Agenda of Strategy, Finance and Risk Committee Meeting

Terms of reference – Strategy, Finance & Risk Committee

Membership

Chairperson	Commission Chair Anne Tolley
Deputy chairperson	To be decided
Members	Commissioner Shadrach Rolleston Commissioner Stephen Selwood Commissioner Bill Wasley
	Matire Duncan – Te Rangapū Mana Whenua o Tauranga Moana Chairperson Dr Wayne Beilby – Tangata Whenua representative Te Pio Kawe – Tangata Whenua representative Rohario Murray – Tangata Whenua representative Bruce Robertson – External appointee with finance and risk experience
Quorum	Five (5) members must be physically present, and at least three (3) commissioners and two (2) externally appointed members must be present.
Meeting frequency	Six weekly

Role

The role of the Strategy, Finance and Risk Committee (the Committee) is:

(a) to assist and advise the Council in discharging its responsibility and ownership of health and safety, risk management, internal control, financial management practices, frameworks and processes to ensure these are robust and appropriate to safeguard the Council’s staff and its financial and non-financial assets;

(b) to consider strategic issues facing the city and develop a pathway for the future;

(d) to review and determine the policy and bylaw framework that will assist in achieving the strategic priorities and outcomes for the Tauranga City Council.

Membership

The Committee will consist of:

· four commissioners with the Commission Chair appointed as the Chairperson of the Committee

· the Chairperson of Te Rangapū Mana Whenua o Tauranga Moana

· three tangata whenua representatives (recommended by Te Rangapū Mana Whenua o Tauranga Moana and appointed by Council)

· an independent external person with finance and risk experience appointed by the Council.

Voting Rights

The tangata whenua representatives and the independent external person have voting rights as do the Commissioners.

The Chairperson of Te Rangapu Mana Whenua o Tauranga Moana is an advisory position, without voting rights, designed to ensure mana whenua discussions are connected to the committee.

Committee’s Scope and Responsibilities

A. STRATEGIC ISSUES

The Committee will consider strategic issues, options, community impact and explore opportunities for achieving outcomes through a partnership approach.

A1 – Strategic Issues

The Committee’s responsibilities with regard to Strategic Issues are:

· Adopt an annual work programme of significant strategic issues and projects to be addressed. The work programme will be reviewed on a six-monthly basis.

· In respect of each issue/project on the work programme, and any additional matters as determined by the Committee:

· Consider existing and future strategic context

· Consider opportunities and possible options

· Determine preferred direction and pathway forward and recommend to Council for inclusion into strategies, statutory documents (including City Plan) and plans.

· Consider and approve changes to service delivery arrangements arising from the service delivery reviews required under Local Government Act 2002 that are referred to the Committee by the Chief Executive.

· To take appropriate account of the principles of the Treaty of Waitangi.

A2 – Policy and Bylaws

The Committee’s responsibilities with regard to Policy and Bylaws are:

· Develop, review and approve bylaws to be publicly consulted on, hear and deliberate on any submissions and recommend to Council the adoption of the final bylaw. (The Committee will recommend the adoption of a bylaw to the Council as the Council cannot delegate to a Committee the adoption of a bylaw.)

· Develop, review and approve policies including the ability to publicly consult, hear and deliberate on and adopt policies.

A3 – Monitoring of Strategic Outcomes and Long Term Plan and Annual Plan

The Committee’s responsibilities with regard to monitoring of strategic outcomes and Long Term Plan and Annual Plan are:

· Reviewing and reporting on outcomes and action progress against the approved strategic direction. Determine any required review/refresh of strategic direction or action pathway.

· Reviewing and assessing progress in each of the six (6) key investment proposal areas within the 2021-2031 Long Term Plan.

· Reviewing the achievement of financial and non-financial performance measures against the approved Long Term Plan and Annual Plans.

B. FINANCE AND RISK

The Committee will review the effectiveness of the following to ensure these are robust and appropriate to safeguard the Council’s financial and non-financial assets:

· Health and safety.

· Risk management.

· Significant projects and programmes of work focussing on the appropriate management of risk.

· Internal and external audit and assurance.

· Fraud, integrity and investigations.

· Monitoring of compliance with laws and regulations.

· Oversight of preparation of the Annual Report and other external financial reports required by statute.

· Oversee the relationship with the Council’s Investment Advisors and Fund Managers.

· Oversee the relationship between the Council and its external auditor.

· Review the quarterly financial and non-financial reports to the Council.

B1 - Health and Safety

The Committee’s responsibilities with regard to health and safety are:

· Reviewing the effectiveness of the health and safety policies and processes to ensure a healthy and safe workspace for representatives, staff, contractors, visitors and the public.

· Assisting the Commissioners to discharge their statutory roles as “Officers” in terms of the Health and Safety at Work Act 2015.

B2 - Risk Management

The Committee’s responsibilities with regard to risk management are:

· Review, approve and monitor the implementation of the Risk Management Policy, Framework and Strategy including the Corporate Risk Register.

· Review and approve the Council’s “risk appetite” statement.

· Review the effectiveness of risk management and internal control systems including all material financial, operational, compliance and other material controls. This includes legislative compliance, significant projects and programmes of work, and significant procurement.

· Review risk management reports identifying new and/or emerging risks and any subsequent changes to the “Tier One” register.

B3 - Internal Audit

The Committee’s responsibilities with regard to the Internal Audit are:

· Review and approve the Internal Audit Charter to confirm the authority, independence and scope of the Internal Audit function. The Internal Audit Charter may be reviewed at other times and as required.

· Review and approve annually and monitor the implementation of the Internal Audit Plan.

· Review the co-ordination between the risk and internal audit functions, including the integration of the Council’s risk profile with the Internal Audit programme. This includes assurance over all material financial, operational, compliance and other material controls. This includes legislative compliance (including Health and Safety), significant projects and programmes of work and significant procurement.

· Review the reports of the Internal Audit functions dealing with findings, conclusions and recommendations.

· Review and monitor management’s responsiveness to the findings and recommendations and enquire into the reasons that any recommendation is not acted upon.

B4 - External Audit

The Committee’s responsibilities with regard to the External Audit are:

· Review with the external auditor, before the audit commences, the areas of audit focus and audit plan.

· Review with the external auditors, representations required by commissioners and senior management, including representations as to the fraud and integrity control environment.

· Recommend adoption of external accountability documents (LTP and annual report) to the Council.

· Review the external auditors, management letter and management responses and inquire into reasons for any recommendations not acted upon.

· Where required, the Chair may ask a senior representative of the Office of the Auditor General (OAG) to attend the Committee meetings to discuss the OAG’s plans, findings and other matters of mutual interest.

· Recommend to the Office of the Auditor General the decision either to publicly tender the external audit or to continue with the existing provider for a further three-year term.

B5 - Fraud and Integrity

The Committee’s responsibilities with regard to Fraud and Integrity are:

· Review and provide advice on the Fraud Prevention and Management Policy.

· Review, adopt and monitor the Protected Disclosures Policy.

· Review and monitor policy and process to manage conflicts of interest amongst commissioners, tangata whenua representatives, external representatives appointed to council committees or advisory boards, management, staff, consultants and contractors.

· Review reports from Internal Audit, external audit and management related to protected disclosures, ethics, bribery and fraud related incidents.

· Review and monitor policy and processes to manage responsibilities under the Local Government Official Information and Meetings Act 1987 and the Privacy Act 2020 and any actions from the Office of the Ombudsman’s report.

B6 - Statutory Reporting

The Committee’s responsibilities with regard to Statutory Reporting relate to reviewing and monitoring the integrity of the Annual Report and recommending to the Council for adoption the statutory financial statements and any other formal announcements relating to the Council’s financial performance, focusing particularly on:

· Compliance with, and the appropriate application of, relevant accounting policies, practices and accounting standards.

