Agenda of Strategy, Finance and Risk Committee Meeting

Terms of reference – Strategy, Finance & Risk Committee

Membership

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

Role

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

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

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

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

Membership

The Committee will consist of:

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

· the Chairperson of Te Rangapū Mana Whenua o Tauranga Moana

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

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

Voting Rights

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

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

Committee’s Scope and Responsibilities

A. STRATEGIC ISSUES

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

A1 – Strategic Issues

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

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

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

· Consider existing and future strategic context

· Consider opportunities and possible options

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

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

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

A2 – Policy and Bylaws

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

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

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

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

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

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

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

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

B. FINANCE AND RISK

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

· Health and safety.

· Risk management.

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

· Internal and external audit and assurance.

· Fraud, integrity and investigations.

· Monitoring of compliance with laws and regulations.

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

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

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

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

B1 - Health and Safety

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

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

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

B2 - Risk Management

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

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

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

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

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

B3 - Internal Audit

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

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

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

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

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

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

B4 - External Audit

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

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

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

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

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

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

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

B5 - Fraud and Integrity

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

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

· Review, adopt and monitor the Protected Disclosures Policy.

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

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

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

B6 - Statutory Reporting

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

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

· Compliance with applicable legal requirements relevant to statutory reporting.

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

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

· Any decisions involving significant judgement, estimation or uncertainty.

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

· The disclosure of contingent liabilities and contingent assets.

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

· Significant adjustments resulting from the audit.

Power to Act

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

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

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

o make a rate;

o make a bylaw;

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

o adopt the LTP or Annual Plan;

o adopt the Annual Report;

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

o adopt a remuneration and employment policy;

o appoint a chief executive.

Power to Recommend

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

UNCONFIRMED Strategy, Finance and Risk Committee Meeting Minutes

20 September 2021

MINUTES

Strategy, Finance and Risk Committee Meeting

Monday, 20 September 2021

Order of Business

1 Opening Karakia. 3

2 Apologies. 3

2.1 Apologies. 3

3 Public Forum.. 3

3.1 Lynne Moore - Three Waters Proposal 3

3.2 Ross Steele - Three Waters Proposal 4

4 Acceptance of late items. 4

5 Confidential business to be transferred into the open. 4

6 Change to order of business. 4

7 Confirmation of Minutes. 5

7.1 Open and Public Excluded minutes of the Strategy, Finance and Risk Committee meeting held on 16 August 2021. 5

8 Declaration of conflicts of interest 5

9 Business. 5

9.1 Mainstreets' Monitoring Report for the period to 30 June 2021. 5

9.2 Audit New Zealand - report to the Commissioners on the audit of the 2021-31 Long-term Plan. 8

9.3 Tauranga City Council Draft Annual Report 2020/21. 8

9.5 Three Waters Reform Progress Update. 9

9.4 Internal Audit - Procurement Health Check. 10

9.6 Updated outline work programme for the Committee. 11

9.7 Growth & Land Use Projects Progress Report - September 2021. 11

9.8 Transport Strategy and Planning Progress Report - September 2021. 12

10 Discussion of late items. 13

11 Closing Karakia. 13

MINUTES OF Tauranga City Council

Strategy, Finance and Risk Committee Meeting

HELD AT THE Tauranga City Council, Council Chambers, 91 Willow Street, Tauranga

ON Monday, 20 September 2021 AT 10.30am

PRESENT: Commission Chair Anne Tolley, Dr Wayne Beilby (Deputy Chairperson), Commissioner Stephen Selwood (via video link), Commissioner Bill Wasley, Ms Matire Duncan, Mr Te Pio Kawe and Ms Rohario Murray

IN ATTENDANCE: Marty Grenfell (Chief Executive), Paul Davidson (General Manager: Corporate Services), Susan Jamieson (General Manager: People & Engagement) (via video link), Nic Johansson (General Manager: Infrastructure), Christine Jones (General Manager: Strategy & Growth), Gareth Wallis (General Manager: Community Services), Michael Vujnovich (Manager: Project Tauranga), Anne Blakeway (Manager: Community Partnerships) (via video link), Kathryn Sharplin (Manager: Finance), Jon Hobbs (Internal Auditor), Steve Burton (Director of City Waters), Jeremy Boase (Manager: Strategy & Corporate Planning), Andy Mead (Manager: City & Infrastructure Planning), Alistair Talbot (Team Leader: Transport Strategy & Planning), Coral Hair (Manager: Democracy Services), Robyn Garrett (Team Leader: Committee Support) and Jenny Teeuwen (Committee Advisor)

1 Opening Karakia

Mr Te Pio Kawe opened the meeting with a karakia.

2 Apologies

2.1 Apologies

Committee Resolution SFR5/21/1

Moved: Commissioner Bill Wasley

Seconded: Dr Wayne Beilby

That the apologies for absence from Commissioner Shadrach Rolleston and Mr Bruce Robertson be received and accepted.

Carried

3 Public forum

3.1 Lynne Moore - Three Waters Proposal

Key points

· Ms Moore spoke in opposition to the Three Waters proposal.

· The current system was not old and was well maintained and upgraded as required.

· The proposal would see assets that belonged to the people of Tauranga given away with little consultation with the people who owned the assets, the ratepayers.

· The proposal was one-sided - $48 million for assets that were worth $1.6 billion.

· It was unacceptable that the Commissioners were considering the proposal.

· Ms Moore requested that a referendum be held so that the people of Tauranga could have their say and be heard.

3.2 Ross Steele - Three Waters Proposal

Key points

· Mr Steele was concerned about the Three Waters proposal. He believed the government was trying to strongarm 67 local authorities throughout New Zealand to give up their water related assets and infrastructure for a pittance of the true value of those assets.

· In Tauranga, the offer was $48 million. The water assets of the city were valued in the region of $1.3 billion to $1.6 billion.

· The Commission were required to communicate with the community openly and honestly and to act with absolute integrity and transparency. The Commission had a moral obligation to look after the assets of the Tauranga City Council (TCC) on behalf of the ratepayers.

· Mr Steele requested that a binding referendum on the topic of the Three Waters proposal be held to allow all ratepayers to have their say.

· Mr Steele challenged the Commission to do what was right for the ratepayers and opt out of the proposal. The assets were not Council’s to give away.

Commission Chair comment

The Commission was not making a decision, and could not make a decision, on such a significant asset owned by the ratepayers without going to the people first. The Government, whose reform it was, was not yet asking for that decision to be made. Councils had been asked to get the views of their communities on the proposed reform and report those back to the Government. The Local Government Act 2002 protected the interests of the ratepayer and if a decision was to be made on the significant assets of Tauranga’s waters, then there would be a formal consultation process. The Commission were aware of the groundswell of worry and concern about what was going to happen. There was still uncertainty around whether a decision would be required from ratepayers or whether the Government would make the reform mandatory. The Commission wanted to know what was ahead for Tauranga as soon as possible and so had requested that Central Government get on with it, as just talking about the proposed reform created uncertainty and considerable concern and fear in Tauranga’s communities. It was noted that the proposal stated that ownership of the assets would be retained by the ratepayers through their local authority.

The Commission Chair Anne Tolley thanked Ms Moore and Mr Steele for their presentations.

4 Acceptance of late items

Nil

5 Confidential business to be transferred into the open

Nil

6 Change to order of business

Nil

7 Confirmation of Minutes

7.1 Open and Public Excluded minutes of the Strategy, Finance and Risk Committee meeting held on 16 August 2021

Committee Resolution SFR5/21/2

Moved: Commissioner Bill Wasley

Seconded: Ms Rohario Murray

That the Strategy, Finance and Risk Committee:

(a) Confirms the open minutes of the Strategy, Finance and Risk Committee meeting held on 16 August 2021 as a true and correct record.

(b) Confirms the public excluded minutes of the Strategy, Finance and Risk Committee meeting held on 16 August 2021 as a true and correct record.

Carried

8 Declaration of conflicts of interest

The following conflicts of interest were noted:

· Ms Matire Duncan, in relation to item 9.5 as she was a member of the TCC project team for the Three Waters reform that had been established internally.

· Ms Rohario Murray, in relation to item 9.7 and anything connected to Resource Management Act 1991 (RMA) reforms, as she was an employee of the Ministry for the Environment.

9 Business

9.1 Mainstreets' Monitoring Report for the period to 30 June 2021

Staff Michael Vujnovich, Manager: Project Tauranga

Anne Blakeway, Manager: Community Partnerships

External Sally Cooke and Brian Berry, Mainstreet Downtown

Claudia West and Malika Ganley, Mount Business Association

Sally Benning and Sue Blomquist, Greerton Mainstreet

Mainstreet Downtown, Mount Business Association and Greerton Mainstreet were invited to make presentations to the Commission.

Mainstreet Downtown

· Key points

- Mr Berry and Ms Cooke provided an update on what had happened since the end of the report period.

- The economy was in a stronger position than expected prior to the recent COVID outbreak.

- In the recent lockdown, Mainstreet Downtown had provided an amplified support role with wrap around support to businesses; as much as was needed.

- It was important that the COVID situation did not overshadow the critical challenges and issues the City Centre was experiencing, which had not gone away.

- The co-operation with Greerton Mainstreet regarding “Buy Local” was still in place.

- During COVID level four and three restrictions, Mainstreet Downtown deployed digital communication profiling with over 60 individual members. This was important as Mainstreet Downtown had 10,000 visitors to their website monthly, over 7,000 customers on their email databases and an audience of around 9,000 on their Facebook page. Feedback from the businesses had been positive.

- Mainstreet Downtown had welcomed the recent opportunity to meet with Mr Max Pedersen as part of the TCC review of the Mainstreets. They were looking forward to receiving feedback and the recommendations and awaited the opportunity to provide feedback on those recommendations.

· In response to questions

- There was a lack of cohesion with TCC at a strategic level. A lot more could be achieved by working together. Mainstreet Downtown would like to see better communication, rather than being kept at arm’s length, and a better understanding about what each party was doing.

- Priority One’s focus was on economic development which was not necessarily Mainstreet Downtown’s role; however, Mainstreet Downtown did meet regularly with Priority One and believed they were on the same page and heading in the same direction.

- Papamoa Mainstreet had a different make-up and model that it worked under. There was an appetite for a more collaborative strategic approach across the Mainstreets, but care was needed regarding a one size fits all model as the different areas had different challenges.

Mount Business Association

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

· Key Points

- Key achievements for the reporting period included key events i.e. Sunday cinema and Tunes at Noon, held at Te Papa o Ngā Manu Porotakataka.

- Key initiatives included website development, taking over the i-Site pod from Tourism Bay of Plenty, strategy sessions, submitting to TCC’s LTP, and developing a new branding identity.

- Key activities included assessing member communications needs and an overhaul of the member database.

- Key issues and challenges included bringing financial auditing up to date, working through a restructure, and member engagement.

- Future activities included the AGM which had been delayed due to COVID and was now scheduled for next week, the roll out of the Destination Marketing Plan, and finalising financials.

· In response to questions

- Member engagement was a challenge as nothing had been done in this space in the last couple of years. With the new Board and more consistent staff, it was expected that member engagement would improve.

- The Mount Business Association had not consulted with tangata whenua over the new logo design. It was suggested that the local iwi be contacted for their advice and agreement.

- A culture fest was planned for the coming school holidays which would include a skate pump track.

Greerton Mainstreet

· Key Points

- Greerton was a community village, not dominated by chain stores. It was in close proximity to a primary and secondary school, and was within mobility scooter distance for the older population living in the area.

- Greerton needed a traffic counter installed, more security cameras, and no more businesses selling alcohol.

- Greerton’s most successful yarn bombing event to date had just completed.

- Greerton had bounced back well since coming out of lockdown. There were few free car parks and car parks had a good turnover rate.

- It was disappointing that the annual Cherry Blossom event was not likely to happen due to COVID restrictions.

