Agenda of Ordinary Council Meeting

Ordinary Council Meeting Agenda

24 June 2021

11 Business

11.1 Deliberations Report - Options for the Level of Investment and Implications for Rates and Debt

File Number: A12605351

Author: Kathryn Sharplin, Manager: Finance

Tracey Hughes, Financial Insights & Reporting Manager

James Woodward, Delivery Manager

Authoriser: Paul Davidson, General Manager: Corporate Services

Purpose of the Report

1. The purpose of this report is to present options for the level of investment in the 2021-31 Long-Term Plan (LTP) and the impact on rates and debt. These options take into account submissions on the LTP consultation document in relation to how much to invest along with further information affecting the capital and operating budgets. As other deliberations reports are worked through there may be further changes to the financials presented in this report.

Recommendations

That the Council:

a) Receives the Deliberations Report - Options for the Level of Investment and Implications for Rates and Debt

b) Agrees to the proposed level of capital investment for the LTP proposed in Option 1 and detailed in Attachment A, with the associated level of rates and debt in Attachment C.

c) Notes that the proposed level of rates and debt in later years of the LTP may be reduced as a result of reforms or alternative funding arrangements and that any such impact would be incorporated in subsequent Annual and Long-Term Plans.

d) Agrees to the proposed capital delivery adjustments in Option 1 that have been increased and adjusted to reflect revised assumptions or uncertainty of timing of funding agreements with partners including Waka Kotahi NZTA (Waka Kotahi) and challenges around project readiness regarding resilience projects identified within the bulk fund.

e) Agrees that the level of maintenance and renewals to be delivered in the first three years of the LTP will be less than budgeted in the draft LTP based on the lower Waka Kotahi funding.

f) Agrees to the list of projects in Attachment B that may be brought forward into 2022 from 2023 and later years to manage deliverability of the overall capital programme and support delivery of key outcomes.

g) Notes the reduction from the draft in rates-funded operational costs of $1.7m from lower opening debt position in July 2021 that resulted from slower capital delivery in 2021, and lower salary market movement than assumed in the draft.

h) Notes other deliberations reports recommend additional operational budgets to be added to 2022, which if agreed would offset some of the reduction in rates requirement noted in (g).

i) Agrees that the proposed budget includes areas of operating costs to be loan funded including:

i. Keenan Road and Tauriko Business Estate structure planning and

ii. Transport System Plan (TSP) programme management and stakeholder engagement and

iii. A portion of the community grants fund that may relate to capital items purchased through the grant

j) Agrees to debt retirement associated with these items over a period of five years to be rate-funded consistent with rate-funding for the appropriate activity.

Executive Summary

2. Tauranga City is a growth city with a legacy of underinvestment to cater for both its existing and future communities. It is experiencing a significant deficit in housing supply, transport infrastructure, community amenity, wastewater and water capacity. This is negatively impacting on the well-being of our community. The LTP provides the opportunity for Council to define a clear pathway forward to address these issues and to support this with an investment plan which is transparent for our community.

3. To address the issues facing the city and the outcomes sought on behalf of the community, significant capital investment is required in the LTP across three waters, transportation and community facilities. The first consultation topic in the LTP consultation document was “Invest in our City Now and for the Future. The proposal considered the amount and type of investment over the next ten years across six main areas of expenditure.

4. Overall, submissions have been in support of additional investment across the priority investment areas. However, many submissions have opposed the proposed rates increases, throughout the LTP. A balance between additional investment and rates has been suggested.

5. As well as the options consulted upon, this report identifies a further option for consideration in response to submissions and subsequent risk around Waka Kotahi (NZTA) funding and timing of the Transport System Plan (TSP).

6. As noted in the financial strategy, rate-funded debt retirement is not the preferred option to enable capital investment at the scale proposed. Local Government reform and alternative funding and financing arrangements have the potential to reduce the need for debt retirement. Several submissions supported the greater use of alternative funding and financing tools.

7. Deliverability was questioned in submissions and particularly in relation to justification for the proposed rating increases. It has also been subject to ongoing review by staff who recommend amendment to the programme under all options, based around rephasing projects not delivered in 2021, updated cost, timing, funding and deliverability information. Planning will continue to be able to increase delivery capability and project readiness so that should further funding become available needed investment can continue.

8. Waka Kotahi has revised down the projected subsidy rates for maintenance and renewals for the period 2022-2024 by $7m. The agency is still in the process of assessing relative priority of the larger transportation programme, including TSP against other priorities, which will affect the amount of funding available to Tauranga over time. Some of the programme adjustments recommended are to allow for uncertainty in the level of funding for TSP.

9. Operational budgets have been amended with no net increase in rates from these adjustments. Salary budgets have been amended to reflect revised establishment budgets and this has been fully offset by increased capitalisation across the business.

10. As a result of slower capital delivery, the rates requirement in 2022 has reduced by $1m, with a further $0.7m reduction in salary market movement. Revised lower capital spend in the early years of the LTP means lower debt servicing and depreciation costs continue through the early years of the LTP.

11. Specific areas of loan-funded operating expenditure have been identified for next year for which specific council approval is requested. Carry forward of operational budgets funded from rates in 2021 is also included in the revised budget and will be confirmed after the annual report.

Background

12. On 15 March 2021 council considered the issues and options facing the city, the outcomes sought on behalf of the city and the capital investment programme required to deliver on those outcomes. This work followed from earlier work on 14^th and 15^th December 2020 on investment options which were presented as scenarios of investment and financial implications along with the extent to which they delivered outcomes for the city.

13. As summarised in the 15 March 2021 council report, Tauranga has been on a fast growth track for much of the past 40 years and this is expected to continue.

14. However, during that time the city’s supply of housing and business land, its transport options, its water and wastewater networks, and its community facilities have not kept pace. A legacy of underinvestment has brought Tauranga to where it currently is, under-performing as a city and not meeting the needs of its residents, businesses and visitors.

15. In general, Tauranga’s infrastructure is running at or beyond its capacity. Nowhere is this more evident than on its transport system. But population growth and increased community demands are also putting increased pressure on other asset types and services. For instance, the city’s community facilities, the places that support the things we love to do, are often old and under-capacity; Baycourt was opened in 1983 and is half the size that might be expected for a city of 150,000 people; Memorial Park pool was opened in 1955; and the Domain grandstand was built in 1962 and has significant seismic issues. And while council is currently constructing a third water supply on the Waiari Stream, modelling shows that planning needs to start now to secure a fourth supply.

16. The Local Government Act 2002 requires that councils:

‘promote the social, economic, environmental, and cultural well-being of communities in the present and for the future’.^{^[1]}

17. In terms of the Local Government Act requirement, it is arguable that the city is currently able to promote the well-being of communities in the present. It is certain that without significant investment it will not be able to promote those same well-beings ‘for the future’.

18. In addition, significant planning has been completed at both sub-regional and city scale defining the strategic needs and gaps. This includes the Urban Form and Transport Initiative, Western Bay of Plenty Transport Systems Plan, Community Infrastructure Facilities Plan, corridor wastewater studies, infrastructure resilience plan. These various planning studies all build on the concept of creating well-serviced, connected communities to enable communities to thrive. Collectively these and other plans emphasise:

· the need for greater transport choices

· the need to invest in housing supply including intensification of existing urban areas

· the need to invest in facilities, not just transport corridors and pipes

· the need to future-proof investments in long-life capital assets

· the need to be resilient to climate change and other natural hazards.

19. Recognising these investments issues, the first consultation topic in the LTP consultation document was “Invest in our City Now and for the Future. The proposal considered the amount and type of investment over the next ten years across six main areas of expenditure:

(i) Community spaces and places

(ii) Supplying land for homes and businesses

(iii) Transport

(iv) City centre

(v) Resilience

(vi) Delivery

Investment Options Developed for Consultation

20. Two options were presented in the consultation document.

a) The preferred option 1 - to invest $4.6b, with an increase in rates (excluding water charges and including new kerbside service) paid by an average residential property of $7.58 per week and by an average commercial property of $32.45 per week.

b) The alternative option “to invest less” proposed a lower level of investment of $4.0b, with an increase in rates (excluding water charges and including a ) paid by an average residential property of $6.65 per week and by an average commercial property of $30.21 per week increase. This alternative option proposes projects not undertaken across community, transport, city centre, and resilience. The level of investment for supplying homes and businesses remained at the same level as option 1, which was to commence the two new growth areas at Te Tumu and Tauriko West by 2026.

21. The rates impact in 2022 was similar in option 2 as both options identified a need for significant capital expenditure over the ten years so that the costs of delivering, planning and providing the agreed levels of service next year remained similar. Both options included the new kerbside waste collection service. Future years rates were lower in option 2 with lower debt retirement required and lower operating costs from capital investment.

22. Further options for lower investment and rates were not provided in the consultation document. This is because lower investment options did not achieve required outcomes, particularly around housing supply, in the early years of the LTP.

23. The basis of the investment options for the draft consultation had been set at the council meetings of 14th and 15th December 2020. As part of the LTP development, Council considered report 10.3 Long-Term Plan 2021/31 – Update and Working Draft. In this report four fiscal scenarios (A to D) were considered that reflected a balance between investment to meet the current and future needs of the community and its fiscal impact on debt and revenue requirements.

24. Scenario A&B were restricted investment scenarios that focussed only on development of critical core infrastructure and did not support new community infrastructure or development of Tauriko West or Te Tumu new growth areas. These scenarios did not meet the strategic direction of council, the identified current and future needs of the community or Government requirements for new land supply for housing. Scenario C built on the base scenarios with partial implementation of approved strategic direction with only Tauriko West new growth area supported by council investment and limited community and transportation investment. Scenario D involved substantial implementation of approved strategic direction including community and transportation infrastructure.

25. On 15 December Council agreed Scenarios A&B had been useful for establishing the foundations of the LTP, and agreed that the draft for the baseline LTP should be at a Scenario C-Plus level that included Te Tumu growth area development within the ten years and further transportation investment from the scenario D option. This formed the basis of Option 2 levels of investment on the consultation document.

26. Subsequently, commissioners proposed a preferred option that included more community investment and more rapid implementation of resilience infrastructure investment within the ten years. This formed the basis of Option 1 the preferred option for the consultation document.

Submission responses

27. The consultation process involved feedback both verbal through community consultation and hearings and written through the written submission process. Commissioners held 34 different meetings over the 30-day consultation period involving 2200 people. 26 meetings were organised with the help of community leaders as well as a further 4 community drop in sessions and 4 pop up meetings at the home show, Saturday sports and farmers markets.

28. The core themes discussed at every meeting were:

(i) The six key investment areas

(ii) Who pays

(iii) Can we deliver and what assurance do we have

(iv) The city needs a vision

(v) What is going to happen in October and after the commissioners leave

29. The common sentiment of the meetings was that people were generally supportive of the LTP direction of the commissioners.

30. Of the 1054 submissions that directly commented on the level of investment and debt and rates impact- option 1 or 2:

(i) 490 (46%) were in support of the proposed level of investment in option 1.

(ii) 164 (16%) supported the lower level of investment proposed in option 2.

(iii) 20 (2%) commented on priority areas of investment but did not indicate support for either investment option 1 or 2.

(iv) 380 (36%) (355 of which were proforma responses from individual members of the Tauranga Ratepayers Alliance) supported much lower rates increases and the implied lower level of investment.

31. Of the 380 submissions that supported much lower rates most did not identify priority expenditure, but noted investment was needed and that growth infrastructure should be paid for by development contributions and targeted rates applicable to new properties and developments. These submissions expressed concern at one or a number of the following:

(i) The average rates increase for next year both residential and commercial

(ii) continued increases in rates over the ten years which would be unaffordable for some ratepayers

(iii) the size of capital expenditure proposed.

(iv) The ability of the council to deliver investment competently and efficiently

(v) The staff costs driving part of the rates increase for next year

32. Taken together the support for option 2 (164 submissions) and much lower rates (380 submissions including pro forma submissions) totals 533, exceeding the number of submissions supporting the proposed increased level of investment as per the draft LTP (490 submissions).

Options added in response to submissions

33. In response to concern about the level of rates increases two more options are presented in this report.

34. Option 3. This option aims to deliver on investment more slowly. By budgeting to complete the proposed investment over a longer timeframe outside the ten years, some of the rates increases arising from the large debt retirement charges proposed for transportation and resilience investment are also deferred outside the ten years.

35. This option is costed as to rates impact and total level of capital investment (Attachment C). The total capital proposed is $4.3b. It includes delivery of both new growth areas and of community infrastructure. The delivery of resilience, transportation (including TSP), and community projects includes a portion of expenditure phased outside the ten years. This is achieved through capital delivery adjustments across the programme and not by moving out specific projects. The difference from option 1 is an additional $371m moved out of the ten years. The detail of which projects would be moved out would be developed in later LTPs. The reduction in capital expenditure in the ten years reduces the required rate funded debt retirement over the ten years, by moving some of this beyond 2031. The programmes phased out of the ten years include $220m of TSP, and $151m of resilience.

36. Option 4. This option is identified as the investment level that would support ongoing single digit rates increases (excluding the impact of kerbside waste collection in year one). This would require a return to a level of investment between scenario B and C as considered by council in December 2020. These options were not supported by council in December as the baseline for the draft LTP. Option 4 is not fully costed because of uncertainty as to which areas of investment would be removed.

37. The capital programme would be closer to $2b over the ten years along the lines of scenario B/C in the December scenarios reported to council. It is likely to mean no significant community projects, new growth area investment limited to Tauriko West and not Te Tumu and not undertaking transportation projects agreed with our regional and NZTA partners. This option is not consistent with the strategic direction of council and Government requirements for land supply. This option has not been modelled as to detailed rates impacts from 2023 but would be expected to retain rates increases at single digit levels based on the key drivers of rates increases over time being due to capital investment (debt servicing, depreciation and debt retirement).

38. No option is presented to significantly reduce rates in 2022 from what is proposed in option 1. The level of rates is largely committed to as a result of past decisions on:

(i) The new kerbside waste collection service; and

(ii) staff and consultancy budget increases to enable higher capital delivery, programme assurance, planning and stakeholder engagement.

39. There would be some potential to reduce consultancy budgets and not recruit into new vacancies if decisions were made to reduce levels of service or specific initiatives.

Deliverability and Costs– Revisions to LTP phasing and budgets

40. Deliverability has been commented on frequently in submissions, even where higher investment levels are supported.

41. Further review of the investment programme that was proposed in option 1 and 2 of the consultation document has been undertaken by council staff in response to:

(i) slower capital delivery in 2021 ($66m),

(ii) revised costs and timing within and beyond the ten years ($111m),

(iii) third party funding and other project deliverability information.

42. These amendments to the programme have been applied to options 1,2, and 3. In option 1 it has resulted in $66m of budget from 2021 added to the 2022 programme, about $66m of budget from 2022 moved out to 2023 or later years which keeps the first year of capital investment similar to the draft budget. The overall increase of $177m in the ten-year programme has been largely offset by moving $155m of projects outside the ten years. The capital programme therefore remains at $4.6b for option 1. (Attachment A)

43. To achieve this movement outside the ten years high-level capital programme adjustments have been made to the resilience programme.

44. Staff will continue to plan for increased project delivery so that should additional funding become available will be in a position to deliver projects phased to later years or beyond the LTP period. The list of projects included in Attachment B relate to later year projects that may be able to be brought forward in order to ensure capital delivery is maximised. This provides some flexibility in managing the capital programme to ensure project delivery is maximised provided it is managed within the overall debt envelope.

Transport Investment and Waka Kotahi funding

45. A key assumption of this LTP is that most transport investment receives 51% subsidy from Waka Kotahi. Since the consultation, NZTA has advised that they are not able to fully fund TCC’s Maintenance, Operations and Renewal (MOR) request for 2022-2024. The reduction in Waka Kotahi funding is $7m less than budgeted meaning $14m of work is affected^{^[2]}.

46. The reduction in Waka Kotahi funding for MOR for 2022-2024 will eventually result in a reduced level of service. While we will be able to deliver the expected level of service under the new contract in year one and two, a lower level of funding will show for example more potholes, less sweeping / cleaning, more chip-seal where asphalt is justifiable, in year three of the LTP. The reduction in expected MOR has been factored into a wider transport programme capital adjustment which sees this expenditure moved out of year 3 and into later years of the LTP.

47. There is also risk around the amount and timing of Waka Kotahi investment in the TSP and other transport projects. To reflect this uncertainty about funding levels and timing, transport investment in the first five years has been reduced by $145m, with this budget moved into the last five years. Further information will be forthcoming over the next months and refined in later years as NZTA considers its funding priorities. The capital adjustments included for TSP across all investment options provide flexibility for council to respond to deliverability and funding uncertainty.

Revised Capital Programme – option 1

48. The revised option 1 programme capital expenditure after the adjustments described above is shown below, with the orange line representing the draft budget that was consulted on. The blue line represents the revised profile of expenditure including more substantial capital adjustments for TSP and resilience, particularly in the middle years of the 10-year programme. The revised programme is likely to be more deliverable as it suggests a more consistent level of annual expenditure.

49.

50. There is considerable supply side risk on costs of infrastructure with both the costs of materials and labour supply under pressure. Risk and contingency allowances have been included in current project budgets. However, further work is required to identify the potential impact on the programme over time of continued increases. The capital project delivery team will continue to review and manage this area of risk.

Operational Budgets

51. Operational budgets at the activity level have been amended within and amongst activities to reflect corrections, changes in timing, carry forward of 2021-funded operating projects and some reprioritisation of initiatives. There has been no net increase in rates from these changes. Salary budgets have been amended to reflect revised establishment position budgets and this has been fully offset by increased capitalisation across the project design and delivery parts of the business. The revised financials for each option from option 1 to 3 are shown as Attachment C.

52. There have been savings in operating costs and rates requirement in 2022 which flow through the next few years as a result of the lower opening debt balance from slower capital delivery in 2021. The revised phasing of projects also flows through to a proposed later start to rates-funded debt retirement to fund investment.

53. In 2022 a reduction in rates requirement of $1.7m (0.8% lower rates increase) comes from lower debt servicing and depreciation. This reduction applies across all options.

54. Under the revenue and financing policy operating expenditure can be loan funded where there is long-term benefit from the expenditure rather than benefits occurring in the year of spend. This rationale has been applied in the past for grants to the community for capital projects (eg, surf life-saving building) or for plans that provide long term benefit such as new growth area structure plans (Tauriko West, Te Tumu). In the LTP draft budgets these items of expenditure were identified as loan funded but they now require specific council resolution to support this.

55. The specific areas of operating expenditure requiring council support to be loan funded include:

a) Keenan Road and Tauriko Business Estate structure planning and

b) Transport System Plan (TSP) programme management and stakeholder engagement and depending on decisions regarding funding of the community grants

c) The portion of community grants relating to capital expenditure where these are recommended to be rate funded.

56. Loans used to fund operating costs are recommended to be paid back over 5 years with an associated rates requirement to retire these loans and cover interest.

57. Some items of operational expenditure budgeted and rated in 2021 will now not be undertaken till 2022. Budgets and funding for these areas of expenditure proposed to be carried forward to 2022 are outlined in Attachment D.

58. Operational budgets have been set based on the best available information at this time however the significant increase in this LTP investment programme together with a rapidly changing planning and delivery environment may require further changes throughout the year. Every attempt will be made to manage any changes within existing budgets and any implications that cannot be managed within budgets will be reported to Council.

Alternative Funding and Financing of Investment and reducing Debt Retirement

59. Some submissions supported greater use of government funding or alternative funding and financing tools. Council staff continue to work with Government agencies and regional partners to consider alternative ways of funding new infrastructure. At this stage there are no specific alternative funding and financing options secured. However, future annual plans and LTPs are expected to incorporate these options as an alternative to rates-funded debt retirement.

60. The proposed water reform, which could see council water assets and liabilities transferred to a separate entity, would free up significant balance sheet capacity and reduce the need for rate funded debt retirement as has been proposed in the draft LTP.

Strategic / Statutory Context

This report is prepared in response to submissions on the consultation document on the LTP. The process for preparation of the Long-Term Plan is set out under the Local Government Act 2002.

Ordinary Council Meeting Agenda

24 June 2021

11.2 Deliberations Report - Rating Structure Proposals for the 2021-31 Long-term Plan

File Number: A12614351

Author: Kathryn Sharplin, Manager: Finance

Jim Taylor, Transactional Services Manager

Authoriser: Paul Davidson, General Manager: Corporate Services

Purpose of the Report

1. This report considers community feedback on the 2021-31 Long-Term Plan (LTP) on options for rating structure, which defines who pays what share of the total rates requirement. Specifically, the report considers responses to consultation on preference for targeted or general rates, and the proposed increase in the commercial differential from 1.2 to 1.6 from 2022.

Recommendations

That the Council:

(a) Receive the Deliberations Report – Rating Structure Proposals for the 2021-31 Long-term Plan

(b) Agree to targeted rates to ring-fence specific investment areas of council vs general rates - option 1

(d) Agree to a further $150,000 budget to undertake further work on possible rating categories that reflect different affordability and benefit profiles within the community, including, but not limited to, the Central Business District, Port and related industries, a wider industry grouping, Airbnb, and location-based groups. This would also include future changes to differential levels across these categories and may lead to proposals for higher commercial rates in future years.

(e) Agree to undertake further work on possible amendment to rates postponement involving both a review of Tauranga’s rates postponement policy including financial implications, and support for the development of a national rates postponement scheme or other third party schemes before February 2022.

(f) Agree to contribute $50,000 from existing finance budget to the design of the national rates postponement scheme referred to in resolution (e).

Executive Summary

2. Two specific proposals for rating structure were consulted on as part of the LTP:

(a) the greater use of targeted rates to support investment in specific activities of council

(b) an increase in the commercial differential from 1.2 to 1.6 from 2022.

3. The level of rates was discussed in the Deliberations Report, which outlined options for investment and the rating requirements associated with those options. This report considers rating structure - who pays what share of the total rates requirement.

4. There were a total of 1,228 submissions relating to rating structure:

(a) 632 covered the use of targeted rates rather than general rates, with 421 in favour of the proposed move to greater targeting. Between 20-30 submissions were by organisations representing their members.

(b) 596 covered the commercial differential, of which 175 were from commercial ratepayers or business groups. Many of the business group submissions on the commercial differential requested lower commercial differentials or exemptions for particular groups due to hardship. 421 from residential submitters supported an increased commercial differential. Several proposed ongoing increases in commercial differential through the LTP. A new option presented below is based on a further increase in the differential after 2022 by 0.1 per annum to a differential of 2.5 by 2031.

(1) a Port and related Industry rating category

(2) a Central Business District (CBD) category

(3) small retail in larger higher value building complexes e.g., shopping malls

(4) Airbnb residential properties subject to commercial rates

(5) accessible properties on the grounds of affordability, and the desire to retain financial capacity to build more affordable properties

(d) Rates postponement was proposed in submissions to enable ratepayers with low incomes but growing property values to postpone rates while remaining in their current homes.

Background – Topic Two – funding the investment priority areas

Targeted vs general rates

5. A total of 632 submitted on this consultation topic with the following results:

6. The discussions below present the synthesis of the key questions asked in the Tauranga City Council Draft Long Term Plan 2021-2031 Submission Form.

Chart, bar chart

Description automatically generated Targeted rates

Option 1	Option 2	No response	Comments only
421	211	1,155	45

The chart and table above present the preferences selected by online survey and paper survey submitters. The options were:

Option 1: Introduce new targeted rates for stormwater, transportation and community facilities, and to extend the resilience targeted rate to include capital expenditure (our preferred option)

Option 2: No new targeted rates but continue to collect through general rates

7. There was some misunderstanding in submissions that proposed targeted rates would charge specific geographic areas for the specific community investments proposed. However, this had not been proposed as it could not be fairly or efficiently achieved. The large council investments proposed across waters, roading, parks and community facilities are for investments that form part of city-wide networks. This means the utilisation of and benefit from an individual investment, including community spaces and places, would be wider than only people within a geographic radius of that investment.

8. The benefit of the targeted rates proposed was to enable revenue to be ring-fenced for the agreed activity. This is particularly relevant where revenue is to support particular investments as proposed through the community facility targeted rate and the transportation rate. If the expenditure was delayed the revenue would be retained for that investment when it occurred rather than redirected elsewhere. Debt retirement charges are part of each targeted rate and would be directed to debt in the activities in which the investment is undertaken.

9. The targeted rate concept, particularly in transport, is consistent with the Infrastructure Funding and Financing levy being investigated for potential inclusion in later years of the LTP.

Option – Commercial Differential

10. The consultation document proposed increasing the commercial differential from 1.2 to 1.6, noting the following arguments:

(a) the benefit of investment to the commercial sector

(b) the much higher differentials charged in other cities

(c) and the tax advantages to the commercial sector with post tax rates closer to the residential rate at a differential of 1.6.

11. A total of 596 submitted on this topic with the following results

Chart, bar chart

Description automatically generated

Option 1	Option 2	No response	Comments only
421	175	1,191	58

The chart and table above present the preferences selected by online survey and paper survey submitters. The options were:

Option 1: Increase the commercial differential to 1.6 in 2021/22 (our preferred option)

Option 2: Increase the commercial differential to 1.4 in 2021/22 and then to 1.6 in 2022/23 and onwards

Additional Rating Categories or means of offering different rating treatment for specific groups

12. A number of submissions called out specific categories of ratepayers who are likely to feel more strongly the impact of rates, including the commercial differential. Some submissions identified the possibility of creating additional rating categories that may better differentiate the commercial sector and the beneficiaries of investment. It may also help to support some groups currently struggling in the economic environment. These suggested categories included:

(a) a port industries group reflecting the impact the port and related activities have in particular on transport infrastructure and requirements within and leading into the city.

(b) A CBD group which reflected an area of the city currently struggling as reinvestment is made and economic changes reflected in that investment. The options could include recognising the benefit of that investment in later rating differentials and other matters referred to in the separate issues and options report on the city centre.

(d) Airbnb residential properties subject to commercial rates

(e) accessible properties on the grounds of affordability, and the desire to retain financial capacity to build more affordable properties

13. These options were not consulted on in the LTP and it is recommended that further work be undertaken on various options to differentiate the commercial sector and identify the beneficiaries of proposed and required council investment. This work would require additional budget of $150,000. It would include analysis of the benefits of council investment that may accrue to specific groupings or the extent to which these operations may contribute to council costs, legal advice and engagement costs to help support such a separate rating category. The outcome of such work could be consulted on through later annual plans and long term plans and may lead to proposals to increase commercial rates via an increased differential or other rates.

Rates Postponement

14. Rates postponement was proposed in submissions to enable ratepayers with low incomes but growing property values to postpone rates while remaining in their current homes. At present postponed rates recognised on land title would be reflected in higher debt for councils. A review of the existing rates postponement policy including financial impacts could be undertaken to be consulted on in a subsequent annual plan, but would not be able to be completed in time for the 2022 year. Some councils do operate rates postponement schemes with low uptake and high cost which is reflected in their interest rate and other charges.

15. There has been work done to date supported by some growth councils, Local Government Funding Agency (LGFA) and Local Government New Zealand (LGNZ) to look at a national scheme for postponing residential rates with a charge against the property to be realised on sale.

16. This national scheme has a number elements one of which is referred to above as rates postponement. The other elements of the scheme being explored are property development loans, development contribution deferrals and as an aggregator for smaller projects to support levies via the Infrastructure Funding and Financing legislation. There is still more work to be done on this option to provide an off-balance-sheet solution for councils. It is recommended that council support LGNZ to promote a national rates financing scheme which would enable residential ratepayers to postpone rates with a charge on their title while ensuring that councils still receive the required revenue stream so that council debt is not increased. Alternative schemes could also be reviewed as part of these investigations.

17. TCC contributed $30K in 2020 towards the establishment of a national scheme. Further funding has been requested from LGNZ and the supporting councils to continue work to assess options. Contributions have been agreed to by a number of Councils and it is proposed that TCC contribute $50k to this scheme, which could be funded from within existing finance budget. Further requests for funding may be made as the project proceeds and it is unlikely that this solution will be finalised before the next LTP.

Ordinary Council Meeting Agenda

24 June 2021

11.3 Deliberations Report - Pitau Road Village and Hinau Street Village

File Number: A12564612

Author: Fiona Nalder, Strategic Advisor

Authoriser: Christine Jones, General Manager: Strategy & Growth

Purpose of the Report

1. This report presents the results of consultation on options for the future of Pitau Road and Hinau Street villages. It recommends that Pitau Road and Hinau Street villages are separated from the elder housing portfolio and sold for private redevelopment.

Recommendations

That the Council:

(a) Resolves that Pitau Road village and Hinau Street village are separated from the elder housing portfolio and sold for private redevelopment.

(b) Resolves that the net proceeds from the sale of Pitau Road village and Hinau Street village are retained, together with the net proceeds from the sale of the elder housing portfolio, in an elder housing and social/public housing reserve, until such time as Council confirms its application.

Executive Summary

2. Council’s elder housing portfolio consists of 246 units across nine villages located in Tauranga and Mount Maunganui (see Attachment 1 - Map of Elder Housing Villages). In 2018, following a review of the elder housing activity and community consultation, Council decided to divest of the elder housing portfolio to one or more public housing providers.

3. Council is negotiating to sell seven of the nine villages to Kāinga Ora: Homes and Communities.

4. Council decided in March 2021 to consult on the future of the remaining two villages - Pitau Road village and Hinau Street village - as part of the 2021-2031 Long Term Plan process. Two options were consulted on:

i. Council’s preferred option: Pitau Road village and/or Hinau Street village are separated from the elder housing portfolio and sold for private redevelopment.

ii. Alternative option: Pitau Road village and/or Hinau Street village are sold as part of the elder housing portfolio.

5. Council received a total of 1,788 submissions. Of these, 576 people chose one of the two options, and 1,212 chose neither option.

6. Out of those who chose either option 1 or option 2, 79.5% wanted Pitau Road village and/or Hinau Street village to be separated from the elder housing portfolio and sold for private development (option 1) and 20.5% of submitters thought these villages should be sold as part of the elder housing portfolio (option 2).