· Compliance with applicable legal requirements relevant to statutory reporting.

· The consistency of application of accounting policies, across reporting periods.

· Changes to accounting policies and practices that may affect the way that accounts are presented.

· Any decisions involving significant judgement, estimation or uncertainty.

· The extent to which financial statements are affected by any unusual transactions and the manner in which they are disclosed.

· The disclosure of contingent liabilities and contingent assets.

· The basis for the adoption of the going concern assumption.

· Significant adjustments resulting from the audit.

Power to Act

· To make all decisions necessary to fulfil the role, scope and responsibilities of the Committee subject to the limitations imposed.

· To establish sub-committees, working parties and forums as required.

· This Committee has not been delegated any responsibilities, duties or powers that the Local Government Act 2002, or any other Act, expressly provides the Council may not delegate. For the avoidance of doubt, this Committee has not been delegated the power to:

o make a rate;

o make a bylaw;

o borrow money, or purchase or dispose of assets, other than in accordance with the Long Term Plan (LTP);

o adopt the LTP or Annual Plan;

o adopt the Annual Report;

o adopt any policies required to be adopted and consulted on in association with the LTP or developed for the purpose of the local governance statement;

o adopt a remuneration and employment policy;

o appoint a chief executive.

Power to Recommend

To Council and/or any standing committee as it deems appropriate.

Strategy, Finance and Risk Committee Meeting Agenda

17 May 2021

8 Business

8.1 Appointment of Deputy Chairperson for the Strategy, Finance and Risk Committee

File Number: A12541775

Author: Coral Hair, Manager: Democracy Services

Authoriser: Susan Jamieson, General Manager: People & Engagement

Purpose of the Report

1. The purpose of the report is to set out the process to appoint a Deputy Chairperson for the Strategy, Finance and Risk Committee.

Recommendations

That the Strategy, Finance and Risk Committee:

(a) Receives the Appointment of Deputy Chairperson for the Strategy, Finance and Risk Committee report.

(b) In accordance with Clause 25 of Schedule 7 of the Local Government Act 2002, confirms that the voting system to be used to elect or appoint the Deputy Chairperson for the Strategy, Finance and Risk Committee is:

System A; OR

System B

Background

2. On 27 April 2021 the Council established the Strategy, Finance and Risk Committee and appointed five of the nine members and on 10 May 2021 appointed the other four members.

3. Council committees are not required to appoint a Deputy Chairperson, however it is customary to do so and this is usually carried out at the first meeting of the committee. In the absence of a Chairperson, the Deputy Chairperson will assume the responsibilities of the Chairperson.[1]

Strategic / Statutory Context

4. Clause 25 of Schedule 7 of the LGA 2002, sets out the voting systems for certain appointments including a deputy chairperson of a committee. Before the process starts the Committee is required to determine by resolution that a person is to be elected or appointed by using either System A or System B. The systems are described below:

System A

The candidate will be elected or appointed if he or she receives the votes of a majority of the members of the local authority or committee who are present and voting. This system has the following characteristics:

(a) there is a first round of voting for all candidates;

(b) if no candidate is successful in the first round, there is a second round of voting from which the candidate with the fewest votes in the first round is excluded; and

(c) if no candidate is successful in the second round, there is a third round, and if necessary subsequent rounds, of voting from which, each time, the candidate with the fewest votes in the previous round is excluded.

In any round of voting, if two or more candidates tie for the lowest number of votes, the person to be excluded from the next round is resolved by lot.

System B

The candidate will be elected or appointed if he or she receives more votes than any other candidate. This system has the following characteristics:

(a) there is only one round of voting; and

(b) if two or more candidates tie for the most votes, the tie is resolved by lot.

5. System B is recommended as the system to be adopted as it is the simplest.

6. Once that decision is made by the Committee, the Chairperson calls for candidates for the position of Deputy Chairperson of the Strategy, Finance and Risk Committee. If more than one candidate is standing, a vote is undertaken in accordance with either System A or System B as previously resolved. If one candidate only is nominated that person is appointed by resolution of the Committee.

Options Analysis

7. The Committee has two options, to appoint or not appoint a Deputy Chairperson.

8. There is no requirement in the LGA 2002 to appoint a Deputy Chairperson however it is customary and considered best practice to appoint a Deputy Chairperson who can take on the duties and responsibilities of the Chairperson in their absence.

9. Clause 26 (6) of Schedule 7 of the LGA 2002 sets out the process for electing a member to preside at the meeting if the Chairperson is absent and the Deputy Chairperson has not been appointed.[2]

Financial Considerations

10. There are no financial impacts from this decision.

Legal Implications / Risks

11. There are no legal implications or risks from appointing a Deputy Chairperson.

Significance

12. The Local Government Act 2002 requires an assessment of the significance of matters, issues, proposals and decisions in this report against Council’s Significance and Engagement Policy. Council acknowledges that in some instances a matter, issue, proposal or decision may have a high degree of importance to individuals, groups, or agencies affected by the report.

13. In making this assessment, consideration has been given to the likely impact, and likely consequences for:

(a) the current and future social, economic, environmental, or cultural well-being of the district or region

(b) any persons who are likely to be particularly affected by, or interested in, the issue, proposal, decision, or matter

14. In accordance with the considerations above, criteria and thresholds in the policy, it is considered that the decision is of low significance.

ENGAGEMENT

15. Taking into consideration the above assessment, that the decision is of low significance, officers are of the opinion that no further engagement is required prior to the Committee making a decision.

Click here to view the TCC Significance and Engagement Policy

Next Steps

16. Update the Terms of Reference.

Attachments

Nil

Strategy, Finance and Risk Committee Meeting Agenda

17 May 2021

8.2 Financial Monitoring Report for Nine Months to 31 March 2021

File Number: A12495812

Author: Kathryn Sharplin, Manager: Finance

Tracey Hughes, Financial Insights & Reporting Manager

Authoriser: Paul Davidson, General Manager: Corporate Services

Purpose of the Report

1. The purpose of this report is to inform Council and the public of our financial performance for the nine months of the financial year to 31 March 2021. It also notes how the projected underspend of capital budget and some operational projects will be addressed as part of the Long-term plan (LTP) process.

Recommendations

That the Strategy, Finance and Risk Committee:

(a) Receives the Financial Monitoring Report for Nine Months to 31 March 2021 report.

(b) Notes that the projected capital under-delivery for 2021 along with some deferred operational expenditure will result in rephasing of aspects of the capital programme and rebudgeting of expenditure as part of the LTP process through to July 2021.

Executive Summary

2. The full year financial projection for operating surplus is for an operating result $9.5m favourable to budget. The overall surplus, which includes asset revenue as well as operational revenue, is a projected full year surplus of $49m, which is $2.7m favourable to budget.

3. The key operational variances occur across non-rate funded activities. In particular, user fees revenue for the airport and building services is closer to the pre-Covid expectations of revenue than was expected when budgets were set. The rates requirement is currently projected to be as budgeted.

4. Net debt at year end is projected to be $610m-$620m which is $66m-$76m below budget due to slower timing of capital delivery. The main risk to this debt projection is timing and cost of the final two months of capital project delivery.

5. The financial summaries for operational budgets, borrowing and capital are included as Attachments A and B to this report.

Background

6. This report is for monitoring and reporting purposes showing, Council’s financial performance in delivering services to the community and undertaking capital investment as set out in the 2018-28 Long-term Plan and the subsequent 2020-21 Annual Plan. The financial results and forecasts are normally provided to Council along with non-financial results. Due to timeframes to collate non-financials, the financial report is provided separately as the information is relevant to the Long-Term plan.