- Greerton Mainstreet had no contact from Priority One, other than they received the Priority One newsletter.

- Greerton Mainstreet would welcome strategic planning and a dedicated TCC person to raise issues and concerns with.

· In response to questions

- Greerton currently had two empty shops, plus the NZ Post Office building which had been empty for a number of years. Businesses that moved on were pretty quickly replaced.

- There were no regular meetings with the other Mainstreets, but they did talk and communicate with each other.

In response to questions

· The strategic gap that existed between TCC and the Mainstreet organisations had been highlighted in the report.

· The Mount Business Association’s financial accounts not having been audited for some time had previously been raised in Council, but there had been no consequences.

· Having a single point of contact within TCC for the Mainstreet organisations would be helpful.

· The draft review report had been received from Mr Pedersen two weeks ago. Staff had provided feedback to Mr Pedersen a week ago and a meeting to review this would take place later this week. A final review report would then be circulated to the Commission for review and feedback before being presented to Council at the 4 October meeting.

· Commissioners supported the final review report also going out to the Mainstreets for comment and feedback. If the report went out to the Mainstreets for feedback, the final report would not be ready for the 4 October meeting, but would be presented to Council at the following meeting.

Committee Resolution SFR5/21/3

Moved: Commissioner Bill Wasley

Seconded: Commissioner Stephen Selwood

That the Strategy, Finance and Risk Committee:

(a) Receives the Mainstreets’ Monitoring Report for the period to 30 June 2021.

(b) Receives the Mount Mainstreet Report to 30 June 2021.

(d) Receives the Greerton Village Mainstreet Report to 30 June 2021.

(e) Receives the Papamoa Unlimited Report to 30 June 2021.

(f) Circulates the Pedersen Mainstreet Review Report to the Mainstreet organisations prior to consideration by Council.

Carried

Attachment

1 Presentation - Mount Business Association

9.2 Audit New Zealand - report to the Commissioners on the audit of the 2021-31 Long-term Plan

Staff Paul Davidson, General Manager: Corporate Services

Kathryn Sharplin, Manager: Finance

Josh Logan, Team Leader: Corporate Planning

In response to questions

· The peer review of the Infrastructure Strategy and Asset Management Plans was around the overall presentation. If time had allowed, a higher level of quality assurance of the documents would have occurred prior to them going to Audit New Zealand.

· The level of Waka Kotahi funding received had been higher than expected so the level of adjustment needed was less. A full reconciliation of the Long-Term Plan (LTP) against the Waka Kotahi updated funding would be presented to Council at the 4 October meeting.

· It was expected that there would be no further impact due to the previous COVID 19 lockdown. Current predictions were that around $1.5 million of revenue would be lost due to the current COVID lockdown, largely through events, parking, and airport related fees.

· Whether there would be any penalties due to TCC’s breach of the National Policy Statement for Urban Design (NPS-UD) was not yet known.

Committee Resolution SFR5/21/4

Moved: Commissioner Stephen Selwood

Seconded: Mr Te Pio Kawe

That the Strategy, Finance and Risk Committee receives the report from Audit New Zealand on the audit of the 2021-31 Long-term Plan.

Carried

9.3 Tauranga City Council Draft Annual Report 2020/21

Staff Paul Davidson, General Manager: Corporate Services

Kathryn Sharplin, Manager: Finance

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

In response to questions

· The first section which summarised the results met the tests of being both complete and transparent.

· The following suggestions for edits were made:

- Page 8 – It was suggested that the infographics for iwi and hapū would be better placed on page 7.

- Page 17 – Working with tangata whenua – include reference to Te Rangapū Mana Whenua o Tauranga Moana.

- Page 23 – it needed to be made clear that the proposed timeframe for the Three Waters Reform was the Government’s timeframe and could change e.g. if the Government were to decide that the reform was to be made mandatory.

- Page 28 - regarding property prices, reference to where the median amount was obtained from and a date be added.

- Page 30 – the table be re-titled to read “Dwelling Consents Issued” to avoid confusion.

- Ensure the correct spelling for names is used e.g. Puhirake Ihaka (page 69).

- A mana whenua lens be added throughout the document.

- Include statistics of Māori in Tauranga.

- In the Financial Overview, provide a fuller, easy to understand explanation around depreciation and how it worked in terms of how TCC would manage renewals and fund the capital programme going forward.

· The following clarifications were made:

- Page 37 – it was clarified that the rates to be collected for the weathertight claims was to increase the balance of the $0.4 million Risk Management Fund.

- Page 39 – Council Controlled Organisations – TCC’s financial accounts were only consolidated when there was over 50% interest in the share of investment.

Committee Resolution SFR5/21/5

Moved: Commissioner Bill Wasley

Seconded: Commissioner Stephen Selwood

That the Strategy, Finance and Risk Committee:

(a) Receives the Report - Tauranga City Council Draft unaudited Annual Report 2020/21

(i) Agrees the proposed presentation of the annual report, with the comments and suggested amendments made at the meeting, including the year in review.

(ii) Agrees that the final surplus due to interest should be transferred to an interest rate reserve to assist to manage variability in interest rates over the next few years.

Carried

Attachment

1 Presentation - 2021-22 Draft Annual Report

Item 9.5 was taken next.

9.5 Three Waters Reform Progress Update

Staff Nic Johansson, General Manager: Infrastructure

Steve Burton, Director of City Waters

Kathryn Sharplin, Manager: Finance

The Commission Chair reiterated her comments made in the Public Forum Section of this meeting around the Three Waters reform.

Staff Comment - Nic Johansson, General Manager: Infrastructure

It should be noted that the Three Waters reform was not the only reform currently happening. Reforms of Local Government and the Resource Management Act 1991 (RMA) were also underway. Unfortunately, the Three Waters reform was not well understood, not just in Tauranga but right across the 67 councils in the country, and strong feedback had been received. This feedback would be presented to Government at the end of February. Future challenges had also not been well articulated in terms of capacity, capability and funding, and new regulations would make it even harder to provide the service. There was also the challenge of growth for Tauranga. Water services were already running at full capacity and water restrictions would need to be in place throughout the coming summer. Whilst this would be mitigated when the Waiāri Water Treatment plant became operational, the wastewater service would continue to run at the absolute maximum, and it would be difficult to stay ahead of the curve in terms of what was needed for this.

In response to questions

· 200 pieces of feedback had been received on the website so far. A full report on the feedback received would be presented to the 4 October Council meeting.

· It was clarified that the Commission had made a response to the proposed Entity B, not DIA (page 100 of the agenda).

· Analysis showed that there were quite significant benefits to TCC in terms of the debt opportunity facilitated by the reform process that would enable TCC to borrow more money for future services and capital investment going forward. To have a clear understanding of the costs and benefits and impact/risks on the ratepayer, both sides of the ledger needed to be clearly explained, in particular the long term implications of wastewater being at capacity, climate change, future stormwater management, rising environmental standards and rising health standards.

Discussion points raised

· It was noted that the previous elected council had resolved last year to become involved and work with others in the Bay of Plenty and Waikato, so collaboration work had already been underway for over a year in this space.

· Mr Stuart Crosby, President of Local Government New Zealand (LGNZ), had clearly articulated the concerns LGNZ had over the three water reforms, including the media campaign currently undertaken by the Government.

· It was unfortunate that the scheduled pop-up engagement sessions with the commissioners had not happened due to the latest COVID restrictions.

Committee Resolution SFR5/21/6

Moved: Commissioner Bill Wasley

Seconded: Commissioner Stephen Selwood

That the Strategy, Finance and Risk Committee:

(a) Receives the report Three Waters Reform Programme Update; and

(b) Recommends to Council that it continue to support Tauranga City Council’s involvement in collaborative workstreams with other local authorities in the Water Entity B area, as proposed by the Department of Internal Affairs.

(c) Notes a full report will be presented to Council on information related to three waters reform along with initial Rangapū and community feedback on 4 October.

(d) Notes a project team is being established internally to undertake ongoing work related to the three waters reform.

Carried

At 12.40pm, the meeting adjourned.

At 1.22pm, the meeting resumed.

9.4 Internal Audit - Procurement Health Check

Staff Paul Davidson, General Manager: Corporate Services

Jon Hobbs, Internal Auditor

In response to questions

· The Digital Services work programme would continually update and prioritise the digital prioritisation and change management component of TCC’s procurement practices.

· Checks were carried out as part of the procurement process for a project ranging from conflict of interest forms through to background checks on suppliers’ due diligence on any subcontractors they used.

Committee Resolution SFR5/21/7

Moved: Commissioner Stephen Selwood

Seconded: Commissioner Bill Wasley

That the Strategy, Finance and Risk Committee receives the Procurement Health Check report.

Carried

9.6 Updated outline work programme for the Committee

Staff Christine Jones, General Manager: Strategy and Growth

Jeremy Boase, Manager: Strategy & Corporate Planning

One alteration was noted on page 119 of the agenda – the Criteria for City Centre Development Incentive Fund would now be presented at the 4 October Council meeting.

In response to questions

· It was suggested that if Committee members had an interest in any particular issues in the work programme, that they let staff know and the relevant information would be provided to them.

· The rates remission and postponement policies review draft would be ready for consideration and adoption through the Annual Plan process.

· A quarterly update on the work programme would be provided to the Committee.

· A review of community centres/halls would flow into the next LTP.

· The strategic priorities for affordable housing and transportation were currently reported quarterly to this Committee through the Growth and Land Use Projects Progress Report and the Transport Strategy and Planning Progress Report. Both reports were on the agenda for this meeting. To ensure a strong focus remained on these strategic priorities, it was suggested that these be reported more frequently than quarterly.

Committee Resolution SFR5/21/8

Moved: Dr Wayne Beilby

Seconded: Ms Rohario Murray

That the Strategy, Finance and Risk Committee approves the outline work programme for the Committee per Attachment 1.

Carried

9.7 Growth & Land Use Projects Progress Report - September 2021

Staff Christine Jones, General Manager: Strategy and Growth

Andy Mead, Manager: City & Infrastructure Planning

In response to questions

· The Priority Development Area Report presented to the SmartGrowth Committee last week would be circulated to Committee members. These reports would be presented at Strategy, Finance and Risk Committee meetings going forward.

· The Infrastructure Funding and Financing paper would also be circulated to the Committee on a confidential basis.

· Priority and focus needed to turn more to affordable housing in Tauranga’s development areas. Currently, all the proposed housing in these areas would be at market value, and the affordability gap in Tauranga would become even more significant. More land would need to be made available that would accommodate affordable housing. SmartGrowth work to assess the future growth opportunities in the urban areas in the east, western corridor and Te Puna, identified through the Urban Form and Transport Initiative (UFTI), was being brought forward and the Housing Action Plan adopted by SmartGrowth recently also included some specific actions to address the affordability issue. The Government would be looking to see what TCC was doing in terms of the breach of the National Policy Statement for Urban Development (NPS-UD). Future Growth & Land Use Projects Progress Reports would include housing affordability as a key focus.

· The letter from Commissioners to central government regarding TCC’s breach of the NPS-UD would be circulated to Committee members.

· If the freshwater, transport and access issues for Te Tumu and Tauriko West were not resolved, around 13,000 houses would be removed from the equation; approaching 50% of the future development capacity.

· There were also significant affordability issues for Māori land trusts in terms of papakainga. There were two funds coming up for Māori housing – one for $380 million for construction and one for $350 million for Māori housing. Through the priority development area, TCC had been advocating strongly for funding to be made available to assist Māori trusts to get expert advice to help them prepare applications to access this funding.

· The SmartGrowth Housing Action Plan Group was currently being established. The purpose of this group and what they would be doing would be reported back to the next meeting.

· It was suggested that the wording of paragraph 10 of the report be changed from “may be prudent” to “would be prudent”.