7. The most common reasons provided in support of option 1 were that elder housing should not be delivered by Council and that the location was not a suitable location for subsidised housing (either public or elderly).

8. The most common themes expressed by those in support for option 2 (sell as part of the elder housing portfolio) were concern as to where the current tenants would go and a general desire to see more elderly housing across the city rather than less.

9. Both those in support of option 1 and those in support of option 2 commented on the need to care for the current tenants and to reinvest disposal proceeds into elder and social/public housing.

10. This report recommends that Pitau Road village and Hinau Street village are separated from the elder housing portfolio and sold for private redevelopment (option 1) and that the net proceeds from these sales is retained in an elder housing and/or social/public housing reserve until Council decides on its specific application.

11. If Council does decide in favour of option 1:

· further work would occur identifying and analysing divestment options. A report outlining the options would be presented to Council later this year.

· tenants from these villages would be re-housed in affordable and secure housing elsewhere. All tenants would be supported through this process and offered a unit in one of Council’s remaining seven elder housing villages.

Background

12. Council’s elder housing portfolio consists of 246 units across nine villages located in Tauranga and Mount Maunganui (see Attachment 1 - Map of Elder Housing Villages). In 2018, following a review of the elder housing activity and community consultation, Council decided to divest of the elder housing portfolio to one or more public housing providers, with sale proceeds to be retained to an elder or social housing specific reserve, until such time as Council has confirmed potential application. Council also resolved that the welfare of tenants was to be the guiding principle of the divestment process.

13. Council has begun formal non-binding negotiations to sell seven of the nine villages to Kāinga Ora: Homes and Communities (central government’s public housing provider). Pitau Road village and Hinau Street village are not included within these negotiations.

14. Instead, Council decided in March 2021 to consult on the future of Pitau Road village and Hinau Street village as part of the 2021-2031 Long Term Plan process. Two options were consulted on:

i. Council’s preferred option: Pitau Road village and/or Hinau Street village are separated from the elder housing portfolio and sold for private redevelopment.

ii. Alternative option: Pitau Road village and/or Hinau Street village are sold as part of the elder housing portfolio.

15. Council’s preferred option provides a balance between delivering a better outcome for ratepayers, whilst still being committed to achieving positive outcomes for the community. It offsets the discounted prices that the remainder of the elder housing portfolio is expected to be sold for.

16. The financial cost of providing public housing is reflected in the discounted value assigned to land sold for public housing purposes. In New Zealand, sales of land for public housing (to either Kāinga Ora or registered community housing providers) have typically achieved 50% or less of market value. The estimated combined market value of Pitau Road village and Hinau Street village is $18-$23 million.

17. This report recommends that the net proceeds from the sale of the Pitau Road village and Hinau Street village are retained to an elder or social/public housing specific reserve, until such time as Council has confirmed potential application. These proceeds will reduce debt whilst they remain in this reserve.

PItau Road village

18. Pitau Road village is the oldest and second largest village, with 38 units spread across a site of 7677m². It is on undulating land in a suburban area of central Mount Maunganui. The units are poorly designed, small (32m²) and no longer meet recommended minimum standards (primarily accessibility).

19. In addition to design limitations, the units are ageing, with one unit permanently vacant due to subsidence (i.e. there are 37 occupiable units). Pitau Road village reaches the end of its asset life in 2021 and requires either significant renewal or redevelopment. Recent work completed in the village has focused on protecting the health and safety of tenants, but if the village was to stay as public housing it would require a significant further investment of funds.

20. Whilst possible to maintain the liveability of the units via extensive renewals, this would not overcome the basic design flaws of the units, such as size and accessibility. As a result, maintaining Pitau Road village as public housing would require the site to be redeveloped.

Figure 1: Pitau Road village

Hinau Street village

21. Hinau Street village is the smallest village in the elder housing portfolio in terms of both land size (2,022m2) and number of units (12). It is on flat land, in central Mount Manganui, and is close to Blake Park and cafes. It was constructed in 1975 and unit sizes range between 36m2 to 42m2. Whilst units do not meet accessibility standards and the village is ageing, the overall condition of the village is acceptable, with its end of asset life estimated as 2031.

22. The village is currently zoned as high density residential, which allows for one dwelling per 100m². Multi-storey housing is located nearby. Although the condition of the village does not require immediate redevelopment or renewal, its zoning and underlying land value make it a good candidate for redevelopment and intensification. Under its current zoning, redevelopment would allow for an additional 8 dwellings to be provided on the site.

Figure 2: Hinau Street village

Consultation process

23. The options for Pitau Road village and Hinau Street village were consulted on as part of the Long Term Plan consultation process, which ran from 7 May to 7 June 2021.

24. The consultation for the Long Term Plan included city-wide advertising, drop in sessions across the city, promotion at events, such as the Little Big Market and the Farmers Market, and meeting with key stakeholders, such as ratepayer groups. In addition to this, targeted consultation occurred as follows:

· Drop-in sessions at each of the nine elder housing villages. These sessions provided information and support for all tenants, ensuring they knew how to make a submission and supporting them to do so, if they wished.

· A letter-drop to residents to live nearby Pitau Road village and Hinau Street village

· Emails directly to potentially interested parties, including Grey Power, local members of parliament, Mount Maunganui RSA and Age Concern.

Summary of Long Term Plan submissions

25. Council received a total of 1,788 submissions. Of these, 576 people chose one of the two options and 1,212 chose neither option. In many cases, those who chose neither option did so because their submission was a targeted submission highlighting a particular issue or funding need (e.g. The Incubator).

26. Out of those who chose either option 1 or option 2, 79.5% wanted Pitau Road village and/or Hinau Street village to be separated from the elder housing portfolio and sold for private development (option 1) and 20.5% of submitters thought these villages should be sold as part of the elder housing portfolio (option 2).

27. The table below shows the total breakdown of submissions.

Table 1: Analysis of LTP submissions

Total no. of submissions	1,788 (100%)
No. of submissions in support of option 1 (sell for private redevelopment)	458 (25.6%)
No. of submissions in support of option 2 (sell as part of the elder housing portfolio)	118 (6.6%)
No. of submissions selecting neither proposal	1,212 (67.8%)

28. Out of those who submitted in support of option 1 (sell for private redevelopment), 132 submitters provided comments explaining their choice. The most common reasons provided in support of option 1 were because submitters felt that elder housing should not be delivered by Council and that the location was not a suitable location for subsidised housing (either public or elderly). A number of these submitters also emphasised the need to care for the current tenants through any change and expressed a desire for the proceeds of the sale to be allocated towards elder and/or social or public housing.

29. Out of those submitters in support for option 2 (sell as part of the elder housing portfolio), 51 people provided comments. The key themes expressed by this group were concern as to where the current tenants would go, a general desire to see more elderly housing across the city rather than less, and the view that Council should not sell the elder housing portfolio at all. The view that Council should not sell the elder housing portfolio at all was also frequently expressed by the small number of submitters who chose neither option but provided comments.

30. Submissions provided by tenants of Pitau Road village and Hinau Street village, tenants from the remainder of the elder housing portfolio and residents of streets close[3] to Pitau Road village and Hinau Street village are shown below.

Table 2: Analysis of tenants and residents

Group	Option 1 (sell for private redevelopment)	Option 2 (sell as part of the elder housing portfolio)
Tenants in Pitau Road village and Hinau Street village	2	8
Tenants in the remainder of the elder housing portfolio	5	0
Residents nearby Pitau Road and Hinau Street villages	44	3

31. In addition to submissions from individuals, submissions were received from the following groups:

· Accessible Properties – does not indicate a preference for either option, wishes to see a plan for how sale proceeds will support the delivery of community housing.

· Age Concern – supports option 1, on the condition that sale proceeds are reinvested in social housing provision and Council advocates for more community spaces within developments.

· Baywide Housing Advocacy Service – does not support either option, does not believe Council should sell the elder housing portfolio.

· Citizens Advocacy Tauranga Inc – does not support either option, does not believe Council should sell the elder housing portfolio.

· Kāinga Tupu – some members of the Kāinga Tupu partnership support option 2 and want to see a plan for how sale proceeds will support the delivery of community housing.

· Mount Business Association/Mount Mainstreet – does not indicate a preference for either option, wishes for funds from the sale of Pitau Road village and Hinau Street village to be ring-fenced for expenditure in Mount Maunganui.

· Sanderson Group – supports option 1, identifies the Pitau Road village site as a suitable location for a fully integrated rest home care facility, including dementia (as there is shortage of this type facility in Tauranga and growing need).

· Smartgrowth Housing Affordability Forum – supports option 1, on the condition that the sale terms require redevelopment and intensification of the sites, including 30% of affordable or social housing. Wants to see a plan for how sale proceeds will support the delivery of community housing/elder housing.

· Tauranga Housing Advocacy Trust – does not support either option, does not believe Council should sell the elder housing portfolio.

· Te Rangapū Mana Whenua o Tauranga Moana Partnership – supports option 1, and the allocation of sale proceeds towards the rebate of development contributions for papakāinga housing. Encourages further discussion with mana whenua regarding the sale, prior to the divestment approach being decided.

32. The key themes across all submissions are discussed in more detail below.

Key themes

Delivery of elder housing is not the role of Council

33. This piece of feedback was frequently given by those in favour of selling for private redevelopment. This view was also expressed by a small number of those who wished to see the villages sold as part of the divestment of the elder housing portfolio as a whole (i.e. sold to a public housing provider).

34. Characteristic examples of this feedback are as follows:

· All social housing should be funded by central and not local government

· Stick to roading, stormwater, sewage and core council functions.

· Our elders need somewhere to go but this should not be a core council function… if anything it should be central government

35. Current central government policy disincentivises local government from providing subsidised housing. Councils are not permitted to become registered community housing providers. This means that councils cannot access the income related rent subsidy that allows registered community housing providers and Kāinga Ora to receive market rent whilst charging tenants only 25% of their income.

36. As a result, providing subsidised housing is not financially sustainable for most councils. This issue was one of the factors that drove the decision in 2018 to divest to a public housing provider. Additionally, public housing providers, such as registered community housing providers and Kāinga Ora, are focused on housing as their core business and this is reflected in the expertise of their staff and their processes. Because of this, these organisations can deliver better overall outcomes for tenants.

Pitau Road village and Hinau Street village are not suitable locations for public housing

37. This was another one of the most common pieces of feedback given by those in favour of selling for private redevelopment. In many cases the location was viewed as unsuitable due to the value of the land. The lack of localised need for public housing was also raised by some submitters. Below are examples of feedback.

· Given the value of land involved, I do not think it is either sensible or sustainable to retain this land for the purposes of elder housing, particularly in an environment where the properties are not ideal for purpose and require upgrading anyway.

· Mount Maunganui has no urgent need for social housing - it is not an appropriate use of land. Irresponsible to sell cheaper than market given greater need for social housing in other suburbs and money from sale can be used to help fund other projects in an area of higher need.

· The land values are too high to keep it in the elder housing portfolio and as long as that money made from the sale is reinvested in public housing it is a good thing.

38. The estimated combined market value for these sites is $18-$23 million. Sales of land for public housing purposes elsewhere in New Zealand have achieved 50% or less of market value.

Concern for the wellbeing of the current tenants

39. Many submitters, both those who chose option 1 and those who chose option 2, expressed concern for the future of the current tenants. For many of those submitters who supported selling these villages for private development, this support was conditional on the current tenants being cared for. Examples of these comments are as follows.

· As long as the elderly aren't left out in the cold, I'm happy with this.

· Although this may be difficult for tenants, as they may feel like they're being booted out, it's good to empathize and remind them constantly that you're not leaving them behind and will be helping to ensure they find somewhere new and secure to live.

40. For those submitters who wanted the villages retained as part of the elder housing portfolio and sold for private redevelopment, there was significant concern as to where the existing tenants would be housed.

· If you sell for private development the elders in those villages could be displaced to go where?

· Where are these old people going to live? Do you even consider them at all? They certainly can't afford the rents in this area.

41. Council adopted tenant wellbeing as the principle unpinning the divestment process and has made a commitment to existing tenants that they will continue to have an affordable place to live, regardless of the sale process.

42. If Council decides to adopt option 1 (sell Pitau Road village and Hinau Street village for private redevelopment), Council will work with the existing tenants to ensure they have affordable and secure accommodation. All tenants will be offered a new tenancy in one of the other seven villages in Council’s elder housing portfolio. Moving tenants out of Pitau Road village and Hinau Street village would take time, as tenants would only move once replacement housing became available. If tenants wish to stay in Mount Maunganui, and there are no Council owned units available, Council will liaise with other public housing providers to see if they have available stock.

43. Throughout this process the following support would be provided to tenants:

· access to a tenant support person who is available throughout the entire process to support tenants and answer questions and concerns.

· development of a personalised relocation plan for each tenant.

· a financial package to assist in relocation, including paying reasonable moving costs within Tauranga and rent assistance for a 12-week period.

· assistance with setting up phone, utilities and services such as GP, dentist, etc., as desired by the tenant.

The growing need for elderly housing and public housing in Tauranga

44. This was a common theme expressed by many submitters, regardless of which option they chose. For those submitters in favour of option 1 (sell for private redevelopment) this was commonly expressed in terms of wishing to see the funds from a sale reinvested into subsidised elderly and/or public housing. For example:

· I would like the commissioners to consider putting a greater percentage than the currently allocated $1.5m of the eventual sale proceeds to support the development of new purpose built elder housing, (or papakāinga/social housing) to be built by registered community housing providers ensuring our vulnerable older people are well looked after now and into the future.

· I am deeply concerned for the availability of housing for the elderly in the future. This problem is only going to get worse as we see more and more people unable to purchase their own homes. I can however see the sense in option 1. However, Council must continue to keep an eye out to provide land for future housing for the elderly and disadvantaged in our community.

· Agree - the capital raised from selling such high-value land could be reused to build more and better fit for purpose housing

45. Typically comments from those in favour of option 2 (retaining villages within the elder housing portfolio for sale to a public housing provider) focused on the shortage of elder and public housing and opposed any decrease in housing supply for these groups.

· The money from the sale of Pitau Village must go back into provision of elder housing. There is an urgent need for MORE elder affordable housing for our vulnerable older people.

· I think these should remain as part of the portfolio as our elderly need more support with housing. Not everyone can afford a residence in a private village.

· I am very concerned about the fate of a lot people imminently going into retirement without a home of their own (or with insufficient equity in their homes). They will be unlikely to afford rents (and unable to re-finance) and I think more elder social housing is going to be needed - not less.

46. The need for public housing in Tauranga generally, and for elderly, is well documented. Supply of public housing in Tauranga is lower than across New Zealand as a whole. Nationally, public housing makes up 4.1% of total housing stock, whilst in Bay of Plenty, public housing makes up 2.5% of housing stock[4].

47. Recent years have seen the number of households on Tauranga City’s housing register (the list of people waiting for public housing) increase significantly, as is shown in the graph below.

Figure 3: Tauranga city housing register numbers, by year

48. Figures from SmartGrowth’s 2017 Housing Need and Demand Report illustrate the growing demand for affordable rental housing for elderly, with renter occupied dwellings with people aged 65 years and older projected to increase by 63% between 2017 to 2027, and by 222% between 2017 to 2047. The same report forecasts demand in Tauranga City for public housing (all ages) to increase from 1,610 to 3,440 by 2047.

49. The growing need for public housing in Tauranga was one of the drivers of the 2018 decision to divest the elder housing portfolio. Council’s elder housing portfolio is aging. Without access to central government funding the cost to Council of retaining the portfolio, let alone redeveloping and increasing stock numbers in response to need, would be significant and funded via rates and debt. Given Council’s financial challenges, the decision was made to sell the portfolio to a public housing provider who has access to central government funding. The intent of this decision was to secure the long-term sustainability of the activity and deliver increases in the quantity of stock over time.

50. The original decision to divest of the elder housing portfolio included the following resolution.

That Council provide for any sale proceeds to be retained to an “elder or social housing” specific reserve, until such time as Council has confirmed potential application. (M18/43.13)

51. Currently, the proposal is that proceeds from the sale of Pitau Road village and Hinau Street village are used to deliver housing outcomes for the city.

52. This report recommends that the proceeds from the sale of Pitau Road village and Hinau Street village are also allocated towards elder and social/public housing, rather than housing outcomes more generally. This is in response to community feedback and in recognition of the need for increased public housing supply (including for elderly) in the city. It provides clarity regarding the types of housing outcomes intended to be delivered and aligns with the original resolution regarding expenditure of sale proceeds.

A desire for Council not to sell any of the elder housing villages

53. A small number of submitters chose neither option, but provided a comment expressing their preference. Many in this group did not want to see Council sell the portfolio at all. The following are examples of this feedback.

· All council owned public housing should be retained

· Do NOT sell keep for the most vulnerable people of Tauranga

· I do not think that they should be sold at all.

· What about not selling and upgrading

54. Whilst the purpose of this consultation was not to revisit the previous decision, in responding to feedback this report has highlighted key drivers of the 2018 decision. Tenant wellbeing has been a priority throughout the process, guiding both the original 2018 decision and the subsequent approach to divestment. The adopted outcomes for the divestment are listed below in decreasing order of importance:

i. Quality of life for tenants (includes general tenant wellbeing and access to wrap around services)

ii. Long term security and affordability for tenants now and into the future

iii. Quality and number of units provided

iv. Financial return

Other

55. Other, less frequently expressed, thoughts and suggestions included:

· Ideas for the expenditure of sale proceeds (skatepark, libraries, 50 metre pool, traffic issues).

· A request to use the Pitau site as a carpark.

· Questioning as to whether, if the land had been gifted, it could be sold by Council.

· Requests for funds from the sale of these two villages to be ring-fenced for expenditure in the Mount.

· A desire for intensified development of the sites.

· A desire for the sites not to be intensified and for the character of the surrounding streets to be preserved.

· Requests for the land to be offered (or gifted) back to iwi and hapū.

· Requests for a transparent sale process (such as auction) and for sale to achieve the best possible price.

· Requests for more detail about what the sale proceeds would be spent on.

Tangata whenua

56. Council initially engaged with iwi and hapū regarding the proposed options for Pitau Road village and Hinau Street village via the Te Rangapū Mana Whenua o Tauranga Moana Partnership. Tangata whenua were advised of the options, the upcoming consultation and of the opportunity to make a submission.

57. Following this, Council contacted Ngāi Te Rangi (iwi), Ngāi Tūkairangi (hapū) and Ngāti Kuku (hapū) directly, as Pitau Road village and Hinau Street village fall within the rohe of these iwi and hapū.

58. Ngai Tūkairangi and Ngāti Kuku have formally registered their interest in these two sites.

59. Further engagement will occur with Ngāi Tūkairangi and Ngāti Kuku once Council has decided whether to sell the villages for private redevelopment or retain them as part of the elder housing portfolio and sell them to a public housing provider.

Strategic / Statutory Context

60. This report outlines two options which have been consulted on with the community. Both these options have the potential to deliver positive housing outcomes for the city. The recommended option (option 1) balances positive housing outcomes, tenant wellbeing and prudent financial management.

61. This supports the following community outcomes:

· We have a well planned city - Tauranga is a city that is well planned with a variety of successful and thriving compact centres and resilient infrastructure.

· We are inclusive, and value our culture and diversity - Tauranga is a city that recognises and values culture and diversity, and where people of all ages and backgrounds are included, feel safe, connected and healthy.

62. In addition, option 1 delivers on the following Council principles:

· We deliver value for our communities through prudent financial management, ensuring we plan and provide affordable fit-for-purpose services.

· Sustainability and resilience underpin our decision making and service delivery, protecting the future of our city.

· We work in partnership with tangata whenua, our communities, sub-regional stakeholders and central government.

· We manage the balance between the social, economic, cultural and environmental wellbeing of our communities.

Options Analysis

Option One (recommended option)

63. Option 1 - Proposal: Pitau Road village and/or Hinau Street village are separated from the elder housing portfolio and sold for private development (recommended option)

64. Key risk: that Council is viewed as placing financial gain over the wellbeing of its elderly tenants. To an extent this can be mitigated via clear messaging, which communicates how tenants are being cared for through this process, the reasons why these two properties are not viewed as priority locations for future public housing development, and the housing/community benefits enabled by such divestment/revenue.

Advantages

Disadvantages

Will deliver a better overall financial outcome for Council and the community.

Balances tenant welling, public housing outcomes, housing outcomes more generally and financial return.

Proceeds from the sale of Pitau Road village and Hinau Street village are retained in an elder and social/public housing reserve.

Debt is reduced in the interim whilst proceeds remain in this reserve.

Recognises that the underlying land value of these sites means they are not well suited for public housing development from a financial perspective.

Recognises consultation finding - out of those submitters who chose an option, the majority chose option 1.

Requires the current tenants to be rehoused elsewhere in the portfolio, which will take time and resources, and may be upsetting for a number of the tenants.

Decreases land available for development as public housing.

Option Two

65. Alternative option: Pitau Road village and/or Hinau Street village are sold as part of the elder housing portfolio.

66. Key risk: that Council is criticised for selling high value land at a price that is significantly less than market value.

Advantages

Disadvantages

The sites continue to be used for public housing.

Allows, in the short term, for existing tenants to stay in their units (however both these sites are likely to be redeveloped in the future, with Pitau Road village needing redevelopment in the near future due to its age and condition. If sites are redeveloped, existing tenants will need to move, at least temporarily).

Council sells the sites at a significantly discounted rate, and as a result the proceeds in the elder and social/public housing reserve are much lower.

There is a risk that the purchaser (KO or a CHP) sells the land on the open market once the usage encumbrances have expired, with the purchaser benefiting financially from the high land value of these villages rather than Council. To some extent, this risk can be mitigated through the sale agreement.

Does not align with the consultation findings consultation - out of those submitters who chose an option, the majority chose option 1.

Recommended approach

67. Council’s commitment to achieving positive community outcomes via the divestment of the elder housing portfolio will inevitably result in a lower sale price for the elder housing portfolio.

68. Due to their high land values, removing Pitau Road village and Hinau Street village from the wider elder housing divestment package would provide Council with an opportunity to partially offset the decreased price expected to be received for the remaining elder housing villages. The remaining elder housing villages would still offer significant scope for redevelopment and intensification, facilitating increased public housing supply for Tauranga.

69. This report recommends that, if Council does decide to separate Pitau Road village and Hinau Street village from the elder housing portfolio and sell them for private redevelopment, the resulting net proceeds are retained to an elder or social/public housing specific reserve, until such time as Council has confirmed potential application. This recommendation would result in the proceeds from the divestment of Pitau Road village and Hinau Street village being treated in the same fashion as the proceeds from the sale of the remaining elder housing portfolio.

70. Council has allocated $1.5m of the net proceeds to rebates on development contributions for registered community housing providers and papakāinga housing. It is expected that the sale will deliver significant additional funds which can then support the delivery of elderly, community and public housing across the city, particularly if Council decides to sell Pitau Road village and Hinau Street village for private redevelopment. It is not recommended that these funds are allocated at this stage, as there is no certainty regarding the amount of funding available. Once there is certainty regarding this amount, it is recommended that a plan is developed for the expenditure of these funds.

71. In summary, option 1 (selling Pitau Road village and Hinau Street village, for private redevelopment) can be viewed as providing Council with a divestment option that delivers positive housing outcomes and positive outcomes for tenants (current and future), along with a better financial return that would be otherwise expected.

Financial Considerations

72. The combined estimated market value for Pitau Road village and Hinau Street village is $18-$23 million.

73. Proceeds of sale would be ring fenced and used to:

· Meet the disposal costs for these two properties.

· For elder and social/public housing (e.g. the $1.5 million of sale proceeds committed to rebates on development contributions for registered community housing providers and papakāinga housing).

74. The costs associated with the disposal of Pitau Road village and Hinau Street village are estimated below. These estimates exclude staff time and apply only to the disposal of Pitau Road village and Hinau Street village (i.e. they are separate from the costs incurred to date by the disposal of the elder housing portfolio). Actual costs will depend on the final sale costs and any further due diligence costs.

Table 3: Estimated disposal costs

Item	Estimated cost
Market Valuations	$14,510 for February 2021 valuation reports $8,000 (estimated) for updated valuations upon Council decision. (note: for disposal purposes, the actual market valuation will be as per at the date of Council decision).
Pre-divestment due diligence (e.g. section 40 offer back reports)	$908 to date
Moving costs, including utilities	$129,000 (based on $3,000 per tenant, total of 43 tenants)
Rental assistance	$82,560 ($160 per week, for 12 weeks, total of 43 tenants)
Sale costs	Pitau Road village – approximately 3.5% of asset value Hinau Street village – approximately 4% of asset value
TOTAL	$234,978 (plus GST if any) plus sale costs

Legal Implications / Risks

75. Section 40 of the Public Works Act 1981 applies to both Pitau Road village and Hinau Street village. If Council decides to sell the villages for private redevelopment, then there may be a requirement to offer the former owners (or their successors in title) an opportunity to purchase these sites back at market value.

76. Investigations into Pitau Road village show that two of the parcels are not subject to offer back requirements as both the original owners and the successors in title are deceased. See the sections highlighted in green in Figure 4 below.

77. However, the other land parcels (highlighted in red in Figure 4 below) which form Pitau Road village may have offer back requirements. If Council chooses to sell Pitau Road village for private redevelopment, further work will be completed investigating the acquisition history of the village. As well as identifying any offer back obligations, this work will consider whether any of the parcels were gifted to Council, and what potential impacts (if any) gifting would have on disposal of the land.

Figure 4: Potential offer back obligations – Pitau Road Village

78. Investigations into Hinau Road village have identified offer back requirements for the entire site.

79. Council has consulted on the draft Acquisition and Disposal Policy. The disposal processes in this policy would apply to the divestment of Pitau Road village and Hinau Street village, regardless of which option Council chooses to proceed with.

Consultation / Engagement

80. Please refer to the information contained under the background section of this report.

Significance

81. 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.

82. 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

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

ENGAGEMENT

84. Taking into consideration the above assessment, that the decision is of high significance, officers are of the opinion that no further engagement is required prior to Council making a decision (as the completed Long Term Plan consultation, summarised in this report, meets Council’s engagement requirements for this decision).

Next Steps

Divestment

85. Council has not yet decided on the divestment approach for Pitau Road village and Hinau Street village. If Council proceeds with option 1 (sell for private redevelopment), further work will occur to identify and analyse divestment options. The final decision regarding the divestment approach will be made via a report to Council later this year.

86. Both Pitau Road village and Hinau Street village provide unique development opportunities and the chance for Council to achieve strategic outcomes for the community along with financial gain. The Pitau Road village site, at 7677m², provides an opportunity for developments which cannot be accommodated on smaller sites, such as a rest home care facility as mentioned in the LTP submission by the Sanderson Group. The Hinau Street village is zoned high density urban residential. The upcoming options analysis for these sites will consider the range of strategic outcomes that Council may wish to achieve via the disposal, and will address factors such as density, use and timing of redevelopment.

87. The draft Acquisitions and Disposals policy will apply. This means that if Council chooses to dispose of Pitau Road village and/or Hinau Street village as surplus properties, then the Right of First Refusal process applies. However, if Council chooses to achieve strategic outcomes for the community via the disposal of Pitau Road village and/or Hinau Street village, then the Right of First Refusal process does not apply. These considerations will be addressed in the report to Council on divestment options. Further engagement with mana whenua will occur prior to Council deciding on its divestment approach.

Tenants

88. If Council decides to sell Pitau Road village and Hinau Street villages for private redevelopment, then the tenants of these two villages will need to move. All tenants will be offered a unit in one of Council’s other seven elder housing villages.

89. Tenants will only move when there is alternative affordable and secure housing available for them. This will take time and tenants will be supported before, during and following their re-housing. This will include financial assistance, personalised relocation plans and access to Council’s Tenant Support Officer.

Attachments

1. Attachment 1 - Map of Elder Housing Villages - A12630620 ⇩

Ordinary Council Meeting Agenda

24 June 2021

11.4 Long-term Plan Deliberations - Draft Community Funding Policy and proposed Community Grants Fund

File Number: A12630710

Author: Anne Blakeway, Manager: Community Partnerships

Richard Butler, Funding Specialist

Emma Joyce, Policy Analyst

Authoriser: Gareth Wallis, General Manager: Community Services

Purpose of the Report

1. To enable deliberations on issues arising from submissions on the proposed Community Grants Fund (the fund) and the draft Community Funding Policy (the draft policy).

Recommendations

That the Council:

(a) Approves the inclusion of a contestable community grants fund in the Long-term Plan 2021-2031.

(b) Confirms the amount of the contestable community grant funding that will included in each year of the Long-term Plan 2021-2031.

(i) That administration of the fund will be undertaken in-house by council staff;

(ii) That the maximum available grant is $50,000;

(iii) That the fund is not required to be apportioned equally across the four well-beings;

(iv) That a portion of the Community Grant Fund will be ring-fenced for kaupapa Māori initiatives

That there is no ring-fencing of a portion of the fund to enable kaupapa Māori initiatives;

(v) That schools, kura and early childhood centres are able to access the Community Grant Fund;

(vi) That social enterprises are unable to access the Community Grant Fund;

(vii) That individuals are unable to access the Community Grant Fund; and

(viii) That applicants to the Community Grant Fund are not required to “match” any Council funded amount with their own funds.

(d) Delegates authority to the Chief Executive to make minor editorial amendments to the Community Funding Policy 2021 for the purposes of correction or clarification.

(e) Revokes the Community Investment Policy.

Executive Summary

2. The consultation document for the Long-term Plan (LTP) included a proposal to establish a new $1.81 million contestable grants fund. While the draft LTP asked people for their feedback on the fund itself, a parallel consultation process asked people for their feedback on the draft policy developed to support administration of the fund. A copy of the draft policy as consulted is provided as Attachment One[5]. This recognises that while legally Council was required to run two consultation processes, it is likely that the community would choose to provide feedback on both matters through a single submission.

3. This report enables deliberation on issues arising from submissions on the fund and recommends approval of $1.81 million of operational funding be included in each year of the LTP.