7. In July 2020, following the Covid19 lockdown, the 2020-21 Annual Plan was revised to reflect an expectation of slower economic activity and building development. This has not proved the case with building development and asset revenue from development contributions being at pre-Covid levels.

Strategic / Statutory Context

8. Maintaining expenditure within budget ensures delivery of services in a financially sustainable way, e.g., a shortfall of rates funding or other revenue not matched by lower expenditure would result in higher levels of debt.

DISCUSSION

Part 1: Financial Performance

9. Attachments A and B to this report provide a summary of Council’s financial performance for the year to date. The content of this report includes:

(a) A summary of revenue and expenditure year to date with revised full year projections presented as a Statement of Comprehensive Revenue and Expense (Attachment A).

(b) The Treasury report which shows borrowing year to date and full-year projections, the average cost of funds and money market investments benchmarked to average return (Attachment A).

10. Summary Statement of Comprehensive Revenue and Expense (SOCRE, Attachment A) shows the operating and capital revenue and expenses in a format consistent with the Annual Report. It shows the year to date results for revenue and expenditure and provides full-year forecasts.

11. The nine-month result in the SOCRE forecasts a full year operational result which is $9.5m favourable to budget ($19.4m operating deficit). The overall surplus including asset revenue is $49.1m which is $2.7m favourable to budget. Revenue and expenditure budgets had been reduced in the revised annual plan post Covid-19. Actual operating revenue is ahead of budget.

12. Operating revenue is projected to be $6.7m above budget by year end. User fees are projected to be $4.6m above budget. User fee revenue has been particularly strong across Building services and airport activities as follows:

(a) Building services - up $3.8m

(b) Airport revenue - up $1.4m

13. Operating expenditure is projected to be below budget by $2.8m with other expenses lower than budget due primarily to budgeted contribution to Bayfair underpass, operating costs of kerbside, lower renewals undertaken by BVL, and some wastewater planning all not occurring until next financial year. These lower costs have been partially offset by higher costs associated with increased activity, particularly in building services. Some of these expenditure budgets will be requested to be carried forward into 2022 as part of the LTP process.

14. Development contribution revenue is tracking at pre-Covid19 levels and is expected to achieve $30m for the year.

15. Capital Expenditure is tracking well behind budget with a $108m underspend forecast. This underspend is over and above the capital adjustment of $43m budgeted as expected under-delivery of budgeted projects. Key projects such as Waiāri, Te Maunga and streetscape are underway, and expenditure is expected to be carried forward to the early months of 2022.

16. Debt is now projected to be significantly below annual plan budgeted levels largely as a result of slower capital delivery. The annual plan budget was for year-end debt of $686m. We are now projecting the year end position to be closer to $610-$620m. Depending on decisions on carryforward budgets and capital programme rephasing the debt position in the early years of the LTP is likely to be below that in the current draft LTP.

17. Summary Revenue and Expenditure variance by activity (Attachment A) highlights key variances by activity and provides a full year forecast. These results feed into the whole of council forecasts contained in the SOCRE.

18. The Treasury Report (Attachment A) shows total net debt to 31 March 2021 of $554m with the full year net debt forecast in the range of $610m-$620m, which is lower than budget by $66m to $76m as a result of slower timing of capital delivery.

19. The interest rate average at the end of March was 3.05%. Total HIF borrowing at 0% interest has increased to $96.5m. The year-end forecast average interest rate is approximately 3%.

20. The TCC Capital expenditure table (Attachment B) identifies capital project budgets for the year by significant projects and remaining growth, level of service and renewal project expenditure. It also shows $43m of capital expenditure adjustment which was the budgeted amount of capital non-delivery for the year. To the end of March 2021, capital spend has been $108m, which is 42% of full year budget. The full year projections at the end of March have been revised down to forecast expenditure of $149m, $58% of the full year budget.

21. Key pieces of work will continue to increase both internal and external capacity to deliver larger capital programmes. Throughout the LTP hearings and deliberations phases, staff will look to rephase capital expenditure, taking into account the ability of the organisation and sector to deliver on substantially larger programmes.

OPTIONs

22. There are no options associated with this report. The report is provided as information only.

Significance

23. The Local Government Act 2002 requires an assessment of the significance of matters, issues, proposals and decisions in this report against Council’s Significance and Engagement Policy. Council acknowledges that in some instances a matter, issue, proposal or decision may have a high degree of importance to individuals, groups, or agencies affected by the report.

24. In making this assessment, consideration has been given to the likely impact, and likely consequences for:

(a) the current and future social, economic, environmental, or cultural well-being of the district or region

(b) any persons who are likely to be particularly affected by, or interested in, the issue, proposal, decision, or matter

25. In accordance with the considerations above, criteria and thresholds in the policy, it is considered that the matter is of low significance.

ENGAGEMENT

26. Taking into consideration the above assessment, that the matter is of low significance, officers are of the opinion that no engagement is required.

Next Steps

27. This report ensures monitoring of Council performance to ensure compliance with Council’s budgets, policies and delegations. The review of spend to budget in 2020-21 for both capital projects and key operational expenditure (e.g. city planning) will be undertaken over coming weeks to form the basis of an executive report to deliberations on the LTP. Progress on this will be reported through the LTP process and budgets adjusted in July to reflect the latest information available which is expected to particularly impact on the early years of the capital expenditure programme in the Long-Term Plan.

Attachments

1. Attachment A - March 21 Financial Report - A12481624 ⇩

2. Attachment B - March 21 Capital Project Summary - A12506505 ⇩

Strategy, Finance and Risk Committee Meeting Agenda

17 May 2021

8.3 Audit NZ Report on the 30 June 2020 Annual Report and Preparation for the 2021 Annual Report and Audit

File Number: A12503821

Author: Kathryn Sharplin, Manager: Finance

Tracey Hughes, Financial Insights & Reporting Manager

Marin Gabric, Senior Financial Accountant

Authoriser: Paul Davidson, General Manager: Corporate Services

Purpose of the Report

1. The purpose of this report is to advise the Strategy Finance and Risk committee of the process and timetable for the annual audit of Tauranga City Council (TCC) and to present for information the Audit New Zealand Report to the Council on the Audit of Tauranga City Council for the year ended 30 June 2020.

Recommendations

That the Strategy Finance and Risk Committee:

(a) Receives the report Audit New Zealand Report on the 30 June 2020 Annual Report and Preparation for the 2021 Annual Report and Audit

(b) Receives the Report to Council from Audit New Zealand on the audit of Tauranga City Council for the year ended 30 June 2020

Executive Summary

2. TCC is audited annually by Audit New Zealand on the Annual Report for the year ended 30 June. The report includes information for the past year, including financial statements and non-financial performance measures set by Council during the Long-term plan (LTP) and annual plan processes.

3. As part of the audit process Audit New Zealand provide a report to Council on the audit. It sets out audit findings and draws attention to areas where the city council is doing well and where there are recommendations for improvement. Council staff review the findings and recommendations in the report and implement improvements.

4. The audit report was received in November 2020 and would normally be presented to council earlier than May of the following year. However, due to the appointment of commissioners and prioritisation of the LTP, this report has on this occasion been incorporated in discussions on the 2021 Annual Report and audit process. In the interim, staff have reviewed and where possible implemented changes as a result of the audit recommendations.

Background

5. Every year council produces an annual report. The annual report provides the community, the government, lending agencies, councillors and staff with a summary of work completed by council during the year and our performance both financial and non-financial compared with our proposed performance as set out in the relevant LTP (prepared three-yearly) and annual plans (prepared in the two years between adopting the LTP).

6. The audit process includes an interim audit which reviews council’s information systems, processes and internal controls. This is followed by a final audit of the financial and non-financial information for the year and its presentation in the Annual Report.