· It was requested that care was used in the use of language in the report e.g. for paragraph 9(b) of the report, it could be perceived that the delays were because of Māori. It was suggested that the word “complications” could be replaced with “matters”. More sensitivity was required for the language used in relation to Māori and Māori land.

Committee Resolution SFR5/21/9

Moved: Commissioner Stephen Selwood

Seconded: Commissioner Bill Wasley

That the Strategy, Finance and Risk Committee:

(a) Receives the Growth and Land Use Projects Progress Report – September 2021.

(b) Notes the work programme for SmartGrowth is going to include an assessment of future additional development options and affordable housing options.

Carried

9.8 Transport Strategy and Planning Progress Report - September 2021

Staff Christine Jones, General Manager: Strategy and Growth

Andy Mead, Manager: City & Infrastructure Planning

Alistair Talbot, Team Leader: Transport Strategy & Planning

In response to questions

· Funding through the National Land Transport Programme for the Totara Street cycleway had been approved this week for this financial year.

· TCC had met with Māori trust board members last week regarding what was happening with the Wairakei town centre and the Te Tumu Interchange. TCC was also supporting the trust board in terms of communication, so that they had a skilled person who spoke te reo and had a good understanding of cultural issues to assist them to communicate and connect with beneficiaries.

· It was still anticipated that the “spade in the ground” for the Tauranga Northern Link (TNL) would happen by the end of 2021. The tolling aspect was running in conjunction with the project and would not hold the project up.

· The bus service operating model was not expected to be available before the end of next year. The work currently being undertaken in Cameron Road could change the focus of where a city centre bus facility should be. TCC was working with the Bay of Plenty Regional Council to make sure the scope covered this. If the size and scale of the facility changed from what was originally anticipated, it would be easier to find appropriate locations.

· Four priorities had been identified for the Hewletts Road area – freight, public transport, general traffic, and the active modes of cycling and walking. The option mix would need to be developed to find the right solution across priorities for all four modes. The focus would not just be on public transport and inter-regional freight.

· The business case for the Hull/Hewletts/Totara area would provide a problem definition at the corridor/intersection level.

· Reasonable information was already available on commercial vs freight vs private for the Hull/Hewletts/Totara area, but more would need to be obtained. Rail could provide some elements for the solutions for the area so would remain a key part of it.

Committee Resolution SFR5/21/10

Moved: Commissioner Stephen Selwood

Seconded: Commissioner Bill Wasley

That the Strategy, Finance and Risk Committee receives the Transport Strategy and Planning Progress Report – September 2021.

Carried

10 Discussion of late items

Nil

11 Closing Karakia

Ms Rohario Murray closed the meeting with a karakia.

The meeting closed at 2.45pm.

The minutes of this meeting were confirmed as a true and correct record at the Strategy, Finance and Risk Committee Meeting held on 1 November 2021.

.......................................................

CHAIRPERSON

Strategy, Finance and Risk Committee Meeting Agenda

1 November 2021

9 Business

9.1 Local Alcohol Policy

File Number: A12927417

Author: Ariell King, Team Leader: Policy

Rebecca Gallagher, Policy Analyst

Jeremy Boase, Manager: Strategy and Corporate Planning

Jane Barnett, Policy Analyst

Authoriser: Barbara Dempsey, General Manager: Regulatory & Compliance

Purpose of the Report

1. To consider the background information required under section 78(2) of the Sale and Supply of Alcohol Act 2012 and adopt a draft Local Alcohol Policy and Statement of Proposal for consultation.

Recommendations

That the Strategy, Finance and Risk Committee:

(a) Receives the information required under section 78(2) of the Sale and Supply of Alcohol Act 2012 (attachment one)

(b) Agrees to retain the content of the current Local Alcohol Policy with the following changes

(i) Introduce a new section in the draft Local Alcohol Policy for club licences to provide clarity for the community and applicants (option b (1))

(ii) Propose a reduction in the opening hours in the Tauranga City Centre with a proposed closing time of 2:00am instead of 3:00am (option b (2))

(iii) Amend the one-way door restriction to commence at 1am instead of 2am to align with the proposed change in hours above.

(d) Adopts the draft Tauranga Local Alcohol Policy (attachment two) and the Statement of Proposal (attachment three) for consultation from 17 November 2021 to 20 December 2021.

(e) Authorises the Chief Executive to make any necessary minor drafting or presentation amendments to the draft Local Alcohol Policy, the Statement of Proposal and the related consultation material prior to the commencement of consultation.

Executive Summary

2. Tauranga and Western Bay of Plenty District’s Joint Local Alcohol Policy (LAP) was adopted on the 22 July 2015. It sets out decisions about the sale and supply of alcohol in Tauranga and the Western Bay.

3. The LAP is made under the Sale and Supply of Alcohol Act 2012 (the Act), with a review required every six years. This review has begun and has been undertaken in accordance with the requirements set out in the Act. This includes the required engagement with the Police, the Medical Officer of Health and the Licensing Inspectors.

4. The Committee is now able to consider the background report and draft Local Alcohol Policy and determine if any amendments are to be proposed for consultation.

5. There are three changes recommended to the existing policy. This includes creating an individual policy rather than a joint one, separating the club licence requirements from the on-licence requirements and a slight reduction in trading hours for on-licences in the Tauranga City Centre from 3:00am to 2:00am. This would also require an amendment to the times of the one-way door restrictions.

6. Regardless of which option the committee supports, consultation is required using the special consultative procedure. This consultation will take place from mid-November to mid-December 2021.

Background

7. Tauranga and Western Bay of Plenty District’s Joint Local Alcohol Policy (LAP) was adopted on the 22 July 2015. It sets out decisions about the sale and supply of alcohol in Tauranga and the Western Bay.

8. The LAP is made under the Sale and Supply of Alcohol Act 2012 (the Act). The objectives of this Act are that:

· the sale, supply, and consumption of alcohol should be undertaken safely and responsibly; and

· the harm caused by the excessive or inappropriate consumption of alcohol should be minimised.

9. The Act sets out the requirements regarding local alcohol policies. Section 75 allows territorial authorities to develop local alcohol policies if they choose to.

10. Section 97 of Act requires that the LAP be reviewed, using the special consultative procedure, six years after it came into effect.

11. Section 77 sets out the contents of policies:

1. A local alcohol policy may include policies on any or all of the following matters relating to licensing (and no others):

a. location of licensed premises by reference to broad areas

b. location of licensed premises by reference to proximity to premises of a particular kind or kinds

c. location of licensed premises by reference to proximity to facilities of a particular kind or kinds

d. whether further licences (or licences of a particular kind or kinds) should be issued for premises in the district concerned, or any stated part of the district

e. maximum trading hours

f. the issue of licences, or licences of a particular kind or kinds, subject to discretionary conditions

g. one-way door restrictions.

2. Paragraphs (a) to (d) of subsection (1) do not apply to special licences, or premises for which a special licence is held or has been applied for. A local alcohol policy must not include policies on any matter not relating to licensing.

12. District Licensing Committees must have regard to any relevant LAP (Section 105 (1) (c)).

13. Council has a role in alcohol licensing, through the LAP, administration of the District Licensing Committee (DLC), and its regulatory and enforcement roles (including the Council Alcohol Licensing Inspector).

Current Local Alcohol Policy

14. The key components of the current policy for Tauranga and Western Bay of Plenty are set out in Table one. The current policy can be found at lap_policy (tauranga.govt.nz)

Table One – Current Local Alcohol Policy

	Tauranga	Western Bay of Plenty	Common
Off-licence maximum hours	7am – 10pm	7am – 10pm	√
On-licence maximum hours – excluding Tauranga city centre	9am – 1am	9am – 1am	√
On-licence maximum hours – Tauranga city centre	9am – 3am
One-way door on-licensed premises licensed until after 2am	Only applies to Tauranga city centre as per attachment 1 of the policy
On-licence discretionary conditions			√
Special licence discretionary conditions			√

LAP Review

15. As noted above, a LAP is required to be reviewed every six years. The process for review is prescribed in subpart 2 of the Act. It includes requirements for a draft LAP, consultation, a provisional LAP and in certain situations, appeals.

16. Section 78(2) of the Act requires Council to have regard to a number of matters before preparing (and reviewing) a draft LAP:

· Objectives and policies of its district plan;

· The number of licences of each kind held for premises in its district, and the location and opening hours of each of the premises;

· Any areas in which bylaws prohibiting alcohol in public places are in force;

· The demographics of the district's residents;

· The demographics of people who visit the district as tourists or holiday makers;

· The overall health indicators of the district’s residents and;

· The nature and severity of the alcohol-related problems arising in the district;

· Other indicators may also be considered including crime, traffic accidents and hospital admissions to help understand the nature and severity of alcohol related problems.

17. In preparing a draft LAP Council has considered these matters. This information is provided in the research report (attachment one).

18. The review process requires Council to consult Police, inspectors, and the Medical Officer of Health, before producing and adopting a draft LAP for consultation. Consultation has been undertaken with these stakeholders and their feedback is attached to the research report (attachment one). A summary of the feedback is provided in table two below:

Table Two: Feedback from Stakeholders identified in the Act

Stakeholder	Summary of Feedback
Medical Officer of Health (MoH)	Support for LAP Support strengthening of LAP as follows: · Define maximum alcohol outlet density in specific areas and zones · Reduce off-licensed premises trading hours · Implement a one-way door policy in the last hour of opening for all on-licensed premises that are open after 1.00am · Proximity of alcohol outlets need to be capped at current levels within a specified footpath distance from schools and other education facilities. · Reference research linking the density and trading hours with increased alcohol consumption and related harm.
Western Bay of Plenty Police	Support retaining the LAP “A LAP is essentially to ensure the sale, supply and consumption of alcohol is undertaken in a safe and responsible manner and the harm caused by the excessive consumption of alcohol is minimised”. Propose the following · On-licensed premises in the Tauranga CBD close at 2am instead of the current 3am permitted closing time. · One-way door restriction for any licensed premise that operates past midnight that takes effect one hour prior to closing · Limiting the areas where licensed premises would be allowed. It is proposed that none are located in areas zoned as industrial and that the areas considered as ‘entertainment precincts’ are limited to areas such as the Tauranga and Mount Maunganui CBD. · A limit on the number of licensed premises in any one area and also the ability to ensure licensed premises are not in vulnerable communities. Provide evidence to support reducing the closing time of on-licensed premises in the CBD. · Data of the occurrence of victimisation for the two main mesh blocks in the Tauranga CBD area highlights the increased crime and disorder between midnight and 4am Saturday and Sunday mornings. · Testimonials also give evidence of the high level of disorder and crime during these hours.
Licensing Inspectors	Note benefits from having the LAP. Without the LAP there is likely to be an increase in hearing for applications. Unclear how practical it would be to include a proposed density or a sinking lid

19. We have also sought initial feedback with the appellants to the 2015 policy, current licence holders, all Hauora operating in the region and some local support services. The feedback received is included in the research report (attachment one).

Joint or individual policy

20. Council currently has a joint policy with Western Bay of Plenty District Council (WBOPDC). WBOPDC have confirmed at their Policy Committee meeting on 19 October 2021 that they wish to have an individual policy. As such Council will also be pursuing an individual policy.

Options Analysis

21. The Council has three options available in regard to the review of the LAP:

a) Retain the current policy as is (as an individual policy)

b) Amend the policy

c) Revoke the current policy

22. All options require consultation using the special consultative procedure.

Option a – Retain the current policy as is (as an individual policy)

23. This option retains the current policy with the only change being the separation of the policy from WBOPDC. The advantages and disadvantages of this option are outlined below.

Advantages	Disadvantages
· The DLC are still able to issue licences in accordance with the LAP conditions/requirements · Likely to be supported by those who appealed the last draft policy as there is no change and the current policy has been generally supported by these parties. This is likely to result in a less expensive process with less likelihood of a costly and lengthy legal challenge.	· No additional changes proposed that could potentially address alcohol harm · Does not reflect the changes that the Police, Medical Officer of Health and inspectors have proposed. Unlikely to be supported by other community groups that are involved in this area. Initial feedback suggests that they would prefer stronger and additional measures to be included in the draft LAP.