4. The report also enables deliberations on submissions to the draft policy and provides an opportunity to make changes to the draft policy prior to adopting the policy.

Background

5. As part of its deliberations on the Annual Plan 2020/2021, Council requested staff investigate creating a dedicated fund to provide support to community organisations. Referring community requests for funding received through the annual plan or long-term plan to a specific fund would reduce the risk of ad hoc and non-transparent decisions on support to community organisations being made via the annual plan or long-term plan process.

6. Staff developed a new policy to support administration of the proposed fund. The draft policy outlines the broad criteria for funding support, in particular ensuring requests for funding meet wider council objectives. Provision was retained in the policy to establish longer-term partnership agreements with select community organisations that have a track record of delivering actions and programmes that align with community outcomes and Council’s strategic priorities.

LTP consultation on establishing a community grant fund

7. As part of the LTP consultation, residents were asked whether they preferred:

· Option 1: Set up a community grants fund of $1.81 million per year (our preferred option), or

· Option 2: Retain the current approaches to community funding and support.

The current approach is to disburse funds through a mix of grants approved through the annual plan submission process, and to service historical funding agreements.

8. A number of submissions in favour of option 2 interpreted it as “no, I do not support community grant funding” rather than retention of the status quo.

9. In general, there was broad support for providing community funding through a dedicated fund, with some submitters highlighting the contribution of community organisations to Tauranga. Submitters noted that a dedicated fund would be more transparent than in the past where the “loudest” organisations received funding. This includes support for longer-term partnership agreements.

10. Submitters who expressed reservations about the fund cited the importance of funding core services and infrastructure, rather than providing funding to community organisations. These submitters noted that groups in need of community funding should fundraise or seek sponsorships from local businesses.

11. Submitters both for and against the fund noted that there are other existing community funders, such as Tauranga Energy Consumer Trust (TECT), Acorn and BayTrust. While some submitters suggested that these other funders provided sufficient funding and a separate council fund was not necessary, other submitters suggested council work alongside these organisations to ensure the best outcomes for the community.

12. For some submitters, enabling the best outcomes for the community meant allocating any fund to specific “buckets” to ensure equity of funding between different sectors. Submissions also included requests for specific consideration of funding for Māori initiatives, including funding to enable feasibility work for potential papakāinga development.

13. A summary of submission feedback points is provided as Attachment Two. Some issues raised in commentary on the proposed fund (such as provision of community facilities, playcentre funding or skate parks) will be discussed elsewhere as part of the LTP hearings and deliberations.

Consultation on draft policy

14. A total of 15 submissions were received on the draft policy. One submitter opposed the policy and the suggested funding criteria. Five submitters disagreed with restricting the maximum amount of funding to $50,000. Similar to feedback received through the LTP funding submission process, submissions received through the fund suggested that there needed to be robust criteria underpinning the fund and transparent administration. This is supported by the draft policy. All submissions to the draft policy are appended at Attachment Three.

15. Issues arising from the submissions to the draft policy and proposed fund are as follows:

· whether to proceed with a fund;

· the amount of a fund;

· whether to administer the fund ourselves or through other community funding providers;

· maximum amount available through the fund;

· apportioning the fund equally across the four well-beings;

· ring-fencing part of the fund for kaupapa Māori initiatives;

· allowing schools, social enterprises and individuals to apply to the fund; and

· requiring applicants to “match” any council contribution.

Financial Considerations

Financial makeup of the fund

16. In developing the fund in late 2020, staff totalled existing level of service subsidies and direct grants to community organisations to reach a figure of $1.81 million. This sum was promoted in earlier reports on the fund and draft policy development, with a caveat that it may be adjusted through the LTP process.

17. Although accurately captured in the LTP financial information, it was not made clear in any reporting or the LTP consultation material that the $1.81m fund was actually made up of $980,000 rates-funded opex (incl $160,000 LOS subsidies) and $830,000 loan-funded opex. The loan-funded opex portion being reflective of the significant portion of previously budgeted grants supporting capital developments (e.g. Merivale Action Centre and Mount Cricket Club).

18. Council’s Revenue and Financing Policy states that Council “may resolve to use loans to fund opex where the expenditure provides benefits outside the year of operation, such as community grants for assets”. For example, a loan funded grant of approximately $1 million was provided to support the construction of the new Pāpāmoa surf lifesaving club building. As such, provision for one-off discretionary grants to support capital development were excluded from the policy as any such grant would require the submission of a formal business case and specific Council approval. Applications would also likely exceed the proposed $50,000 maximum allowable through the proposed grant fund.

19. In line with the Revenue and Financing Policy, the parameters of the fund proposed through the draft policy do not envision capital grants being provided to community organisations. Rather, the fund and draft policy is in response to requests for specific operational funding to support projects and business-as-usual expenses. Therefore, of the $1.81 million proposed in the draft LTP for a potential fund, only the rates-funded portion of $980,000 would be available to support operational grant funding.

20. Staff identified the above matter during the consultation period and developed an alternative suggestion to increase the rates-funded portion of the fund to $1.31 million (leaving only $500,000 loan-funded in 2022 FY). A sum of $329,693 was identified to carry forward from the current financial year, meaning no additional rates requirement in the 2022 FY from that presented in the draft LTP. The total balance of the fund would remain $1.81 million with a split of rates-funded opex and loan-funded opex.

21. Options for resourcing a fund, including whether to retain a portion of loan-funded opex or to have a fully rates-funded fund, are outlined in issue 1.2 below.

Funding for existing funding agreements

22. A number of current community funding agreements are due to expire on 30 June 2021. A portion of the grant fund will initially be set aside to provide for the continuation of existing service level agreements based on the individual requirements of each. In future, some of these agreements may cease or transition to partnership agreements.

23. Council could consider including additional budget to provide for new partnership agreements that may eventuate over the next three years. Separate issues and options reports have been prepared in response to some organisations’ requests for new agreements, or to continue existing agreements. For example, the Papamoa Residents and Ratepayers requested a grant of $150,000 per annum to support their advocacy work on behalf of their community, and Predator Free Bay of Plenty requested just over $43,000 to continue their community-based biosecurity work. In total, requests for funding of potential partnership agreements amounts to approximately $500,000 in year one. This sum excludes organisations such as The Elms or Taonga Tauranga who acknowledged existing support but did not specify an amount in their submissions requesting continued funding or support[6].

Strategic / Statutory Context

24. The proposed fund and draft policy are intended to support Council and the community to achieve strategic priorities and community outcomes.

Options Analysis

Issue 1 – Establish a Community Grant Fund

25. Council should first confirm whether to establish a contestable community grant fund in the LTP (issue 1.1) and if yes, the amount and resourcing of that fund (issue 1.2 and 1.3).

Issue 1.1: Inclusion of a community grant fund in the LTP

Option	Advantages	Disadvantages
1.1.1	Approve a community grant fund. (Recommended)	· Clear and transparent means of disbursing funds to community organisations. · Demonstration of commitment to support community organisations. · Recognition that work of community organisations also contributes to the social, economic, cultural and environmental well-being of Tauranga.	· Nil

Option

Advantages

Disadvantages

1.1.1

Approve a community grant fund.

(Recommended)

· Clear and transparent means of disbursing funds to community organisations.

· Demonstration of commitment to support community organisations.

· Recognition that work of community organisations also contributes to the social, economic, cultural and environmental well-being of Tauranga.

· Nil

1.1.2

Do not approve a community grant fund.

(Not recommended)

· Acknowledges comments in submissions that there are alternative community funding providers.

· Reverts to status quo of approving or declining funding applications through ad hoc processes.

· Reverts to status quo of only providing funds to groups who know they can request funding through the annual plan.

· Limited demonstration of commitment to support community organisations or of the role such organisations have in contributing to the well-being of Tauranga residents.

Issue 1.2 – Amount of Community Grant Fund

26. Should Council agree to include a fund in the LTP, consideration should be given to the amount of that fund. As noted in the financial considerations section above, while a figure of $1.81 million was widely disseminated, it was not made clear that this included a portion of loan-funded opex that can only be granted for asset development.

27. There are five options Council could consider when determining the amount of the fund:

· A $1.81 million fully rates-funded grant fund including carry-forward of $330,000 from current financial year (option 1.2.1).

· A $1.81 million split between $1.31 million of rates funded opex and $500,000 loan-funded opex (option 1.2.2).

· A $1.81 million fund split as $980,000 rates funded opex (incl. $160,000 LOS subsidies) and $830,000 loan-funded opex (option 1.2.3).

· A fund of less than $1.81 million (option 1.2.4).

· A fund of more than $1.81 million (option 1.2.5).

28. The table below outlines the advantages and disadvantages of each option.

Option	Advantages	Disadvantages
1.2.1	Approve Community Grant Fund of $1.81 million operational funding (rates-funded).	· Consistent with the amount promoted through the LTP consultation process. · Reflects intention of the fund to provide operational funding for community organisations. · Ensures sufficient funds to service current service level agreements and the new grant fund.	· Rates increase of 0.2% in 2022 FY.

Option

Advantages

Disadvantages

1.2.1

Approve Community Grant Fund of $1.81 million operational funding (rates-funded).

· Consistent with the amount promoted through the LTP consultation process.

· Reflects intention of the fund to provide operational funding for community organisations.

· Ensures sufficient funds to service current service level agreements and the new grant fund.

· Rates increase of 0.2% in 2022 FY.

1.2.2

Approve Community Grant Fund of $1.81 million split as $1.31 million rates funded opex and $500,000 loan funded opex, with the rates-funded portion increasing by $100,000 each year to be $1.81 million fully rates-funded by 2027 financial year.

· No impact on rates in year one.

· Consistent with the amount promoted through the LTP consultation process.

· Reflects intention of the fund to provide operational funding for community organisations.

· Loan-funded opex for grants can only be used for assets, not for operational projects or business as usual activity.

· Potential that Council funding pays for assets not in our ownership.

· Previous grants for capital works are generally more than maximum suggested under the draft policy.

· Potential reduction in ability to service existing funding agreements or new partnership agreements.

1.2.3

Approve Community Grant Fund of $1.81 million split as $980,000 rates funded opex (incl. $160,000 LOS subsidies) and $830,000 loan-funded opex

(as included in the draft LTP financial information).

· Reflects the financial numbers included in the consultation document for the LTP.

· No additional impact on rates.

· The split between opex and capex was not clearly conveyed in the question included in the LTP consultation material.

· Loan-funded opex for grants can only be used for assets, not for operational projects or business as usual activity.

· Potential that Council funding pays for assets not in our ownership.

· Previous grants for capital works are generally more than maximum suggested under the draft policy.

· Potential reduction in ability to service existing funding agreements or new partnership agreements.

1.2.4

Approve an amount less than $1.81 million.

· No impact on rates.

· Acknowledges that there are other community funding organisations in Tauranga.

· Acknowledges submissions opposed to the fund and amount.

· Acknowledges LTP consultation document suggested an amount “up to” $1.81 million.

· Potential reputation risk as perception in community is that the fund is $1.81 million.

· Potential reduction in ability to service existing funding agreements or new partnership agreements.

1.2.5

Approve an amount higher than $1.81 million.

· Potentially able to support additional community organisations, projects and services.

· May be difficult to distribute all funds in one year.

· Unlikely to align with the community’s expectations of the amount of the fund given the consultation to date.

· Impact on rates.

· Does not acknowledge submissions opposed to the fund or that suggested $1.81million was already too high.

Issue 1.3 – Retain fund administration in Council or merge with other community providers

29. Some submissions cited the existence of other community funding providers and suggested council funding could be merged with those funds. The draft policy notes that the assessment panel will include an independent person from one of the community funding organisations.

30. The table below outlines the advantages and disadvantages of merging the fund with other community providers.

Option	Advantages	Disadvantages
1.3.1	Merge fund with other community funding providers\.	· Reduces administration costs. · It could be argued that the philanthropic funding organisations have more technical skills/expertise in this area.	· Limited visibility of Council support (may be interpreted as TECT or Acorn funding). · Funding decisions may not align with Council outcomes. · Potential that some organisations receive reduced funding.
1.3.2	Do not merge fund with other community funding providers. (Recommended)	· Visibility of Council funding in the community. · Funding decisions align with Council outcomes. · Inclusion of representative from community providers ensures collaboration on disbursement of fund and external expertise.	· Duplicated administration costs.

Option

Advantages

Disadvantages

1.3.1

Merge fund with other community funding providers\.

· Reduces administration costs.

· It could be argued that the philanthropic funding organisations have more technical skills/expertise in this area.

· Limited visibility of Council support (may be interpreted as TECT or Acorn funding).

· Funding decisions may not align with Council outcomes.

· Potential that some organisations receive reduced funding.

1.3.2

Do not merge fund with other community funding providers.

(Recommended)

· Visibility of Council funding in the community.

· Funding decisions align with Council outcomes.

· Inclusion of representative from community providers ensures collaboration on disbursement of fund and external expertise.

· Duplicated administration costs.

Issue 2 – Draft Community Funding Policy

31. As noted above, issues arising from submissions to the draft policy are as follows:

· maximum grant amount allowable under the policy (issue 2.1);

· apportioning fund equally across the four well-beings (issue 2.2);

· ringfencing a portion of the fund for kaupapa Māori initiatives (issue 2.3);

· allowing schools to apply to the fund (issue 2.4);

· allowing social enterprises and individuals to apply to the fund (issues 2.5 and 2.6); and

· requiring applicants to match requested council contribution (issue 2.7).

Issue 2.1 – Maximum grant allowable under the policy

32. The draft policy proposes that the maximum grant available through the grant fund is $50,000. This figure was reached by determining that most applications for council funding are for less than $50,000. Partnership agreements may be for higher amounts and the draft policy does not stipulate a maximum amount.

33. The advantages and disadvantages of the options regarding the maximum available are outlined below.

Option	Advantages	Disadvantages
2.1.1	Maximum grant available is $50,000 (as in draft policy). (Recommended)	· Anticipated that most applications will be for an amount less than $50,000. · Recognises that Council is not the sole source of community funding.	· Some community organisations may desire more than $50,000.
2.1.2	Increase the maximum grant available.	· Nil	· Previous community grants rarely exceed $50,000 (except for capital grants). · Does not recognise that there are other community funding providers.

Option

Advantages

Disadvantages

2.1.1

Maximum grant available is $50,000 (as in draft policy).

(Recommended)

· Anticipated that most applications will be for an amount less than $50,000.

· Recognises that Council is not the sole source of community funding.

· Some community organisations may desire more than $50,000.

2.1.2

Increase the maximum grant available.

· Nil

· Previous community grants rarely exceed $50,000 (except for capital grants).

· Does not recognise that there are other community funding providers.

Issue 2.2 – Apportioning fund equally across the four well-beings

34. In developing the draft policy, it was noted that there is a perception that some sectors receive a disproportionate amount of council funding and therefore, the draft policy should respond to that perception by allocating the fund equally over the four well-beings. This view was shared in some submissions – for example from Socialink.

35. While this perception was noted in a December 2020 Council report on community grant funding and the proposed fund, no recommendation was made on the issue. A matrix of existing community funding attached to that report showed that most grants were for projects with multiple well-being outcomes.

36. The table below outlines the advantages and disadvantages of apportioning the fund over the four well-being areas.

Option	Advantages	Disadvantages
2.2.1	Apportion fund equally over the four well-beings.	· Perception that no area (for example, environment) receives less funding.	· Does not recognise that some projects may impact multiple well-being areas. · Potential to overspend in one area due to demand but underspend in a different area. · Potential increased administration costs for applicants to identify appropriate outcome area and staff to determine if that is the correct area.

Option

Advantages

Disadvantages

2.2.1

Apportion fund equally over the four well-beings.

· Perception that no area (for example, environment) receives less funding.

· Does not recognise that some projects may impact multiple well-being areas.

· Potential to overspend in one area due to demand but underspend in a different area.

· Potential increased administration costs for applicants to identify appropriate outcome area and staff to determine if that is the correct area.

2.2.2

Do not apportion fund equally over the four well-beings.

(Recommended)

· Recognises that potential projects may have multiple outcomes.

· Potentially less administrative burden for applicants as funding applications do not have to align with a particular outcome area.

· Potential perception that some areas receive less funding.

Issue 2.3 – Ringfencing a portion of the fund for kaupapa Māori initiatives

37. While some feedback recorded opposition to initiatives that were seen to only benefit Māori, other submissions noted that kaupapa Māori initiatives could have wider benefits, particularly tourism projects. While the draft policy provides for iwi and hapū organisations to apply for funding, there is no provision ringfencing a portion of the fund for kaupapa Māori initiatives.

38. This proposal is separate to the suggestion to ringfence a portion of the proceeds from the sale of elder housing to offset development contribution costs for papakāinga development.

Option	Advantages	Disadvantages
2.3.1	Ringfence a portion of the fund to support kaupapa Māori initiatives.	· Acknowledges obligations under Tiriti o Waitangi. · Acknowledges kaupapa Māori initiatives can have benefits for the wider community, such as tourism.	· Opposition to specific funding for Māori projects. · Potentially less funding available for other community-led projects.
2.3.2	Do not ringfence a portion of the fund to support kaupapa Māori initiatives.	· All funding remains available for community-led projects. · Acknowledges community opposition to funding for Māori projects. · Enables the fund to allocated based on the merits of the application which may be more or less than a specific ring-fenced portion.	· Limited acknowledgement of obligations under Tiriti o Waitangi.

Option

Advantages

Disadvantages

2.3.1

Ringfence a portion of the fund to support kaupapa Māori initiatives.

· Acknowledges obligations under Tiriti o Waitangi.

· Acknowledges kaupapa Māori initiatives can have benefits for the wider community, such as tourism.

· Opposition to specific funding for Māori projects.

· Potentially less funding available for other community-led projects.

2.3.2

Do not ringfence a portion of the fund to support kaupapa Māori initiatives.

· All funding remains available for community-led projects.

· Acknowledges community opposition to funding for Māori projects.

· Enables the fund to allocated based on the merits of the application which may be more or less than a specific ring-fenced portion.

· Limited acknowledgement of obligations under Tiriti o Waitangi.

39. Should Council agree to option 2.3.1, an additional provision will be added to the policy noting that “A portion of the community grant fund will be ring-fenced for kaupapa Māori initiatives”. This is shown highlighted at clause 5.3.6 in the attached draft policy.

Issue 2.4 – Allowing education providers to access funds

40. The definition of community organisations in the draft policy is “A voluntary or not-for-profit organisation that serves a public benefit; and that relies on volunteers for at least its governance; and has values, purpose and objectives independent of government or commercial institutions. It must be a registered trust or incorporated society registered under the Charities Act 2005. Unless there are clearly justified reasons, membership or participation in its activities should be available to everyone who wishes to join”. This definition could exclude schools and early childhood education providers from accessing the fund.

41. The table below considers the advantages and disadvantages of allowing schools and early childhood providers to access the fund by noting them as an exception to the general provision that funding is only available to registered charitable entities.

Option	Advantages	Disadvantages
2.4.1	Allow schools, early childhood centres and kura to access funding. (Recommended)	· Recognises the role of education providers in supporting wider community outcomes. · Aligns the Community Grant Fund to the current Match Fund criteria, where schools can access support from the Match Fund. · Acknowledges that council has provided funds to schools in the past. · Provides support for community-led projects in schools in our most vulnerable communities.	· Schools are funded by central government and potentially have access to other sources of funding.
2.4.2	Do not allow schools, early childhood centres and kura to access funding (as in draft policy).	· Acknowledges that schools have other potential sources of funding.	· Some education-led projects with wider community outcomes may not be funded. · Does not acknowledge that council has provided funds to schools in the past.

Option

Advantages

Disadvantages

2.4.1

Allow schools, early childhood centres and kura to access funding.

(Recommended)

· Recognises the role of education providers in supporting wider community outcomes.

· Aligns the Community Grant Fund to the current Match Fund criteria, where schools can access support from the Match Fund.

· Acknowledges that council has provided funds to schools in the past.

· Provides support for community-led projects in schools in our most vulnerable communities.

· Schools are funded by central government and potentially have access to other sources of funding.

2.4.2

Do not allow schools, early childhood centres and kura to access funding (as in draft policy).

· Acknowledges that schools have other potential sources of funding.

· Some education-led projects with wider community outcomes may not be funded.

· Does not acknowledge that council has provided funds to schools in the past.

42. Should Council agree to option 2.4.1, “schools, early childhood centres and kura” will be added to draft clause 5.1.8 to note that both schools, and iwi and hapū organisations are exceptions to the general rule that only community organisations able to call themselves registered charitable entities are able to access the grant fund. This recommended change is highlighted in the attached draft policy.

Issue 2.5 – Allowing social enterprises to access funds

43. Clause 5.1.8 of the draft policy states that “Council does not fund limited liability companies or incorporated societies that are not registered charities”. This may exclude social enterprises from accessing the fund. Social enterprises are ‘hybrid organisations that trade goods and services in order to achieve their social, environmental, economic or cultural goals’. The December 2020 report recommended excluding social enterprises from being eligible from the fund. This recommendation reflected that the draft policy (and fund) is intended to provide funding to projects that originate from the community. However, submitters noted that social enterprises may be just as invested in delivering for the community as not for profit community organisations. Accountability measures could be put in place to ensure any profits from social enterprises were re-invested in the community.

44. The table below outlines the advantages and disadvantages of allowing social enterprises to access the fund.

Option	Advantages	Disadvantages
2.5.1	Allow social enterprises to access funds by amending draft clause 5.1.8 to include an exception for social enterprises	· A subset of groups with priorities and objectives that may support and achieve Council’s strategic priorities, and the community outcomes, would be able to potentially access funding from Council.	· Funding may be provided to projects that do not originate from the community. · Council could be seen to be providing funding to private enterprises, including companies with a for profit purpose.

Option

Advantages

Disadvantages

2.5.1

Allow social enterprises to access funds by amending draft clause 5.1.8 to include an exception for social enterprises

· A subset of groups with priorities and objectives that may support and achieve Council’s strategic priorities, and the community outcomes, would be able to potentially access funding from Council.

· Funding may be provided to projects that do not originate from the community.

· Council could be seen to be providing funding to private enterprises, including companies with a for profit purpose.

2.5.2

Do not allow social enterprises to access funds.

(Recommended)

· Ensures funds are directed to projects that originate from the community.

· Council is not seen to be potentially providing funding to private enterprises.

· Social enterprises who may support priorities and objectives aligning with Council strategic priorities cannot access funding.

Issue 2.6: Allowing individuals to apply to the community grant fund

45. One feedback point was noted suggesting individuals should be allowed to apply for funding. The advantages and disadvantages of this are outlined in the table below.

Option	Advantages	Disadvantages
2.6.1	Allow individuals to access funding.	· Potential that some projects with good community outcomes not supported.	· Risk to Council that an individual does not have the same structure for ensuring transparency and accountability of funds. · Assumption underpinning policy is that funded projects have wider community support and originate from the community.
2.6.2	Do not allow individuals to access funding. (Recommended)	· Mitigates any risk that individuals do not have the structure to ensure transparency and accountability of funds. · Ensures funded projects have wider community support.	· Potentially some projects with good community outcomes not supported.

Option

Advantages

Disadvantages

2.6.1

Allow individuals to access funding.

· Potential that some projects with good community outcomes not supported.

· Risk to Council that an individual does not have the same structure for ensuring transparency and accountability of funds.

· Assumption underpinning policy is that funded projects have wider community support and originate from the community.

2.6.2

Do not allow individuals to access funding.

(Recommended)

· Mitigates any risk that individuals do not have the structure to ensure transparency and accountability of funds.

· Ensures funded projects have wider community support.

· Potentially some projects with good community outcomes not supported.

Issue 2.7 – Requiring organisations to “match” the requested council funding

46. One feedback point was recorded suggesting that applicants should “match” any council contribution with their own funds. While this is fundamental to the Match Fund, the draft policy does not envision this applying to the Community Grant Fund given the higher amount of available funding. However, the draft policy encourages community organisations to not see Council as a seed funder and to seek complementary funding from other providers.

47. The advantages and disadvantages of requiring organisations to match funding is outlined in the table below.

Option	Advantages	Disadvantages
2.7.1	Require applicants to the Community Grant Fund to “match” any requested council funding.	· Ensures that Council is not funding all of a project.	· Applicants may not be able to “match” funds due to larger amounts being sought.
2.7.2	Do not require applicants to the Community Grant Fund to “match” any requested council funding. (Recommended)	· Acknowledgement already in draft policy that applicants to the Community Grant Fund should apply to other funders, as well as Council.	· Council may fund all of a project.

Option

Advantages

Disadvantages

2.7.1

Require applicants to the Community Grant Fund to “match” any requested council funding.

· Ensures that Council is not funding all of a project.

· Applicants may not be able to “match” funds due to larger amounts being sought.

2.7.2

Do not require applicants to the Community Grant Fund to “match” any requested council funding.

(Recommended)

· Acknowledgement already in draft policy that applicants to the Community Grant Fund should apply to other funders, as well as Council.

· Council may fund all of a project.

Other matters

Revocation of Community Investment Policy

48. If adopted, the policy would replace the existing Community Investment Policy. A copy of the current Community Investment Policy is appended as Attachment Four. The 2003 Community Investment Policy was last amended in 2009 to remove reference to two redundant community assistance funds. As reported to Council in December 2020, the scale of change between the draft policy and the Community Investment Policy is substantial, therefore requiring a new policy. It should be noted that the sentiment of the Community Investment Policy has been captured in the draft policy.

Legal Implications / Risks

49. There are no legal implications or other risks arising from the recommendations.

Consultation / Engagement

50. A total of 45 different feedback points were raised in submissions on the proposed grant fund (Attachment Two). As noted above, there was general support for proceeding with a grant fund, so long as grants were subject to a robust and transparent process. Those that opposed the fund cited the existence of other community grant providers, or a preference that the money be spent on infrastructure and other services.

51. For expediency, consultation on the draft policy was run in parallel with the LTP consultation. A total of 15 submissions were received as part of the policy consultation.

52. The Community Partnerships team hosted two workshops for community organisations to introduce the fund and policy. Approximately 40 organisations attended the workshops. In addition, numerous communications explaining the proposed fund and policy were emailed out to the Community Partnerships database.

53. In developing the draft policy, staff met with representatives of the environment and social sectors. Strong support was received for including partnership agreements in the draft policy.

54. Some submitters cited that the limited information meant they could not put forward a fully formed view. Information on the proposed fund, impact on rates, and the draft policy was included in the LTP consultation material.

Significance

55. 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.

56. 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

57. In accordance with the considerations above, criteria and thresholds in the policy, it is considered that the matters are of medium significance.

58. As noted above, a change in the budget amount or make up of the budget may be considered of medium significance, due to it being difficult to reverse. Similarly, a decision to allow schools to access the fund may be considered of medium significance as it affects a sub-group of the community, with the community grant fund itself being of moderate public interest.

ENGAGEMENT

59. Taking into consideration the above assessment, that the matters are of medium significance, officers are of the opinion that no further engagement is required prior to Council making a decision. If the Commissioners decide to make additional changes to the policy (particularly changes that were not raised in submissions or addressed in earlier reports), consideration will need to be given to whether further engagement is required under the Local Government Act 2002.

Next Steps

60. Should the proposed fund be confirmed through the LTP, it is anticipated that the first Community Grant Fund round will be held in September 2021, with funds disbursed prior to Christmas 2021. The assessment panel’s decision on funding recipients will be provided to Council for information.

61. The draft policy states it will be reviewed every three years to align with the LTP planning cycle. However, there may be a need to review the policy earlier as part of a comprehensive review of council’s funding framework. Such a review could consider, inter alia, options for specific funds to support Māori outcomes and marae development, rental subsidies and leases, and other council grants fund (e.g. Event Funding Framework).

62. An earlier review of the policy many also be required, once we understand community need and interest, particularly interest in partnership agreements.

Attachments

1. Draft Community Funding Policy 2021 - A12630796 ⇩

2. Summary of feedback points on the community grant fund - A12628042 ⇩

3. Submissions on draft Community Funding Policy - A12612044 ⇩

4. Community Investment Policy - A12623837 ⇩

Ordinary Council Meeting Agenda

24 June 2021

Draft Community Funding Policy

Policy type	City
Authorised by	Council
First adopted	XXX	Minute reference	XXX
Revisions/amendments	NA	Minute references	NA
Review date	This policy will be reviewed every three years to align with the long-term plan.

1. PURPOSE

1.1 To ensure a structured, transparent, and fiscally prudent approach to the fair distribution of funding assistance to eligible entities for the ~~contestable~~ community grants fund, the community development match fund, and partnership agreements.

2. SCOPE

2.1 This policy applies to community grant funding allocated by Tauranga City Council through the following methods:

· ~~Contestable Grants~~Community Grant Fund

· Community Development Match Fund

· Partnership Agreements

2.2 Events funding and the Stewart and Carruthers Funds are outside the scope of this policy.

2.3 All monies provided by central government for council to distribute (for example, Creative Communities) are outside the scope of this policy.

3. DEFINITIONS

Term	Definition
Community Development Match Fund	A sub-set of community grant funding and specifically refers to two funding windows of up to $1,000 (small grants) and up to $10,000 (medium grants) that aim to support community initiatives that promote social, cultural and environmental wellbeing. The match fund requires that the applicant match the funds provided by council with funds, volunteer contribution or in-kind contribution of at least equal value to the funds provided by council.
Community grant funding	Financial contribution to a community organisation, group or sector of the community to achieve a specified outcome. This includes the Contestable Grant Fund, the Community Development Match Fund and Partnership Agreements.
Community organisation	A voluntary or not-for-profit organisation that serves a public benefit; and that relies on volunteers for at least its governance; and has values, purpose and objectives independent of government or commercial institutions. It must be a registered trust or incorporated society ~~with Charities Commission charitable status~~registered under the Charities Act 2005. Unless there are clearly justified reasons, membership or participation in its activities should be available to everyone who wishes to join.
Contestable grant funding	Refers to the following: · Funding to support the delivery of a clearly defined activity, project or initiative · Monies awarded through a publicly contestable process · An assessment panel assesses funding applications and allocates limited funds as fairly and strategically as possible · Applications are invited through scheduled funding round(s), which are publicly advertised and have an opening and closing date · Eligible applicants have an equal opportunity to be considered for a grant · A clearly defined assessment process is applied to all applicants in a transparent manner · Financial allocation is discoverable and public
Partnership Agreement	Refers to non-contestable, multi-year agreements with select community organisations, with generally long-standing relationships with Council to deliver actions and programmes that align with community outcomes and council’s strategic priorities.