Audit New Zealand Recommendations on the 2020 Annual Report

7. Audit New Zealand identified main audit risks and issues prior to the audit which included:

(a) Covid-19,

(b) Fair value assessment of assets

(d) Management override of internal controls

(e) Revaluation of airport infrastructure and improvements and parks facilities

(f) Transition of finance system from Ozone to SAP

8. No issues were raised in relation to these risks.

9. A number of new recommendations were made and along with comments on progress against existing recommendations. Recommendations are coded under three categories:

(a) Urgent – significant deficiency exposes council to significant risk

(b) Necessary – deficiencies that need to be addressed to meet best practice including internal control

10. Page 5 of the Audit New Zealand report identifies new recommendations.

(a) No urgent recommendations were identified

(b) Four necessary recommendations were identified relating to performance measure data (4.1), timing of capitalisations (4.2), reviewing of journal entries (4.3) and updating of disclosure of interest in other entities.

11. All the necessary recommendations have been reviewed and items 4.2, and 4.3 have been addressed through process and system changes. The disclosure amendments required in 4.4 will be addressed as part of the year end processes. For item 4.1, from 2021-22, the first year of the 2021-31 LTP, measures and their measurement have been updated.

Timetable for Audit of the 2021 Annual Report

12. Audit New Zealand will commence their interim audit in the week of 10 May 2021, and will be on site for the finalisation of the audit in August 2021. Adoption of the audited Annual Report is planned for the final week of October 2021.

Strategic / Statutory Context

13. Requirements for the Annual Report and audit are set out in the Local Government Act 2002.

Options Analysis

14. This report and the attached Audit New Zealand report are for information.

Financial Considerations

15. There are no financial considerations arising directly from this report.

Legal Implications / Risks

16. There are no legal implications or risks arising from this report.

Consultation / Engagement

17. The Audit New Zealand report provides feedback to council and staff on areas for improvement. It is an internal document not requiring consultation with the community. Consultation on budgets occurs on the LTP and annual plans that are reported against in the annual report. The audited Annual Report is made public and included on the TCC website once adopted.

Significance

18. The Local Government Act 2002 requires an assessment of the significance of matters, issues, proposals and decisions in this report against Council’s Significance and Engagement Policy. Council acknowledges that in some instances a matter, issue, proposal or decision may have a high degree of importance to individuals, groups, or agencies affected by the report.

19. In making this assessment, consideration has been given to the likely impact, and likely consequences for:

(a) the current and future social, economic, environmental, or cultural well-being of the district or region

(b) any persons who are likely to be particularly affected by, or interested in, the issue, proposal, decision, or matter

20. In accordance with the considerations above, criteria and thresholds in the policy, it is considered that the matter is of low significance.

ENGAGEMENT

21. Taking into consideration the above assessment, that the matter is of low significance, officers are of the opinion that no further engagement is required prior to Council making a decision.

Next Steps

22. Staff will work with councillors during the internal audit process for the audit of the 2021 Annual Report.

Attachments

1. Report to the Council on the Audit of Tauranga City Council - 30 June 2020 - A12147401 ⇩

Strategy, Finance and Risk Committee Meeting Agenda

17 May 2021

8.4 Treasury Strategy

File Number: A12519791

Author: Mohan De Mel, Treasurer

Authoriser: Paul Davidson, General Manager: Corporate Services

Purpose of the Report

1. Treasury Policy requires strategies to be approved on a six-monthly basis. Treasury Policy was last reviewed November 2020. This report seeks approval for strategies for treasury risk management activities, debt issuance, investments, foreign exchange exposure management and interest rate hedging activities.

Recommendations

That the Strategy, Finance and Risk Committee:

(a) Receives the Treasury Strategy report.

(b) Approves the issuance of long and short-term debt on a wholesale basis to manage cash-flows.

(c) Approves the management of fixed interest rate hedging in the range of 50% to 60% at 2 years forward, and the range of 30% to 40% at 5 years forward.

(d) Approves maintenance of a minimum of $15m of cash and short-term investments to manage cash-flows.

(e) Approves hedging of all significant foreign exchange exposures.

(f) Recommends to Council to approve an interim Borrowing of $30m for the month of July 2021.

Executive Summary

2. This report outlines all significant treasury operational activities and seeks confirmation of existing strategies and approval for planned strategies.

3. Treasury Strategy is an important element of sound financial management and allows Council to efficiently manage its funding and associated risks.

4. This report notes that borrowing may be undertaken during July 2021, prior to the approval of the Long-term Plan (LTP) for general funding.

Background

Debt Management

5. Council has a large investment in infrastructural assets which have a long economic life and long-term benefits. Debt is utilised to fund infrastructure and it is recognised as an efficient mechanism to allocate the cost of infrastructure to the community.

6. Core external debt and working capital requirements are managed by issuing a combination of long-term and short-term debt. The maturity dates for new debt issuance are assessed under the following criteria:

· Borrowing margins for short vs long-term

· Investor demand including bank funding

· Local Government Funding Agency (LGFA) or other wholesale margins / maturities offered

· Compliance with LGFA covenants

· Housing Infrastructure Fund (HIF) drawdowns

· Existing maturity profile

· Available undrawn bank facilities

7. The graph below shows the debt maturity profile as at 31 March 2021 (years ending June).

8. Over the last 9 months a total of $148m of new medium to long-term debt has been issued. In addition, a further $20m of short-term debt was issued during the year to manage intra-year cash flows and this has now been repaid.

9. Debt duration (i.e. average maturity) is now at 5.43 years and it is planned to maintain duration above 5.0 years while ensuring no more than 33% of debt shall be subject to refinancing an any rolling 12 month period.

10. During 2020-21, $56m of long-term debt is due to mature and these maturities have been progressively pre-funded.

11. Debt position up to 30 June 2021:

Debt as at 31 March 2021 $680m

Drawdown from HIF during May / June or arrange funding from LGFA $ 10m

Long-term debt – May 2021 (maturity) ($ 50m)

HIF – June 2021 (maturity) ($ 6m)

Forecast gross debt 30 June 2021 (Net Debt approximately $600m) $634m

12. Net debt forecast has been revised down to $610 based on actual cashflows for April and is subject to change based on the level of capital expenditure undertaken over the next 2 months.

13. Forecast debt position for the 2021/2022 year:

Forecast gross debt 30 June 2021 $634m

New debt issuance 2021/2022 $182m

Long-term debt maturity ($66m)

Forecast gross debt 30 June 2022 $750m

The forecast gross debt of $750m by 30 June 2022 is $50m less than assumed in the draft LTP and expected delivery of capital during 2022 will be reassessed as part of finalising the LTP.

The chart below shows the indicative debt issuances planned by maturity for the 2021/22 financial year commencing July 2021.

14. Under Council’s Treasury Policy, Council is required to approve the borrowing programme annually. Normally this approval is sought in conjunction with the annual plan in June for the subsequent year. As the LTP approval is now planned to be completed post 30 June 2020, an interim borrowing approval of up to $30m is requested to manage cash flows. This borrowing will be scheduled only if detailed cash flows show a requirement for the period 1 July through to 31 July.

Bank Facilities

15. Currently Council has a $70m bank facility which is undrawn. This facility matures on 31 October 2023 and it is planned to renegotiate to extend the maturity date to October 2024. Generally, bank facilities are maintained within the ‘2 to 4 year’ maturity band.

16. Finance, Audit and Risk Committee Council previously approved to increase bank facilities by a further $30m as the debt levels increase to manage liquidity risk. An alternative basis to manage liquidity risk being to maintain a higher cash / short term investments position.

17. In general, bank facilities are available to be drawn down at short notice, provided if drawn, they are able to be repaid on a quarterly basis.

18. Access to liquidity funding by way of committed bank facilities and or liquid investments is required to manage liquidity risk.