Advantages

Disadvantages

· The DLC are still able to issue licences in accordance with the LAP conditions/requirements

· Likely to be supported by those who appealed the last draft policy as there is no change and the current policy has been generally supported by these parties. This is likely to result in a less expensive process with less likelihood of a costly and lengthy legal challenge.

· No additional changes proposed that could potentially address alcohol harm

· Does not reflect the changes that the Police, Medical Officer of Health and inspectors have proposed. Unlikely to be supported by other community groups that are involved in this area. Initial feedback suggests that they would prefer stronger and additional measures to be included in the draft LAP.

Option b – Amend the policy taking into consideration initial feedback from stakeholders - recommended

24. This option would see the existing policy amended taking into consideration the initial feedback from stakeholders. This option would also see a separation from WBOPDC.

25. The proposed amendments with corresponding advantages and disadvantages of each are set out below. Where an amendment is recommended by staff they are also included as red text in the draft LAP (attachment two):

Option b (1) - recommended

26. Separate section in the draft LAP for Clubs rather than being included in the off-licence section.

Advantages

Disadvantages

· Provides clarity for the different types of licence holders

· Does not introduce new provisions, is simply an administrative change to the policy.

· Nil

Option b (2) – recommended

27. Reduce the opening hours in the Tauranga City Centre (as defined in Schedule 1 of the draft LAP) with a proposed closing time of 2:00am instead of 3:00am. This will also have the consequential effect of reducing the one-way door timeframes by one hour (as illustrated in the draft policy).

Advantages

Disadvantages

· Reflects changes that are supported by the Police and Medical Officer of Health

· May assist in reducing alcohol harm in the community

· Likely to be supported by other community groups that are involved in this area. Initial feedback suggests that they would prefer stronger and additional measures to be included in the draft LAP

· Likely to result in fewer patrons from other areas of the region travelling to the Tauranga City Centre following a closing time of 1:00pm in other locations e.g. The Mount.

· May not be supported by current licence holders in the Tauranga City Centre. This may result in an expensive process with a high likelihood of a costly and lengthy legal challenge.

Option b (3) – not recommended

28. Reduce maximum trading hours for off-licences.

Advantages

Disadvantages

· Reflects changes that are supported by the Medical Officer of Health

· Likely to be supported by other community groups that are involved in this.

· Unlikely to be supported by current licence holders. This may result in an expensive process with a high likelihood of a costly and lengthy legal challenge.

· May be difficult to provide evidence in any potential appeal process that a reduction in the maximum trading hours would directly result in a reduction in alcohol harm.

Option b (4) – not recommended

29. Create a density cap for the number of licenses in any particular area.

Advantages	Disadvantages
· Reflects changes that are supported by the Police and Medical Officer of Health · May assist in reducing alcohol harm in the community · Likely to be supported by other community groups that are involved in this area. Initial feedback suggests that they would prefer stronger and additional measures to be included in the draft LAP.	· May not be supported by those who appealed the last draft policy and current licence holders. This may result in an expensive process with a high likelihood of a costly and lengthy legal challenge · Insufficient evidence and analysis currently available to determine where a density could or should apply and what would be considered an effective density. It is also unclear that density in itself is the issue regarding alcohol.

Advantages

Disadvantages

· Reflects changes that are supported by the Police and Medical Officer of Health

· May assist in reducing alcohol harm in the community

· Likely to be supported by other community groups that are involved in this area. Initial feedback suggests that they would prefer stronger and additional measures to be included in the draft LAP.

· May not be supported by those who appealed the last draft policy and current licence holders. This may result in an expensive process with a high likelihood of a costly and lengthy legal challenge

· Insufficient evidence and analysis currently available to determine where a density could or should apply and what would be considered an effective density. It is also unclear that density in itself is the issue regarding alcohol.

Option b (5) – not recommended

30. Create specific distance requirements whereby an on or off-licence could be located in regard to a particular activity e.g. school, place of worship etc.

Advantages

Disadvantages

· Reflects changes that are supported by the Police and Medical Officer of Health

· May assist in reducing alcohol harm in the community

· Likely to be supported by other community groups that are involved in this area. Initial feedback suggests that they would prefer stronger and additional measures to be included in the draft LAP.

· May not be supported by those who appealed the last draft policy and current licence holders. This is likely to result in an expensive process with a high likelihood of a costly and lengthy legal challenge

· Insufficient evidence and analysis currently available to determine the specific distances and particular activities where the distance would be applied.

31. If the Committee wished to consider including amendments that were in response to option b (3), (4) or (5) additional research and analysis would be required. As such it would be advisable not to adopt a draft policy at this meeting but rather request staff to bring this information back to the Committee at a later date for consideration and adoption of a draft policy at that point in time.

Option c – Revoke the current policy – not recommended

32. This option would see the current policy revoked and not replaced with a new policy. The DLC would make all decisions regarding a new licence through the application process. The advantages and disadvantages of this option are outlined below.

Advantages

Disadvantages

· Nil

· Removes previously agreed positions with the community regarding matters such as trading hours, one-way doors etc

· Potential for appeals from key stakeholders

· Will not demonstrate how Council could assist in meeting the objectives of the Act

· Will not be supported by other stakeholders that have provided initial feedback.

Financial Considerations

33. Financial considerations regarding the decision to adopt a draft policy for consultation are constrained to the costs associated with the engagement and consultation.

34. Dependant on what is included in the draft LAP there could be future costs associated with potential appeals.

Legal Implications / Risks

35. The legal implications and risks are dependent on the option that is supported by the Committee.

36. Option (a) decreases the risk of an appeal by current or potential future licence holders whereas this risk increases if the Committee supports the recommended options or considers amendments aligning with option b (3), (4) or (5). There is also a potential risk of adverse implications for Council’s relationship with the Police, Medical Officer of Health and other stakeholders if Option a is supported by the Committee.

Significance

37. 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.

38. 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.

39. In accordance with the considerations above, criteria and thresholds in the policy, it is considered that the decision to adopt a draft policy for consultation is of high significance.

Engagement

40. The Sale and Supply of Alcohol Act 2012 requires that the special consultative procedure is undertaken regardless of which option is supported by the Committee. Accordingly, a Statement of Proposal (SOP) has been prepared (attachment three). The SOP has been prepared based on the recommendations contained in the report and will form the basis of the consultation with the community.

Next Steps

41. Consultation on the draft LAP will take place between Wednesday 17 November 2021 and Monday 20 December 2021.

Attachments

1. Background Report (A12796258) PDF - A13010177 ⇩

2. Draft Local Alcohol Policy (A12983519) (PDF) - A12998245 ⇩

3. Statement of Proposal - A12995710 ⇩

Strategy, Finance and Risk Committee Meeting Agenda

1 November 2021

9.2 Update on the City Vision Project

File Number: A12993601

Author: Sarah Stewart, Strategic Advisor

Lindsay Price, Strategic Community Relations Advisor

Authoriser: Christine Jones, General Manager: Strategy & Growth

Purpose of the Report

1. This report provides an update on progress for the City Vision Project.

Recommendations

That the Strategy, Finance and Risk Committee:

(a) Receives the ‘Update on the City Vision Project’ report.

Background

2. During late 2019 and early 2020, Tauranga City Council gathered a range of inputs as the first phase of developing and delivering a shared future vision and multi-partner action plan for Tauranga City. This work highlighted that many city leaders had a strong appetite for a vision that would propel our city forward. As such, Council’s Policy Committee approved the City Futures Project concept on 16 June 2020[1].

3. More recently, a range of factors contributed to rethinking the City Futures Project, including the need to respond to the challenges brought by the 2020 COVID-19 pandemic, various local government reform initiatives underway and changes to Council’s political leadership.

4. As a result, it was proposed that the envisaged multi-partner City Futures Project be superseded by the Strategic Framework Refresh Project, which includes a vision for Tauranga City. It was acknowledged that all City Futures Project inputs to date would continue to be valuable to the City Vision and the wider Strategic Framework Refresh Project.

5. The Strategy, Finance and Risk Committee approved the Strategic Framework Refresh Project concept (including the City Vision) on 28 June 2021, resolving that the Committee:

· Supports a focussed Council-led approach to the development of a city vision, drawing on information received through prior engagement processes and seeking further community input through a further defined engagement process.

· Approves a strategic framework refresh for Tauranga City Council, building on existing strategies, plans and information received through prior engagement processes, and identifying and filling key gaps in the existing strategic framework.

6. The City Vision project is one of ten workstreams of the Strategic Framework Refresh Project.

7. On 30 August 2021, Council approved the concept design and proposed method for the City Vision Project. At this meeting consideration was given to the uncertainty of the Covid-19 situation, including the impact of Level 3 and Level 4 lockdown restrictions impacting on the safety and ability for people to gather. At this meeting it was agreed that the City Vision project was to progress primarily using on-line methods with the aim to deliver the majority of outputs by December 2021, with the City Vision being finalised in the new year.

City Vision

8. The purpose of the City Vision Project is to create a shared vision with the community that will be used to guide Tauranga City Council’s actions that contribute to achieving the vision through to 2050.

9. For Council, the City Vision will establish an enduring pathway forward and will guide Council’s work with our community to achieve a positive future. It will inform all that Council does to ensure we are working together to achieve the same goals. Council’s contribution to City Vision 2050 will be achieved through the delivery of key projects and initiatives.

10. Key outcomes of this project are that Tauranga City has a vision agreed and owned by the Tauranga community, that people in the city know what the city stands for, and that the City Vision resonates for people that live, work, play and learn here.

11. The City Vision aims to be:

· A statement of what we (as a city) desire the future to be.

· Bold and aspirational, with clarity and passion.

12. Through the City Vision project, an opportunity exists to:

· Acknowledge our past and the challenges of our present.

· Lay a foundation of shared identity to reset community relationships.

· Unite our communities and inspire meaningful change.

update on progress

13. Since the 30 August Council meeting, progress on the City Vision project has included:

· Analysis and synthesis of previous work such as the Vital Updates, Strategic Conversations and WSP Future Ready workshops as well as analysis of community feedback on the many Council projects that have involved an element of consultation or engagement.

· Appointment of Stanley Street to help develop the City Vision, including the creation and implementation of a City Vision campaign – Stanley Street is a fully integrated creative agency offering creative strategy, media and design services. Stanley Street have the capability and capacity to deliver within the tight timeframes.

· Development of a primarily online campaign that will launch early November (including the creation of a website, video and social media). This campaign will enable people to tell us what they value today and gain a sense of understanding around what is going to be important to them in the future. The campaign is designed to be fresh and youthful as a way of encouraging rangatahi and those who do not usually engage with Council to become involved.

· Communicating with our key city partners about the campaign and requesting their support to help make the campaign a success by distribution through their networks.

Financial Considerations

14. Financial costs are estimated at approximately $245K. This includes creative strategy and design, website creation and maintenance, and video production. Budget is available within the approved 2021/22 budget.

Legal Implications / Risks

15. This report has no legal implications.

16. The key risk to this project is the significantly tight timeframe. It should be noted that majority of work needs to be complete to feed into the wider Strategy Framework Refresh Project with initial workshops commencing in December 2021.

Significance

17. 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.

18. 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 City Vision Project

19. In accordance with the considerations above, criteria and thresholds in the policy, it is considered that the matter of a City Vision is of high significance, however the decision proposed in this report is of low significance.

ENGAGEMENT

20. Taking into consideration the above assessment, that the matter of a City Vision is of high significance, officers are of the opinion that the nature of this project requires further community involvement as outlined in this report.