4 PRINCIPLES

4.1 The following policy principles will guide council’s decision-making process, and inform the design and implementation of council’s community grant funding programme:

· Transparency

· Equity

· Accountability; and

· Recognition of our partnership relationship with iwi and hapū from Tauranga Moana.

5. POLICY STATEMENT

5.1 General

5.1.1 Community organisations support council to promote the social, economic, cultural and environmental wellbeing of Tauranga residents.

5.1.2 Community grant funding will build upon and support community-led initiatives, which create positive change in the community, enhance the community’s ability to meet its own needs, and develop local community leadership.

5.1.3 Tauranga City Council allocates community grant funding from a limited pool of money.

5.1.4 Council is not a primary funder of community organisations. All grants will recognise council’s role as a complementary funder through prioritising those organisations that have actively sought other funding before approaching Council.

5.1.5 Grants will be targeted to achieve council’s strategic priorities, community outcomes, principles of support, and be appropriate to the purpose and role of a local authority.

5.1.6 The total financial assistance provided through the Contestable Grants Fund, Community Match Fund, and Partnership Agreements is agreed every three years through the Long-term Plan.

5.1.7 All requests for community grant funding received as a submission to the Annual Plan or Long-term Plan will be referred to the Contestable Grants Fund, Community Development Match Fund, or for discussion regarding a Partnership Agreement.

5.1.8 Council does not fund limited liability companies or incorporated societies that are not registered charities. The only exceptions to this are iwi or hapū organisations requesting funding to deliver kaupapa Māori outcomes and schools, kura, and early childhood centres.^{^[7]}

5.1.9 A community organisation yet to become a registered charitable entity under the Charities Act 2005 ~~register as a trust with Charities Commission charitable status or an incorporated society with Charities Commission charitable status,~~ may use an umbrella organisation to receive funds where there is clear evidence that the organisation intends to ~~register as a trust or incorporated society with charitable status~~become a registered charitable entity. This excludes small grants received through the Community Development Match Funds, which may be directly given to unregistered groups.

5.1.10 In general community funding will not be provided where delivery of the project is outside the Tauranga City Council area.

5.1.11 Any monies in the community grant funding budget not allocated at the end of the council financial year will not be carried forward.

5.2 General funding criteria

5.2.1 The general funding criteria are outlined in schedule one. These criteria will be considered when assessing applications to determine their relative merit and assist decision-makers to prioritise between applications of similar merit. Applicants must also have regard to the specific fund requirements in the schedules.

5.2.2 All applications for community grant funding must demonstrate how the activity promotes one or more of the well-beings (social, economic, environmental, cultural) of the local community, and the community outcomes included in the Long-term Plan applicable at the time of the application. Preference will be given to those organisations that demonstrate that funding will promote more than one of the well-beings and community outcomes.

5.2.3 Funding will not be provided for any of the goods, services or activities listed at schedule two to this policy. Council may specify additional exclusions for funding.

5.2.4 Council (or committee of Council with delegated authority) may amend the schedules at any time via resolution.

5.3 ~~Contestable~~ Community Grants Fund

5.3.1 The ~~Contestable~~ Community Grants Fund is open to applications from community organisations, including schools, kura and early childhood centres¹. Organisations, including iwi and hapū organisations, delivering kaupapa Māori outcomes may also apply to the fund.

5.3.2 The minimum funding amount for the ~~Contestable~~ Community Grants Fund is $10,001 and the maximum amount is $50,000.

5.3.3 Applications for amounts less than $10,000 will be referred to the Community Development Match Fund.

5.3.4 The ~~Contestable~~ Community Grants Fund will be distributed through two funding rounds, spread equally throughout the year. No more than 60% will be allocated in the first funding round to ensure sufficient funds are available for future rounds.

5.3.5 All decisions on applications for the ~~Contestable~~ Community Grant Fund will be made by an assessment panel consisting of at least two senior Council staff, a representative appointed by Te Rangapū Mana Whenua o Tauranga Moana and an independent representative from one of the community philanthropic funding organisations, based upon recommendations from technical experts on Council staff.

5.3.6 A portion of the Community Grant Fund will be ring-fenced to support kaupapa Māori initiatives.^{^[8]}

Note: Refer to schedule three of this policy for principles of support to be considered.

5.4 Community Development Match Fund

5.4.1 The Community Development Match Fund is open to applications from community organisations, not for profit groups, communities of interest, iwi and hapū organisations, informal and grass root neighbourhood groups.

5.4.2 Groups with no formal legal structure may apply for grant funding when an umbrella organisation that meets this policy’s definition of a community organisation has been nominated and agreed to receive and administer the funds.

5.4.3 Community Development Match Fund medium grants of between $1,000 and $10,000 are distributed through at least two funding rounds per year.

5.4.4 Applicants need to provide a match of at least 50% of the total value of the project of in-kind support, volunteer time or money.

5.4.5 Small grants of up to $1,000 are distributed throughout the year. Decisions on applications for small grants are made by the Community Partnerships Team.

5.4.6 Decisions on applications for the Community Development Match Fund will be made by an assessment panel of an independent representative from one of the community philanthropic funding organisations and at least two senior members of staff from Council.

Note: Refer to Schedule four for specific requirements.

5.5 Partnership agreements

5.5.1 Council will pursue partnership agreements with organisations that have a track record of delivering actions and programmes that align with community outcomes and Council’s strategic priorities. Other characteristics these organisations will have are:

· Key capacity building organisations

· Cornerstone providers within their sector

· Robust strategic and business plans are already in place.

5.5.2 In most cases, partnership agreements will be for a minimum of three years and are designed to provide financial certainty and a longer time horizon for the recipient organisation’s planning and programming. We aim to support recipients to increase their capacity and expand their activities with the goal of achieving financial sustainability.

5.5.3 The parties will enter into a formal funding agreement that articulates clear performance objectives. Funding will be paid on a six-monthly basis subject to performance (i.e. achievement of agreed outcomes).

5.5.4 Any funding provided to support a partnership agreement may not be used for any of the activities included at schedule two of this policy.

5.5.5 All partnership agreements will meet the general criteria and eligibility for funding outlined in this policy.

5.6 Decisions on funding applications

5.6.1 The extent of the due diligence undertaken by Council staff and the amount of information requested from applicants will be relative to the amount of community grant funding being requested.

5.6.2 In a competitive funding environment, the following will be a lower priority for funding:

· Travel and accommodation outside Tauranga or the western Bay of Plenty sub-region, unless Council is convinced there will be a tangible benefit for Tauranga communities

· Retrospective costs (where the activity has already taken place), unless this is necessary as a condition of the grant or Council is satisfied there are other mitigating circumstances

5.6.3 Preference will be given to community-led or iwi/ hapū led organisations that demonstrate genuine engagement with local communities or tangata whenua and encourage participation across diverse communities.

5.7 Transparency and accountability

5.7.1 Council will ensure that all administrative and decision-making processes about community grant funding are presented in such a way that they can be easily understood by the community.

5.7.2 The extent of the due diligence undertaken by Council staff and the amount of information requested from applicants will be relative to the amount of community grant funding received.

5.7.3 Any form of community grant funding will be described in a funding agreement commensurate with the level of funding provided. The agreement will contain the roles and responsibilities that both the Council and the organisation receiving funding agree upon, and the project, activity or service that the organisation will provide to the community. The agreement may vary depending on the amount of support provided and the type of support.

5.7.4 Council is reminded of its requirement to be financially prudent and undertake transactions with good business practice. This applies to the distribution of community grant funding under this policy. Council upholds its statutory responsibility to ensure the lawful, transparent and prudent expenditure of public funds.

5.7.5 Community grant funding recipients are required to acknowledge publicly (at a scale commensurate with the level of funding received) the receipt of Tauranga City Council community grant funding by the appropriate methods outlined in the recipient’s individual funding/partnership agreement.

5.7.6 Acknowledgment in the organisation’s annual report is mandatory (where an organisation prepares one).

5.7.7 All recipients of community grant funding must ensure that the funded activity remains compliant with all relevant legislation, regulations and terms and conditions, including health and safety legislation.

5.7.8 A failure to meet all relevant terms and conditions associated with Council community grant funding may result in all or one of the following:

· termination of funding

· decline of future funding

· repayment of part or all of the allocated funding.

5.7.9 All recipients of community grant funding are required to complete an accountability report (at a scale commensurate with the amount of funding provided) and provide any other funding expenditure or evaluation documentation requested by Council. These must be completed either as soon as the funds are spent, or within one calendar year of receipt of grants funding, whether allocated funds were spent or not.

5.7.10 A failure to return required funding accountability or evaluation documentation may result in a denial of funding in future grants applications.

5.7.11 Any unspent funds must be returned to Council within one year of receipt unless there is prior agreement with the Council to carry over such funds.

5.7.12 Any discrepancies in funding (e.g. funds spent on activities other than those specified in the approved grants funding application) may result in an audit of the recipient’s accounts and the funded activity, and the potential return to the Council of grants funding received.

5.7.13 Funding allocation may be reviewed on a case-by-case basis, in order to evaluate project outcomes, assess the extent to which the funding achieved Council’s strategic objectives, and ensure the grants programme continues to reflect community needs.

5.7.14 Conflicts of interest will be identified and appropriately managed.

5.7.15 Adequate records are kept at each stage of the funding lifecycle to support internal and external audit requirements and evaluate the impact of the grants programme.

5.7.16 Methods of monitoring will be proportional to the amount of funding and the funding recipient and not impose an unnecessary burden on recipients.

6. DELEGATIONS

6.1 The implementation of this policy is delegated to the Chief Executive and their sub-delegates.

7. REFERENCES AND RELEVANT LEGISLATION

7.1 Charities Act 2005
Local Government Act 2002

8. ASSOCIATED POLICIES/PROCEDURES

· Procurement Policy

· Stewart Trust and Carruthers Trust Funds Policy

· Events Funding Framework

· Active Reserves Level of Service Policy

9. SCHEDULES

Schedule one: General criteria to be considered in assessing applications for the Contestable Grants Fund, Community Development Match Fund, and Partnership Agreements

Has the application…….

Made a compelling case for how the proposal aligns to the funding priorities established?

Clearly defined the purpose, expected community outcomes, and expected achievement of social, economic, environmental and cultural wellbeing of the local community of the project, activity, or service, for example the need they are meeting and why this is important?

Clearly described the project, activity or service, what will be delivered, and satisfied council that it is viable?

Demonstrated the capability, capacity and experience to deliver the project, activity or service to an appropriate standard, evidenced by a relevant track record of successful delivery?

Presented a realistic, evidenced-based budget for the project, activity or service, and identified exactly how the council grant would be spent?

Given thought to how the community organisation will show the grant has benefited the community (or for larger grants, identifying how the organisation will evaluate the success of the project, activity or service)?

Identified who the project, activity or service will benefit and where in Tauranga City Council area these people are likely to come from?

Provided evidence of community support for, and/ or involvement in, the project, activity or service, and/or evidence of support from the recognised regional or national body (where relevant)?

Shown that the project, activity or service will support multiple funding priorities (this is not required, but may affect the relative merit of the project)?

Disclosed all council funding (financial or otherwise) e.g. current council funding, rental subsidies, previous grants, leases, licenses to occupy?

Schedule two: Activities that will not be funded through community grant funding

Commercial activity

Debt servicing or repayment

Legal expenses (for example, to defend an organisation in Court or to challenge a decision in the Environment Court)

To employ individual persons

Building consent fees and resource consent fees

Activities that promote religious ministry, or political purposes and causes

Medical expenses

Public services that are the responsibility of central government (e.g. core education, healthcare, social work, whanau ora services) except where Council has identified it as a strategic outcome e.g. homelessness, or it addresses a need in a priority community.

Physical works where relevant consent or permit has not yet been issued. Council may agree to a grant subject to consents or permits being granted. The funding would be released on receipt of the required consents or permits.

Purchase of tobacco, alcohol, vape supplies or other psychoactive substances

Development of clubrooms on active reserves (based on requirements in the Active Reserves Level of Service Policy)

Schedule three: Principles of support to be considered when applying to the Contestable Grant Fund

Communities of need and social equity

We want to our city to be a great place to live for everyone. We are committed to ensuring that those who need support most receive it by providing financial and other support for initiatives focused on areas of high deprivation and priority communities of interest.

Encourage Kaupapa Māori Outcomes

We value the importance of strengthening and supporting Kaupapa Māori outcomes and acknowledge the need for nurturing strong relationships founded on Māori values, principles and practices.

Community pride and belonging

Celebrating identity, heritage and cultural diversity, and feeling of a sense of belonging and inclusion. We are committed to celebrating our diverse cultural identities and fostering the creative arts to enhance the wellbeing of our community.

Wellbeing and participation

So that Tauranga is an inclusive and accessible city that enables healthy living and recreation to support improved wellbeing. Note that this includes healthy and active communities - supporting healthy living and physical activity and having access to health services for all ages, cultures, and disabilities.

Safe and resilient communities

People are safe and feel safe in their homes, neighbourhoods and public places.

Environmental sustainability

Environmental restoration, helping minimise our impact on the environment and promoting sustainability of our resources in Tauranga Moana.

Schedule four: Community Development Match Fund

What can get funded?

• All Match Fund applications must demonstrate a contribution to at least one of the Principles of Support.

• Preference will be given to applications that benefit Priority Communities.

How much and when?

	Small grants	Medium grants
Funds available	Applications – up to $1,000	Applications – up to $10,000
When you can apply	Anytime	Twice a year – see TCC website for details
When you will get a decision	Within three weeks of receipt of application	Within two weeks of the Match Fund Panel meeting

Who can apply?

The Community Development Match Fund is open to applications from community organisations, not for profit groups, communities of interest, tangata whenua organisations, informal and grass root neighbourhood groups.

Council will administer funds directly to unregistered groups for small grants. For medium grants, unregistered group applicants are required to identify a legally constituted organisation such as a charity, incorporated society or Trust to act as an “umbrella organisation” willing to receive and monitor funds on your behalf. You will need to obtain the umbrella organisation’s approval for this and provide details of the umbrella organisation in your application form.

Match Fund Principles of Support

The below Principles of Support demonstrate how Tauranga City Council understands and approaches community wellbeing. Any project must demonstrate that it contributes to at least one of the Principles of Support. The more and better that a project application aligns with Council’s Principles of Support, the more likely the project will be supported by the Match Fund.

1. Communities of need and social equity: We want to our city to be a great place to live for everyone. We are committed to ensuring that those who need support most receive it by providing financial and other support for initiatives focused on areas of high deprivation and priority communities of interest.

2. Encourage Kaupapa Māori Outcomes: We value the importance of strengthening and supporting Kaupapa Māori outcomes and acknowledge the need for nurturing strong relationships founded on Māori values, principles and practices.

3. Community pride and belonging: Celebrating identity, heritage and cultural diversity, and feeling of a sense of belonging and inclusion. We are committed to celebrating our diverse cultural identities and fostering the creative arts to enhance the wellbeing of our community.

4. Wellbeing and participation: So that Tauranga is an inclusive and accessible city that enables healthy living and recreation to support improved wellbeing. Note that this includes the principle of Healthy and active communities: Supporting healthy living and physical activity and having access to health services for all ages, cultures, and disabilities.

5. Safe and resilient communities: People are safe and feel safe in their homes, neighbourhoods and public places.

7. Environmental sustainability: Environmental restoration, helping minimise our impact on the environment and promoting sustainability of our resources in Tauranga Moana.

Priority Communities

The Match Fund recognises that, from a social wellbeing and equity perspective, some communities face higher need than others, require more support, and are less likely to access council or other support. We have identified the areas of interest that we recognise need priority support and funding – Priority Communities.

Note: Importantly, the Match Fund decision panel will not exclude any communities (not otherwise excluded – see below). However, in deciding to allocate limited funds, it will prioritise the below Priority Communities to be as effective as possible.

Match Fund decisions will be weighted towards these areas of interest and we recommend that all applicants take the time to meaningfully address the relevant areas in their application.

• Support in areas of high deprivation (those communities with a deprivation index of 7-10 or are otherwise identified as the communities of highest deprivation in Tauranga).

• Increase access to community facilities and services.

• Reduce homelessness.

• Decrease inequity by providing opportunities for everyone to participate and be included in programmes, services, events and initiatives.

• Welcome newcomers and embrace and celebrate cultural diversity.

• Encourage social connectiveness in order to reduce social isolation.

• Ensure our community has access to the history and stories of Tauranga.

• Provide infrastructure and services that support healthy and active living for all ages and abilities.

• Increase community resilience and preparedness.

• Improve safety – either family, home or community.

• Improve the level of engagement amongst community organisations operating for a similar purpose and their collective impact on the community.

• Tauranga values strong partnerships with community organisations which are sustainable and supporters of our community wellbeing outcomes. We encourage collaboration with and between organisations.

• Promote and improve youth engagement and advocacy.

• Improve tools and resources for community organisations to provide a better experience for our communities.

• Help minimise our impact on the environment and promote sustainability of our resources in Tauranga.

What we don’t fund

Support is not available to:

• Individuals

• Political parties

• Commercial entities

• Projects or programmes with any religious proselytization.

• Maintaining ongoing programmes, events or services

• Operating expenses of organisations including funding permanent staff

• Maintenance or deferred maintenance

• Purchase or improvement of privately-owned facilities

• Funding activities that involve any alcohol, tobacco, substances and gaming

• Professional fundraising services

• Activities/projects already completed

• Projects that have already been funded or part-funded by Council

• Projects, initiatives or programmes which could be deemed anti-competitive

• Internal applicants from Council

• Council-controlled organisations (CCOs)

• Other local authorities, government agencies or public sector entities

• Projects or programmes which are to be delivered ostensibly outside the geographic area of Tauranga City

Support will also not be granted to applicants that:

• are not aligned to Council’s Principles of Support

• require debt servicing assistance or have outstanding debt with Tauranga City Council

• whose activities or behaviour could be deemed discriminatory, racist or illegal

• have breached previous support agreements with Tauranga City Council, including post-event reporting requirements and where no commitment has been made to rectify this situation

Types of things we fund include:

• Professional Services such as consents; professional consultants (landscape architect, graphic designer, web designer, educators); artists (DJ, performing artists); services (translation, interpretation, printing, advertising, filming); insurance for project if required.

• Supplies and Materials such as landscape materials; tools; paint; books, appropriate manuals; facility rental; playgroup equipment; marketing material; equipment hireage; food; event and volunteer costs.

• Construction/Capital such as demolition, grading and other activities related to site preparation; utilities work (water retention, sewer connection); electrical work (site lighting, electrical service, transformer) concrete work (sidewalks, ramp, seat walls); irrigation (connections, piping, spray sprinklers).

Community contributions – the match

You need to provide at least 50% of the value of the project in in-kind support or volunteer time or money as your match.

• materials and supplies: valued at their retail or rental prices. Donors must document this value of the match.

• cash donations: from fundraising or donations with evidence such as a bank statement.

• professional services: valued at a maximum of $100 per hour. Donors must document on letterhead the value of the services being donated.

• volunteer labour: valued at 15% above the minimum wage per hour for participants over 16-years of age.

Match Fund – other information

• Events: Projects that are events must provide “free or low cost (i.e. $10 or under) admission to the public”

• Opportunity to Pitch: Applicants are welcome to pitch their projects to Panel representatives, please contact the Community Development Advisor for the Match Fund

• The Match Fund Panel has the discretion to fund projects that are ongoing programmes, events or services, however, this is only available for applications from unregistered organisations.

• An applicant is only eligible for one small grant and one medium grant in the same financial year (July to June).

Ordinary Council Meeting Agenda

24 June 2021

Attachment two: Summary of feedback points on supporting community grant fund

Submission number	Issue	Response
20, 48, 56, 78, 104, 115, 128, 130, 167, 225, 243, 255, 309, 320, 354, 355, 357, 358, 390, 398, 405, 411, 417, 456, 498, 822, 1167, 1231, 1239, 1278, 1279, 1315, 1344, 1397, 1411, 1432, 1453, 1512, 1514, 1517, 1519, 1553, 1556, 1562, 1565, 1567, 1581, 1609, 1629, 1642, 1687, 1689, 1696, 1700, 1705	General support	1. This issue is considered as part of issue 1.1 – Establishment of a Community Grant Fund.
2, 94, 131, 401, 477	Support the new approach, noting that in the past the “loudest” organisation have received the most support or will improve transparency
7, 84, 679, 682, 725, 920. 1227, 1369, 1373, 1604, 1630	Support but suggests the amount is low	This issue is considered as part of Issue 1.2 – Amount of Community Grant Fund
103, 155, 158, 163, 233, 703, 1172, 1644	Support but should be increased
259, 347	Support but have a cap or limit on the fund amount
83, 163, 210, 238, 255, 259, 723, 831, 924, 1215, 1261, 1304, 1309, 1400, 1546, 1617, 1626, 1638, 1659, 1685, 1739	Supports but with transparency and clear benefits to community, and criteria	No separate discussion on this issue. However, the draft policy is intended to ensure that there is appropriate transparency and oversight of the community grant fund.
212, 258, 259, 347, 402, 911, 1444	Conditional support (eg, independent assessment, duplication of funding with other charities) flexibility
39, 109, 407, 531, 570, 591, 1392, 1429, 1512, 1611, 1671, 1699	Combine the funds with existing community funders such as TECT or Acorn and / or collaborate with these providers	This issue is discussed as part of issue 1.3 – retaining fund in Council or merging with other community funding providers
72	Support but fund should be independently administered
570	Distribute through lotteries
1784	Support but fund should be distributed through lead sector agencies
1512, 1519	Organisations should also have funds raised	The Match Fund guidelines require that organisations put up a similar contribution to the requested funding amount. Issue 2.7 considers whether this should also be a requirement of applicants to the proposed community grant fund.
1131	Supports as other charitable funds (gambling trusts) hard to get	No specific comment.
417, 1036, 1104	Support but notes limited info understanding of current situation	No specific comment.
1172, 1724, 1175	Notes existing funding or support and signals intention to apply to fund	This issue is discussed in paragraphs 23 -24.
131, 1172, 1300, 1373	Supports longer-term relationships	Partnership agreements are supported through the draft policy (draft provision 5.5).
410	Do not support but supports strategic partnerships
4, 456, 1175, 1319, 1407, 1408, 1694, 1724	Specific request for funding or acknowledgement of existing funding	Specific requests for funding are subject to separate issues and options reports.
41, 83, 145	Support but note increased administration costs	This issue is discussed as part of issue 1.3 – retaining fund in Council or merging with other community funding providers
593, 1671	Support but start with lower amount	This issue is considered as part of issue 1.2 – Amount of Community Grant Fund
766	Support but notes other council priorities as well
41	Prioritise smaller clubs and organisations	Ringfencing of funds for specific purposes is discussed as part of issue 2.2 – Apportioning fund equally across the four well-beings 2.
406	Designated “bucket” of funds for community purposes
1604, 1699
Balanced amongst the well-beings
21, 702, 1111
Targeted support for environment and climate change projects
701, 703, 732	Targeted support for arts
236, 1371, 1243,1538	Funds should be made available to support projects with Māori outcomes (such as tourism projects or feasibility works to establish papakainga)	This issue is discussed as part of issue 2.3 – Ringfencing a portion of the fund for kaupapa Māori initiatives
478, 656, 716	Targeted funds for community sport or community facilities	Investment in community facilities is subject to separate issues and options reports. Provision for skate parks is also considered elsewhere as part of the LTP deliberations.
225, 354, 398	Funds should be made available for a skate park
99, 1282, 1306, 1687	Support and note specific projects
1100	Support but allow schools to apply	This issue is discussed as part of issue 2.4 – Expanding definition of community organisations to include schools
702, 1605, 1644, 1733	Support but allow social enterprises to apply	This issue is discussed as part of issue 2.5 – allow social enterprises to access funds
1611	Support but allow individuals to apply	This issue is discussed as part of issue 2.6 – allow individuals to access funds
24, 29, 37, 60, 63, 66, 70, 113, 117 169, 179. 183, 222, 590, 595, 730, 1211, 1258, 1259, 1273, 1381, 1570, 1603, 1701, 1702, 1741	Do not support – other investment priorities and not council core business	This issue is discussed as part of Issue 1.1: Inclusion of a community grant fund in the LTP and issue 1.2 – Amount of Community Grant Fund
1233	Do not support as not transparent in the past
8	Do not support – local business should support
5, 396, 1343,	Do not support – charities should seek support from community
45	Do not support – individual should support through their preferred charity
263	Do not support as charities should raise own funds
831	Targeted rate for community grants
296	Do not support as amount should be decreased	This issue is considered as part of issue 1.2 – Amount of Community Grant Fund
290, 706, 1423	Do not support as other funders	This issue is discussed as part of issue 1.3 – Retaining administration of fund in Council or merging with other community funding providers
1387	Do not support as needs robust rules	No separate discussion on this issue. However, the draft policy is intended to ensure that there is appropriate transparency and oversight of the community grant fund.
568	Do not support as might be way to fund museum	No discussion on this issue as part of this report but addressed elsewhere as part of the LTP deliberations.
256, 580, 1543	Do not support as will fund Māori	This issue is discussed as part of issue 2.3 – Ringfencing a portion of the fund for kaupapa Māori initiatives
23, 137, 189, 192, 421,588, 1178	Do not support as no information on existing funding	3. Information on the fund, impact on rates, and associated policy were included as part of the LTP consultation document.
9, 71, 137, 192, 421, 596, 660, 661, 918, 1659	Neutral – more fund or cost information
442,	Neutral – there are other priorities	This issue is considered as part of issue 1.1 – Establishment of a Community Grant Fund.

Ordinary Council Meeting Agenda

24 June 2021

11.5 Deliberations Report - Location of Civic Administration Premises

File Number: A12622923

Author: Brigid McDonald, Manager: Strategic Investment & Commercial Facilitation

Jo Stone, Senior Strategic Advisor

Authoriser: Christine Jones, General Manager: Strategy & Growth

Purpose of the Report

1. This report presents the outcome of consultation on two options for the location of Council's new civic administration premises. It recommends the selection of 90 Devonport Road as the medium-term location for Council's administrative offices.

Recommendations

That the Council:

(a) Receives the Deliberations Report – Location of Civic Administration Premises;

(b) Approves the selection of 90 Devonport Road as the preferred location for Council's administration premises for the medium term, with updated capital budget of $16.7m over years 2022-2024 of the Long-Term Plan;

(c) Delegates to the Chief Executive the authority to negotiate an agreement to lease, and development agreement regarding the fit-out of the office space for Council's purposes, with the developer, Willis Bond.

Executive Summary

2. A decision was made in 2018 to deliver a new leased civic administration building at Council’s Willow Street site (‘Civic Precinct’), through the Long-Term Plan 2018-28.

3. The need remains to locate Council’s CBD-based staff in one location that is fit for purpose. Greater benefits are now identified in locating the civic administration premises at 90 Devonport Road.

4. Community feedback indicates greater support for the 90 Devonport Road option over the Willow Street option, primarily due to the resultant activation of this area of the CBD and the ability to plan and deliver community facilities within the Civic Precinct in parallel.

5. Opposition to the preferred option focused primarily on supporting the status quo (that is, staff located at multiple locations, rather than Option 2 – Civic Precinct location), the rationale for consolidation, accessibility / car parking / public transport considerations, and need / cost more generally.

6. Proceeding with the recommended option of 90 Devonport Road will enable Council to have its administration activities and CBD-based staff in one location sooner, in 2024, while at the same time planning and redevelopment of the Civic Precinct commences with the new library and community hub and open space projects. This will result in Council-led activation of both the northern and southern CBD areas, stimulating further private investment and energy in the city centre.

Background

7. Under Council’s former Heart of the City master planning process in 2016 the need for a new consolidated council office and civic administration building was identified as a key component of the Civic Precinct redevelopment. This was a result of discovering toxic mould in 2015 and consequent demolition of Council’s administration building and closure of part of remaining building, with most staff then relocated to temporary premises at 2 Devonport Rd and Spring Street.

8. Council approved development of a new civic administration building through a Long Term Plan Amendment in 2016, noting at that that time that the Willow Street civic buildings were no longer fit for purpose and beyond reasonable repair, and that it was undesirable to continue to accommodate Council's staff and services across multiples sites. This was confirmed in the LTP 2018-28, with proposed redevelopment of the Civic Precinct sites at Willow and Durham Streets.

9. Through the Heart of the City programme, following a public procurement process, Council entered into a development partnering agreement with Willis Bond & Co to redevelop the Civic Precinct.

10. Further refinement of building requirements and feasibility for redevelopment of Willow Street site was advanced throughout 2019, however Council’s Elected Members were unable to reach agreement regarding civic administration building location and prioritisation within the Civic Precinct.

11. Unrelated to Council's planning and decision-making for a new administration building, in December 2019, Council agreed to sell its property 82-98 Devonport Road ('90 Devonport Rd') to Willis Bond for $10.75m.

12. Discussions occurred during 2020 regarding potential civic administration premises at a CBD location other than the Civic Precinct, as a medium-term option while continuing to envisage a return to a Civic Precinct-based office in the medium to long term. A market sounding and short-listing process occurred, and Council selected 90 Devonport Road / Willis Bond as the preferred development option.

13. Council currently owns both the Civic Precinct site and 90 Devonport Road, with the latter currently under contract for sale to Willis Bond.

14. Meanwhile, Council’s CBD staff continue to work from three main sites at Cameron Road, Spring Street and Willow Street.