19. Both Council’s Treasury Policy and LGFA financial covenants require a level of undrawn committed bank facilities or liquid investments or a combination of these. The key objective is to maintain adequate liquidity in the context of managing debt maturities and debt servicing on a 12-month rolling basis.

20. It is important to note that any drawdown from bank facilities would need to be managed within the existing net debt to revenue ratio.

21. LGFA now are also offering committed facilities to Councils. Consideration will be given to undertake the increased $30m of facilities with LGFA.

22. Current annual facility costs are 0.20% ($140k for $70m). Generally pricing on facilities are reviewed on an annual basis.

Liquidity Risk

23. Treasury Policy outlines the management framework for funding, liquidity and credit risks. Liquidity risk primarily focuses on ensuring that there are sufficient funds available to meet obligations in an orderly manner.

24. Two key liquidity risk management indicators are:

(a) The primary debt maturity limit requires ‘external debt, committed bank facilities and cash / cash equivalent investments’ to be maintained above 100% on 12-month peak forecast net external debt, and

(b) No more than 33% of debt be refinanced in any rolling 12-month period.

Forecast debt levels remain compliant with the above liquidity risk indicators.

25. New debt issuances are managed to maintain debt duration above 5 years.

Local Government Funding Agency (“LGFA”)

26. The New Zealand Local Government Funding Agency (“LGFA”) is an agency specialising in financing of the local government sector. LGFA was established to raise debt on behalf of councils on terms that are more favourable to them than if they raised the debt directly.

27. LGFA was incorporated as a limited liability company under the Companies Act 1993 on 1 December 2011. Following the enactment of the Local Government Borrowing Act 2011. As LGFA is majority owned by councils, it constitutes a “Council Controlled Organisation” (“CCO”) under the Local Government Act 2002.

28. LGFA currently has 45m ordinary shares on issue, 20m of which remain uncalled. Currently there are 30 council shareholders owning 80% and New Zealand Government owning 20%.

29. The capital structure of LGFA also includes Borrower Notes. These are subordinated convertible debt instruments which each council that borrows from LGFA must subscribe for 2.5% of any long-term borrowing from LGFA by a council. Under normal circumstances, these Borrower Notes are redeemed at the maturity of the associated debt.

30. LGFA has credit ratings from S&P Global Ratings and Fitch Rating Services. Credit rating was upgraded to AAA (local-currency) by S&P on 21 February 2021 and is equivalent to the New Zealand Government’s offshore rating.

31. LGFA’s debt obligations are guaranteed by council shareholders and any other councils that borrow in excess of $20m (total guarantors 60). The New Zealand Government does not guarantee LGFA. Any call under the guarantee will be allocated across all the guarantors on a pro rata basis in relation to their rates revenue.

32. Now 71 councils (out of 78) are members of LGFA.

33. The LGFA Board is responsible for the strategic direction and control of LGFA’s activities and comprises five independent directors and one non-independent director.

34. The LGFA Shareholders’ Council comprises five to ten appointees from the council shareholders and the New Zealand Government. The role of the Shareholders’ Council being to:

· Review and report performance of LGFA and the Board;

· Recommend the appointment, removal, replacement and remuneration of directors;

· Recommend changes to polices, or the Statement of Intent, or any other matters requiring council approval; and

· Update shareholders on LGFA matters.

35. LGFA can lend to councils and to 100% council owned Council Controlled Organisations (CCOs) (only exception being those with a partial Crown ownership). Any lending to CCOs requires parent council(s) approval with appropriate security structure arrangements.

36. As at 31 March 2021, total LGFA bonds (long-term) on issue were $14,240m, of which $565m have been on-lent to Tauranga City Council.

37. The graph below shows the borrowings from LGFA on a fixed interest vs floating interest rate basis.

38. Current new fixed rate borrowing rates from LGFA are:

1 Year 0.71% 6 Year 1.76%

2 Year 0.84% 8 Year 2.18%

3 Year 1.06% 12 Year 2.69%

4 Year 1.30% 16 Year 3.06%

5 Year 1.55%

Latest LGFA Borrowing rates attached.

Security

39. Generally, debt will be issued under the existing Council’s Debenture Trust Deed (“DTD”) which offers rates revenue as security to attract lower borrowing margins. Council’s Trustee appointed under the DTD is Covenant Trustee Services Limited. All debt obligations are registered with Link Market Services Limited.

Interest Rate Risk Management

40. The overall objective of the interest rate risk management strategy is to:

· Minimise the average net interest cost on borrowings over the long-term.

· Minimise large concentrations of interest rate risk.

· Increase duration of the interest rate re-pricing profile.

· Maintain an appropriate mix of floating / fixed interest rate exposures.

41. Council is exposed to interest rate fluctuations on existing and future borrowings. Interest rate risk is minimised by managing floating and fixed interest rate exposures within the Treasury Policy limits framework. The overall outcome of interest rate risk management is reflected in the average interest rate on borrowings.

42. As at 31 March 2021 the fixed interest position was $504m which was 79% of debt. The graph below shows the existing fixed interest rate positions (fixed rate debt and interest rate hedging) over the next 3 years on a monthly basis:

43. Treasury Policy outlines the framework for interest rate risk management activities. Interest rate risk is managed with minimum and maximum fixed rate debt percentages by time bands. These minimum and maximum levels by time bands are designed to minimise interest rate re-price risks.

44. The chart below shows the fixed interest rate positions relative to forecast debt over time. The fixed interest rate positions include fixed rate debt issued, planned drawdowns from HIF and existing interest rate hedging. Forecast debt levels have been adjusted to recognise future lower capital delivery / carry forwards at the end of each year throughout the LTP period, these adjustments range from $50m to $120m. This adjustment is required to ensure interest rate hedging is maintained at the appropriate level and not over hedged.

45. To illustrate the above graph, at March 2023 the fixed interest rate position is at 49% based on forecast debt of $858m.

46. Analysis of debt levels and associated fixed rate positions are reviewed on a monthly rolling basis. The graph below shows the current position rolled forward to 30 June 2021. Changes from the above graph reflects debt and interest rate hedging maturing between 1 April and 30 June 2021.

47. The fixed interest rate profile (%) will be amended once the LTP is finalised.

48. In terms of managing longer term interest rate risks, it is recommended to maintain an interest rate hedging profile between 50% to 60% at 2 years forward and 30% to 40% at 5 years forward. It is planned to increase the interest rate hedging levels over the next 6 months.

Net Interest Budget

49. Gross debt is forecast to be $635m with net debt of $610m as at 30 June 2021. The average interest rate for 30 June 2021 is forecast to be 3.0%.

50. The table below shows the net external interest position for the current year and 2021/22 year. Forecast interest savings for the current year resulting from Reserve Bank reducing the Official Cash Rate (March 2020), long-term interest rates reducing due to global risks and slower capital expenditure delivery.

Net External

Interest

Budget

Forecast

Variance

Fav (Unfav.)

2020/21

$20.30m

$19.66m

$0.64m

2021/22

$21.69m

The higher net interest budget for 2021/22 reflects higher debt and a gradual increase in interest rates during the 2^nd half of the year.

51. The graph below shows the forecast monthly debt levels together with the average interest rates for the current and next financial years.

Investments

52. From a short-term working capital management perspective, it is proposed to maintain a minimum liquid investments balance of $15m. This level of working capital is sufficient to manage the net cash flows during an average month. Overall, the investment portfolio is managed in line with the detailed monthly cash flow forecast.

Foreign Exchange

53. Under the policy, upon approval of expenditure, all significant commitments for foreign exchange are hedged. Generally foreign exchange exposures above NZ$100,000 are regarded as significant.

Currently there are no outstanding foreign exchange contracts.