Next Steps

21. Next steps to progress the City Vision include the following:

· Preparations continue to finalise on-line tools and media for the City Vision launch on 8 November;

· On-line campaign runs from 8 November to 29 November 2021;

· Workshops held early December with Te Rangapū, Kaumatua Forum and rangatahi on the key interim findings of the project with the purpose of shaping the draft city vision;

· Update to the Committee on 13 December with key interim findings from the project and feedback from engagement with rangatahi, Te Rangapū and Kaumatua Forum;

· Report to Council for City Vision adoption – 8 February.

Attachments

Nil

Strategy, Finance and Risk Committee Meeting Agenda

1 November 2021

9.3 Strategic Framework Refresh Project Update

File Number: A12991041

Author: Anne Payne, Strategic Advisor

Jeremy Boase, Manager: Strategy and Corporate Planning

Authoriser: Christine Jones, General Manager: Strategy & Growth

Purpose of the Report

1. The purpose of this report is to summarise the planned approach to, and output from, the Strategic Framework Refresh Project which is scheduled for delivery by July 2022.
Note: This report focuses on Tauranga City Council’s strategic framework structure and content. Updates on the City Vision project and on sustainability initiatives underway are provided via two separate but related reports to this Committee meeting.

Recommendations

That the Strategy, Finance and Risk Committee:

· Receives the Strategic Framework Refresh Project Update report; and

· Notes that the Strategic Framework Refresh Project aims to be delivered by July 2022.

Background

2. A paper entitled ‘Strategic Framework for Tauranga City Council’ was presented to the Committee on 28 June 2021^{^[2]}. This paper outlined the work undertaken on a multi-partner City Futures Project over the previous 12 months, factors that contributed to rethinking of that project, and proposed a more tailored approach that could be taken to address identified gaps.

3. In response to the 28 June 2021 paper, the Committee approved the Strategic Framework Refresh Project concept, which comprises:

· working with the community to develop a City Vision for Tauranga, and

· refreshing Tauranga City Council’s strategic framework to ensure Council’s strategic direction contributes to that City Vision and is clearly articulated and understood.

4. The Committee also approved the project’s intention to draw on information received through prior engagement processes as far as possible, and acknowledged that the City Futures Project input to date would continue to be valuable to the City Vision and the wider Strategic Framework Refresh Project.

5. Since then, planning work has been underway. This report focuses on Tauranga City Council’s strategic framework refresh aspects of the overall project, as the City Vision planning work is well underway and is reported separately to this meeting.

6. This report builds on a project update report to Council on 13 September 2021^{^[3]}.

Tauranga city council’s strategic framework refresh

7. The purpose of the strategic framework refresh project is to ensure that Tauranga City Council has a current, cohesive and understandable strategic framework that provides a clear line of sight from Council activity to the City’s Vision (currently also under development as part of this project).

8. The need for this refresh has become more pressing due to a range of external factors (such as climate change and more general environmental concerns, Covid-19 impacts and changes to government policy – including 3-Waters, Resource Management Act and local government reforms) and internal factors (staff change over time – losing our ‘institutional memory’, age of some existing strategies and plans, governance change).

9. The combined impact of these factors is that our overall strategic direction is not easily seen or understood by our external partners and community, or by many within our own organisation. We have many strategies and plans, but it is difficult to see how they fit together, what takes priority and what our overall objectives and goals are.

10. A strategic framework is an externally-facing, visual outline of an organisation’s overarching strategic direction. A strong strategic framework should be creative but clear, relevant, future-focussed and aspirational. Notably, it should align with an organisation’s goals and objectives, not just with existing initiatives.

11. For Tauranga City Council, the key outcomes from this project to refresh our strategic framework are that:

· Our community and partners will be easily able to see how the organisation is contributing to the community outcomes and to achieving Tauranga City’s Vision.

· Our governance and staff will have a shared understanding of what the organisation is trying to achieve and how we aim to get there.

· Our people will know how they fit into the bigger picture of what the organisation is working toward.

· We will be guided by a set of current, relevant and succinct strategic documents, which ‘weave together’ where this makes sense.

· We will have a clear focus for evaluating existing programmes, and those considered in the future, to ensure all efforts support our overarching purpose.

Strategic framework concept

12. At its simplest, our refreshed strategic framework is depicted as a flax weave which shows our community outcomes connecting up to Tauranga City’s Vision and our three strategic approaches ‘weaving through’ everything we do. To deliver on our strategic direction we are guided by our six underpinning principles – which are represented as the foundation stone for the strategic framework.^{^[4]}

13. The content of the strategic framework, our strategies and plans, then articulate how Council will contribute to achieving our community outcomes and, ultimately, Tauranga City’s Vision. This is further described in the next section.

14. Our strategic framework structure and content will better enable us to appropriately balance our strategic direction and priorities across the social, environmental, economic and cultural aspects of community wellbeing – as represented by our community outcomes and strategic approaches.

15. An initial mock-up of our strategic framework concept is shown in the diagram below:

Strategic framework content

Summarising our strategic direction

16. We are creating a summary of Tauranga City Council’s strategic direction for each of the eight ‘strands’ of our strategic framework, i.e. for each community outcome and strategic approach. These new summary documents, provisionally titled ‘At A Glance’, are critical additions that will help focus the organisation on our overarching goals and also provide succinct information for our partners and our community.

17. For the community outcome or strategic approach it relates to, each At A Glance summary will outline:

· Why this is important for our city, and what success will look (and feel) like for our community.

· Clear overarching direction for Tauranga City Council, including Council’s role.

· Priority actions and opportunities for Tauranga City Council, including any ‘step changes’ needed to leverage or optimise progress.

· Gaps that need filling in terms of current Tauranga City Council strategy, and how these are to be addressed.

· Constraints and challenges and how Tauranga City Council plans to manage these.

· How the strategic direction is being, or is to be, delivered – clear links through to key contributing activities and what the targets and measures are for success.

18. The At A Glance summaries are Tauranga City Council-focused, but our intention is to work with key partners and stakeholders to develop these during the course of this project.

Our strategies and plans

19. Tauranga City Council currently has a wide range of strategies and plans, some of which are recent and highly relevant, while others are older and potentially of less relevance than when they were adopted.

20. As part of this project, we will confirm which of our strategies and plans should be wholly or partly retained, and where those most appropriately belong within our refreshed strategic framework. Most of our strategies and plans contribute to more than one community outcome, this will be recognised within our strategic framework.

21. Our aim is that, once our At A Glance summaries of strategic direction are in place, our underpinning strategies and plans should be more action-focused. Note that this project focuses on Tauranga City council strategies and plans, joint strategies and plans will be reviewed with partners as agreed.

22. As part of this project we will also develop new strategies and plans where critical gaps have already been identified (e.g. sustainability, Te Ao Māori, natural environment, and social wellbeing) or are confirmed during our At A Glance development processes. Our sustainability framework project and sustainability initiatives, reported separately to this Committee today, are closely linked with this project.

23. Tauranga City Council is attempting to respond appropriately and with a long-term view to the many opportunities and challenges arising from our rapidly changing external environment (such as central government policy, climate change and Covid-19). This means that at any given time there is a wide range of strategic direction work underway and planned across the organisation. One of the key challenges of this project is to ensure we incorporate all of this effort, both current and planned, so that our refreshed strategic framework is comprehensive and remains so over time

Project outputs

24. Our refreshed strategic framework is envisaged as primarily a web-based tool that users (both our community and within our organisation) can click into to move through the layers of the framework, accessing more detail at each level. This web-based structure will give us more flexibility to show that our strategies and plans normally contribute to more than one community outcome. It is more difficult to show this relationship in a written format.

25. A range of printable documents will also be available from the web-based strategic framework tool. A mock-up of one of these, a ‘Framework on a Page’ view (not yet populated) is provided as Attachment 1 to this report. Much of the content of this type of report will be developed or confirmed over the course of this project.

Project approach

26. A summary of key activities and indicative timeframes for this project are set out in Table 1. Please note that these may be subject to change as the project rolls out.

Table 1: A summary of key activities, tasks and indicative timeframes for the Strategic Framework Refresh Project (excluding the City Vision component)

Ref	Activity	Tasks	Indicative Timing
1	Getting started	Overall project concept, structure and approach developed. First-draft At A Glance summaries started for each ‘strand’ of the framework weave.	July – August 2021 (completed)
2	Getting started (continued)	Synthesise key themes from previous engagements, plus any currently underway (also for City Vision project). Confirm the critical gap ‘strands’, which will require sector group workshops to complete the At A Glance summaries (provisionally: Inclusive City, Environment, Sustainability and Te Ao Māori ‘strands’). Communicate the strategic framework refresh process (external and within Tauranga City Council).	September – October
3	Tools progressed	Web-based strategic framework tool developed	October – November
4	Sector group work for more well-developed ‘strands’	Informal engagement with sector groups to complete At A Glance summaries as far as possible for more well-developed ‘strands’ – identify priority actions and any further strategic work required in these areas.	October – November
5	Sector group engagement for critical gap ‘strands’	Following on from the City Vision community and sector group engagement scheduled for November: Hold sector group workshops for critical gap ‘strands’ (provisionally: Inclusive City, Environment, Sustainability, and Te Ao Māori) – identify priority actions and any further strategic work required in these areas, likely to include strategy development.	December
6	Draft to Council	Council receives draft strategic framework including suite of At A Glance summaries for consideration, alongside an update on next steps and the web-based tool development.	December 2021
7	Strategy development for priority ‘strands’, envisaged to be: - Inclusive City - Environment - Sustainability - Te Ao Māori	Under a separate workstream for each ‘strand’ – with separate project and engagement plans. - Each strategy at least in draft form by close of project. - Identify existing strategies & plans that underpin, what needs to be retained and what further work is required.	February – April 2022
8	Finalise content for remaining ‘strands’	Under a separate workstream for each ‘strand’ – level of work required will have been determined during October-November informal engagement with sector groups.	February – April
9	Underpinning strategies and plans updated	All existing strategies and plans either programmed to be formally rescinded or positioned within the refreshed strategic framework.	February – April
10	Web-based strategic framework tool finalised and populated	Web-based framework tool tested, finalised and populated – including processes for ongoing content ownership and management.	February – April 2022
11	Council adopts draft strategic framework	Council adopts draft strategic framework, including refreshed content, for public consultation	May 2022
12	Public consultation and response	Public consultation on draft strategic framework, including refreshed content. Proposed amendments in response to consultation feedback.	June 2022
13	Council adopts final strategic framework	Council adopts final strategic framework, including refreshed content.	July 2022

Financial Considerations

27. Financial costs depend on how much external resource is required to deliver key elements of the project to a quality standard and within the specified timeframes. There may be a requirement for external resourcing to develop key strategies for our ‘critical gap strands’ (up to four processes), web-based tool development and maintenance, creative design and publication development.

28. Budget is available within the approved 2021/22 Annual Plan for strategy development. This budget also accommodates the City Vison project and will be monitored closely as these projects progress.

29. An Annual Plan 2023 budget item may also be required for post 30 June 2022 work, such as design and delivery of publication material and additional functionality for internal use of the web-based strategic framework tool.

Legal Implications / Risks

30. This report has no legal implications. Any risks associated with the recommended approach will be identified during more detailed planning of the workstreams for each ‘strand’ of the framework, as outlined in the approach section above.

Consultation / Engagement

31. There has been considerable consultation with both the community and city leaders to date, as referenced in the background section of this report. Further involvement with both the general community and sector groups is outlined in the project approach section above.

Significance

32. 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.

33. 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.

34. In accordance with the considerations above, criteria and thresholds in the policy, it is considered that the issue of Tauranga City Council’s strategic framework refresh is of high significance, however the decision proposed in this report (being to receive a project update) is of low significance.

ENGAGEMENT

35. Taking into consideration the above assessment, that the matter of Tauranga City Council’s strategic framework refresh is of high significance, officers are of the opinion that the nature of this project requires further community involvement as outlined in this report.

Next Steps

36. Next steps to progress Tauranga City Council’s strategic framework refresh are outlined in the project approach section above.