15. A report received by Council in March 2020 captured numerous concerns and inefficiencies resulting from the current accommodation situation, including reduced productivity, health and safety concerns, and impacts on organisational culture. The report also outlined the procurement process taken to develop and recommend the preferred option.

16. Following receipt of the report, Council resolved to approve the location at 90 Devonport Road as the preferred location and Willis Bond as the development partner to deliver a medium-term leasehold premise accommodating Council's civic administration offices and meeting spaces. Authority was given to delegate the Chief Executive to negotiate and agree lease terms, and to notify unsuccessful candidates and complete the associated procurement process.

17. In March 2021, Council re-confirmed in principle the reconsolidation of Councils office-based services to a single location, imminently, with the intention to secure leased interim office accommodation, and consideration of other proposals and options for before a decision to proceed with lease discussions. It was also confirmed Council could continue to engage in 'in good faith' and non-binding discussions with Willis Bond.

18. Given the proposed change of location from the Civic Precinct, which was the focus of community consultation in 2016 and 2018, the now proposed location at 90 Devonport Road was included for feedback in the consultation draft LTP 2021-31.

strategic / financial context

19. As previously reported March 2021, the change in location will allow Council to have its administration activities in one location, providing a higher level of service, while eliminating the inefficiencies and organisational culture issues involved in staff located at and/or moving between three separate buildings. These benefits include:

(a) A single fit-for-purpose premises ready to be occupied within three years, developed by experts in office developments;

(b) Activating an area in the CBD which has been in sharp decline;

(c) Enabling Council to sell a complex site at fair market value (Council has for a number of years been unable to attract interest in this site at a market price);

(d) The sale proceeds from 90 Devonport Road provide funding and therefore reduces the debt Council needs to raise for the new premises costs.

20. 90 Devonport Road is free of the underlying land interests and complexities associated with delivering multiple new facilities in parallel within the Civic Precinct.

21. If a decision is made to locate the civic administration premises at 90 Devonport Road, Council can then, with respect to the Civic Precinct, focus on engaging with mana whenua, completing master planning and prioritising development of a community building/library and open green space as the first new developments.

22. The total capital budget costs for the Civic Administration Premises included in the draft LTP were: Option 1 – $16.1m; Option 2 – $17.5m.

23. An internal submission has been included to defer the build for Option 1 by one year, with delivery completion moved to July 2024. This change extends the period of the temporary locations which in turn reduces operational expenditure in the short term and reduces capital expenditure in the 2022 financial year. This results in the updated capital budget of $16.7m.

24. Updated cost comparisons are summarised below:

Option 1 (updated) - Proposed 2021-31 LTP		Option 2 - Adopted 2018-28 LTP
Lease purpose build office Devonport Road - 8000m2 over 15 years completion July 2024		Lease purpose build office located on Willow or Durham Street sites over 15 years - 8000m2 completed July 2025
Average annual operating cost over 7 years:	$5.7m - $6.1m	Average annual operating cost over 6 years:	$5.5 m - $6.0m
Average annual rates cost over 7 years:	$4.0m - $4.3m	Average annual rates cost over 6 years:	$3.9m - $4.2m
Debt Impact from 2024:	$16.7m	Debt Impact from 2025:	$17.5m

LTP Consultation

Overview of feedback

25. Submission numbers and option preferences expressed regarding this topic:

Option 1	Option 2	No response	Comments only
434	93	1,260	107

Responses to submitters’ key themes and issues

Rationale for consolidating in new premises

26. The cost of further maintenance and repair of the remaining Willow Street buildings is not a good investment in the short or long term (refer previous reports by Prendos and other consultants).

27. The current model of operating from numerous sites is inefficient, impacts on aspects of service delivery by Council, and is less than desirable with regards to organisational culture and effectiveness.

28. Other vacant premises in the CBD are not in consolidated ownership to enable a straightforward lease or redevelopment option.

Preferred location – Council services and staff, impact on CBD

29. Previously, through the Heart of the City programme, key activities around supporting development and growth in the CBD were identified and agreed. Locating the civic administration premises within the CBD will help activate the southern end of the CBD, provide civic administration services for the wider community in an accessible location and provide more efficient use of staff time and resource by being in one location. The location is in line with Tauranga City Plan - City Centre zoning for business activities.

30. Some submitters would prefer Council’s administrative functions to be outside of the CBD on the assumption this would reduce costs and enable easier parking. First, a decision has already been made by Council to establish its civic base in the CBD, supporting city centre revitalisation and current and future public and private investment. Second, such submissions assume all/most users of Council’s services will/can drive rather than use public transport or active modes, which is not the case.

31. As noted above, the confirmation of the 90 Devonport Road option will enable Council to invest in and facilitate activation and revitalisation of two parts of the CBD. Further, the master plan for the Civic Precinct can enable a longer term location of civic administration premises back at that location.

32. With regard to the city centre planning more generally, Council is currently commencing a refresh of strategic planning for the city centre. This will include refreshing the 10-year implementation planning relating to delivery of public realm projects, movement (access and safety) and community infrastructure, with a focus on city centre revitalisation, including attracting more people to live in the city. This process will include engagement with key stakeholders to assist in understanding how further residential/mixed use development (inter alia) can be encouraged and facilitated. Consideration will also be given to delivering public projects alongside private development investment, including residential, to enable more integrated and timely delivery.

Accessibility and transport

33. The National Policy Statement: Urban Development (NPS-UD) provides Council with direction around future development and connectivity. The NPS-UD requires that Council enables higher-density residential development in proximity to employment opportunities (including the city centre and neighbourhood centres), existing and planned rapid transit bus stops and where commercial activities are easily accessible by active or public transport networks. The location of the future civic administration building will be accessible to public parking and to the location of a future public transport hub.

34. Some submitters have expressed concern regarding the accessibility of 90 Devonport Road due to hills/gradient relative to public transport and parking locations, with implications for people with mobility issues. This will require further work with the developer regarding parking provision and site / design configuration, and the Regional Council regarding connection to public transport routes / stops.

Timing

35. Some submitters have expressed support for this timing / space created by Option 1, that is, locating the civic administration premises at 90 Devonport allows time for proper planning of the Civic Precinct and allows time for engagement with the hapu.

Cost / Value for Money

36. Council’s is required to ensure investments and liabilities are managed in a prudent, effective and efficient manner that supports the social, economic, environmental and cultural well-being of the Tauranga community. As such, a range of funding and delivery options to develop a new civic administration building were assessed across several programmes since 2016, including the Heart of the City to the current Civic Redevelopment programme.

37. Council identified the leasehold solution reduces Council’s capital commitment required compared to develop and own approach and mitigates development risk in a volatile construction market. Willis Bond has been a development partner with Council through the previous Willow Street masterplan process to deliver a civic administration building in a different location. The key point of difference is the civic administration premises will be delivered on another Council owned site within the CBD where, comparatively, increased investment benefits can be realised.

Other themes, issues

38. Some submitters have commented on what and how Council will procure delivery of the new premises, with concern that it will be environmentally sustainable (e.g. level six green star performance rating certification), and will create jobs for local people. These will be key considerations in Council’s negotiations and procurement approaches.

39. Numerous submissions seek costs savings through reductions in staff numbers. This issue beyond the scope of this report and is dealt with through other aspects of deliberations reports to the Commission regarding the Council’s services and operational requirements and standards.

40. Design – Rangapu Mana Whenua o Tauranga Moana has submitted in support of Option 1 on the basis that Tauranga Moana Design Principles are applied in all aspects of the project and that discussions on appropriate elements and opportunities are discussed with the mana whenua groups of that area. This will be an element for early discussions with the developer.

41. Universal Design Principles / accessibility – the Disability Advisory Group has submitted in support of Universal Design across all public spaces and places to ensure quality of life equitable and inclusive access to community facilities is embedded. This will be an element for early discussions with the developer and associated Council service delivery function areas.

42. Heritage Management measures– Heritage NZ Pouhere Taonga submits that all Council projects involving ground disturbance seeks archaeological advice prior to the development of these projects. This will be an element for early discussion with the developer.

Submitter References

43. The submission reference numbers of those who submitted on this topic are as follows:

1, 2, 3, 6, 7, 8, 10, 12, 13, 14, 15, 16, 17,18, 19, 20, 24, 25, 26, 36, 37, 38, 39, 40, 41, 44, 46, 48, 49, 56, 58, 60, 61, 62, 64, 66, 67, 68, 69, 70, 71, 72, 73, 75, 77, 78, 79, 80, 82, 83, 84, 85, 86, 87, 89, 91, 92, 93, 94, 96, 97, 98, 99, 100, 101, 102, 103, 104, 105, 106, 108, 110, 111, 113, 114, 115, 116, 127, 128, 129, 130, 131, 132, 133, 134, 135, 136, 137, 139, 141, 142, 144, 145, 147, 148, 150, 151, 152, 153, 155, 156, 157, 158, 159, 160, 161, 164, 165, 166, 167, 168, 169, 172, 173, 174, 175, 177, 178, 179, 180, 181, 182, 184, 185, 186, 188, 189, 190, 191, 192, 193, 194, 195, 200, 205, 206, 209, 210, 212, 213, 214, 215, 216, 217, 218, 219 220 222 223 224 225 226 229 230 231 233 236 237 238 242 244 245 247 249 250 253 254 255 256 257 258 259 260 262 263 270 274 281 289 290 295 296 303 309 320 322 342 345 347 348 349 352 354 355 357 358 359 360 361 362 365 366 387 388 390 396 397 398 401 402 404 405 406 407 408 409 410 411 412 413 414 418 419 421

444 445 446 448 451 454 460 474 475 476 477 478 487 492 539 555

559 568 574 575 576 577 578 579 581 582 586 588 589 591 592 595

596 597 598 599 602 603 626 660 662 664 665 666 667 668 670 673 674 677 679 681 684 686 690 701 702 703 706 707 709 710 711 712 716 717 718 720 721 722 723 726 727 728 729 730 731 732 733 736 762 765 766 767 775 794 822 828 831 838 864 909 910 911 912 913 914 915 916 917 920 921 923 924 925 927 951 959 1013 1025 1030 1035 1036 1037 1099 1101 1103 1109 1110 1113 1114 1131 1133 1140 1163 1166 1167 1168 1173 1181 1183 1206 1211 1212 1215 1227 1231 1232 1236 1238 1239 1243 1244 1245 1246 1251 1260 1261 1262 1265 1268 1270 1271 1273 1275 1276 1278 1280 1282 1293 1294 1300 1303 1304 1305 1306 1307 1308 1313 1318 1321 1331 1343 1344 1345 1360 1362 1367 1371 1374 1377 1378 1380 1381 1383 1384 1385 1387 1388 1389 1390 1392 1400 1402 1411 1416 1417 1419 1420 1424 1425 1426 1428 1429 1430 1431 1432 1434 1435 1436 1437 1438 1448 1465 1513 1515 1517 1518 1519 1520 1521 1522 1523 1538 1541 1542 1546 1549 1550 1552 1553 1554 1556 1558 1559 1560 1562 1563 1564 1565 1569 1578 1580 1583 1585 1587 1593 1601 1605 1609 1611 1616 1617 1621 1624 1625 1626 1628 1629 1630 1635 1638 1639 1641 1642 1644 1645 1647 1648 1651 1655 1658 1659 1660 1662 1663 1667 1675 1678 1680 1681 1683 1684 1685 1689 1692 1696 1700 1703 1704 1705 1722 1730 1731 1733 1739 1780 1783 1808 1809 1811

Options Analysis

44. Both location options for consultation assume leasehold tenure and the requirement for 8,000m² gross floor area.

Option 1 – Recommended Option

Option 1: Lease purpose-built office, 90 Devonport Road

45. This option includes continuing the current lease arrangements across multiple sites for 2-3 years while the design and construction of the premises occurs.

46. Construction – Willis Bond will develop the base building.

47. Fit-out, activities – Council will design and commission the interior fit out for its purposes to hold all staff administrative facilities within the same location, this could include council chambers, customer services, and other services such as transport operations and emergency management.

48. Delivery - revised to early-mid 2024. This differs from consultation draft LTP date of completion of July 2023 due to re-evaluation of the current supply and construction environment. As noted above, this change reduces capital and operational expenditure in the first two years of the LTP.

49. The updated capital budget totals $16.7m, which includes a contingency of $0.6m.

50. Average annual operational cost over 7 years of the LTP range between $5.7m and $6.1m based on market values and projections. A range is provided as actual cost is subject to commercial negotiations and agreement pending Council’s decision on LTP.

51. Key risks –

(a) possible cost escalations impacting current budget estimates, as the project progresses to detailed design stages and more accurate costings are available;

(b) programme delays due to supply chain issues and matters beyond Council control;

(c) some uncertainty as to space requirements due to impending changes such as waters reform and wider local government reform being initiated by central government.

52. Summarising the pros and cons of this option:

Advantages

Disadvantages

Certainty of development timeframe - the site is cleared for development, building can advance much sooner

Consequently, staff are relocated to one location sooner, with resultant efficiencies and organisational culture gains

A single fit for purpose facility which can be occupied by 2024, developed by experts in office developments

Activates an area in the CBD which is in sharp decline, encouraging new investment in retail and commercial activities

Enables Council to sell a complex Council owned site at fair market value

The sale proceeds provide funding and therefore reduces the debt Council needs to raise for the new building

Flexible leasehold terms can be negotiated

Location-based efficiencies, adjacent to Bay of Plenty Regional Council

Book-ends southern and northern CBD with Council activities

Compact site – innovative design required to ensure maximisation of site and good amenity outcomes

Access and connectivity to public transport needs further consideration

Parking provision within the immediate area is constrained

Shifts activity to southern end of CBD, impacting on northern businesses until further development activates northern CBD

Needs to be a longer-term lease (at least 12 years) for developer to achieve yield

Option 2

Option 2: Lease purpose-built office, Willow/Durham Street sites (Civic Precinct)

53. This option includes containing the current lease arrangements across multiple sites for at least 3-5 years while design and construction of the new premises occurs.

54. The Civic Precinct master plan requires refresh and Council approval to confirm activity locations with best connectivity and amenity for community needs / uses. As part of this process, Council will engage with mana whenua to understand their aspirations for the land and development and will seek to work in partnership. This work and engagement will happen irrespective of the location of the civic administration office premises, but is likely to take longer if the site is to accommodate two developments at the same time.

55. Construction - Willis Bond will develop the base building alongside other Council facilities within the precinct.

56. Fit-out, activities - Council will design and commission the interior fit out for its purposes.

57. Delivery - July 2025.

58. Total capital budget estimate $17.5m from 2025. (Note: this capital cost is based on the inflated square metre rate used in the 2018-28 LTP adjusted for the reduced net floor area.)

59. Projected average annual operational cost over 6 years – $5.5m to $6.0m.

60. Key risks:

(a) outcomes and delivery timing due to engagement required regarding Civic Precinct land and redevelopment;

(b) possible cost escalations impacting current budget estimates, as the project progresses to detailed design stages and more accurate costings are available;

(d) some uncertainty as to space requirements due to impending changes such as waters reform and wider local government reform being initiated by central government.

61. Summarising the pros and cons of this option:

Advantages

Disadvantages

Consolidation of Council and community activities within Civic Precinct, greater interaction of staff/people and use of space

Well-connected and accessible to current public transport routes/interchange and waterfront

Further activation of northern CBD / downtown area with increased worker population

Council could commit to longer term lease and potentially better rent and incentives

Significant work required to clear site and confirm development locations, etc

Decreased level of service for longer period due to delayed relocation and longer delivery programme

Increased cost and dislocation of services and staff being in multiple temporary locations for longer period, including library and customer service centre

Direct adverse impacts on staff continue for longer period

Constraints and risks associated with delivering two significant construction projects at the same time on the same site (community hub/library and civic administration offices)

Significance

62. 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.

63. The proposed change in location of the new civic administrative premises from the Civic Precinct to the preferred site at 90 Devonport Rd for the medium term (12+ year lease) is considered to be of medium significance. Consultation on this matter has been fulfilled through the current LTP process.

64. While many submitters chose not to comment on this topic, some submitters queries why Council was consulting on a topic they deemed to be an operational decision for Council. The key reasons for deeming medium significance of the location change include:

(a) The location of a new administration offices was part of the wider suite of civic facilities planned for delivery at the Civic Precinct through the former Heart of the City Programme and consulted on via the LTP 2018-28;

(b) The likely term of lease (beyond 10 years); and

(c) High public interest generally in Council decision-making in the context of recent issues with various Council projects / processes and governance.

Next Steps

65. Work is currently underway to –

(a) complete a workplace strategy for the new premises, informing final space requirements, and confirming other key build requirements to meet Council’s operational needs as a tenant; and

(b) ensure appropriate procurement strategies and procedures are implemented for the project.

66. Subject to the above resolutions being made, the next steps require negotiation of a suitable agreement to lease and development agreement with the developer of 90 Devonport Road, being Willis Bond. This would commence immediately following Council resolutions being passed.

Attachments

Nil

Ordinary Council Meeting Agenda

24 June 2021

11.6 Deliberations Report - Options for the accelerated delivery of the Papamoa East Interchange

File Number: A12609866

Author: Sarah Stewart, Strategic Advisor

Authoriser: Christine Jones, General Manager: Strategy & Growth

Purpose of the Report

1. The purpose of this report is to:

· summarise community responses to the 2021-31 Long Term Plan (LTP) Consultation Document relating to the delivery of the Pāpāmoa East Interchange (PEI);

· present options for both the timing and level of investment for the Pāpāmoa East Interchange; and

· recommend that alternative funding and financing models continue to be explored with central government partners in order to accelerate delivery of the Pāpāmoa East Interchange.

Recommendations

That the Council:

(a) Notes that the 2018 Housing Infrastructure Fund arrangement between Tauranga City Council, Waka Kotahi (NZTA) and Ministry of Business Innovation and Employment has not been finalised and expires June 2021 (funding was agreed to enable infrastructure to support Te Tumu Urban Growth Area, including delivery of the Pāpāmoa East Interchange);

(b) Provides in the LTP for the delivery of the PEI by 2024 (accelerated timing) and continues to actively explore alternative funding and financing options with central government partners (noting that Staff will report back to Council with funding and financing options for decision before proceeding past the preloading and design stage) as outlined in Option 4; and

(c) Approves $XXXM (to be advised at Council meeting) to be brought forward in the LTP to cover Pāpāmoa East Interchange preloading and design costs in the 2021/22 financial year to allow for delivery in 2024 if appropriate funding and financing is determined.

Executive Summary

2. The PEI is a proposed transport interchange directly linking with the Tauranga Eastern Link (TEL) at the eastern end of Wairakei and adjacent to the proposed Te Tumu Urban Growth Area.

3. Council is seeking to accelerate the delivery of the PEI to completion by 2024. The PEI is key to unlocking investment and the delivery of much needed housing as well as social, economic and environmental benefits for current and future Pāpāmoa East residents and businesses. Early PEI delivery will enable development in the eastern corridor prior to Te Tumu urban growth area being implemented.

4. An accelerated approach aligns with those that submitted on the LTP. Eight submissions were received on the LTP that directly related to the PEI. Seven of the eight submitters supported the provision and funding of the PEI and three submitters requested that the PEI be fast tracked and delivered as early as 2024.

5. In this report, four options are outlined that focus on the timing of PEI delivery and level of investment. The preferred option is to continue to actively explore alternative funding and financing options with central government partners with the view to delivering the PEI in 2024. Following discussions with central government, staff would report back to Council for final decision making before the PEI project proceeds past the preloading and design stage.

Background

6. In 2018, Tauranga City Council had a series of projects accepted for funding by the Crown through the Housing Infrastructure Fund (HIF). Funds were to enable the development of the Wairakei and Te Tumu Urban Growth Areas. A key part of this application was the construction of the PEI. The arrangement was for an interest free loan to be repaid over a ten-year period that needed to be drawn down by June 2021. The interest free benefit was to be spread over Council’s full debt portfolio (not just the PEI project).

7. The arrangement at the time was strongly linked to development of Te Tumu Urban Growth Area commencing, including certainty of the plan change to rezone the land for urban purposes and securing access through multiply owned Māori Land.

8. Te Tumu is currently subject to securing an infrastructure corridor through multiply owned Māori Land and while demonstrable progress is being made, the timing of resolution is unknown. While development is delayed, there remains significant pressure to address the shortage of housing stock, increasing house prices, inadequate infrastructure, increasing traffic congestion and the lack of community facilities in the eastern corridor.

9. In Wairakei, the planning for additional housing and a new greenfield town centre (The Sands) is complete, consents have been issued and investors are waiting to initiate myriad housing, commercial and community projects. All that remains is commitment to delivery of key infrastructure as a signal to boost investor confidence that urban expansion in the eastern suburbs is to progress prior to development of Te Tumu Urban Growth Area.

10. Delivery of the PEI will act as a ‘catalyst’ or ‘enabler’ that will provide the level of confidence needed to unlock housing and commercial opportunities in Wairakei.

Pāpāmoa East Interchange

11. PEI is a proposed transport interchange at the eastern end of Wairakei and adjacent to the proposed Te Tumu Urban Growth Area. The PEI directly links to the Tauranga Eastern Link (TEL) and is planned to service the Wairakei area and provide direct access to the new town centre, as well as the greenfield development area of Te Tumu in the future. Connecting directly to the TEL will provide safe and efficient access to Whakatāne, Rotorua, Tauranga City and the planned Rangiuru Business Park (which has secured separate infrastructure funding through the Provincial Growth Fund).

Benefits from fast-tracking the Pāpāmoa East Interchange

12. Benefits to be realised through the PEI are of a scale that warrant construction prior to Te Tumu development taking place.

13. The PEI is key to unlocking investment and the delivery of much needed housing as well as social, economic and environmental benefits. Through the creation of ‘Connected Centres’, (the strategy approved by the Urban Form and Transport Initiative (UFTI) and the Western Bay of Plenty Transport System Plan (TSP)), people will be able to live, work, learn, play and move within the eastern sub-region. To achieve this, appropriate housing, infrastructure, community facilities and employment opportunities are needed to create liveable and connected communities.

14. Fast-tracking the PEI will enable Tauranga City Council and partners to:

· Respond to the housing need ‘at pace’ by:

o accelerating the development of 750 homes in Wairakei

o providing for a further 3,030 currently zoned homes in Wairakei and 6,000 in Te Tumu in the future as well as 2,000 potential homes in Bell Road

o support the Rangiuru Business Park Provincial Growth Fund project planned for completion in 2022 through provision of housing for 4,000 employees;

· Unlock the creation of a new town centre ‘The Sands’ with between 2,500 and 7,555[9] new FTEs providing well located amenity in the east and therefore reducing the need to travel to the west;

· Alleviate pressure on the transport network and on the environment by improving urban form that supports trip containment and encourages mode shift towards more sustainable travel options – thereby reducing greenhouse gas emissions in support of New Zealand’s net zero emissions by 2050;

· Work together to ensure mixed housing options are delivered, including social and affordable housing, in order to meet the growing need of the housing deprived and lower income households within Tauranga’s eastern suburbs.

15. The below figure[10] illustrates the proposed location of ‘The Sands’ Town Centre (highlighted area) in relation to Te Tumu Urban Growth Area and the proposed Bell Road development to the south of the TEL. The Sands Town Centre is a consented greenfield development proposed by Bluehaven Group that has been structure planned with Tauranga City Council over the last ten years.

Consultation through the LTP

16. In the LTP consultation document, the second priority for capital expenditure is “Land for homes and businesses”. It outlines that our city needs more homes to accommodate our growing population and includes projects that “provide roads, pipes and other infrastructure for homes and businesses in new areas” to cater for the 35,000 homes needed in the next 45 years.

17. A proposal for Te Tumu area is set out in the LTP consultation document that includes investment of $462 million in and around Te Tumu over the next 10 years, including $152 million on transport. Included in this Te Tumu package is “the construction of a direct link to the Tauranga Eastern Link via the PEI to support residential development and also 57 hectares of land for new businesses and employment".

18. Council received a total of eight submissions directly relating to the PEI. Of these, seven submitters supported that the provision and funding of the PEI be included in the LTP. The remaining submitter (289) queried costs associated with the project.

19. In general, submitters supported the PEI as it is perceived as pivotal to the realisation of the city’s urban development strategy in the eastern corridor. Submitter reasoning included that the PEI opens-up new growth areas; provides employment opportunities; provides additional housing capacity; will result in multi-modal opportunities to minimise carbon emissions; and will alleviate congestion on Pāpāmoa roads that are already at capacity.

20. Best Lands (1355) and Bluehaven Group (1339) both stated that the eastern corridor and Tauranga city all significantly benefit from the establishment of the PEI. The key benefits stated by submitters included that the following would be delivered in Wairakei and Te Tumu:

· “Enabler of additional business land for employment and GDP growth in The Sands Town Centre and Mixed Industry and Business Areas;

· Enabler of significant supply of additional homes that can be delivered at pace;

· Regional network transportation efficiencies and decarbonisation through self-containment and multi-modal network;

· Employment numbers of 7,050 FTE for the construction and 7,555 FTE associated with The Sands on completion will be created; and

· The ability to provide much needed community facilities in a high population growth area.”

21. In addition, further requests were made from submitters, including that:

· the delivery of the PEI is brought forward to open in 2024 (Best Land, Bluehaven Group and Kaitiaki Properties (1788));

· a further $6M for a southern leg be added to the PEI budget to support the 2,000 homes in Bell Road that are adjacent to the PEI, south of the expressway (Kaitiaki Properties); and

· Council commits to underwriting the investment for completion of PEI by 2025, in the event of Central Government funding delays (Bluehaven Group).

22. Best Land also submitted that the significance of the Te Tumu Urban Growth Area and The Sands are understated in Council’s decision making and should be more fully recognised.

23. Four submitters commented on cost increases in terms of transport and in relation to the PEI (Pāpāmoa Residents and Ratepayers (1694), David and Marie Quill (603), Zariba Holdings (289) and Pāpāmoa Residents and Ratepayers (1694). Zariba Holdings called for more independent cost estimations and use of independent project management around the collation of development contributions and execution of projects. Pāpāmoa Residents and Ratepayers stated that the PEI should be funded by central government and not Tauranga ratepayers.

Engagement with central government partners

24. The original Housing Infrastructure Fund (HIF) arrangement between Tauranga City Council, Waka Kotahi (NZTA) and Ministry of Business Innovation and Employment in 2018 is yet to be finalised and expires in June 2021.

25. Staff have submitted a working draft proposal to key central government agencies. This proposal is to amend the original HIF application to fast track the delivery of the PEI and associated projects to enable development in the eastern corridor prior to Te Tumu Urban Growth Area being implemented. Ongoing discussions with Treasury, Ministry of Housing and Urban Development and Waka Kotahi are also occurring to actively explore all viable funding and financing options. Securing Waka Kotahi funding through an amendment of the HIF application is paramount for this key transport infrastructure to progress as Waka Kotahi has no available funding in the next ten years.

26. Staff are also in discussions with Waka Kotahi and the Crown around tolling options. It may be possible to toll the PEI under the Land Transport Management Act, utilising a secondary gantry that may be required to mitigate equity issues on the existing toll road, resulting from the building of the PEI. Council is also seeking Waka Kotahi’s consideration in using some of the toll funding (including via the possible additional toll gantry to the west of the PEI) for partial funding of the PEI. The Order in Council enabling toll funding of PEI would be managed on the Council’s behalf by Waka Kotahi. These discussions are very preliminary.

27. Further it should be noted that cost estimates have significantly increased in the time period since the initial Te Tumu HIF Business Case was submitted. This is primarily as a consequence of the construction market price shifts over the past few years. This will be a key point of discussion with central government agencies as we jointly work through the revised HIF proposal.

Strategic / Statutory Context

28. With clear strategic alignment with the National Policy Statement on Urban Development 2020 and sub-regional policies, early delivery of the PEI aims to ensure that the Pāpāmoa East suburbs become a well-functioning urban environment that meets the changing needs of the community.

29. In addition, it supports the implementation of the vision set by SmartGrowth, UFTI and the TSP through the ‘Connected Centres’ programme. Connected Centres is the philosophy embedded throughout UFTI and the TSP. Its focus is on improved urban form and better transport choice to support people to travel less and travel differently bringing with it many social, economic and environmental benefits. Improved access to transport, employment, education, community facilities as well as environmental benefits are all to be realised through the implementation of the ‘Connected Centres’ philosophy.

30. This report outlines four options. Options 2-4 support the delivery of positive housing, transport, employment and business outcomes for the city. Option Four, the recommended option, balances the community outcomes (below) with prudent financial management.

31. Community outcomes are the goals we set to help guide the LTP. Early delivery of the PEI supports the following community outcomes:

· We have a well-planned city - Tauranga is a city that is well planned with a variety of successful and thriving compact centres and resilient infrastructure.

· We can move around our city easily - Tauranga is a well-connected city, easy to move around in and with a range of sustainable transport choices

· We support business and education - Tauranga is a city that attracts and supports a range of businesses and education opportunities, creating jobs and a skilled workforce

· We recognise we are an integral part of the wider Bay of Plenty region and upper North Island – Tauranga is a well-connected city having a key role in making a significant contribution to the social, economic, cultural and environmental well-being of the region.

32. Option Four also aligns with Council’s commitment to investigating other financing and funding options at a city, sub-regional, regional and national level to find alternatives to some of the rate-funded debt retirement proposed in the LTP. It provides an opportunity for everyone to pay a fair share in our city’s transport infrastructure.

Options Analysis

33. The four options identified for Council’s consideration relate to the timing of the PEI and also funding and financing. This is shown in the table below.

	Timing of delivery		Investment
	2024	2026	Investment
Option 1	X	X	X
Option 2	X	P	P	Council debt, DC’s & rates
Option 3	P	X	P	Council debt, DC’s & rates
Option 4	P	X	P	Explore alternative funding and financing

Option One: Do not provide for the delivery of the PEI in the LTP.

34. Key risk: Council is not meeting its responsibility to provide adequate transport infrastructure to support residential development and business and employment opportunities. Council is criticised for hindering the development of much needed homes and associated business and employment opportunities in eastern Pāpāmoa.