Treasury Policy

54. Treasury Policy was reviewed by Bancorp Treasury Services and approved by Finance, Audit and Risk Committee November 2020. Key changes were:

· Revision of interest rate hedging time bands (Treasury Policy section 5.1.1);

· Simplification of the debt maturity structure to no more than 33% of debt maturing in any 12 month period; and

· Introduction of the treasury performance measuring methodology.

Copy of the Treasury Policy attached.

Strategic / Statutory Context

55. The Treasury Strategy is an important element of sound financial management and allows Council to efficiently manage its funding and associated risks. These strategies ensure compliance with Treasury Policy Limits.

Options Analysis

56. Option 1: Approve Recommendations

The Committee is recommended to approve the above treasury strategies. The recommendations ensure compliance with Council’s Treasury Policy: the effective management of both interest rate and funding risks and allows the achievement of existing net interest rate budgets.

Option 2: Do not Approve Recommendations

Council may decide not to approve the recommendations. This may risk Council not complying with its Treasury Policy and may lead to increased interest rate and funding risks, and sub-optimal net interest costs. Council would not be able to borrow to fund its capital programme for the month of July without an approved borrowing resolution.

Consultation / Engagement

57. Taking into consideration the above assessment, that the matter is of low significance, officers are of the opinion that no engagement is required.

Significance

58. The Local Government Act 2002 requires an assessment of the significance of matters, issues, proposals and decisions in this report against Council’s Significance and Engagement Policy. Council acknowledges that in some instances a matter, issue, proposal or decision may have a high degree of importance to individuals, groups, or agencies affected by the report.

59. In making this assessment, consideration has been given to the likely impact, and likely consequences for:

(a) the current and future social, economic, environmental, or cultural well-being of the district or region

(b) any persons who are likely to be particularly affected by, or interested in, the issue, proposal, decision, or matter

60. The consideration of treasury risk management activities is considered of low significance, in terms of Council’s Significance and Engagement Policy. These approvals support ongoing operational risk management activities.

Next Steps

61. Implementation of Treasury Strategy within the Treasury Policy framework.

Attachments

1. Treasury Policy Final 3 November 2020 - A12519938 ⇩

2. Council Borrower Weekly Email - 27 April 2021 - A12520101 ⇩

Strategy, Finance and Risk Committee Meeting Agenda

17 May 2021

8.5 Quarter 2&3 LGOIMA Requests and Commission Queries

File Number: A12492477

Author: Will Henry, Democracy Services Advisor

Authoriser: Coral Hair, Manager: Democracy Services

Purpose of the Report

1. To update the Committee on Local Government Information and Meetings Act 1987 (LGOIMA) and Privacy requests as well as the Commission queries and the final Mayor and Councillor request data.

Recommendations

That the Strategy, Finance and Risk Committee receives the report: Quarter 2 & 3 Local Government Official Information and Meetings Act 1987, the final Mayor and Councillor requests and the Commission queries.

introduction

2. This report is for six months and includes data on the LGOIMA and Privacy Act requests. It includes Commissioner queries and the last update on the Mayor and Councillors requests. There are no observable trends noted in this reporting period. Further analysis in the table:

Analysis of LGOIMA and privacy requests received 1 October 2020 to 31 March 2021
Measure	Statistics
Total received	114
Total finalised	138^{^[3]}
Total LGOIMA	107 (94%)
Total privacy	2 (2%)
Total both LGOIMA & privacy	5 (4%)
Total withdrawn	4 (3%)
Total withheld in part	27 (24%)
Total withheld	14 (12%)
Total provided in full	69 (61%)
Total finalised within statutory timeframes	130 (93%)^{^[4]}
Total chargeable time	681 hours^{^[5]}
Average chargeable time taken	7.3 hours
Longest time taken	50 hours
Total requesters who made two or more requests	10 requesters^{^[6]}
Total extensions of time	8

data analysis

3. The top four allocations by business group for the official information requests received in the period were: People and Engagement (26%), Corporate Services 26%, Regulatory and Compliance (23%) and Infrastructure (18%).

Source of Requests 1 October 2020- 31 March 2021
Source	Statistics
Total received from individuals	81 (72%)
Total received from organisations	20 (17%)
Total received from the media	13 (11%)

4. Three Ombudsman complaints and one Privacy Commissioner complaint in relation to official information requests are currently open. Of these, one Privacy Commissioner complaint was received in Q2 and two Ombudsman complaints were received in Q3. Two of the Q2/Q3 complaints belong to the amended response process.

5. All LGOIMA considered to be of public interest are published on the TCC website. These can be searched for by subject or date, the published responses can be found under the Council page, Official Information requests, view LGOIMA responses. The link to the responses is below:

https://www.tauranga.govt.nz/council/about-your-council/official-information-requests/lgoima-responses

commissioner and mayor and councillors queries

6. Commissioner enquiries come mainly through the Commissioner clinics. These are logged and responded to. Statistics for the period 9 February to 31 March 2021 are set out below.

Commissioner enquiries – 9 February 2021 to 31 March 2021
Type of measure	Statistics
Number received	11
Number finalised	9 (2 enquiries are outstanding)
Business Group allocation	Regulatory and Compliance (36%), Community Services (27%), Infrastructure (18%), Chief Executive (18%)

7. Between 1 October 2020 and 8 February 2021, we received 178 Mayor and Councillors queries. All of these have been finalised.

Ombudsman’s report and policy

8. The report on LGOIMA compliance and practice at TCC was published by the Office of the Ombudsman on 3 February 2021. A progress report was provided to the Office of the Ombudsman on 14 April 2021. Of the 37 suggested actions from the initial investigation there are now nine outstanding that the staff Working Group continues to progress.

9. Over this period the Charging Policy, Complaints Procedures, Unreasonable Complainant Conduct Policy have all been completed and are published on the TCC website. These documents along with the Unreasonable Complainant Guidelines have been sent to People Leaders to discuss with their teams so staff are aware of the new policies and procedures.

Attachments

Nil

Strategy, Finance and Risk Committee Meeting Agenda

17 May 2021

8.7 Sustainability Update

File Number: A12506212

Author: Sarah Searle, Strategic Advisor

Authoriser: Christine Jones, General Manager: Strategy & Growth

Purpose of the Report

1. To provide an update on the sustainability work programme (“Sustainability Framework Project”), including sustainability stocktake and next steps.

Recommendations

That the Strategy, Finance and Risk Committee receives the report – Sustainability Update.

Executive Summary

2. A comprehensive sustainability stocktake (“the Stocktake”) is being undertaken by sustainability consultants Proxima Consulting Ltd (“Proxima”) and this will be shared with Commissioners and relevant stakeholders in coming weeks.

3. Next steps and intended phases of the Sustainability Framework Project are outlined below, namely -

(a) Sustainability Stocktake and Advice (Phase One) – underway – completion by end of this Financial Year

(b) Development of Sustainability Strategy and Action Plan (Phase Two)

(c) Implementation, monitoring and measurement, and reporting of progress against the action plan (Phase Three)

4. Progress updates will be brought back to this Committee per the draft Committee work programme under development.

Background

5. As part of the 2020/21 Annual Plan process, Council approved a refreshed approach to sustainability encompassing social, environmental, cultural and economic wellbeing. That approach included:

· the delivery of a stocktake of council’s current approach to sustainability

· the creation and implementation of a sustainability framework for the organisation

· the development and implementation of action plans

· the establishment of an independent sustainability advisory board

· a $400,000 budget for the board, consultants and staff to enable this work to occur

6. It is important to emphasise that sustainability through this resolution and subsequent work is defined holistically, not solely environmental sustainability.

7. Papers brought to Council and the Policy Committee on 16 July, 08 September and 20 October 2020 focussed on establishment of the proposed Independent Sustainability Advisory Board (“ISAB”) and commencement of the sustainability stocktake.