Attachments

1. Strategic Framework content on a page - A12995664 ⇩

Strategy, Finance and Risk Committee Meeting Agenda

1 November 2021

11. We have been holding one-on-one meetings with these stakeholders to discuss the findings. We have also identified further relevant stakeholders to engage with (and in some cases have met with already), including but not limited to BoP District Health Board, Western Bay of Plenty District Council, Zespri, the Carbon Reduction Group, the Ministry for the Environment, Te Puni Kōkiri and Waka Kotahi.

12. It is anticipated that sector group workshops will be held in December to discuss the sustainability and environment ‘At a Glance’ strategic summaries, including priority actions and further strategic work required, per the process set out in the Strategic Framework Refresh paper also being presented today.

Te Rangapū Mana Whenua o Tauranga Moana Partnership (“Te Rangapū”)

13. A special workshop was held with Te Rangapū on 27 September to share the findings of the stocktake, and seek feedback on -

· What does sustainability mean in Te Ao Māori?

· What does sustainability look like to Tauranga tangata?

· What are some examples of how our tipuna ensured sustainability of Te Ao Māori?

· How can we ensure Te Ao Māori will be sustained into the future?

· The model used for the stocktake (Thriving Cities and an adaptation of “Doughnut Economics”), including one indigenous interpretation of the Doughnut by Tūhoe Māori as set out below.

14. The workshop generated rich discussion, key points including:

(a) Tikanga and kawa (practices, behaviours, expression of values) and core values such as kaitiakitanga (guardianship and protection), tāutuutu (reciprocity)

(b) Guardianship of hauroa (holistic wellbeing) including taiao (environmental), tinana (physical), hinengaro (mental/emotional), wairua (spiritual), whatumanawa (emotional balance) and whanau.

(c) Whakapapa mana tuku i ho – the inherent value in the natural environment and inherent responsibility in looking after it.

15. The workshop also looked briefly at the indigenous view on Doughnut Economics developed by Circular Economy professional Juhi Shareef and scientist Teina Boasa-Dean and whether this might align with our local thinking – could we utilise/amend Boasa-Dean’s reimagining of the doughnut from a Tūhoe Māori perspective?

Figure 1: Boasa-Dean’s reimagining of the doughnut from a Tūhoe Māori perspective

16. The initial reaction from Te Rangapū towards the Tuhoe model was that it was a good summary but there was an agreement that follow-up work to discuss and consider this in more detail would be valuable. That would enable a tailored approach for Tauranga Moana.

17. It is also clear that inevitably, by their nature, sustainability and Te Ao Māori are interwoven and integral to each other and there will therefore be overlap between the Sustainability and Te Ao Māori “cross-weaves” or strands of the strategic framework under development. It is anticipated that these strands will be very closely aligned and cross-refer to each other, with the likely points of difference being around key actions / focus areas.

Short-term / immediate actions

Energy and carbon management

18. In partnership with the Energy Efficiency Conservation Authority (“EECA”), we have appointed an Energy Advisor. This partnership includes a requirement for us to reduce our energy consumption by 2GWh of energy in the next two years and collaborate with Bay Venues to achieve this.

19. We are certified for 2018/19 under Toitū Envirocare (“Toitū”)’s CarbonReduce programme and are now working through certification for the 2019/20 and 2020/21 years. Toitū are an independent company who provide certified Greenhouse Gas inventories and measurement and monitoring of carbon emissions. Their certifications are both nationally and internationally recognised.

20. Updates on this workstream will be provided as work progresses.

Opportunities with Bay of Plenty Regional Council (“BoPRC”)

Regional climate change risk assessment -

21. We are part of the technical working group assisting BoPRC in undertaking a regional climate change risk assessment to identify and understand the climate change risks within the region. This risk assessment will be used to inform adaptation planning and will provide input into district-level assessments.

22. This process will support councils to manage and respond to changing legislation relating to climate change risks and adaptation. BoPRC are working with experts from Tonkin + Taylor on this project and representatives from both Tonkin + Taylor and BoPRC were part of the working group who developed the recently released national guidance, ensuring alignment between our regional process and the National Climate Change Risk Assessment.

Regional carbon footprint -

23. We are also contributing funding to BoPRC working with AECOM to update the Bay of Plenty’s regional carbon footprint covering the three years: 2018/19, 2019/20 and 2020/21. This will include a more detailed analysis for the Transport and Energy sectors and also a Tauranga-specific analysis.

Other opportunities -

24. We are exploring other opportunities for collaboration with BoPRC and councils within the region, including the possible use of “FutureFit” as an engagement tool (which enables both individuals and businesses to assess their carbon footprint / environmental impact) and the Ministry for the Environment’s Our Climate Future exhibition booked for May/June 2022.

Sustainability and environment strategies’ “At a Glance”

25. We will be briefing consultants to assist with the process for consolidating prior work and developing the Environment Strategy “At a Glance” for the workshops in December as outlined above and in the Strategic Framework Refresh paper.

26. It is anticipated that a Climate Action Plan is one of the key plans which will sit under the Environment Strategy.

STRATEGIC AND STATUTORY CONTEXT

27. The development of a sustainability framework is part of the broader Strategic Framework Refresh project.

28. Sustainability will be a “cross-weave” throughout Council’s refreshed strategic framework as well as being incorporated into a number of the other strategic weaves (including environment strategy) aligned with Council’s Community Outcomes.

Financial Considerations

29. Funding of $400,000 (to cover staffing and project costs) has been included in the 2021-31 LTP for year 1.

30. Funding/resource requirements for years 2 and 3 will be considered through the 2022/23 Annual Plan process.

31. Long term funding/resource requirements will be considered as a part of the 2024-34 Long Term Plan process (as detailed in the final adopted strategy/framework and action plan).

Consultation / Engagement

32. As set out above individual conversations are being held with stakeholders, with broader workshops and engagement planned for December through development of the Strategy’s At a Glance.

Significance

33. 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.

34. 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.

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

Next Steps

36. The actions set out in this report will be progressed with updates brought back per the Committee work programme.

Attachments

Nil

Strategy, Finance and Risk Committee Meeting Agenda

1 November 2021

9.5 Development contributions work programme

File Number: A12989262

Author: Andy Mead, Manager: City & Infrastructure Planning

Authoriser: Christine Jones, General Manager: Strategy & Growth

Purpose of the Report

1. The purpose of this report is to:

(a) Address current priorities for improving the Development Contributions Policy in the short to medium term (starting with the 2022/23 Development Contributions Policy);

(b) Contextualise the ongoing development contributions work programme within council’s wider suite of growth funding tools and associated workstreams, including delivery risks.

Recommendations

That the Strategy, Finance and Risk Committee:

(a) Receives this report Development contributions work programme; and

(b) Endorses the work programme for implementation in the upcoming draft Development Contributions Policy 2022/23 and beyond.

(c) Notes the work programme will be reported against and reviewed on an on-going basis, with significant changes reported through the Executive and this Committee as appropriate.

Executive Summary

2. Staff and external advisors are working together to identify and prioritise a Development Contributions Policy (DCP) work programme. This work programme will be designed to ensure the DCP is working as effectively as possible to support growth funding and optimise this revenue stream.

3. The draft work programme is attached, and priority work is identified in paragraph 10.

4. Development of the DCP is led by the Growth Funding team (part of the City & Infrastructure Planning activity in the Strategy & Growth Group). This team is also heavily involved in coordinating TCC’s other growth-related funding and financing opportunities.

5. The key risk to delivery of priority work is sufficient resourcing due to the current workload associated with infrastructure funding (including working with Crown Infrastructure Partners on Infrastructure Financing & Funding and progressing Infrastructure Acceleration Fund applications).

Discussion

6. Staff are looking to undertake ongoing improvements to our DCP to ensure the policy is continues to operate effectively and support growth in Tauranga. Development contributions are a significant revenue stream which recover growth infrastructure costs. The projected annual revenue in the LTP for development contribution increases from $27 million in 21/22 to $60 million 28/29.

7. Together, the City & Infrastructure, Finance and Environmental Planning teams have identified a long list of projects to improve the DCP.

8. This list contains significantly more projects than could be achieved in the current year with existing resourcing. As such, projects have been prioritised from 1 (highest priority) to 5 (lowest priority) based on urgency, benefit and opportunity cost. Then they have been grouped in categories: DCP amendments, implementation improvements and other projects. Most category 1 projects relate to amendments to the DCP to support growth in the city and ensuring development contribution revenue opportunities are maximised.

9. Below are the top priority projects in respect of policy improvements, there are also other priorities outside of the policy itself, especially the delivery of a communications plan associated with the upcoming increase to citywide DCs associated with the Waiāri water treatment plant (as per LTP decisions).

10. Two other large workstreams are worth noting:

(a) Funding for Transport System Plan (TSP) projects – DC funding for TSP projects will be investigated once investigations into alternative funding mechanisms (Infrastructure Funding and Financing levies (IFF), Infrastructure Acceleration Fund (IAF)) have concluded. This project is ranked priority category 2.

(b) Creation of new catchments – with continued growth we are proposing the creation of up to five new greenfield development contributions catchments. These are Lower Belk (Tauriko Business Estate extension), Tauriko West, Te Tumu, Keenan Road & Upper Ohauiti. The extent to which development contributions will be required in these areas will depend on the application of other funding options such as IAF, IFF and direct developer funding/delivery of infrastructure.

Existing capacity and future demand

11. This work programme is only one of many funding and financing projects being coordinated by the Growth Funding team. Others include:

(a) Four Infrastructure Accelerator Fund applications;

(b) Two Infrastructure Funding and Financing proposals;

(d) Agreements with developers for the delivery of infrastructure

(e) Potential future workstreams e.g. road pricing.

12. The team was established in its current form in July 2021 with an increase to 2.5 FTEs.

13. In some respects it is well resourced. From a DCs perspective, TCC has a high level of inhouse expertise and has developed long-term relationships with economic and legal advisors to support development of the policy. However, given the size of the DCP work programme it’s likely that more than the current 0.5 FTE specifically dedicated to the DCP will be required to ensure progress does not stagnate.

14. In other respects, resourcing is constrained. TCC has enjoyed significant success to date with its IAF applications and HIF application and our IFF proposals are looking promising. The volume of work associated with these projects is anticipated to increase rather than decrease going forward. This is highly likely to exceed existing capacity and risks slowing the pace at which these projects are delivered. It also means that little if any of the other 2.0 FTE resources in the growth funding team can be allocated to progressing the DCP work programme for at least 6 months.

15. Consequently, resourcing is assessed as the biggest risk to delivering the priority DCP tasks. Discussions on resourcing are ongoing with management and the Executive in order to ensure sufficient staff and external resource is available for these projects. Another risk to note is the challenges associated with making DC decisions on specific projects when this relies on outcomes of investigations on other on-going or upcoming funding sources e.g. the cross over with IAF and IFF in Te Papa and Tauriko West.

recommendation

16. Our recommendation is that the Committee endorse the work programme in its current form noting the risks set out above. The work programme will be reported against and reviewed on an ongoing basis with significant issues escalated to the Executive and the Committee as appropriate.

Financial Considerations

17. There are no financial considerations associated with the work programme itself. However, staff note (as described above) there may be substantial financial implications associated with some of the projects in the work programme (for example the proposed Te Papa and City Centre infill catchment).

Legal Implications / Risks

18. There are no legal risks associated with the work programme itself. However, staff note there may be some risk of legal challenge if TCC does not pursue necessary improvements to the DCP itself.

Consultation / Engagement

19. We are not proposing to undertake consultation on the work programme. The DCP will be amended each year in line with the work programme and the draft amendments will be consulted on with the community as part of the Annual Plan or Long-term Plan consultation process.

Significance

20. 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.

21. 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 proposal.

