four weeks. BVL will re-consider its position if the current four-week lockdown period is extended.

The wage subsidy is applicable for 12 weeks and there is an expectation from central government that all staff included in the subsidy will be retained at a minimum of 80% of their normal salaries and wages for the full 12 weeks.

Casual staff and contractors will not be paid during the closure period.

(b) Other operating expenses

All operational expenditure has been classified as either essential or non-essential. Non-essential expenditure will be suspended as soon as feasible. Essential expenditure will continue for the immediate future. Medium to long-term position to be determined in consultation with TCC.

In general, capital expenditure (both renewals and new capital) has been suspended as of 23 March. Some capital expenditure may occur, but it will require approval on a case by case basis by BVL’s Chief Executive. Medium to long-term position to be determined in consultation with TCC.

11. BVL will continue to work with TCC staff to help clarify their position on the longer-term expenditure in each of the above scenarios.

12. Due to the uncertainty around how long community facilities are to remain closed as a result of the COVID-19 pandemic, it is proposed that authority is delegated to TCC’s COVID-19 Emergency Committee to provide further increases to the Intra-Group Two-Way Loan Agreement with BVL during the COVID-19 pandemic, when a resolution of Council is not possible. This would be subject to TCC being able to remain within its Treasury Policy limits.

Strategic / Statutory Context

13. An increase to the Intra-Group Two-Way Loan Agreement between TCC and BVL, from $20.1 million to $25 million will ensure a maturity date of greater than one year is maintained for the loan agreement at any time, to enable disclosure as ‘non-current debt’ for the Annual Report.

Options Analysis

Option 1: Approve the proposed increase to the Intra-Group Two Way Loan Agreement between BVL and TCC.

14. Council approves the proposed increase of $4.9 million to the Intra-Group Two-Way Loan Agreement between BVL and TCC from the current $20.1 million to a proposed $25.0 million.

15. Delegates to TCC’s Emergency Committee the authority to provide further increases when a resolution of Council is not possible.

Advantages

Disadvantages

· Brings the limit in line with BVL’s forecast operational spend to 30 June 2020.

· Ensures a maturity date of greater than one year is maintained for the loan agreement at any time, to enable disclosure as ‘non-current debt’ for the Annual Report.

· Nil

Budget – Capex: Not applicable

Budget – Opex: Not applicable.

Key risks: This would be subject to TCC being able to remain within its Treasury Policy limits and subject to BVL continuing to work with council staff in monitoring their cashflow position.

Recommended? Yes

Option 2: Does not approve the proposed increase to the Intra-Group Two Way Loan Agreement between BVL and TCC.

16. Council does not approve the proposed increase of $4.9 million to the Intra-Group Two-Way Loan Agreement between BVL and TCC to a proposed $25.0 million.

17. Council does not approve delegation to TCC’s Emergency Committee the authority to provide further increases when a resolution of Council is not possible.

Advantages

Disadvantages

· Nil

· Keeping the loan limit at the current $20.1 million does not reflect forecast operational spend to 30 June 2020. The responsibility for operational funding will likely fall on Council.

· Ensures a maturity date of greater than one year is maintained for the loan agreement at any time, to enable disclosure as ‘non-current debt’ for the Annual Report.

Budget – Capex: Not applicable

Budget – Opex: Not applicable.

Key risks: The financial impact of COVID-19 on BVL will likely fall on Council.

Recommended? No

Financial Considerations

18. The financial considerations are outlined in the main body of this report.

Legal Implications / Risks

19. BVL has provided assurance that they will continue to work with TCC staff to closely monitor their cashflow position, so that TCC is able to remain within its Treasury Policy limits.

Consultation / Engagement

20. No community consultation or engagement is required

Significance

21. Under TCC’s Significance and Engagement Policy, this matter is of low significance.

Next Steps

22. Following TCC approval of the $4.9 million increase, a variation of the Intra-Group Two-Way Loan Agreement would be drafted by TCC’s Legal team, for sign off from the Mayor, Chief Executive and Chair of BVL.

23. This loan agreement would need to be reviewed again following the approval of the Annual Plan 2020/2021.

Attachments

1. BVL Cash Forecast to 30 June 2020 - A11352014

[1] A recession is technically defined as two consecutive quarters of GDP decline.

[2] Within 14 days after the service of the notice.

[3] LIPS = Live Integrated Project System (Council information system for recording projects in)

[4] PT Blueprint = Public Transport Blueprint (BOP Regional Council Bus Services – transport strategy)


AGENDA Ordinary Council Meeting Tuesday, 21 April 2020
I hereby give notice that an Ordinary Meeting of Council will be held on:
Date:	Tuesday, 21 April 2020
Time:	1pm
Location:	Tauranga City Council By video conference
Please note that this meeting will be livestreamed if possible; a recording will be publicly available on Tauranga City Council's website: www.tauranga.govt.nz.
Marty Grenfell Chief Executive

Chairperson	Mayor Tenby Powell
Deputy chairperson	Cr Larry Baldock
Members	Cr Jako Abrie Cr Kelvin Clout Cr Bill Grainger Cr Andrew Hollis Cr Heidi Hughes Cr Dawn Kiddie Cr Steve Morris Cr John Robson Cr Tina Salisbury
Quorum	Half of the members physically present, where the number of members (including vacancies) is even; and a majority of the members physically present, where the number of members (including vacancies) is odd.
Meeting frequency	Six weekly or as required for Annual Plan, Long Term Plan and other relevant legislative requirements.

· To ensure the effective and efficient governance of the City

· To enable leadership of the City including advocacy and facilitation on behalf of the community.

· Oversee the work of all committees and subcommittees.

· Exercise all non-delegable and non-delegated functions and powers of the Council.