Advantages

Disadvantages

Delivers a positive short-term financial outcome for Council and community by removing this project from council’s balance sheet at a time when council has limited balance sheet capacity.

Lowers private investor confidence which is likely to limit residential, community services and commercial development in Pāpāmoa East suburbs. This is likely to result in a slower release of housing supply and the delay of The Sands Town Centre and other commercial and community services planned in Wairakei.

Places continued strain on an already constrained transport network with no respite in the short or medium term.

Does not align with the strategic direction of creating ‘Connected Centres’ as outlined in UFTI and the TSP.

Damages relationships with developers and others relying on the PEI being delivered.

Key infrastructure is not in place ready for Te Tumu development.

Does not support the Rangiuru Business Park project that relies on available and accessible housing in Pāpāmoa.

Option Two: Provide for the delivery of the PEI in the LTP by 2026 (original timing) and do not explore alternative funding and financing options.

35. Key risk: Significant financial risk to Council if Te Tumu urban growth area is further delayed or does not eventuate resulting in substantial debt on council’s balance sheet with limited development contributions being collected, placing an unfair burden on ratepayers. Reputational risk if Council is perceived as making imprudent financial choices that do not ensure value for money for our communities.

Advantages

Disadvantages

Raises private investor confidence which is likely to encourage residential, community services and commercial development in Pāpāmoa East suburbs. This is likely to result in accelerated housing supply and earlier development of The Sands Town Centre and other commercial and community services planned in Wairakei.

Implements the ‘Connected Centres’ strategy as set out in UFTI and TSP.

PEI is in place to support the delivery of Te Tumu urban growth area once Māori Land Court issues are resolved.

Significant risk to Council as this option places all project debt on council’s balance sheet, including any Funding Assistance Rate (FAR) subsidy available and secured through Waka Kotahi.

Does not accurately reflect those that will benefit from the PEI and puts an unfair burden on today’s ratepayer (due to the need for a debt retirement rate to manage prudent debt levels for Council).

Does not reflect that this key piece of infrastructure links to the nationally significant TEL as part of the State Highway system and therefore should be part funded by Waka Kotahi.

No recognition of Council’s active discussions relating to funding and financing options with central government partners (The Treasury, Ministry of Housing and Urban Development and Waka Kotahi), including the possibility of amending the Housing and Infrastructure Fund proposal, tolling, and other potential infrastructure funding and financing mechanisms.

Option Three: Provide for the delivery of the PEI by 2024 (accelerated timing) and do not explore alternative funding and financing options.

36. Key risk: As above (Option Two).

Advantages

Disadvantages

As above - but at pace.

Provides better alignment with the timing of the Rangiuru Business Park project expected to be complete by mid-2022 and that relies on available and accessible housing in Pāpāmoa East.

As above (Option Two).

Option Four: Provide in the LTP for the delivery of the PEI by 2024 (accelerated timing) and continue to actively explore alternative funding and financing options with central government partners. Report back to Council for decision making (project gateway) with funding and financing options before project proceeds past the preloading and design stage.

37. This is the recommended approach.

38. Key risk: The degree of financial risk to Council can only be determined once a funding and financing package is determined. The extent that risk is unable to be transferred or reduced still remains (as per option 2). In addition, there is risk that the FAR subsidy from Waka Kotahi will not be available retrospectively. Reputation risk is partially mitigated by the project gateway decision point.

Advantages

Disadvantages

Allows council to make a prudent financial decision ensuring value for money for communities and fair and equitable distribution of costs to those benefiting from the PEI.

Opportunity to put in place a funding and financing package with central government partners that fairly reflects those that will benefit from the PEI.

Aligns with our approach set out in the LTP consultation document to find additional ways to fund and implement strategies and plans in partnership with Government and others to better balance the needs of existing and new residents.

Provides the ability to reduce the projected impact on ratepayers if alternative financing and funding arrangements are secured (through reduction in rate funded debt retirement).

Enables Council to quantify and fully understand the financial risk prior to committing to the PEI investment.

Timing is not ideal as LTP decision making is occurring now.

Council commits to preloading and design costs but may not go ahead with PEI delivery in the short to medium term.

Uncertainty for private investors which may result in delays to residential, community services and commercial development in Pāpāmoa East suburbs.

Recommended approach

39. Option Four is the recommended approach. It represents council’s commitment to this project and the benefits that will be realised by our communities and the wider region. It also recognises that a balance in funding that accurately reflects those that will benefit from the PEI is possible.

40. This option aligns with Council’s commitment to investigate other financing and funding options at a city, sub-regional, regional and national level to find alternatives to some of the rate-funded debt retirement proposed in the LTP. It provides an opportunity for everyone to pay a fair share in our city’s transport infrastructure.

41. Although the quantum of risk is uncertain until a funding and financing package is determined, Option Four represents significantly less financial risk for council and the community. It also provides another decision gateway for council before the project proceeds to the next stage. Although this may leave developers with a level of uncertainty, it allows for prudent financial management and minimisation of financial risk.

Financial Considerations

42. To be tabled at Council meeting.

Legal Implications / Risks

43. As noted in paragraph 41 Option Four limits the financial risk to Council. It effectively seeks to limit the risk to Council of placing all project debt relating to the PEI on Council’s balance sheet.

44. It is difficult to determine the quantum of financial risk to Council prior to the decision on funding and financing, as this can only be determined once a funding and financing package has been agreed upon.

Consultation / Engagement

45. Please refer to the information contained under the background section of this report.

Significance

46. 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.

47. 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 decision.

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

ENGAGEMENT

49. Taking into consideration the above assessment, that the decision is of high significance, staff are of the opinion that further engagement with central government agencies is required prior to Council making a decision on the most appropriate way of funding and financing the PEI.

50. No further community consultation is considered necessary outside of the LTP submission process.

Next Steps

51. Several challenges need to be addressed to start delivering on the ‘Connected Centres’ programme in the east. Fast-tracking the PEI and working collaboratively with partners are key components for success.

52. Next steps for fast-tracking the PEI are:

· Renegotiation of the HIF arrangement with the Crown to facilitate the urgent need for increased housing supply and to support the Connected Centres strategy;

· Tauranga City Council and Waka Kotahi NZTA enter into direct negotiations in relation to tolling, including the thorough exploration of other funding sources;

· Complete the detailed design for the PEI;

· Commence procurement, with a focus on pre-loading of the site in the current construction season (2021) and prepare documentation for full construction to commence in the subsequent season (2022);

· Working with developers and the Crown in relation to the provision of social and affordable housing opportunities;

· Continuing to actively discuss the PEI with Treasury, Ministry of Housing and Urban Development and Waka Kotahi to explore all options, particularly in relation to funding and financing of the PEI.

53. Unlocking access to Te Tumu Urban Growth Area through multiply owned Māori land is an issue still to be resolved, which needs to be separated from PEI delivery. Addressing this is the subject of a separate Tauranga City Council initiative with good progress being made. Maintaining momentum in resolving access issues as they relate to Te Tumu is vital to unlocking this planned growth area in the future.

Attachments

Nil

Ordinary Council Meeting Agenda

24 June 2021

11.7 Submissions to the Draft 2021/22 Development Contributions Policy

File Number: A12633258

Author: Ana Blackwood, Development Contributions Policy Analyst

Authoriser: Christine Jones, General Manager: Strategy & Growth

Purpose of the Report

1. The purpose of the report is to consider and respond to matters raised by submitters through the consultation of the 2021/22 Draft Development Contribution Policy.

Recommendations

That the Council:

(a) Approve that the 2021/22 citywide development contribution increases be implemented as per Options 3 and 4 being:

(i) From 1 August 2021 based on an increase of $7,500, for a 3+ bedroom dwelling (and adjusted accordingly for smaller dwellings and non-residential development); and

(ii) From 1 February 2022 based on a further increase of the lower of $10,500 or approved development contributions for 2021/22, for a 3+ bedroom dwelling (and adjusted accordingly for smaller dwellings and non-residential development); and

(iii) Delegate authority to the Chief Executive or his sub-delegate to consider and where appropriate approve on a case-by-case basis further exemptions or reductions in situations where there are warranted by exceptional circumstances (as determined at the discretion of CE or his sub-delegate).

(b) Approve the responses to external submissions received on the draft 2021/22 Development Contributions Policy as set out in Attachment B and any consequential amendments required to the 2021/22 Development Contributions Policy and Long-Term Plan.

(c) Approves the reduction in the funding allocation of Waiari Water Supply Scheme including associated trunk watermain projects from 100% development contribution funded to 90% development contribution funded.

(d) Notes that where applicable the draft Development Contributions Policy will be amended to reflect other resolutions made through the Long-Term Plan and that changes to Capital Expenditure budgets for growth projects will have an impact on the development contribution levies.

(e) Signals to the development, building and general community that there may be further increases to city-wide or local development contributions from 1 July 2022 including (but not limited to) the growth share of new community facilities, transport projects and Te Papa investment planned for within the 2021 – 2031 Long Term Plan.

Background

2. Council adopted the draft 2021/22 Development Contributions Policy (draft policy) in May 2021. Public consultation on the draft policy occurred in conjunction with the Long-Term Plan.

3. Approximately 50 submissions were received in relation to development contributions. Details of these submissions are set out in Attachment A.

4. Approximately 25 of these submissions relate to the increase in the citywide development contributions. The remainder relate to a variety of topics ranging from comprehensive submissions from land developers on budgets and timing for specific projects, through to more general comments on the growth pays for growth principal adopted by the council regarding funding.

5. Topic 1 within the body of this report focuses on the submissions relating to the increasing citywide development contributions.

6. Topic 2 is in relation to the appropriate share of growth funding and rate funding for the costs of the Waiari Water Supply Scheme (WWSS).

7. Topic 3 is in relation to the impact of the budget changes being considered through the Executive recommended changes to the LTP. The initial calculations by staff indicate that the citywide development contributions are likely to increase even further compared to what has been consulted on the draft 2021/22 Development Contribution Policy.

8. The other submission topics have been summarised in Attachment B along with a proposed response to each. Subject to approval via this report these responses will be supplied to all the relevant submitters.

9. Several developer submissions relate to the capital expenditure budgets and include recommendations to change or increase budgets.

10. We note that there were also several submissions from Iwi groups and Community Housing Providers (CHPS) in relation to the grant that is being established to subsidise development contributions for Papakainga/Community Housing Providers. These matters are considered within a separate issues and options report ‘Grants for DC’s on Community and Papakainga Housing”.

TOPIC 1: CITYWIDE DEVELOPMENT CONTRIBUTION increase

11. The Draft 2021/22 Development Contributions Policy included a proposal to increase the citywide development contributions payable on building consents by approximately 130%. As an example, this equates to an increase in costs of roughly $16,000 for a new residential dwelling with 3 or more bedrooms.

12. Most of this increased cost (approx. $13,000 per house) relates to the Waiari Water Supply Scheme and associated trunk mains being introduced into the Policy for the first time. This includes recent project cost escalation for that project as well as the need to bring forward trunk water supply pipelines into Mount Maunganui costing approximately $50m to enable the benefits of the new water treatment plant to be maximised. These watermains were initially thought to be outside the 21-31 LTP period but further modelling demonstrated the need for them to be delivered sooner and within the LTP period. When comparing cost changes to the core Waiari Water Supply Scheme this $50m cost should not be included.

13. The remaining increases to citywide charges are the result of increases in the costs of projects which were already being funded via development contributions (including Te Maunga wastewater).

14. The draft policy proposed that the increased fee will apply to any building consents lodged on or after the 1 August 2021.

15. This increase in the citywide development contribution fee for this year was signalled within the development contributions consultation documents from 2020. This was circulated within the Council’s ‘toolbox newsletter’^{^[11]} from April 2020 and discussed in the final adopted 2020/21 DC Policy. This communication noted “the exact quantum of the increase cannot be calculated until project costs are finalised but is expected to be an increase of between $5,000 and $9,000 per residential dwelling compared to the 2020/21 citywide development contribution fees”.

16. While staff have engaged with the professional development and building community on the expected fee increases it has been more difficult to target communication to individual home builders (although any phone calls or estimates for building consent costs for the last 3 - 5 months should have included an advice that the fees were expected to increase).

Submission Points Made

17. Indications from the building industry are that either they did not see the information or some that did have said that they did not fully understand that it related to fees payable on building consents.

18. Whilst there are some submitters who have expressed anger at the increased fees, most of the feedback is directed towards the manner of implementation and the short timeframe provided to account for increased costs. “Development contributions should be predictable and allow developers to plan with certainty and ensure that DCs are factored into pricing and sales. Large scale year on year changes in Development Contributions make this difficult to manage” ^{^[12]}

19. Of particular concern is where developers / group builders have entered into large numbers of unconditional, and sometimes fixed price, contracts for new builds – and where they are unlikely to be able to lodge building consent before 1 August. In many cases they cannot lodge building consent until the titles have been issued for the allotments which are being built on.

20. Submissions state the increase is “unreasonable and unrealistic” and that insufficient time has been provided to account for this within the pricing of houses. If the increase goes ahead as proposed effective 1 August 2021 - some of the businesses face costs in the order of hundreds of thousands of dollars - or in some instances in the millions. For example, one company with 50 contracts in place will face a total increased cost of approximately $750,000 (depending on the final adopted citywide development contribution charge).

21. Submitters advise that if builders pass these costs on to the purchasers (noting that in some cases they legally can’t or have indicated that they would choose not to), then this could create hardship for those individuals purchasing the homes. For many purchasers the new builds are subject to pre-approved finances and they may not have the ability to extend the approvals. Purchasers who are relying on Kiwisaver grants or subsidies are restricted by a housing cap price of $600,000 for new builds. Adding $16,000 to the cost may push the cost above this cap. It is difficult to quantify how many properties this change may impact.

22. In addition to the submissions from group builders there are several submissions from individuals who have realised that they will be facing the increased cost. Essentially, they are already well advanced within the building process, have approved finances and the increases are likely to cause financial challenges that may limit the ability to complete their works.

23. There are number of different options that have been requested through submissions to help manage the increases. These range from complete deferrals for 18 months through to transitional provisions such as a staggered increase every 3 months.

24. Most submitters have indicated the preferred option is a 12-month deferral.

Options Analysis

25. If Commissioners wish to provide transitional provision or deferral then there are multiple ways for how this could be achieved. The implications of any form of deferral are all very similar in that it would:

- reduce the expected development contribution revenue over the upcoming year,

- increase council debt; and

- transfer the burden of the costs to later development or ratepayers.

26. Another disadvantage of any deferral is that it pushes the increase further out rather than removes the need for it. There are further increases to citywide contributions likely in the next financial year should the Council decide to fund additional community infrastructure and or transportation projects using citywide development contributions. If the full increase to the citywide charge is deferred, then this would compound the quantum of the increase next year. One of the options presented is to transition the increase by phasing the increase through the 2021/22 financial year.

27. Another approach would be to cap the increase in the citywide development contribution applicable this year. Again, there are multiple possibilities for how this could be done. An option is to cap the increase applied this year within a $5,000 to $9,000 range per 3+ bedroom residential dwelling. The $5,000 to $9,000 range is based on the amount signalled as a potential increase in April last year and as included in the adopted 2020/21 DC Policy. This amount would increase revenue but would be a compromise on applying the full increase to all development from 1 August 2021. Implications are still very similar to those of the above.

28. A supplementary option that the Council could adopt alongside any of the other options adopted) is to delegate to its Chief Executive (and any of his nominees) the authority to consider and where appropriate approve case by case exemptions or reductions where there are exceptional circumstances and where leniency is considered appropriate. Types of criteria that might warrant such exemptions would need to be developed by staff and would likely include:

- situations where customers cannot lodge for building consent prior to 1 August 2021 because of unusual and unforeseen circumstances that caused delays to the issue of the title of land and/or

- where there is an unconditional agreement for the purchase of a house / development entered into prior to 30 May 2020; and/or

- where there is a fixed price contract for the house build entered into prior to 30 May 2020.

29. The section below sets out three options that the Council could adopt regarding the citywide development contributions. As discussed above there are multiple variations possible to these options which Council could opt for, but the pros and cons remain very similar.

30. The Supplementary option outlined in paragraph 34 could be used alongside any of the other options.

31. Option 1: No deferral or transitional provisions (noting this option could be based on either the fees as per the draft 21/22 Development Contributions Policy or any adjustments made as the result of Executive Report and external submissions)

Advantages

Disadvantages

· Increases council’s revenue and begins to repay debt earlier than all other options

· Ensures council not unnecessarily leverage its balance sheet for the benefit of developers at the cost of future developers or ratepayers and ensures additional cost burden through the LTP is appropriately spread across different parts of the community

· Sets development contributions at a level consistent with current knowledge of project costs and applies the costs of projects most fairly to those who benefit from the projects

· Most transparent and administratively efficient option for council.

· Likely to cause genuine financial hardship for some individuals and businesses.

· Reputational and relationship damage with the building community

· Likely that final charges will be higher than what was consulted on in the draft

· May result in some short-term inefficiencies in the housing market as developers reorganise their finance to meet higher costs

· Risk of further legal challenges and potentially a judicial review. (Risk of successful challenge assessed as low)

Recommended: No

32. Option 2: Fully defer the start of collection of higher DC’s for Waiari Water Supply Scheme and related projects (retaining the level at the 2020/21 charge). (This reduces the increase to approx. $3,500- $5,000 per household)

Advantages

Disadvantages

· Generally aligned with the requests indicated by many submitters

· Provides time for developers and builders to account for price increase in future sales and enables future homeowners to budget for the increase.

· Delayed revenue stream resulting in increase in the interest costs attributable to the Waiari project and related trunk watermain projects thereby placing a higher burden on future developments or ratepayers

· Further pressure on debt balance because of lower development contribution revenue in the upcoming year.

· Increased financial and balance sheet risk. But relatively minimal in the context of a 30-year project.

· Delayed increases this year will compound the impact of large increases in development contributions that are possible in the 22/23 financial year

Recommended: No

33. Option 3: Increase the 2021/22 citywide development contribution charges

· From 1 August 2021 based on an increase of $7,500, for a 3+ bedroom dwelling (and adjusted accordingly for smaller dwellings and non-residential development); and

· From 1 February 2022 based on a further increase of further increase of the lower of $10,500 or approved development contributions for 2021/22, for a 3+ bedroom dwelling (and adjusted accordingly for smaller dwellings and non-residential development).

Advantages

Disadvantages

· $5,000 - $9,000 was the range of the increase signalled in the 2020/21 Development Contributions Policy and therefore should have been taken into account by the market. $7,500 is within this range.

· Similar advantages as set out in Option 2 but less preferred by developers as will still cause financial challenges (albeit at a lower level) outlined in submissions.

· Enables a stepped increase and reduces the magnitude of the increase from 1 July 2022.

· Similar disadvantages as set out at option two above but to a lesser extent as 2021/22 financial revenue will be higher.

Recommended: Yes

Notes:

· Council could choose to treat residential and commercial / industrial development differently within Option 3.

· The consulted increase was approx. $16,000 for a 3 bedroom home, and staff expect with the changes to capex budgets identified between the draft and final LTP this will increase to approximately $18,000. The recommendation of “the lower of”, enables changes in capex to be reflected but within a defined cap of $18,000.

34. Option 4 Delegate authority to approve one off case-by-case exemption or reduction

Delegates to the Chief Executive and his nominees the authority to consider and where appropriate approve case by case exemptions or reductions to the applicable citywide development contribution charge in situations where there are exceptional circumstances that warrant lenience (as determined at the discretion of CE or sub-delegate).

Advantages

Disadvantages

· Provides for flexibility in being able to address exceptional circumstances on a case by case basis, especially in circumstances where most, or all, of the increase to citywide development contributions was confirmed through the deliberations process

· Increase in staff workload to manage applications

· Would decrease revenue if applied on large scale basis

· Does not provide certainty until the request has been considered and decided on.

Recommended: Yes

TOPIC 2: Waiari WaTER SUPPLY SCHEME

35. The Waiari Water Supply Scheme (WWSS) and associated trunk watermain projects are proposed in the draft DC Policy to be funded entirely via growth, i.e. 100% of costs allocated to development contribution funding. As mentioned in previous reports, Council staff have requested an external peer review on this funding allocation.

36. The current allocations are based on the concept that the need for the project is entirely driven by growth - essentially from today on. The Local Government Act 2002 (Section 197AB (c)) requires that cost allocations must reflect who causes each project but also who benefits. The project will provide a wider community benefit (beyond the growth community) as it will improve the resilience of the city’s water supply by providing an alternative water source in a separate location to the existing two sources which are very close to each other and in streams that are at historically low levels, and where TCC needs to reconsent water takes in the next few years). The interconnected nature of the waters infrastructure will also enable water supply to be managed at a city level making the overall system more resilient as water from multiple sources can be distributed across the city (with some limitations).

37. A report by Insight Economics commissioned by Tauranga City Council noted that property development may not be the only cause of growth in network demand. Other factors such as increased visitor numbers and increase in output from manufacturing firms will also contribute to growth but can’t be charged a development contribution fee. This also lends weight to the argument that the full cost should probably not be funded via development contributions.

38. The water restrictions currently being experienced in the City also support the idea that the existing community will benefit from the completion of the WWSS and associated trunk watermains (noting that there are several non-growth funded projects already underway to manage these shortages).

39. Based on these factors staff consider it appropriate to reduce the funding apportionment from the WWSS and associated trunk watermain projects. Whilst there is not a detailed calculation or methodology available to definitively determine what this proportion should be - a nominal amount of 10% being non-growth funded is deemed appropriate to account for other beneficiaries.

40. In terms of the impact on the Development Contributions Policy this will reduce the citywide development contribution charge by approximately $1,000 per residential house. However, this saving may end up being offset by other increases in capital expenditure budgets as discussed earlier in the report. It is envisioned that a late attachment will be provided on the date of the Council meeting that will provide an updated estimate of the Citywide development contributions once changes to individual capex projects and this proposed change have been taken into account.

41. This change is likely to have a relatively minimal impact on Councils wider finances. The debt is already on council’s balance sheet and so it is simply changing the 10% of the debt from DC funded debt to a rate funded debt. As the capital component of this additional rates funded debt will be drawn from depreciation reserves the only impact on rates will be the interest charges.

42. Alternatively, Council may choose to continue with the existing plan to fund 100% of the cost of the project through development contributions. This option would create some risk of legal challenge on the basis the cost allocation is not fully aligned with the s 197AB(c) requirements described at paragraph 36 above.

43. For the avoidance of doubt, the debt to finance this project is arranged in two facilities. The first is a Housing Infrastructure Fund loan with a ten-year term at 0% interest. The interest free benefit is spread over Council’s full debt portfolio (not just the WWSS project). The second facility is financed by the LGFA as part of our existing financing relationship. We anticipate both financing facilities will be repaid primarily from development contributions.

44. In order to provide greater detail on how the budgeted costs for WWSS are contributing to the proposed increase in development contributions, staff have prepared a further attachment detailing the nature of the WWSS project and a brief history of how the project and its costs have been managed to date. At the time of writing this further attachment is still being finalised. It will be tabled at the Council meeting.

TOPIC 3 – further increases in citywide development contributions

45. Our initial calculations to incorporate the capex changes reflected in the ‘Levels of Investment and Implications” report into the development contribution schedules show that the citywide development contributions are likely to increase further compared to what was consulted on in the draft (even after accounting for a reduction in the funding apportionment of the WWSS and associated trunk watermain projects). These increases are due to budget changes related to both the Te Maunga Wastewater Treatment Plant and Waiari Water Supply Scheme/associated trunk watermains.

46. At the time of writing this report the exact impact of this is yet to be confirmed. Staff will, if possible, provide an additional late attachment with an updated estimate on the impact on the citywide development contribution fee.

47. If for Topic 1 recommended option 3 is approved, then the increase will be capped to a maximum of $18,000 regardless.

Consultation / Engagement

48. As required by the Local Government Act the draft 2021/22 Development Contribution Policy has been consulted on using the Special Consultative Process.

Significance

49. 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.

50. 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 decision.

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

ENGAGEMENT

52. Taking into consideration the above assessment, that the decision is of medium significance, and that formal public consultation in accordance with the requirements of the Local Government Act has been undertaken, no further engagement is required prior to Council making a decision

Next Steps

53. Staff will:

(a) revert to submitters with approved (and if required, amended) responses as set out at Attachment B;

(b) update the Development Contributions Policy, as required, to reflect resolutions agreed through the course of Long-term Plan deliberations; and

Attachments

1. 2022 DCP - Attachment A - Summary of Submitters on the 2021/22 Development Contributions Policy - A12638234 ⇩

2. 2022 DCP - Attachment B- Summary of submissions topics and proposed responses - A12636905 ⇩ l

Ordinary Council Meeting Agenda

24 June 2021

#	Submitter	Theme	Key Messages
29	Neil Pollett	Growth should pay for growth	· Developers and new arrivals i.e. growth, should pay for growth
45	Action Plans - Jon Short	Don’t charge DC’s on BC	· DC’s should not be charged on BC’s (land developer should pay all fees)
74	Mount Masonry Homes Limited/Ultimate Homes NZ	Opposed to timing of citywide increase	· Increase is sudden and will impact first home buyers / builders, unfair considering other financial constraints building industry is facing. · Request staged / transitional approach proposed
97	Jared Schumacher	Opposed to timing of citywide increase	· Does not agree with increase being so sudden (waiting on s224 to be issued, cannot apply for BC)
127	Sally Hickson	Negative impact on delivery of new homes	· Does not help with housing shortage issues or building new homes
289	Zariba Holdings Ltd - Dwayne Roper	More transparency, accountability and accuracy to information provided in Policy	· Provide info on; funds collected for each catchment, allocation of funds, actual project costs, details of estimated projects and increase e.g. PEI. · Input from independent estimators and PM’s around collation of project DC costs and execution
401	Graeme Purches	Supports changes in Policy	· Reverse the concept of developers profiting while building costs inflate
453	Abhishekj Mukherjee	Opposed to citywide increase	· Bank has financed their build based on current fees, will not be able to proceed with increase
455	Roxanne Williams Christopher Cocksedge	Opposed to timing of citywide increase	· Bank has financed their build based on current fees, will not be able to proceed with increase. · Proposed a phased / exemption process for implementation
635	James Rose	Opposed to citywide increase	· Issue of s224 has been delayed 6 months, cannot apply for BC until title is issued
828	No details	Opposed to citywide increase	· Bank has financed their build based on current fees, may not be able to proceed with increase. · Has contract for building but title is delayed
951	No details	Opposed to citywide increase	· Does not encourage development and hinders investment, opposite of intent of Plan change 26. Suggests a more reasonable increase
994	Venture Developments Jarod Thorpe	Opposed to timing of citywide increase	· Has multiple unconditional locked in contracts with customers based on current fees, the increase will cost business over $1m · Proposed deferral of increase by 12-18 months
1004	Disability Advisory Group (DAG) Bryce McFall	Accessible housing	· Proposed reduced DC’s if developers build to Universal Design standards and meet Lifemark standard 4
1036	No details	Growth should pay for growth	· Existing residents should not have to pay for growth
1109	Melissa Conrad	Opposed to citywide increase	· Increase will make housing market even more unaffordable
1174	Mike Speed	Fund Waiari with a user pays system	· WWSS should be funded using a user pays system by increasing all water rates
1243	No details	Papakainga housing	· Supports 100% rebate of DC’s specifically for Maori Housing. · Requests additional funds for non-DC related activities.
1252	Christopher Cocksedge	Opposed to citywide increase	· Has contract for building but title is delayed.
1300	Jo Gravitt	Opposed to citywide increase	· Increase is unrealistic for planning multiple homes. · CHPs and Papakainga social housing should pay a reduced DC fee
1342	Classic Developments - Peter Cooney	Opposed to timing of increase Does not support growth pays for growth	· Infrastructure is often over inflated, and Council does not receive value for money · Suggests alternative funding through PPP’s, SPV’s or targeted rates for more intergenerational equity and to ensure users pay for benefits · Request a deferral of citywide increase by 12 months as it will cost business just under $1m
1356	Summerset Group Holdings Limited Aaron Smail	Retirement Villages Special assessment criteria Timing of payment (land use vs. BC)	· Comprehensive care retirement village and lifestyle retirement village should be separated as they provide different services and demand. · Fees for each activity reviewed e.g. no demand on community infrastructure and more aligned with other Councils (Auckland) · Special assessments should not require specified threshold information · Proposes DC’s should be assessed on land use consent and payable at time of code of compliance of each stage of building at the rates assessed on land use (regardless of time passed) based on section 2.8.4
1361	Ultimate Global Group Levin Da Costa	Timing of payment (land use vs. BC) Opposes timing of increase	· Proposes paying DC’s on land use consent where sufficient information is provided at customers request with proposed provisions to manage risk to Council · Questions the legality of Council not allowing customers lodge BC without title issued when a comprehensive land use consent has been approved · Proposes a transitional Policy where there is a significant increase such as this or a 12 month transition period
1363	PMG Funds Jamie Reid	Remission of DC’s	· Requests consideration for remissions of DCS as incentive for development in the city centre
1364	JWL Investment Trust Ann Fairweather	Remission of DC’s	· Requests consideration for remissions of DCS as incentive for development in the city centre
1393	Property Council NZ Natlia Tropotova	Council funding principals Community infrastructure Opposed to timing of citywide increase	· Ensure “growth pays for growth” principal reflects a beneficiary pays model and consider utilising other tools · Consider alternative funding such as targeted rates, SPV’s or PPP’s to improve intergenerational equity · Do not include community infrastructure in DC fees, consider alternative tools · Questions the requirement for DC’s to fund WWSS as it was funded by HIF · Propose to defer the citywide increase 12 months
1401	Tumu Kaituna 14 Trust TK14 Jeff Fletcher	Review of specified projects	· Requested clarification and proposed changes to multiple projects, primarily within the Papamoa / Te Tumu / Wairakei urban growth areas
1403	Ford Land Holding Pty Ltd (FLH) Jeff Fletcher	Review of specified projects	· Requested clarification and proposed changes to multiple projects, primarily within the Papamoa / Te Tumu / Wairakei urban growth areas
1410	Investore Property Limited Alistair Penny	Review of low demand activities Opposes increase to citywide fees	· Suggests that retail businesses should be considered low demand as it generates lower water and wastewater demand · Opposes increase to citywide fees
1412	Tauranga Crossing Limited Lauren Riley	Group retail with low demand business activities Opposes increase to citywide fees	· Suggests that retail businesses should be considered low demand as it generates lower water and wastewater demand · Opposes increase to citywide fees
1515	No name	Developers should pay more	· Developers should pay more
1610	Reweit and Te Pere Whanau Trust Te Pio Kawe	Development of Maori Land and Papakainga Development Grant	· Discusses the impact of DC fees on development of Maori Land under the Papakainga provisions in city plan · Current Policy exemptions for Papakainga may not have been applied consistently in the past
1723	Urban Task Force for Tauranga (UTF) - Vicki Williamson / Scott Adams	Opposes increases in contributions CDB funding incentives and alternative funding	· Explain increases in Waiari · Defer increase by 12 months to allow consents to be issued · Supports investment in CBD but consider incentives and alternative funding approaches
1730	Ngapeke 5A4 Trust - Rondell Reihana	Development of Maori Land and Papakainga Development Grant	· Proposes provisions for policy being developed to determine how fund will be allocated · Current Policy exemptions for Papakainga may not have been applied consistently in the past
1731	Ranginui 9B Trust - Rondell Reihana	Development of Maori Land and Papakainga Development Grant	· Proposes provisions for policy being developed to determine how fund will be allocated · Current Policy exemptions for Papakainga may not have been applied consistently in the past
1781	Shaker 2007 Limited (G.J Gardner Homes) - Andrea Howden / Shane McConnell		· Significant financial and emotional hardship caused by DC increase · Submission provides options to help mitigate financial hardship created by increase
1806	Tauranga Community Housing Trust - Terese James, General Manager	Community housing grant	· Supports fund but needs to increase
1353 1339	Bluehaven - Nathan York		· Supports DCs provided they are on robust assessment of costs and allocation of benefits and capital is used effectively · Private sector should play a strong role in delivery of key projects
1623	Hawridge Development Ltd	Significant cost increases will negatively affect the provision of housing	· Significant cost increases will negatively affect the provision of housing · Review 4 laning of Te Okuroa Drive · Amend funding apportionments for the Papamoa East Interchange and Papamoa wastewater pump stations · Adjust development contribution increases to more reasonable percentages · Find alternative means of assisting funding development
1610 A	SmartGrowth Combined Tangata Whenua Forum - Te Pio Kawe	Citywide contribution increases	· Proposes provisions for policy being developed to determine how fund will be allocated · Current Policy exemptions for Papakainga may not have been applied consistently in the past
1415	Bethlehem Shores Retirement Village - Tracy Hayson	Retirement Villages	· Reduce local development contributions for retirement village units in similar manner to reductions for citywide contributions
1652	Michael O'Brien	Opposes increases to citywide contributions	· Opposes increases as they are ill advised and unreasonable · Proposes special provisions for purchasers borrowing more than 70% of the cost of their home