8. Due to factors including the appointment of Commissioners and desire to avoid duplication of processes and delays to decision-making, a decision was made at the Council meeting of 08 March 2021 to discontinue establishment of the ISAB as it was no longer the best strategic fit to achieve the desired sustainability objectives.

Sustainability stocktake

9. In December 2020 Proxima were appointed to undertake the Stocktake in order to provide a snapshot of current council activities and advice around applicability of potential frameworks for guiding sustainability.

10. Work on the Stocktake began in late January 2021.

11. Proxima’s work has involved –

· A TCC workshop around applicability of different sustainability frameworks

· Benchmarking of all council activities against a methodology called “Thriving Cities” (which is derived from Doughnut Economics), cross-referenced against Council’s activities and other relevant sustainability frameworks such as the United Nations’ Sustainable Development Goals

· Development of recommendations and high-level observations and insights (including sustainability success stories, big challenges, obvious gaps and insights from stakeholder discussions).

12. At the time of writing this report a first draft of the stocktake had been completed, and it is anticipated that the stocktake will be finalised by mid May.

Next steps and sustainability work programme

13. Significant planning is underway in relation to the Sustainability Framework Project. This has included the addition of a Sustainability Specialist role within the Strategy & Growth group.

14. The intended work programme is divided into three phases, namely –

(a) Sustainability Stocktake and Advice (Phase One) – underway – completion by end of this Financial Year

(b) Development of Sustainability Strategy and Action Plan (Phase Two)

Phase one

15. Per the summary above, Phase One of the Sustainability Framework Project is underway. This phase includes:

· The Stocktake being undertaken by Proxima,

· Review of reports prepared for Council considerations related to sustainability (as referenced above),

· Assessment/review of the Stocktake,

· Benchmarking sustainability work across other ‘like’ councils, including resourcing and organisational structure,

· Peer review/comparison of Proxima work to Sustainable Development Goals, Global Reporting Initiative / other indicators; and

· Planning for linkages between the City Futures Project, strategic framework refresh, and Sustainability Framework Project.

16. Phase One is the information gathering stage and includes initial engagement with TCC activity managers, and already-engaged stakeholders to ensure a representative view of the current state of sustainability performance of the council for its own operations, and the city.

17. At the end of Phase One, we will be in a position to provide the Executive Team and Commissioners with:

· a completed ‘sustainability stocktake’,

· a draft proposal of the way in which sustainability could be incorporated into the council’s strategic framework,

· a comparison of TCC’s current performance/position compared to other ‘like’ councils in New Zealand and Australia; and

· a recommendation on which sustainability framework or goals to adopt to develop a sustainability strategy and associated action plan (which will include the proposed scope, engagement, and the funding and resource requirement).

18. Phase Two (remainder of 2021 calendar year) will involve:

· Genuine co-design and collaboration with key stakeholders to develop the sustainability strategy and action plan.

· Agreeing resourcing for the first two years through the 2022/23 Annual Plan process.

19. Phase Three (2022 and beyond) will involve:

· The implementation of the action plan.

· Agreeing resourcing for the subsequent ten years through the 2024-34 Long Term Plan process.

· Monitoring and measurement of the quantitative and qualitative outcomes of the action plan implementation.

· Reporting of the achievements, challenges, and opportunities realised from the implementation of the action plan.

Link with other key projects

20. As outlined above, it is crucial that the Sustainability Framework Project aligns with other major strategic projects underway.

21. These include the City Futures Project and council’s own strategic framework refresh. Updates on both these projects will be brought to this Committee per the draft work programme under development, and direction sought from the Committee.

22. One important sub-initiative is that work (previously stalled) has recommenced on finalising the draft Environment Strategy, as part of the strategic framework refresh. As noted above, “environment” and “sustainability” are not the same, however an environment strategy (including climate change) will be an essential sub-component to our overall sustainability focus. A workplan is currently being developed for continuing / finalising an environment strategy.

Significance

24. In making this assessment, consideration has been given to the likely impact, and likely consequences for:

(a) the current and future social, economic, environmental, or cultural well-being of the district or region

(b) any persons who are likely to be affected by, or interested in, the issue, proposal, decision, or matter

25. In accordance with the considerations above, while the matter of sustainability affects all Tauranga residents, current and future, and is therefore of high significance, the current report relates to operationalising previous council decisions and the overall assessment of significance is therefore medium.

ENGAGEMENT

26. Per the work programme above and next steps below, the stocktake and associated information will be shared with relevant stakeholders, and broader engagement will be undertaken as part of the next phase(s) of the Sustainability Framework Project.

Next Steps

27. The findings of the stocktake will be shared in coming weeks with the Commissioners and other relevant stakeholders (including those who participated in its preparation).

28. Work will continue on completion of Phase One (as detailed above) of the Sustainability Framework Project and commencement of Phase Two.

29. Regular updates will be brought back to this Committee per the draft work programme.

Attachments

Nil

Strategy, Finance and Risk Committee Meeting Agenda

17 May 2021

8.8 Monitoring and Update Report - City Plan Review

File Number: A12520161

Author: Janine Speedy, Team Leader: City Planning

Authoriser: Christine Jones, General Manager: Strategy & Growth

Purpose of the Report

1. The purpose of this report is to provide an update on the City Plan Review project.

Recommendations

That the Strategy, Finance and Risk Committee:

(a) Receives the Monitoring and Update Report - City Plan Review report.

(b) Notes progress with the City Plan Review project in accordance with the approved project plan.

Executive Summary

2. The review of the Tauranga City Plan project is a significant project for Council and is included in the Long-Term Plan. A project plan was approved by the Urban Form and Transport Development Committee on 21 July 2020.

3. The City Plan Review project is a 4-6 year project, with a proposed plan required to be notified by April 2024 under the National Planning Standards.

4. This report provides an update on the project, and discusses the implications of the Government’s Resource Management Reform.

Background

5. The City Plan Review is currently in Phase 1 (research and investigation) and Phase 2 (issues and options), which are being run concurrently. A dedicated project manager, technical director and community engagement managers have been in place to implement the approved project plan and task requirements. The project structure was implemented in July 2020, with an internal Project Steering Group, Project Team and five workstreams established.

6. Chapter project plans have been prepared for each chapter of the new City Plan to identify scope, resources, risks and deliverables. The 22 chapter project plans provide the basis for preparing a draft City Plan currently planned for public input in 2022 based on the mandatory National Planning Standards.

7. The potential impact of central Government’s Resource Management Reform (RM Reforms) was identified as a significant risk to the City Plan Review during the project planning phase, and noted in the approved Project Plan as potentially having a high impact on the project.

8. On 10 March 2021, the Minister for the Environment, Hon David Parker, announced that Government would introduce three new pieces of legislation to replace the Resource Management Act (RMA). The Natural and Built Environment Act (NBA) would see a combined plan for each region prepared developed collaboratively by all councils within a region.

9. Council are yet to have clear direction from central Government on the implications for a combined plan on the City Plan Review. To manage this risk, staff will be delaying the progression of some chapters to reduce undertaking work that is likely to require rework through a combined plan. However, the City Plan Review will continue with delivery of phases 1 and 2 which culminate in a public discussion document of key issues and options for the City Plan for engagement in October 2021. This approach preserves Council’s position on how and/or if, it proceeds with the further phases of the City Plan Review.

10. Some of the key issues and options topics include affordable housing, urban design and sustainable aspects of development. A further report will be brought to the next committee meeting for direction on issues and options to be included in the upcoming discussion document.

11. Staff will monitor the preparation of the NBA closely and report back to Council when direction is provided on transitional provisions and what impact that has on the City Plan Review.