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

ENGAGEMENT

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

Next Steps

24. If the work programme is approved, staff will continue to prepare amendments to the DCP.

Attachments

1. DC Policy amendments - A12999433 ⇩

2. Implementation projects - A12999437 ⇩

3. Other projects - A12999434 ⇩

Strategy, Finance and Risk Committee Meeting Agenda

1 November 2021

9.6 Source Water Shortage

File Number: A12984913

Author: Peter Bahrs, Team Leader: Water Services

Authoriser: Nic Johansson, General Manager: Infrastructure

Purpose of the Report

1. To highlight the current challenges facing Tauranga’s source water supplies and the risk this poses for the water supply to the city during the summer of 2021/22 and beyond.

2. To outline the steps being taken to mitigate the risks faced.

Recommendations

That the Strategy, Finance and Risk Committee:

(a) Receives the Source Water Shortage report; and

(b) Supports the mitigation measures being implemented

Discussion

Background

3. Flows in the source water streams providing the Tauranga city’s drinking water supply have been trending downwards and currently are at levels significantly lower than normal. This downward trend coincides with three recent dry and hot summers.

4. At the same time, water demand in the city has been steadily increasing due to growth and development. The Waiāri Water Supply Scheme project began in 2016 in order to meet the growth needs.

5. During the summer of 2017/18, water restrictions were required for the first time in 17 years to ensure water demand did not outstrip supply. In the first three years of water restrictions (2017/18 – 2020/21), our primary aim was to minimise the risk of the water treatment capacity being exceeded.

6. However, over the past year Tauranga has faced a new water supply constraint – i.e. the declining availability of source water to draw and treat. Both source water streams, but particularly the Tautau stream which feeds the Joyce Road Water Treatment Plant, are at lower flow levels than has been previously observed in recent decades. As a direct result, last summer’s water restrictions were kept in place longer and were only lifted at the end of June 2021.

Period	Restriction Level	Restriction Period
Summer 2017/18	City wide Sprinkler Ban (first level)	16 December 2017 to 12 February 2018 (60 days)
Summer 2018/19	City wide Sprinkler Ban (first level)	30 January 2019 to 25 March 2019 (54 days)
Summer 2019/20	City wide Sprinkler Ban (first level)	23 January 2019 to 24 March 2020 (60 days)
Summer 2020/21	City wide Sprinkler Ban (first level)	23 December 2020 to 28 June 2021 (187 days)

7. Previously, our focus has been on the Waiāri water supply scheme to overcome our infrastructure limitations and cater for future growth. However, this is no longer the silver bullet to resolve all of our water supply problems. Our primary challenge has moved from infrastructure capacity to one of environmental capability.

8. Even the Waiāri stream is showing similar declining traits to that seen in the Tautau, albeit not to the same extent. This highlights the lack of resilience in TCC’s source water supplies due to climatic effects, especially as all the water sources are shallow aquifer-fed streams. It is noted that although the stream flows have stabilised, they remain at comparatively very low levels.

9. The flows in the source water streams, particularly the Tautau, have not recovered and are at a low level, heading into this summer. In the event that the stream flows continue to decline, it is likely that harsher water restrictions would need to be implemented to avoid breaching our water take consent in the Tautau, while maintaining water supply to the community.

10. Additionally, the Waiāri stream flows are also on a downward trend. The Waiāri consent has a notification requirement to give notice to the Tapuika Iwi Authority if the flow of the Waiāri stream reduces to below 2.8 cubic metres per second (2,800 l/s). This level was reached in August 2021 and current flows are generally slightly below this level.

11. The issues we are now facing can be separated into three key problem statements:

(a) Short term supply of water to Tauranga city will come under significant pressure over summer within the next four to eight months due to the significant reduction in base flow of the Tautau stream, which supplies over 50% of the city.

(b) The three supplies of water, including the yet to be commissioned Waiāri, are all showing similar responses in base flow, and continuity of supply from these sources is coming under scrutiny.

Short term mitigation measures

12. A variety of mitigation measures are in place or being developed as part of the action plan to meet the city’s water demand for the summer and to manage the associated risks. We have two-pronged approach comprising:

· Supply optimisation and demand management

· Supplementary source water supply options

13. Our primary focus is to minimise the overall daily summer peak demand and lessen the stress on the Tautau stream. To achieve this, numerous initiatives are underway, including, but not limited to:

(a) Development of a robust communications strategy and campaign to educate and explain the situation to the community, and seek their support to help conserve water

(b) Bolstering our water restriction strategy and corresponding community education around the need for restrictions

(d) Working with industry and commercial users to ensure efficient use of water resource

(e) Developing a greater understanding of the climatic effects on source water supply and stream flows

Further details on these initiatives are contained in the attachment.

Longer term mitigation measures

14. We want to establish a sub-regional strategic partnership for water to coordinate and consolidate information and investment.

15. Commission scientific research into the cause of the decline, including consideration of, but not limited to, geotechnical, climatic and extraction factors.

16. Tauranga City Council has already kicked off some work to better enable us to understand future quantum and reliability of water supply from existing water take locations. The “Freshwater Management Tool” is a model suite which allows us to simulate the current hydrological and water quality run-off and is able to predict future changes based on intervention options and climate change predictions. This will support good policy decision making and value for money investment decisions.

17. The development of the Freshwater Management Tool has been approved through the LTP process and supplier procurement has just been finalised. The development of the tool will start in November. Bay of Plenty Regional Council staff have been engaged during the set-up of this project and have agreed to be involved on an ongoing basis. This includes providing data, and review of the development of the tool and the outputs.

Next Steps

18. We are forming a water task team to manage the water supply and demand initiatives throughout this summer, as detailed above. The water task team will monitor, review and optimise the summer water strategy as needed.

19. We will also review the city’s water supply strategy in the medium to longer term, with the intention of ensuring greater water supply resilience and sustainability into the future. This is especially important, considering the uncertainty created by the reconsenting of the existing water in 2026.

Attachments

1. Source Water Issues Mitigation Measures - A12993034 ⇩

Strategy, Finance and Risk Committee Meeting Agenda

1 November 2021

9.7 Strategic Procurement Update

File Number: A12988339

Author: David Moore, Manager: Capital Projects Assurance Division

Authoriser: Nic Johansson, General Manager: Infrastructure

Purpose of the Report

1. To provide the committee with an update on the Strategic Procurement Review; and

2. The next steps in the planning and implementation of new capital programme delivery models.

Recommendations

That the Strategy, Finance and Risk Committee:

(a) Receives the Strategic Procurement Update report

Discussion

Background

3. The Long-Term Plan (LTP) 2021/31 contains the most significant programme of capital works that TCC has ever embarked upon. A key enabler to deliver this will be how TCC optimally engages with the supply market by developing and implementing delivery strategies and models to create value and beneficial outcomes for TCC and suppliers which will lead to exceptional project outcomes for our community.

4. This paper summarises the outcomes of the strategic procurement review (Review) undertaken to date and the next steps to commence the planning and implementation of selected capital delivery models.

Strategic Procurement Review - Process

5. The Review commenced in early 2021 with the purpose to develop a procurement strategy to support the delivery of the LTP and to understand the value and benefits that could be generated. Another key deliverable was to provide transparency to the market on the LTP capital pipeline and begin to engage with suppliers on better ways of working together.

6. The Review methodology progressed through a number of consultative and analytical stages involving the contribution from TCC staff, industry representatives and market suppliers. The key stages included:

(a) Project data validation and identification of specific opportunities and risks;

(b) Development of success factors and evaluation of potential delivery model structures;

(c) Industry market workshop involving contractors, consultants and key industry representatives to challenge potential delivery models;

(d) Evaluating and building aggregated works packages and alignment to potential delivery models across City Waters, Transportation and Community Services activity areas; and

(e) Testing and analysing the shortlisted works packages to determine preferred delivery model approaches.

7. In addition to 6(c) above, an update on the Review and an overview of the LTP capital works programme was provided to a good attendance of regional suppliers at the annual contractors’ function.

Strategic Procurement Review - Outcomes

8. The Review process has concluded in 15 potential procurement opportunities for TCC.

9. The total capital spend from these opportunities equates to approximately $1.7 billion of projects within the LTP, with City Waters at $740 million, Transportation at $700 million and Community Services at $220 million. More detail regarding the procurement opportunities is included in Attachment 2.

10. The majority of the $1.7 billion identified spend occurs within the first 5-6 years of the LTP, there is potential to deliver a much higher level of spend through alternative delivery models identified in the Review. This will be reviewed as the LTP develops over time and will influenced by factors such as funding, consenting, project timing and many others.

11. The Review has identified many benefits and value that can be generated from executing the procurement opportunities including:

(a) Greater procurement efficiency;

(b) Reducing construction costs;

(d) Securing key workforce resources;

(e) strengthening relationships with suppliers;

(f) improving safety and wellbeing; and

(g) enhancing community outcomes.

Overall, the benefits should contribute to a greater certainty of delivering the LTP capital works programme. More detail regarding the delivery model benefits is included in Attachment 1.

The realisation of the benefits and the value generated will be staged over time as each new delivery model is implemented. Contractual agreements will need to contain performance measures to monitor and report against some of the benefits, others will be measured and reported internally.

12. A general response from the attendees at the industry market workshop was a lack of certainty of work pipelines from clients and short lead-in times makes it very difficult for the industry to plan and develop their work force and other resources, and minimises their ability to add real value to the client. The impact of current supply chain risks of material price increases and longer delivery times adds to this.

It was made clear that industry would welcome long term client relationships and would favour those clients who could offer a visible and committed pipeline of works with earlier collaboration over those continuing with a traditional “transactional” approach. They further stated that community and socially procured benefits were difficult to implement and add value without long term contractual and project relationships.

13. The preferred delivery models will need to embrace social procurement including the New Zealand Government’s procurement policies for Better Outcomes and the Construction Sector Accord’s guiding principles.

14. The delivery models and opportunities evaluated in the Review have primarily focused on construction contractors however the role of design consultants will also be crucial in delivering the LTP and will need further analysis of their contribution to delivery models in the next phase of the review.

Next Steps

Strategic Procurement – Phase 2

15. Following the industry market workshop back on 1 July 2021, an update on the outcomes of the Review shall be communicated back to the wider industry to demonstrate TCC is ready for change and has an effective LTP procurement plan.

16. Discussions have commenced with Toi Kai Rawa, Bay of Plenty’s Regional Māori economic development organisation to establish a framework where TCC and Toi Kai Rawa can effectively work together in pursuing the development of a Social Procurement Strategy to support local and regional Māori businesses and how this may contribute to LTP capital delivery models.

17. The next phase of strategic procurement will move into the execution of the delivery model opportunities outlined in Attachment 2. This will require engaging an industry procurement specialist to help guide TCC with delivering the Review benefits.

18. The initial focus for delivery model execution shall be on the City Waters opportunities, particularly on the Waters Pipelines and Pump Station packages due to scopes being available and the planned project timing. Community Services has already commenced a review of their existing contractor and professional services panels to better align with their delivery model opportunities.

19. Delivering the Transportation delivery model opportunities will require consultation with Waka Kotahi to ensure it meets their funding procurement and business case processes which may challenge the timing on the Transport opportunities.

20. key upcoming activities and timelines are:

(a) Communications update to market industry – Nov 2021

(b) Commence detailed planning for delivery model(s) execution – Nov/Dec 2021

(d) First delivery model(s) contracts negotiated and commenced – 1 July 2022

Attachments

1. Strategic Procurement Update - 1 Nov 2021 - Attachment 2 - Procurement Opportunities Identified - pdf - A12996551 ⇩

2. Strategic Procurement Update - 1 Nov 2021 - Attachment 1 - Delivery Model Benefits - pdf - A12997675 ⇩

Strategy, Finance and Risk Committee Meeting Agenda

1 November 2021

9.10 Tauranga City Council Draft Consolidated Annual Report 2020/21

File Number: A12981671

Author: Kathryn Sharplin, Manager: Finance

Tracey Hughes, Financial Insights & Reporting Manager

Rhea Brooks, Corporate Planner

Josh Logan, Team Leader: Corporate Planning

Authoriser: Paul Davidson, General Manager: Corporate Services

Purpose of the Report

1. The purpose of this report is to provide the committee with a further update of the year-end financial and non-financial results for Tauranga and the presentation of the front sections of the annual report. This update includes the consolidated financial accounts and amendments to the introductory sections of the report as requested by Strategy Finance and risk at the meeting on 20 September 2021. It is noted that the report is still subject to final audit changes so the final consolidated accounts are not complete at the time of writing.