Ordinary Council Meeting Agenda

24 June 2021

Attachment - Summary of submissions on development contributions and proposed response

Item	Submission numbers	Submission topic	Summary of submission point	Proposed response
1	1623	Wairakei infrastructure services and funding	The submission supports prioritising the proposed capital investments for Wairakei but asks council to reproportion the cost allocations between Wairakei and Te Tumu UAGs to lower Wairakei’s share of the costs for the PEI and the Opal Drive Pump Station.	Staff will continue to engage and work with the submitter regarding the decisions for funding allocations for the Papamoa East Interchange. Funding allocations for this project are currently being reviewed by an external consultant to determine if an amendment is required. The funding allocations for the Opal Drive Pump Station are based on a benefit analysi undertaken by staff. We can share with the submitter the details on how the funding allocations were based or would welcome information from the submitter on the basis of the 15% funding recommendation.
2	1361 1779	Transitional policies	Submissions request that Council allow or develop a policy that would allow transitional development contributions policies in a range of circumstances. Transitional policies will allow developers to plan with certainty, “Large scale year on year changes should be avoided. Council needs to develop transitional policies to avoid undue negative financial consequences and market uncertainty that cause financial viability risks associated with large swings in costs of development.”	We make every effort to signal increases in development contributions as early as reasonably possible and to the best of our knowledge at that time. Generally, this is at least a year ahead of any price changes. We also provided detailed analysis of price changes in our draft Development Contributions Policy 3 - 4 months in advance of any change coming into effect. Where substantial unanticipated changes are implemented, we endeavour to work closely with developers to minimise adverse effects to developers and property buyers. Options for transitional implementation of the Citywide development contributions were presented and considered by Council.
3	289	Policy transparency	The Development Contributions Policy needs to be more transparent, accountable and accurate and needs to provide details about funds collected for catchments and where funds have been allocated, record actual project costs and provide detail of significant estimated projects.	Tauranga City Councils Development Contributions Policy already contains significant amounts of information and detail. Whilst we don’t publish information about funds collected and allocations within the policy, this information can be provided by staff upon request. Project costs are reviewed and updated annually, and costs updated to actual costs as soon as practicable.
4	289	Refunds when DC funded projects are cancelled or removed	Funds are collected for specific projects within the catchment, if these projects do not happen these funds should be returned.	Staff make a case by case decision to determine if a refund of development contributions is appropriate when development contributions have been collected for projects that do not proceed. It is important to note that the fees are collected on a catchment/activity wide basis. So, in some cases a refund may not occur if the projects are replaced by other projects which achieve a similar outcome to the initial project. A refund may also not be considered necessary in the case where the total development contribution for the given catchment/activity has increased as final project costs become realised. If the submitter has a specific project that they feel warrants a refund, we are happy to review the case.
5	289	Interest calculations	Interest and inflation calculations should be adjusted according to what funds have been collected and funds held earning interest if there is a delay in the commencement of the individual project.	Development contribution revenue is held in reserves accounts at a catchment/activity wide level – not each specific project. The development contribution charges are adjusted annually to account for both interest and inflation rates which based on revenue received, planned project delivery timeframes and expected growth projects. Staff can provide the submitter with the relevant inflation and interest spreadsheets if requested.
6	289	Project costing	Would like to see more independent estimates and use of independent project management around the collation of development contribution costs and the execution of projects. Often projects are not accurately estimated and are poorly managed which result in significant and most of the time unnecessary cost overruns.	Development contribution funded projects (as with all other Council projects) are based on the best-known cost estimates at the time of publishing. The level of confidence in the accuracy of costs increases as detailed knowledge of the project increases. Where costs are early in the lifecycle costs estimates are usually based on standardised unit rate costs which have been reviewed by developers and are set out within the Development Contributions Policy. When projects are nearing delivery date and design has been undertaken then costs are usually reviewed by external consultants. Within the last year TCC have been working on processes to improve project costing and introducing quality control processes where selected projects are also reviewed by independent quantity surveyors.
7	1393 - 1 1723 – 1 1779	Growth pays for growth principle	Review the concept of growth pays for growth – consider the use of other funding and financing levers to pay for growth. Ensure that councils financial strategy reflects a beneficiary pays model rather than overly relying on DC fees.	Council is working closely with the Crown on the development of other funding tools such as the Infrastructure Funding and Financing proposals. Because these options are complex and result in charges that are backed by legislation, and are relatively new, the arrangements are still being completed. The new funding tools are likely to be utilised for new growth areas and so are unlikely to impact any current DC charges.
8	1393	Community infrastructure	Do not include community infrastructure in development contribution fee and use alternative funding tools.	Council has delayed the expected starting date for collection of development contributions for new community infrastructure projects for a further year beyond what was initially expected to allow staff to completely analyse all funding options. Council will be considering funding options for the community infrastructure projects in the upcoming year. Staff also note that development contributions for Community Infrastructure and Reserves are not charged for non-residential developments.
9	1361 1393 1723 1412	Waiari Water Supply Scheme	Four submissions received asked for a more robust explanation/transparency on how the Waiari project costs have been allocated. Two of the submission also asked for explanations regarding use of DCs when it was funded by the Housing Infrastructure Fund.	TCC received funding for the Waiari Water Supply Scheme (WWSS) via the Housing Infrastructure Fund (HIF). The HIF provides a 10-year interest free loan to Council. However, these funds are still a debt to the Council which is being repaid through use of development contributions. DCs must be funded over the capacity life of the asset which in this case is significantly greater than 10 years, and therefore the recovery period of these assets is much longer than the interest free period. The interest charged as part of the DC's is still considerable (albeit less than if no HIF had been made available). To calculate the amount payable per household for the WWSS, staff divide the total capital cost of the WWSS (including the expected interest costs to be paid by Council) by the total number of households over the capacity life of the assets (currently based on approximately 30,000 households). This is consistent with Local Government Act 2002 which states that development contributions should be determined in a manner that is generally consistent with the capacity life for which they are intending to be used. It should be noted that staff have also recommended a reduction in the funding allocation of the costs for Waiari so that 10% of the total capital costs will not be funded via growth but rather through general rates. Discussions regarding this are included within the Council report.
10	1401 / 1403	Development contributions for Te Tumu Development	Two submissions received are related to projects funded via development contributions to be collected from Te Tumu land development. The submitter has expressed concern on the significant cost increases for several projects and requests information on the reasons for increases. The submissions ask to meet with council to discuss the projects and issues regarding funding and detailed cost breakdowns.	Council staff will contact the submitter directly to arrange a meeting and to provide the information requested.
11	1363 1364	CBD Development Incentives	TCC should provide a DC remission to incentivise development in the CBD.	A separate Council report is being presented to the Council which includes options regarding possible DC remissions for the CBD.
12	1412	Change category of Retail Developments	TCC’s DC policy should recognise that retail developments do not create the same demand for water and wastewater infrastructure as other commercial activities and TCC should amend the development contributions policy to include retail outlets within the low demand category.	The Low Demand business activities category has been created to specifically reflect demand attributes of storage and warehousing facilities along with utilities type buildings which are largely unoccupied. It is not considered appropriate to group retail activities within the same category as these industries. Citywide DC’s for business activities are charged based on the amount of gross floor associated with the development. This means that larger scale developments pay larger development contributions. This is because there is a general causal nexus between larger businesses and the demand that they place on infrastructure. Large high-water using activities and ‘wet industries’ are typically larger industrial buildings and thus by default pay a higher development contribution than many smaller retail outlets. Creating a separate charging category for retail services would make the policy more complex to interpret and potentially less transparent for customers as it would create more situations in which a development contribution would be charged. i.e. if DCs for retail were lower than other activities then a change in use of a building from a retail service would trigger the requirement to pay additional development contributions – which would most likely be unanticipated by the customer. The Local Government Act acknowledges that developments may be collectively grouped provided it is done so in a manner that balances practical and administrative efficiencies with considerations of fairness and equity. The existing policy includes special assessment provisions to account for those development types whose demand does vary significantly from the average development type assumed in the calculations.
13	1004 - 1	Development contributions for accessible housing	The submission requests that Council help incentivise accessible new builds by applying a reduction in development contributions if developers build to Universal Design standards and meet Lifemark standard 4.	Council will be undertaking a review of several of the charging aspects of the development contributions policy in the upcoming year and will consider amendments such as this through that process. We have contacted Hamilton City Council to request further information in regard to the discounts they apply for the Lifemark standards.
14	1356	Retirement village development	The submission requests special considerations for Retirement Villages to take into account unique demand characteristics of retirement care facilities. The submission requests lower demand factors for all of the activities for which development contributions are charged for. The submission also requests that water, wastewater and stormwater contributions should be assessed according to factors agreed with Council at resource consent stage.	The submission does not provide enough detail to be able to recommend a change to the policy without further work undertaken by staff on actual demand generated by Retirement Villages. Calculating an individual charge at resource consent stage is likely to be impractical and inefficient for Council and would likely result in undercollection of development contributions as systems must be designed to cope with peak flows rather than just average. However, staff consider some of the points raised around how we attribute and calculate development contributions for retirement villages may have merit. We received similar submissions to last year’s DC Policy review and agreed to investigate these matters. Due to other priorities and resourcing constraints this work has not been completed and will occur over the upcoming 12 months instead, with the aim of making any potential changes through the 22/23 DC Policy. We will engage with you further as this work progresses.
15	1356	Fees applicable to low usage developments	Contends that applicants should be able to request a special assessment where it is evident from the resource consent application that a proposal is likely to have a lesser demand on infrastructure without the need to demonstrate that the demand is either 50% below or 100% above the anticipated average demand.	Development contribution charges are based on averages and most developments to some degree will use either slightly higher or lower than what the fees can account for. The Local Government Act acknowledges the need to group developments calculating and requiring contributions provided it is a done in a manner that balances practical and administrative inefficiencies with consideration of fairness and equity. The thresholds are included within the special assessment criteria as it would not be administratively practical to reassess each and every development whose demand characteristics varied from the average demand assumptions. The threshold therefore ensures that only developments which significantly deviate from averages will qualify for reassessment.
16	1356 1361	Timing of payment / land use consents	Two submissions were received that asked for Council to alter the way it charges citywide development contributions for comprehensive developments that require both land use consent and building consent. The submissions ask that Council amend its policy so that citywide development contributions are required on the land use consent and the fees then locked in at the amounts set out in the operative Development Contributions Policy at the date the land use consent is altered. The submissions are proposing that the fees would still be payable on building consents. Charging in this manner would provider developers of large staged projects with more certainty regarding the fees that will be payable.	We recognise the benefit certainty of fees provides to developers and we endeavour to provide clarity regarding the cost of development contributions as soon as is reasonably practicable. Given the speed at which our city is growing, the infrastructure demands (and associated costs) are dynamic and subject to change over time. In our experience, the longer the period between consenting and building, the more likely it is underlying costs will change. Significant developments like retirement villages and town centres can take years or decades to be delivered and which time DCs may change significantly. Hence while there is benefit of certainty to developer, to Council there is significant risk of under-collection if charges rise. Under the submitters’ proposed system, it is less likely that development contributions would cover the final cost of growth infrastructure. Any unmet costs are ultimately met by ratepayers through general rates which is considered to be an unequitable outcome not favoured by ratepayers.
17	1415	Local DCs for Retirement Villages	Local DCs for Retirement Villages should be at 0.5 of the fee for 1 allotment as with citywide development contributions to recognise the reduced demand on services including water, wastewater and roading that retirement villages have.	The infrastructure that is funded via local development contributions is planned at an early date and built to service the total developable land within the given catchment. At the time of the planning it is not often known what development typology will occur on the land. The infrastructure must be built to provide for peak expected capacities. The costs of providing this infrastructure remain the same regardless of type of development is built on the land. If local development contribution fees were to be reduced when smaller developments occurred such as retirement village units - there is no ability to recover the costs that are lost as no additional development can occur. The policy has several provisions within it that prevent council from over collecting from charging larger scale developments like retirement villages. For example, the maximum yield rule places a cap on the number of local development contributions that are charged for large scale developments.
18	1300, 1610, 1730, 1731, 1806, 1817, 1243	Papakainga housing developments	There were several submissions from Iwi groups or representatives in regards to Papakainga housing and relation to development contributions.	These matters have been responded under the separate options and issues papers.
19	1610	Application of Development Contributions Policy to Papakainga housing developments undertaken between 2019 and 2021	Submitter outlines how, in their view, they have overpaid development contributions on the development of four Papakainga properties between 2019 and 2021.	Staff will work with the submitter to investigate the application of the policy to the four properties described and to ensure the policy was applied correctly. If not, staff will reassess development contributions payable and refund any excess contributions paid.
20	1515, 29, 1036	Developers should pay for growth	There were several submissions which asked for Council to charge the costs of infrastructure to developers or increase costs for developers.	The majority of the growth-related capital expenditure costs incurred by TCC are funded wherever possible using Development Contributions. For example, it is intended that all costs incurred by TCC to enable development in future growth catchments of Te Tumu and Tauriko West will be funded via development contributions charged to land developers. In addition, the intention is that the majority of infrastructure required within the catchments will be constructed and paid for by the developers themselves, reducing the debt sheet requirements that TCC would still usually incur if it has funded via DCs
21	45	Timing of charging	Opposes TCCs DCP methodology of charging DCs on building consents	Tauranga City Councils development contributions policy uses a combination of contribution types. Local development contributions are charged at the first available opportunity - which means that they are usually charged on a subdivision consent and paid for by the land developers. Citywide development contributions (CDCs) are used to fund large infrastructure assets which in general provide benefit or service to all developments in the City regardless of location. TCCs decision is that CDCs are charged on building consents. There is a number of reasons that TCC has elected to use this approach. One of the key benefits for home builders is that the citywide development contribution charged is more specifically targeted towards the development typology that occurs on site - meaning that the charge applied more closely reflects the actual demand generated by the development. For example, smaller residential homes with only 1 or 2 bedrooms will pay a lower development contribution than bigger residential homes. The same with non-residential developments. If the fees were calculated at the time of subdivision, then the fee would likely be based on more generalised assumptions as things like dwelling type and building size are generally not known at the time of subdivision.
22		User pays	Waiari costs should be recovered by a user pays system by increasing the water rates to everyone. If everyone benefits, then everyone should pay.	The rationale for using development contributions to fund certain expenditure is based on the assumption that not everyone is benefiting from the expenditure that is needed to enable growth to incur. In the case of the Waiari Water Treatment Plant the need for the new treatment facility is primarily being driven by the growth in the city. In short, if there was to be no further growth in the city then TCC would not need to be build this new facility as the existing water treatment plants could provide the treated water capacity needed to supply all of the existing community (along with a few of the capacity improvement projects which are currently underway and are being funded via rates). DCs are based on principal of attributing costs to those benefit. In this case the beneficiaries of the new water treatment plant are primarily those who are building new houses and adding to the city’s growth levels. Staff are proposing a small proportion of the Waiari costs are ratepayer funded to reflect the resilience and wider network benefits. This matter is considered in a separate report.
23	127	Housing supply	Development contributions policy goes against housing shortage issues	Whilst the development contributions fees do increase the cost of building new homes, they are a required funding tool that enables TCC to build and provide core infrastructure that is critical to enable more housing to be built. If funds to build new roads and pipes in areas that currently have no infrastructure were not able to be recovered from developers, then it is likely that significant amounts of infrastructure could not be delivered thus reducing the amount of development that could occur. Increasing housing supply is an important part of meeting market demand for housing and easing upwards pressure on house prices. Secondly, if Council was not constructing a new water treatment plant funded via DCs then it’s likely that no further development would be able to occur as they would not be able to be provided with a supply of safe potable water for use in the households.
24	74	Timing of fee change and value for money	Submitter asks for: (i) a slower transition to the proposed DCs in order to support the building industry and first home buyers; and (ii) what value does a home buyer get for the extra cost of the DCs	The proposed increases are primarily required in order to pay for a required water treatment plant. Without the completion of the plant new homes will not be able to be constructed as they would not be able to supply with an adequate water supply. The treatment plant is required to provide for the growth community, and thus council’s position is that it should be primarily funded via growth developments. Staff are preparing a report to the Council regarding possible options for phasing in the fee over time or potential to add some further transitional provisions. However, it should be noted that any deferral or provisions of this nature ultimately result in these costs being transferred from a development contribution revenue source to a ratepayer subsidised cost.
25	1779	Tauriko	The submission is largely technical in nature and relates to infrastructure in the Tauriko catchments. - Updates to structure plans - To review final budgets and timing - Update project costs to actual values where possible - Update funding apportionments for wastewater pump stations - Increased capital expenditure budgets	Staff will continue to work with the submitter on the technical aspects noted in the submission and will provide updated budgets and timings as requested and review all actual costs and structure plans. Reimbursements for projects have been noted and the current funding aligns with the submitted dates. Staff have reviewed the funding requests in regard to roundabouts on Taurikura Drive and agree that the capital expenditure budgets for this project need to be updated given they have not been reviewed in approximately nine years. On this basis we will submit for an increase in the roundabout budgets of approximately $700,000.

Ordinary Council Meeting Agenda

24 June 2021

11.8 2021-31 Long-term Plan Deliberations - Economic development and growth management matters

File Number: A12637316

Author: Jeremy Boase, Manager: Strategy and Corporate Planning

Authoriser: Christine Jones, General Manager: Strategy & Growth

Purpose of the Report

1. To consider and determine a number of specific matters raised through the 2021-31 Long-term Plan consultation process relating to economic development and growth management.

Recommendations

That the Council:

Funding for film sector (Attachment 1)

(a) Provides Priority One with $100,000 per annum to distribute to the film and media sector against an agreed set of criteria (Option 3)

City centre development initiatives (Attachments 2 and 3-confidential)

(b) Creates a $500,000 City Centre Development Incentive Fund with a range of criteria that can target the costs of development, especially residential development, covering the likes of development contributions, consenting fees, parking fees during development and public amenity in the vicinity of developments (Option 6)

City centre parking trial (Attachments 4 and 5)

Gloucester Road link (Attachment 6)

(d) Approves the request to bring forward funding for the Gloucester Road link, subject to land transfer and with revised conditions for funding contributions (Option 2)

Lakes Community Association (Attachment 7)

(e) Does not bring forward development of a community centre in the Western Corridor, at this time (community centre timing – Option 1).

(f) Does not add $2.5 million funding to deliver dispersed smaller recreational facilities in The Lakes but instead, utilises existing budgets, where possible, to support the delivery of recreational facilities (funding request – Option 1).

(g) Continues to work with The Lakes Community Association on projects, which may include the establishment of a Council-Residents working group (working group – Option 1).

Wairakei Community Centre Trust (Attachment 8)

(h) Undertakes a planned review of community centre provision, services and models, and engages with the Wairakei Community Centre Trust through that process (Option 1).

Pukehinahina/Gate Pa Community Centre (Attachment 9)

(i) Undertakes a planned review of community centre provision, services and models, and engages with the Accessible Properties’ Limited through that process (Option 2).

(j) Supports the development of a pop-up park/play space (P3) at 899 Cameron Road, by providing a $20,000 one-off funding grant (Option 3).

Tauriko Playcentre (Attachments 10, 11 and 12)

(k) Undertakes a two-stage investigation and reporting process, as outlined in the attachment, and reports back to Council to seek further direction (Option 1).

Grants for development contributions on papakāinga housing and community housing (Attachment 13)

(l) Agrees to double the two grant funds to $500,000 per annum each for three years (total of $3 million in years 1-3) (Option 2)

Crown-owned land in Greerton (Attachment 14)

(m) Supports government partners to engage with existing users, mana whenua and key stakeholders to undertake an options study to explore the most appropriate and efficient use of Greerton Crown land in the short, medium and long term (Option 1)

Te Reti B&C Residue Trust (Attachment 15)

(n) Agrees to fund $84,790 in year 1 of the LTP to construct the widening of the entrance to papakāinga housing between Cambridge Road and Waihi Road (Option 1)

Background

Long-term Plan consultation process

2. Consultation on the Long-term Plan consultation document was undertaken from 7 May to 7 June. In total, almost 1,800 submissions were received covering a wide variety of topics.

This report

3. This report covers a number of matters raised through submissions that broadly relate to economic development and growth management matters.

4. Each identified matter where a clear decision is required by Council has been covered in a separately attached issues and options paper. These issues and options papers include financial considerations relevant to the specific matter.

5. The recommendations within each issues and options paper have been brought forward into the above recommended resolutions for Council’s consideration. Where there is no specific staff recommendation on a matter, the recommended resolutions above provide for Council to select an option from within the issues paper or to craft its own resolution.

6. This is a compilation report. While a single author and authoriser are identified above, in reality the attachments have been prepared by a number of different authors and each has been formally approved by the relevant General Manager. Discussion on each attachment will be led by the relevant General Manager.

Strategic / Statutory Context

7. Where appropriate, relevant strategic context is provided in the individual attachments.

8. Statutorily, the Local Government Act 2002 requires Council to prepare a Long-term Plan following a special consultative procedure. This report is in response to issues raised through that special consultative procedure.

Significance

9. 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.

10. 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.

11. In accordance with the considerations above, criteria and thresholds in the policy, it is considered that the decisions required by this report are individually of low or medium significance.

ENGAGEMENT

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

Click here to view the TCC Significance and Engagement Policy

Next Steps

13. For each matter covered by this report, staff will action the resolutions made by Council.

Attachments

1. Cat 2 - Issues and Options - Funding for Film Sector - A12617301 ⇩

2. Cat 2 - Issues and Options - City Centre Development Incentives (Note has associated confidential attachment) - A12607204 ⇩

3. Confidential attachment - City Centre Development Incentives - model (final) - A12618371 - Public Excluded

4. Cat 2 - Issues and Options - CBD carparking - A12636721 ⇩

5. Cat 2 - Issues and Options - CBD carparking Attachment 1 - City Centre Parking Stock - A12636726 ⇩

6. Cat 2 - Issues and Options - 1766 - Gloucester St Link - A12630565 ⇩

7. Cat 2 - Issues and Options - The Lakes Community Association - A12616150 ⇩

8. Cat 2 - Issues and Options - 551 - Wairakei Community Centre Trust - A12607206 ⇩

9. Cat 2 - Issues and Options - 1394 - Accessible Properties: Gate Pa Pukehinahina Community Centre - A12617181 ⇩

10. Cat 2 - Issues and Options - Tauriko Playcentre - A12615498 ⇩

11. Cat 2 - Issues and Options - Tauriko Playcentre - Attachment 1 - Location Plan of Tauriko Playcentre - A12630814 ⇩

12. Cat 2 - Issues and Options - Tauriko Playcentre - Attachment 2 - Potential effects of proposed road alignments on the Tauriko Playcentre and Hall site - A12643766 ⇩

13. Cat 2 - Issues and Options - Grants for DCs on Community or Papakainga Housing - A12604081 ⇩

14. Cat 2 - Issues and Options - Crown Owned Land -Greerton Racecourse - A12609350 ⇩

15. Cat 2 - Issues and Options - Te Reti B & C Residue Trust funding request - A12639094 ⇩

Ordinary Council Meeting Agenda

24 June 2021

Title: Issues and options – Funding for Film Sector

File Number:

Author: Ross Hudson

Authoriser: Christine Jones

ISSUE

1. Consideration of the funding request from:

· Film Bay of Plenty for $50,000 per annum to support their operational costs, as part of a group of supporting Bay of Plenty councils and charitable funders and consideration of related opportunities to support the Film and Media sector; and

· Other organisations seeking to progress film and media initiatives.

analysis of submission points

2. Film BoP are requesting $50,000 per annum to support their work as an enabler of the Bay of Plenty film and media industry, which focuses on securing inward investment, job creation and skills development opportunities. Established in 2016 and one of eight regional film offices, Film BoP has established partnerships with the NZ Film Commission and government departments and has established multiple connection across the regional, national and international film sectors.

3. Since its inception, Film BoP has been aiming to secure a proportionate share of the $3 Billion New Zealand film industry, in which the Bay had historically under-achieved. They note that over 2020/21 approximately $4 Million was invested in local spending from drama projects that Film BoP have attracted and facilitated in the region, up from $500K in 2019/20 and that there was also a four-fold increase in the number of film location consents processed by the Council’s Events Team. 54% of crew on the Film Bay of Plenty database come from Tauranga, and 57% of the location filming enquiries that we receive are for Tauranga. Submission #1397 provides further details of achievements and objectives.

4. Film BoP have secured funding support from other local councils, BayTrust, and the Tauranga and Rotorua Energy Consumer Trusts. Council’s contribution would be of a similar value to that of Rotorua, albeit significantly smaller on a per capita basis.

5. Several other submitters and speakers also brought to Commissioners’ attention specific opportunities in the emerging Film and Media sectors that could benefit from seed funding.

DISCUSSION and Analysis

6. Council supported Film BoP for four years, before deciding through the last Annual Plan to cease funding. No clear agreed rationale for the decision to cease funding was articulated though concerns were expressed that a disproportionate level of activity was in support of other parts of the region. Limited account appeared to have been taken of the flow-on benefits across the region, or of the Tauranga specific results noted above.

7. The Film industry has significant growth potential and has the capacity to create high skill, high value jobs for local people, especially when effectively aligned with educational and training opportunities. We expect further spillover opportunities from regions with more mature industry such as Auckland, and some potential has already been realised with productions in the Bay.

8. Priority One has advised that they view the Film and Media industry as a desirable industry for growth and diversification in Tauranga-Western Bay and that Film BoP’s proposals are in general alignment with the economic development strategy. They also note that Film BOP are a trusted organisation that have made positive steps to improve governance and local industry participation and have advised that they would be happy to oversee and agree a set of robust objectives and measurable outcomes.

9. Council received multiple submissions for funding to support the local film industry. There appears to be some lack of connectivity and co-ordination between the parties seeking to make progress in this area. There are initiatives being progressed by various parties and there is a risk of disparate resource investment.

10. It seems that there would be benefit from a more co-ordinated and strategic approach to investment in this sector

11. If Council were to support funding for the film and media sector, it is proposed that funding would be via the Economic Development targeted rate, which is a part of the Commercial rate and therefore there is a correlation between funding source and potential beneficiaries.

12. It is proposed that Priority One would be the conduit for funding and to provide oversight and agreement of outputs and intended outcomes and to ensure alignment with agreed economic development priorities. Outputs would be reviewed via Priority One’s reporting to Council and we would propose that the funding level be reviewed in advance of the next Long-Term Plan.

13. Given that Film BoP is not the only agency that is in the process of providing stimulus to the sector and that is seeking funding support to catalyse specific initiatives, it may also be appropriate to provide $100,000 per annum to be made available through Priority One. It may also be more appropriate to create a contestable fund that Priority One oversees as part of its agreement with Council, with criteria to be defined by Priority One in partnership with Council’s Arts & Culture team.

14. The proposed investment is small relative to the potential economic and social benefits that can be derived from a successful film industry in Tauranga and the wider Bay and Council’s investment on behalf of the business community would be matched by other parties. Value for money can be reviewed through our agreement with Priority One. On that basis, our recommendation is that Council supports the submission’s request.