12. As part of this City Plan Review, it was requested that staff consider opportunities for a combined plan with Western Bay of Plenty District Council. Given the uncertainties associated with the RM Reforms, staff from both councils are of the view that preparing a combined plan between the two councils now would be an inefficient use of resources, when the process of a combined plan is expected to be significantly different under the NBA. Staff across both councils’ support alignment across the following:

· Collaborative initiatives currently underway. These include developing a joint commercial and industrial centres hierarchy and the implementation of the National Policy Statement on Urban development 2020;

· Alignment of structure and layout to meet the requirements of the National Planning Standards;

· Bay of Plenty Regional Council – Toi Moana, Western Bay of Plenty District Council and Tauranga City Council meet 6 weekly to discuss alignment across timeframes and workstreams;

· Investigation of key issues and opportunities that cross both councils to be undertaken as one piece of work;

· Joint engagement with tangata whenua where possible;

· Continue previous joint initiatives, such as papakainga provisions and road hierarchy; and

· Using the same eplan tool.

13. Alignment in the above areas will deliver consistency of approach in many of the more significant areas while avoiding the costs and inefficiencies which will likely arise from a fully combined plan process.

Strategic / Statutory Context

14. The City Plan must give effect to current national policy statements. There are also new requirements through national policy statements for urban development and freshwater management and the proposed national policy statements for highly productive land and indigenous biodiversity.

15. In addition, since the last City Plan was adopted, changes have been made at a regional level, with a new Regional Coastal Environment Plan, Regional Natural Resources Plan and amendments to the Regional Policy Statement, in particular introducing more stringent requirements for managing natural hazard risk. The City Plan must not be inconsistent with regional plans.

16. Staff have sought direction from BOPRC on meeting the Regional Policy Statement for natural hazards. A response has recently been received, which staff are currently through and will report back to an upcoming meeting if there are any matters of significance arising.

17. The City Plan can also play a role in terms of implementing Council’s own vision and policies by focusing on those elements that have a resource management lens.

18. The Government is intending to replace the RMA with a new Natural and Built Environments Act. Ministry for the Environment officials have advised that:

a) existing RMA requirements still apply until they are changed.

b) there will be transitional provisions in the new legislation to account for national direction implementation and the different stages that councils are at in their plan processes.

c) An exposure draft of the Natural and Built Environments Bill will be released for submissions mid-year and a final Bill is expected to be ready for introduction to the House by the end of the year.

19. Discussions with other councils on the progression of their reviews, have advised that they are taking the same approach as Council and awaiting direction from central Government before significantly progressing their district plan review. Some councils have already decided not to progress with their reviews. Financial Considerations

20. There are no financial considerations associated with this report. The cost associated with the City Plan Review is proposed through the Long Term Plan 2021-2031 as agreed by the Urban Form and Transport Development Committee on 21 July 2020.

Legal Implications / Risks

21. Section 79 of the RMA requires regional and territorial authorities to commence a review of their plans at least once every 10 years. The Tauranga City Plan was made fully operative in September 2013. Therefore, Council is required to commence a review of the City Plan by 2023.

22. However, central Government introduced the National Planning Standards to make council plans and policy statements more consistent, easier to prepare, understand and comply with. The first set of planning standards came into force on 3 May 2019. The National Planning Standards require Council to publicly notify the next Tauranga City Plan for formal submissions by April 2024. Hence a key reason for commencing the City Plan review ahead of 2023.

23. To meet this timeframe, the project was required to start in the 2020/21 financial year. A significant amount of work is required to meet national and regional direction and address key issues important to the community, tangata whenua and stakeholders.

24. The project plan includes a risk register, that will be revisited on a regular basis. The key risks identified are:

(a) Balance between enabling growth and ensuring high quality built form and environmental outcomes;

(b) Meeting community, tangata whenua and stakeholder expectations;

(d) Giving effect to strategic direction, including Urban Form and Transport Initiative and SmartGrowth;

(e) Timing of Bay of Plenty Regional Policy Statement review and potential challenges implementing some of the existing provisions of the RPS;

(f) Project scope increasing and resourcing being insufficient.

25. For RM Reform, there is a risk as to whether the Government is able to provide sufficient certainty to Council by the end of the year to enable an informed decision on whether or not to proceed with the next phase of the City Plan Review.

Consultation / Engagement

26. Recent planning projects and other Council engagement initiatives are being used to inform the City Plan Review. These include the Te Papa Spatial Plan, Urban Form and Transport Initiative, Proposed Plan Changes 26, 27 and 30, Vital Update 2020 and the City Futures project.

27. Workshops with stakeholders were held on 8, 10 and 11 March 2021 to identify issues and possible solutions or opportunities for the City Plan Review to consider. A second series of workshops is planned for late-June to consider in more detail how the City Plan might address stakeholder issues and concerns.

28. Two hui were held with iwi and hapu on 30 March at Hairini Marae and on 20 April 2021 at Hungahungatoroa Marae to identify issues for tangata whenua, development aspirations and cultural values. Tangata whenua engagement has been progressed through the Tangata Whenua workstream, which was established as part of the project plan adopted in July last year. This includes external and internal resources to progress this workstream.

29. A dedicated City Plan Review webpage was established on Council’s website on 4 December 2020 to provide information and the opportunity to provide comment.

30. Staff have sought to better understand requests for rezoning of land, outside of committed Council growth areas such as Te Tumu and Tauriko West. Information is being obtained from landowners and developers to ascertain rezoning requests to be considered as part of the project.

Significance

31. The Local Government Act 2002 requires an assessment of the significance of matters, issues, proposals and decisions in this report against Council’s Significance and Engagement Policy. Council acknowledges that in some instances a matter, issue, proposal or decision may have a high degree of importance to individuals, groups, or agencies affected by the report.

32. In making this assessment, consideration has been given to the likely impact, and likely consequences for:

(a) the current and future social, economic, environmental, or cultural well-being of the district or region

(b) any persons who are likely to be particularly affected by, or interested in, the matter

33. In accordance with the considerations above, criteria and thresholds in the policy, the City Plan Review has been identified as high significance that has high public interest, however the update provided in this report is of low significance.

ENGAGEMENT

34. Taking into consideration the above assessment, that the matter is of low significance, officers are of the opinion that no further engagement is required prior to Council making a decision.

Next Steps

35. Community awareness of the City Plan Review will commence in the next few months, ahead of the release of topic-based discussion documents in late-September 2021 seeking feedback on issues and options for the City Plan to address.

36. Staff will monitor progress with the replacement RMA legislation and continue to seek certainty on implications and timing for the City Plan Review.

37. Technical work to inform the City Plan Review will continue alongside further stakeholder and tangata whenua/Maori engagement, as set out in the approved project plan.

Attachments

Nil

[1] Clause 26 (4) Schedule 7 LGA “The local authority or the committee may appoint a deputy chairperson to act in the absence of the chairperson.”

[2] Clause 26 (6) Schedule 7 LGA “However, if a deputy mayor or deputy chairperson has not been appointed, or if the deputy mayor or deputy chairperson [is] also absent, the members of the local authority or of the committee that are present must elect 1 of their number to preside at that meeting, and that person may exercise at that meeting the responsibilities, duties, and powers of the [mayor or chairperson].”

[3] This includes some requests made before 1 October 2020 but finalised in this period.

[5] Recording of chargeable time began on 1 November 2020.

[6] The most frequent requester made 12 requests over the period.


AGENDA Strategy, Finance and Risk Committee Meeting Monday, 17 May 2021
I hereby give notice that a Strategy, Finance and Risk Committee Meeting will be held on:
Date:	Monday, 17 May 2021
Time:	10.30am
Location:	Tauranga City Council Council Chambers 91 Willow Street Tauranga
Please note that this meeting will be livestreamed and the recording will be publicly available on Tauranga City Council's website: www.tauranga.govt.nz.
Marty Grenfell Chief Executive