Options Analysis

Option 1: Provide Film Bay of Plenty with $50,000 per annum through the Economic Development rate, to be reviewed before the next Long-Term Plan.

1. Advantages

2. Disadvantages

· Provides a low cost opportunity to support the community outcome that Tauranga is a city that attracts and supports a range of businesses and education opportunities, creating jobs and a skilled workforce

· Adds to the rates burden on commercial ratepayers which is rising significantly

· Risk of uncoordinated and non-strategic approach to film and media investment.

Budget – Capex: N/A

Budget – Opex: $50k per annum via Economic Development rate

Key risks: Investment does not realise significant, or easily measured economic and social benefits

Recommended? No

Option 2: Retain the status quo

3. Advantages	4. Disadvantages
· No additional burden on the commercial ratepayer	· Potentially reduced opportunities to enable economic development in a high potential sector.

Budget – Capex: N/A

Budget – Opex: N/A

Key risks: Missed opportunities to support an identified Community Outcome.

Recommended? No

Option 3: Provide Priority One with $100,000 per annum to distribute to the Film & Media sector against an agreed set of criteria.

5. Advantages

6. Disadvantages

· Provides an opportunity to support a more diverse set of opportunities in the sector

· Enables a more strategic and co-ordinated investment response.

· Increases the rates burden on the commercial sector which already has a significant proposed increase in the 2021/22 financial year.

Budget – Capex: N/A

Budget – Opex: $100k per annum via the Economic Development rate

Key risks: Investment does not realise significant, or easily measured economic and social benefits

Recommended? Yes

Recommendation

15. Council agrees to provide Priority One with an additional $100,000 per annum, funded through the Economic Development rate, to distribute in support of the Film & Media sector, to be reviewed before the next Long Term Plan.

Next Steps

16. Agree criteria and outcomes through Priority One arrangements.

Submissions recieved

Submission #: 1370, 1397, 1542

Attachments

Nil

Ordinary Council Meeting Agenda

24 June 2021

Title: I&O paper – City Centre Development Incentives

Author: Ross Hudson

Authoriser: Christine Jones

ISSUE

1. Consideration of funding to incentivise major developments in the City Centre.

analysis of submission points

2. Priority One and the Urban Task Force propose that Council reduces the cost burden on City Centre development, particularly the increasing cost of development contributions. They see these as a disincentive at a time when Council should be doing all it can to incentivise development in the City Centre. Other submissions (PMG Funds, JWL Investments) echo this view and also consider Council’s general level of investment in the City Centre to be inadequate to achieve stated aims. The submitters propose that Council should provide development contributions relief, or otherwise fund the costs of development contributions for major City Centre developments.

3. Staff have been in dialogue with Priority One and the Urban Task Force on this issue, in the context of collaborative work to understand the scope and scale of major private development opportunities in the City Centre, constraints to development at the scales required to achieve agreed outcomes, and to develop a development ‘blueprint’ for the City Centre that provides a shared, achievable vision for the transformation of the City Centre through public and private investment.

DISCUSSION and Analysis

4. The city centre is in transition from a traditional retail and service centre to a major commercial, retail, civic, cultural, and residential centre for the region. Its successful transformation is integral to the implementation of UFTI, the Te Papa Spatial Plan and Council’s Community Outcomes. Community feedback consistently suggests that a significant proportion of the community wants the city centre to be an investment priority for Council.

5. Meeting our objectives for residential intensification will require approximately 100 new homes per annum in the City Centre and its surrounds over the next 30 years, along with 150 additional employees per annum, most of whom are expected to work in offices.

6. In order to set the City Centre on that trajectory, significant private investment will be required across a set of major developments over the next 10 years. A pipeline of potential developments that can take us on that path exists, and it can also provide other assets that will enable the city centre to meet its broader outcomes through provision of visitor accommodation and consolidated parking supply.

7. Eight to ten major developments with a capital value of over $650m, providing about 115,000sqm of floor space have been identified that are at various stages of concept development and planning, along with a further set of smaller scale opportunities. Whether these developments proceed over the next ten years or not will depend fundamentally on their profitability and their ability to borrow to finance the development. Marginal changes in the profitability of a project can undermine its viability, or its relative viability to other investment options.

Development Contributions

8. Citywide Development Contributions (DCs) are proposed to rise significantly. A two-bedroom apartment that would have paid $6,900 this year, would pay $15,910 next year; 1,000sqm of commercial space would have paid $26,880 this year and would pay $58,820 next year (exc. Local DCs, GST and costs of capital). Priority One and the Urban Task Force have proposed that those rises may impair the viability of the major developments we need to accelerate the transformation of the City Centre and, in some cases, may lead developers to push forward instead with alternatives in other cities where development conditions are more favourable.

9. Total Citywide DCs for the identified major developments are estimated at around $6.2m (the cumulative sum Council might receive). Once Local DCs and costs of capital are added this could grow to over $8.5m (the sum developers might collectively pay). The rates revenue potential of these developments is estimated at over $1.7m per annum at current rates levels, from a base of under $300k. This would rise significantly with revaluations and proposed rates increases, redistributing the rates burden from other parts of the city over time. Note of course that if development does not happen, no new revenue sources are created.

10. In seeking to rebalance investment interest in favour of their city centres, other cities have introduced mechanisms to alleviate the DC burden. Hamilton City Council introduced a fund covering up to 100% of the DC requirements in its city centre from 2013/14. That level was then stepped down to a 66% contribution following a period of renewed investment and uptake of the fund, and it is proposing to continue the fund for at least the next three years. The Council has contributed an average of $1.7m per annum to City Centre DCs (2013-2020). Combined residential and commercial investment in their city centre has risen from an average of $10m per annum (2009-13) to an average of $24m per annum (2013-2020).

11. A City Centre Development Contribution Fund would operate in a similar fashion to the Papakainga and Community Housing Provider funds and would be a debt-financed fund. In order to have a material effect on development viability across several major developments, the Fund would need to be of a size commensurate with the scale of development. It should also look to incentivise early investment.

City Centre Development Incentive Fund

12. Rather than a specific Development Contributions Fund (as requested via the submissions), Council could establish a more general City Centre Development Incentive Fund which could be applied for a broader range of initiatives including development contributions, consenting fees, parking fees during development, and public amenity in the vicinity of developments.

Criteria and Context City Centre Development Incentive Fund

13. To enable the desired outcomes to be achieved in the City Centre, a change in developer perceptions of residential development in the City Centre will be required. The general feedback is that office development is seen as a lower risk proposition. Targeting a Fund, or parts of it, towards residential development, along with some supporting actions such as facilitation through the planning system, could positively influence perception and development risk.

14. Potential fund application and considerations / criteria could include:

(a) A set of identified ‘fundable items’ such as development contributions, consenting fees, parking costs during the development phase, or amenity in the vicinity of the development.

(b) Allocated on a ‘first-come-first-served’ approach conditional on delivery of development within specified timeframes.

(d) Minimum floor areas and/or storeys (e.g. 3 storeys, 2,000sqm)

(e) A maximum sum for any one development

(f) A defined City Centre boundary (such as Marsh Street to 4^th Avenue)

15. If Commissioners agree to establish a City Centre Fund through the Long-Term Plan deliberations, details on its criteria would be confirmed through a follow-up report. It is proposed that this would be done in conjunction with Priority One. The Fund and its criteria may require public consultation. Some parts of the community may consider incentives for developers inequitable, including some developers and landlords in other centres. Those views will need to be balanced against a perspective on the historic regulatory and fiscal frameworks that have allowed the City Centre’s viability to be undermined and with an understanding of the importance of the City Centre to the successful implementation of agreed strategic priorities.

16. The Fund would sit alongside the broader package of proposed investments and initiatives in the City Centre and, as well as its financial value, the Fund would also be a signal to the market of Council’s intent and ambition to lead the transformation of the City Centre.

17. Priority One and the Urban Task Force have also recommended that Council explores ways to de-risk and accelerate its consenting processes for major City Centre developments and to explore options to make the City Plan more enabling of major developments in the City Centre and its surrounds. Early-stage discussions are underway.

18. Submissions have also requested that Council reconsiders the impact of rates increases in the City Centre, noting both the likely flow-through impact on existing tenants – especially retailers and small businesses and the disincentive to potential commercial tenants. We have begun to explore options for an alternative revenue and re-investment mechanism for the City Centre and can bring further details to Council later this year.

Options Analysis

Option 1: Retain the status quo

19. Do not create a City Centre Fund through which Council covers the costs of major City Centre Development Contributions for a limited period of time.

7. Advantages

8. Disadvantages

· Council short-term potential revenues are as per the draft Development Contributions Policy

· No perception of favouritism by developers outside the City Centre

· Retains nexus between growth-related infrastructure provision and developer payments.

· Potential disincentive for proposed City Centre developments through higher Development Contributions.

Budget – Capex: $0

Budget – Opex: $0

Key risks: Small negative influence on investment appetite in the City Centre, given rising DC levels, potentially undermining key city and sub-regional outcomes. Council not seen to be supportive of City Centre development.

Option 2: Create a $3m City Centre Fund to offset Development Contributions costs of major developments for a limited time.

9. Advantages

10. Disadvantages

· Potential to accelerate and increase the scale of development in the City Centre and to negate the additional cost burden of the new DC Policy.

· Potential to increase Council’s rates revenues from the City Centre significantly over time.

· Seen by city centre developers as a tangible action by Council to support and activate development in the City Centre.

· Lost potential development contribution revenues to Council and increased rates and debt requirements

· The Fund would not guarantee development and it is hard to determine whether developments would have gone ahead anyway (and at what scale and timeframe).

· Seen as inequitable by developers outside the City Centre and by parts of the community.

Budget – Capex: N/A

Budget – Opex: $1m per annum, debt-funded opex, for three years.

Key risks: Fund contributes to development costs where developments would have occurred anyway.

Option 3: Create a smaller City Centre development contribution fund (e.g. covering the difference between the current and proposed DC Policy)

11. Advantages

12. Disadvantages

· Lower cost to Council

· Potential to increase Council’s rates revenues from the City Centre over time.

· May be considered insufficient by development community to incentivise major developments

Budget – Capex: Not calculated.

Budget – Opex: N/A

Key risks: Fund contributes to development costs but does not stimulate development. Note that there is potential to create a ‘diminishing scale’ approach in future years.

Option 4: Deferral of Development Contributions rather than Council paying them.

Note - the current DC policy does include some deferral provisions; this option could provide for more favourable deferral conditions such as no or lower interest, and/or longer deferral period.

13. Advantages

14. Disadvantages

· Low to zero cost to Council

· Potential to increase Council’s rates revenues from the City Centre over time.

· May be considered insufficient to incentivise major developments

· Deferral may improve cash-flow to a degree, but will not improve ‘bankability’ of major developments

Budget – Capex: N/A

Budget – Opex: Not calculated.

Key risks: Fund delays development costs but does not stimulate development. Note that there is potential to create a ‘diminishing scale or deferral’ approach in future years.

Option 5: City Centre Residential Development Contribution Fund (only available to the residential component of developments)

15. Advantages

16. Disadvantages

· Focuses fund and developer attention on housing supply

· Limits scope of development interest

Budget – Capex: N/A

Budget – Opex: Not calculated

Key risks: Small risk that Fund distorts market incentives.

Option 6: Create a $500,000 City Centre Development Incentive Fund with a range of criteria that can target the costs of development, especially residential development, covering the likes of development contributions, consenting fees, parking fees during development and public amenity in the vicinity of developments.

17. Advantages

18. Disadvantages

· Provides an ‘agile’ fund that can address a range of development barriers.

· Multiple criteria may increase decision-making complexity and some market uncertainty.

Budget – Capex: N/A

Budget – Opex: $500k per annum, for three years, to be 50% funded through the Commercial Rate and 50% funded through the General Rate.

Key risks: Small risk that Fund distorts market incentives.

Recommendation

20. That Council agrees to Option 6 – the creation of a City Centre Development Incentive Fund to a value of $500k per annum over years 2021/22, 2022/23 and 2023/24, to be funded 50% through the Commercial Rate and 50% through the General Rate, with criteria to be agreed at an upcoming meeting.

Next Steps

21. Report to Council with details of Fund mechanisms, with input from Priority One to help define criteria. Options 2, 3, 5 and 6 would require development of a policy as to how the fund will be allocated. Option 4 would require a subsequent decision of Council on deferral conditions.

Submissions received

Submission #: 1367 (Priority One), 1723 (Urban Task Force), 1393 (Property Council), 1363 (PMG Funds), 1364 (JWL Investments)

Attachments

Confidential attachment Objective Ref A12590717

Ordinary Council Meeting Agenda

24 June 2021

Title: Issues and options – CBD Car Parking

File Number:

Author: Brendan Bisley, Director of Transport

Authoriser: Nic Johansson

ISSUE

1. This report addresses the free 2-hour parking trial in the CBD coming to an end, options and associated costs to be considered in the LTP deliberation.

2. The trial has been in place since August 2020. The trial allows 2 hours of free on street parking. A stay beyond that time requires motorists to pay to use off street carparking facilities.

3. The trial was implemented to

(a) address concerns about the viability of retail in the CBD particularly after the Covid lockdown, and

(b) to monitor the potential impact of parking charges on the turnover of vehicles, and spend.

analysis of submission points

4. A number of submissions have been received that would like to retain the free CBD carparking as well as some requesting a change in the time to P180 to suit their business needs.

DISCUSSION and Analysis

5. As part of the 2020/21 Annual Plan submissions the Council resolved to implement a 2-hour free parking trial within the Tauranga CBD to provide an economic stimulus to support recovery post COVID 19 lockdown.

6. The trial commenced in August 2020 with an initial review proposed for November 2020. In November 2020 the Council resolved to extend the trial to April 2021 to allow time to gather further information as part of introducing the Councils Plate Licence Plate Recognition technology (LPR).

7. The full year 2021 budgeted revenue for on-street parking is $984,200. Zero income for this activity is anticipated for the current financial year due to the free parking trial.

8. Marketview data showing the value of card transactions is used as an indicator of economic activity. It shows that economic recovery profile of the CBD compares with other centres in Tauranga, but it does not categorically show a clear correlation to free parking. By June 2020, economic activity in all areas broadly recovered to levels that aligned with historic trend profile observed since October 2015. The graph below shows the total spend in the Tauranga CBD for the period October 2019 to April 2021.

Enforcement during trial

9. There are three infringement offences that apply to the CBD parking area: (1) failing to pay for parking; (2) parking longer than paid for; and (3) overstaying a (free) time restriction.

10. The Licence Plate Recognition system (LPR) has been in use for 8 months. An average of 120 infringement are issued for overstaying a (free) time restriction per day via the LPR system.

11. The average daily number of infringements has levelled out which would suggest that current enforcement method will need to be improved. 5,169 vehicles received 12,770 LPR infringements issued indicating that some offenders have accepted the cost of infringements (set by Central Government) as an acceptable cost for parking on street as it is similar to the costs of paying for all day parking in the off street facilities. This has resulted in less turnover of carparks, working against the original intent.

Parking Surveys and Occupancy Data

12. Parking surveys were undertaken on 15, 16 and 17 March 2021. Four surveys were undertaken each day. These dates were chosen to align with regional traffic surveys in the Western Bay of Plenty and to avoid school holidays. Best-practice recommends that peak occupancy around 85% is considered an optimal use of the spaces, as the remaining 15% generally allows sufficient space for new visitors to find a place relatively quickly.

13. During these survey days, both parking buildings had peak occupancy levels of 95%. The off-street (all-day) car parks such as Dive Crescent and TV3 saw peak occupancy levels between 96% and 102%. The free car parks (time-restricted) had varying peak occupancy levels between the three days, and these varied between 50% and 89%.

14. The occupancy levels for on-street parking spaces (time-restricted) varied quite heavily: on-street parking spaces in the heart of the CBD (Devonport Road, Durham Street, Grey Street and Willow Street) saw peak occupancy levels of 95%-100%, whereas streets at the edge of the CBD (Second Avenue, had peak occupancy levels between 70 and 81%. Other streets such Arundel Street and The Strand had peak occupancy levels, varying between 31% and 62%.

15. On-street parking spaces outside the CBD where all-day parking is allowed, also had typical peak occupancy levels of 85-105%.

16. This data is showing that the streets outside the core CBD are predominately used for all day parking and the parking buildings are well utilised. The core CBD streets have high occupancy (95-100%) which shows that we have little available parking for customers coming into businesses in those streets.

Parking turnover

17. Encouraging a higher turnover was one of the key objectives to introduce the Trial. Turnover is defined as the number of unique vehicles that can theoretically use one parking space. If the survey would record four unique vehicles parked on one parking spaces during the four surveys on a day, the Turnover was 4. For all-day car parks turnover is typically low (just below or over 1.0).

18. The car parks with a time limit saw higher turnover levels: The Devonport Road Pop Up car park had a turnover over 1.6 (P180), whereas the Library car park had a turnover over 2.1 (P120). At the on-street spaces in the heart of the CBD the survey measures a turnover varying between 1.3 on The Strand and up to 2.9 (Grey Street, Durham Street, Devonport Road and Willow Street). Whilst parking turnover is relatively high on these streets, they also had the highest occupancy levels. For example, a turnover of 2.2-2.7 was observed on Durham Street, but the peak occupancy levels were 92-102%. This achieves the objectives of ‘turnover’, but visitors will find it hard to find a space due to high occupancy levels.

Appendix 1 – Parking Stock within the Tauranga CBD is attached for further information.

19. This data shows that we are achieving carpark turnover in some parts of the CBD, but in the core retail area it is likely that customers will still find it difficult to park near businesses they wish to visit due to the high occupancy rates.

Options Analysis

20. The data collected on parking shows that we have high utilisation of both the off-street and on-street carparks, and it may be difficult for customers to find available carparks on-street. Given the high utilisation of carparks, there is little evidence this is corresponding to an increase in retail trade as the dollars spent in the CBD are similar to the values prior to Covid when there were parking charges.

21. Considering New Zealand is still in Covid recovery mode, changing the current parking arrangement in the CBD may be premature. In addition, a citywide parking strategy needs to be finalised and consulted on with the community. This would address the long-term parking options for the CBD and would be an appropriate time to consider changes to the parking.

22. These factors could mean changing parking charges a number of times within a short period, which we would want to avoid.

23. Council could elect to finish the trial and reinstate charges for parking. Alternatively, the status quo could be retained for a defined period while Council finalises a citywide parking strategy and implements a long-term strategy for the CBD and other areas of the city.

24. It should be noted that implementation of a contemporary parking strategy is likely to introduce higher charges for all types of parking within Tauranga City.

Option 1: Finish the Trial and reinstate carpark charges in the CBD

25. This option would replace the free 2hr carparking with paid parking for the 2hr period, Vehicles parking beyond that time would need to park in the off-street facilities to ensure carparks retain a high turnover to provide carparks for customers of CBD retailers.

19. Advantages

20. Disadvantages

· This option would allow vehicles that park all day to be ticketed as (1) failing to pay for parking or (2) parking longer than paid, which would allow higher ticket charges and would make it less likely they use the on street carparking options. These offences would make a ticket significantly higher than the costs of using the off-street facilities

· The abundance of free all-day parking near the CBD encourages workers to use private vehicles to get to and from the CBD. Parking charges may encourage workers to consider alternatives such as PT and cycling.

· Residents may choose to shop in other parts of the city to avoid the parking charges.

· The change would be implemented before the parking strategy is adopted, so further changes could be required in early 2022 to meet those objectives.

· While we are in Covid recovery mode, free parking could be required again to further support CBD retailers.

Budget – Capex: Nil

Budget – Opex: $20k-30k would be required to reprogramme the parking meters and change parking signs to reflect the paid parking. There would be revenue of approximately $1m per annum from the parking charges.

Key risks: The change would need to be clearly communicate and sufficient time allowed to reprogramme the parking meters and change parking signs.

Recommended? This option is not recommended

Option 2: Retain the 2 hour free parking until strategy is implemented

26. This option would retain the P120 until February 2022. By February 2022, Council will have considered the parking strategy, area implementation plans will have been developed and consultation undertaken with residents and businesses in those areas. This timing also provides for any changes to be well communicated. Given the strategic direction of UFTI, TSP and the emerging Parking Strategy it is likely that the parking fees required to deliver on the desired transport outcomes will be higher than what was charged prior to the Covid related free parking trial.

27. If this option was chosen, additional resources are required to increase the frequency of enforcement activities in the CBD and to ensure vehicle turnover is retained especially as more construction activity gets underway in the CBD. The trial was implemented to support retailers, so it is important this remains the focus by maintaining the high turnover of carparks.

21. Advantages

22. Disadvantages

· The public understand the current carparking arrangements.

· The carparking strategy can be implemented and the long-term strategy for the CBD developed and consulted before any changes are made. This would allow a single change for residents and businesses.

· The retention of the P120 limit encourages higher turnover for retailers’ customers to use.

· The CBD is future proofed if we had another Covid shutdown without further changes. The immunisation programme is expected to be completed by the end of the year so a change in 2022 would be after this.

· There is time to communicate the introduction of parking charges before the February 2022 start date.

· The retention of the 2hr limit does not suit all businesses.

· Additional resources will be required to undertake more intensive parking enforcement and additional loops of the LPRC vehicle to ensure those parking beyond the 2hrs are ticketed daily to ensure all day parking does not become an engrained habit.

· Mode shift is not encouraged.

Budget – Capex: Nil

Budget – Opex: Council will forgo approximately $800,000 in revenue over the additional duration of the free parking period. There may be additional resource requirements for enforcement.

Key risks: Workers and customers get used to free parking in the CBD making it harder to implement future charges. Mode shift is not encouraged due to the abundance of low-cost CBD parking.

Recommended? Yes

Recommendation

28. The continuation of the P120 free carparking is recommended to allow Council to adopt a citywide parking strategy in July/August and then develop and consult on the area implementation plans. Parking charges would then be reinstated from February 2022.

Next Steps

29. No changes are required to retain the current status quo, but additional enforcement resources are required to undertake additional loops of the parking area with the LPRC equipped vehicle to ensure parking turnover is retained for customers of the CBD retailers.

SUBMISSIONS RECEIVED

Submission #:

ATTACHMENTS

Attachment 1 – City Centre Parking Stock


AGENDA Ordinary Council Meeting Thursday, 24 June 2021
I hereby give notice that an Ordinary Meeting of Council will be held on:
Date and time:	Thursday, 24 June 2021 at 9.30am; and Friday, 25 June 2021 at 9.00am
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

Chairperson	Commission Chair Anne Tolley
Members	Commissioner Shadrach Rolleston Commissioner Stephen Selwood Commissioner Bill Wasley
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	As required

Option	Description	pros	cons	Financial implications
1 - from Consultation Document amended for timing of capital programme	$4.6b revised for: 1. 2021 non-delivered projects, 2. additional cost information, 3. deliverability assessment and adjustment for timing of third-party funding. The increase in capex because of 2021 budgets carried into 2022 has been offset by the same amount moved outside the ten years . (attachment A)	The programme is budgeted to deliver on the city’s priority needs in terms of key investment areas. The proposed capital programme supports the ramping up of our capacity to plan and deliver infrastructure and community investment planning and construction alongside our suppliers and partners. The full amount of the transportation programme (TSP) that has been agreed with our transportation partners continues to be budgeted, but with timing to reflect an expectation of slower phasing of funding and project delivery subject to funding confirmation from Waka Kotahi.	There is pressure to deliver infrastructure in the early years of the LTP with risks around supply of materials and construction. There is also risk around the level and timing of third- party funding including Waka Kotahi. Rates are higher than would be the case with lower investment through the ten years reflecting the operating costs of new infrastructure and the need to retire debt to maintain balance sheet capacity. Three waters reform would lift pressure from TCC’s balance sheet reducing the need to retire further debt through additional rates as would some other form of infrastructure funding, although that may come at higher financing costs.	2022 rates $233m compared with $235m in draft Total rates over ten years $4.1b Total capital over ten years $4.6b
2 - from Consultation Document amended for timing of capital programme	$4.1b revised as above	Key advantage is a lower capital programme which is more deliverable. Lower expenditure means reduced rates and debt.	This option excludes a number of community projects that are included in option 1, which means that community outcomes are not met. Resilience investment and transport investment outcomes are achieved more slowly than option one	2022 rates $233m compared with $235m in draft LTP Rates over ten years $4b Capital Investment over ten years $4.1b
New option 3 for delayed capital programme adjusted from option 1	Capital Programme $4.3b. As per option 1 with $371m moved outside ten years and some debt retirement on investment moved outside the ten years.	This option includes community projects that were excluded from option 2. This option retains the option one investment in the plan but delays the budgeting of financing for projects of $371m outside the 10 years in the areas of transport and resilience. This achieves lower debt levels and reduced rates relative to option 1. As the LTP period progresses further assessments and updates will be made to deliverability assumptions which may result in variations to the financing assumptions around this programme.	Because investment is budgeted to take longer the outcomes particularly for transportation and resilience would take longer to achieve than for option 1. May require higher debt and rating levels in future years if more capacity is available to increase deliverability of the programme.	2022 rates $233m compared with the $235m in the draft LTP. Rates over ten years $4b Capital Investment $4.6b however financing is based on a programme of $4.3b
New Option 4	Lower capital investment to achieve single digit rates increases across the LTP after year 1, which remains at consulted levels. Investment would be along the lines of a scenario B/C option from December report to support this level of rates. Detailed financials have not been completed for this option as no investment has been identified to reduce to get to this level. Indicative high-level estimates have been included and would require identification of projects and expenditure to enable this option to be achieved.	Rates would remain at single digit levels for residential ratepayers and lower levels for commercial ratepayers.	Would not achieve Council’s strategic direction and desired community and business productivity needs and outcomes across transportation, land supply for housing, city centre community and resilience investment. Would not meet Government requirements for urban land supply to address population growth pressures.	Financials not fully developed as dependent on investment choices. Estimate rates 2022 approx $230m if resourcing requirements reduced due to lower capital programme. Rates over ten years increasing in single digits so less than $4b over ten years. Identification and adjustment of individual projects including their funding sources is required to fully cost the rates requirement in this option. Capital investment approximately $2-$3b over ten years.

Option	Option description	Pros	Cons	Financial impacts
1	Increase the commercial differential to 1.6. (recommended)	Commercial sector pays a higher share of the rates take and is closer to, but considerably below, that of other metro-councils At 1.6 times the commercial ratepayers are paying the same as residential ratepayers (post tax) based on capital value of properties. City investment is more likely to be at appropriate levels because the benefit to business productivity from investment such as reducing congestion, is paid for by those who receive that benefit. The increase in differential may also help to reduce the risk that ongoing large increases in residential property values relative to commercial values puts growing pressure on residential property owners.	The higher commercial differential would impact some businesses, such as small businesses located in buildings with higher capital value, or those struggling in the current economic and post-covid environment such as some tourism and retail operations.	At the proposed budget level, the median residential rate would be $2,719 and the median commercial rate $6,436
2	Increase the commercial differential to 1.4 in 2022 and 1.6 in 2023	Commercial sector has more time to prepare for the increase in differential. Allows time for those businesses still adjusting post-covid in the current economic environment. The commercial sector pays a higher share of the rates requirement and moves closer to that of other metro-councils over time. Other benefits as for option 1 above	The commercial differential would impact some businesses, such as small businesses located in buildings with higher capital value or those struggling in the current economic and post-covid environment such as some tourism and retail operations.	At the proposed budget level the median residential rate would be $2,775 and the median commercial rate $5,984
3	Retain commercial differential at 1.2	Commercial sector will have taken into account this level of differential for 2022	Commercial sector continues to pay a much lower share of total rates bill than other metro councils. Residential ratepayers therefore will pay a higher share of rates.	At the proposed budget level the median residential rate would be $2,835 and the median commercial rate $5,503
4	Increase the commercial differential to 1.6 in 2022 and continue to increase further thereafter, by 0.1 per annum through to 2.5 by 2031 (this could also be reconsidered as part of the review proposed in the targeted rates section of this report).	Commercial sector pays a higher share of the rates take and moves closer to that of other metro-councils over time. The increase over time would mean that businesses are able to prepare for the higher rating levels. Residential ratepayers experience lower ongoing rates increases Other benefits as for option 2 above	The higher commercial differential would impact some businesses, such as small businesses located in more expensive new buildings or those struggling in the current economic and post-covid environment such as some tourism and retail operations. Ongoing increases in the commercial differential were not consulted on in the LTP and would need further consultation before adoption. This option could be considered as part of a later annual plan or LTP.	At proposed budget level median residential rate would be $2,719 and the median commercial rate $6,436 in 2022. In 2023 the share covered by commercial ratepayers would increase so that the median residential rate would be $3,057 and the median commercial rate $7,546 in 2023

City Centre Parking Stock @ September 2019
Location	2020/21
*Public Parking Spaces*
Buildings
Elizabeth Street	326
Spring Street	235
Off-Street
Cliff Road	124
Devonport Road	73
Dive Crescent	77
Dive Crescent Nth	15
TV3 Site	43
The Strand - Nthn Reclamation	80
Masonic Park	19
Library	55
On-Street
Pay and Display	1142
Time Restricted	753
Free	700
Total Public Spaces	3642
Location	2020/21
*Public Leased Spaces*
Buildings
Elizabeth Street	279
Spring Street (lower)	72
Spring Street (upper)	109
Off-Street
Devonport Road	26
Dive Crescent	30
Durham Street (opp. Baycourt)	40
Masonic Park	3
Kingsview	41
Library	4
TV3 Site	37
Total Public Leased Spaces	641
Private Parking Stock
Farmers
Various	3933
Total Private Spaces	3933
Total Parking Stock	8216
Public Transport Passenger Numbers	3.74m

· 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.

Period from date the land title for the Gloucester St Link was vested in TCC	Payment Proportion of initial cost estimate
0-12 months	21%
13-24 months	17%
25-36 months	13%
37-48 months	8%
49-60 months	4%
61 or more months	0 %