Recommendations

That the Strategy, Finance and Risk Committee:

(a) Receives the Report - Tauranga City Council Draft Consolidated Annual Report 2020/21

Executive Summary

2. The annual report is the key document for Tauranga City Council (TCC) to report back to the community on its achievements for the year. The report provides background information on the operations of council, its governance and the year in review by major activity. It provides comparisons against its non-financial performance targets and financial budgets as set out in year three of the 2018-28 Long-term Plan, which were further revised in the 2020/21 Annual Plan.

3. The consolidated annual report includes the results for TCC’s council-controlled organisations (CCOs) Bay Venues Limited BVL, and Tauranga Art Gallery Trust (TAGT).

4. The updated annual report reflects changes from the report presented on 20 September, both as a result of adding consolidated figures and as a result of changes to accounting presentation of information as agreed with Audit New Zealand. This information is still subject to final audit and internal review so there may be further amendments prior to the final audited document being presented to Council on 6 December 2021.

5. Key consolidated financial results for TCC are as follows:

$258m total operating revenue	$275m total operating expenditure
$32m capital and operating subsidies	$33m development contribution revenue
$182m capital expenditure	$586m net debt
$690k TCC operating surplus due to interest below budget	209% debt to revenue ratio (TCC) D:R consolidated with BVL revenue
$275m Consolidated revenue	$5.5m Consolidated total assets

6. The key financials presented above are largely unchanged to those presented in the summary table on 20 September, although there have been changes to detail presented.

7. Non-financial performance measures are largely unchanged from those presented on 20 September. The numbers are 53% achieved (78 measures), 37% not achieved (55 measures) and 10% not measured (15 measures).

8. The change as a result of the audit from Audit New Zealand, being that one KPI moved from achieved to not measured (Marine Precinct- berth infrastructure).

Background

9. Report 9.3 Tauranga City Council Draft Annual Report was presented to Strategy Finance and Risk committee on 20 September 2021. This report outlined the purpose of the annual report and presented unconsolidated and unaudited financials and non-financial performance measure results and discussion.

10. Draft front sections of the document were considered by the committee as the purpose of these sections is to provide a review of the year and to tell the story of the council’s operations and other key events in a way that is readable by the community. The committee raised matters regarding these sections and requested changes to the presentation including some additional items for inclusion.

11. This updated report addresses the matters raised by the committee, incorporates the consolidated financials, and amendments arising from the review and audit process.

Amendments to front sections

12. As a result of the feedback received at Strategy Finance and Risk Committee on
20 September, the following changes were made to the presentation and content of the front sections:

· The layout changes suggested in section one have been made in consultation with Te Pou Takawaenga unit.

· Also, in consultation with Te Pou Takawaenga unit we have amended and added to section two in the highlight’s challenges and opportunities part in line with the feedback received at the last committee meeting.

· Incorrect spellings of committee members names in section four have been corrected.

· Some images and graphics throughout the document have also been changed in line with feedback received.

Consolidated financials

13. Consolidated financials show some impact of ongoing COVID-19 disruption that affected all the CCOs in terms of revenue and operations.

14. Overall, the impact on the consolidated accounts continue to show an operating surplus. The consolidated financials continue to be under audit review, with accounts to be tabled at the meeting.

Non-Financials – consolidated

15. At the conclusion of the Audit of this draft annual report by Audit New Zealand, Council presents the position of how the council achieved the non-financial performance measures and ultimately the levels of service during the financial year. Of the 148 non-financial performance measures, 133 of them have been measured during the financial year.

16. The result for the full financial year is that a total of 78 non-financial performance measures have been achieved (53%) and 55 were not achieved (37%), with 15 not able to be measured (10%).

17. Also, of the 55 measures not met, the two key themes that emerged, were that services were still impacted due to the ongoing effects of the COVID-19 pandemic and there continue to be ongoing staff shortages in the regulatory and compliance sector.

Strategic / Statutory Context

18. The annual report is prepared consistent with requirements of the local Government Act 2002 (LGA)

Options Analysis

19. There are no options presented in this report.

Financial Considerations

20. The financial statements and information presented is for the financial year ended 30 June 2021. The presentation of the financials section is guided by the requirements of the Local Government Act 2002, accounting standards (International Public Sector Accounting Standards (IPSAS)) and generally agreed accounting policies. It is audited by Audit New Zealand. The accounts are prepared on a going concern basis. There have been no incidence or allegations of fraud, non-compliance. At present staff are continuing to work with Audit New Zealand on matters of presentation of the accounts.

Legal Implications / Risks

21. Due to post-COVID-19 pressures on councils across the country and Audit NZ the timing of adoption of the audited annual report will not meet normal statutory deadlines but Government has approved an extension of time.

Consultation / Engagement

22. The annual report will be made publicly available after adoption. The 2018-28 LTP and the 2020/21 Annual Plan which the year results are measured against were consulted on before being adopted. There is no consultation on the annual report itself.

Significance

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

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

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

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

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

ENGAGEMENT

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

Next Steps

27. Audit New Zealand is currently undertaking its audit of the annual report working with staff to ensure all requirements are met.

28. The final annual report will be presented to Council for adoption on 6 December 2021.

Attachments

1. Draft Annual Report 2020/21 - Sections 1-6 - A13008026 (Separate Attachments 1)

Strategy, Finance and Risk Committee Meeting Agenda

1 November 2021

9.11 Financial and Non-Financial Monitoring Report: Period ended 30 September 2021

File Number: A12990345

Author: Kathryn Sharplin, Manager: Finance

Tracey Hughes, Financial Insights & Reporting Manager

Josh Logan, Team Leader: Corporate Planning

David Moore, Manager: Capital Projects Assurance Division

Authoriser: Paul Davidson, General Manager: Corporate Services

Purpose of the Report

1. The purpose of this report is to inform Council and the public of our financial and service level performance result for the first three months of the financial year 2021/22 and provide an overview of resident perceptions. The report also includes information on progress and risks relating to the capital programme.

Recommendations

That the Strategy, Finance and Risk Committee:

(a) Receives Report Financial and Non-Financial Monitoring Report: Period ended 30 September 2021.

Executive Summary

2. Operational results for the first quarter are tracking slightly favourably to budget. Revenue overall is close to budget with services affected by the alert level restrictions offset by higher revenue across building services. Full year forecasts have not been amended from budget at this stage. Expenditure, both operational and capital is below budget partly due to restrictions. Capital expenditure for the first quarter has been $40m against a budget of $287m, indicating a slow start to the year.

3. Attachment 1 includes the Statement of Comprehensive revenue and expense along with a by activity breakdown of variances in user fee revenue and operating expenditure. A Treasury summary showing debt and full year projections is shown along with a high-level summary of capital expenditure to budget.

4. Attachment 2 summarises the performance of the top 25 capital programmes being undertaken this year.

5. Attachment 3 presents how Council and the community are tracking towards achieving Council’s non-financial performance measures and levels of service.

6. Of the 100 non-financial performance measures, 75 have been measured and reported on. 46 measures (46%) are on track, 26 measures (26%) off track and 25 measures (25%) yet to be measured. 3 measures (3%) have achieved the annual target.

7. Initial analysis of non-financial performance measures shows that of the 26 measures off track, 17 measures (65%), across five activity groups, continue to be affected by the impact of COVID-19.

8. Attachment 4 presents a high-level summary of the wave one results of the Annual Residents Survey.

Background

9. This report is for monitoring and reporting purposes showing Council’s financial and non-financial performance in delivering services to the community.

10. The operational budgets for year one of the Long-term Plan (LTP) set the revenue and expenditure expectations to deliver on agreed service levels and capital investment.

11. In an LTP, the level of service that the council will deliver along with operational budgets and capital investment programme are agreed upon by the council in consultation with the public. Rates and user charges are set based on these budgets.

12. The Local Government Act 2002 stipulates that local authorities are required to report on how well they are performing in delivering these levels of service to their communities as measured by the non-financial performance indicators.

13. In the 2021-31 LTP there were 100 KPIs that were agreed upon, 23 of which are mandatory measures as per section 261B of the Local Government Act.

Strategic / Statutory Context

14. Maintaining expenditure within budget ensures delivery of services in a financially sustainable way.

15. Monitoring non-financial performance is a key function of the committee.

DISCUSSION

Part 1: Financial Performance

16. Attachment 1 to this report provides a summary of Council’s financial performance for the year to date. The content of this attachment includes:

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

(b) A summary by activity of user fee revenue and operating expenditure variances year to date.

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

(d) A summary of capital expenditure to date and full year projections across the whole programme.

Operating Performance and Revenue and Expenditure Variances by Activity (Attachment 1) shows the operating and capital revenue and expenses in a format consistent with the Annual Report. It shows the year to date results for revenue and expenditure. At this stage there has been no amendment to full year forecasts which remain at budget levels.

17. Overall operational expenditure and revenue are tracking favourably to budget.

18. There has been some impact on revenue in areas of the business from COVID-19 alert level restrictions including the airport and community facilities such as Baycourt. However, this has been offset to date by favourable results elsewhere such as in building services. There are forecast full year revenue losses from closure of the two carparking buildings for several months.

19. Operational expenditure has been below budget, partly due to lower activity in some areas due to alert level restrictions. At this stage full year expenditure is expected to be to budget levels.

Summary Treasury and Capital Programme Expenditure

20. Overall capital expenditure for the three months has been $40m against a budget of $287m indicating a slow start to the year. The September expenditure, including accruals, showed a considerable ramp up of expenditure to the previous two months. From a forecast debt perspective, based on low capital delivery year to date, we would expect debt to be lower by year end by about $30m. Total net debt at year end is currently projected to be $730m against a full year budget of $760m.

Part 2: Capital Programme Performance – Top 25 Projects

21. The Top 25 projects and programmes make up approximately 80% of the capital budget. After a slow start to the financial year there has been a gradual increase in productivity and delivery momentum as indicated by the improved ‘actual to budget’ expenditure in September. This has been aided by two thirds of the Top 25 projects in the construction lifecycle stage, such as Waiāri WTP, Cameron Road Stage 1 and Te Maunga WWTP.

22. Although the overall Top 25 health status is satisfactory for the first three months, there is still uncertainty across the programme as to the current and future impact of COVID-19, particularly on supply chain risk of key resources and project materials, which could delay or extend project timeframes, and also increase project costs. Supply chain impacts will be closely monitored over the coming months.

Part 3: Non-Financial Performance

23. Attachment 3 presents how Council and the community are tracking towards achieving Council’s non-financial performance measures and levels of service.

24. Of the 100 non-financial performance measures, 75 have been measured and reported on. Data is not yet available for 25 measures.

25. Of those that have been measured, 46 measures (46%) are on track with 26 measures (26%) off track and three measures have been met already (3%).

26. Of the 26 measures off track, 17 measures (65%), across five activity groups (Community Services, Economic Development, Marine Precinct, Regulatory and Compliance and Spaces and Places), have been affected by the impacts of COVID-19. We will continue to monitor these measures and keep reporting the likelihood of whether these measures will now not be met this financial year over the next two quarters.

27. Where data is not available, the majority relate to annual measures which are only surveyed at one point through the year or to measures that have no current method of assessment.

Part 4: Perceptions Monitor

28. The Annual Residents’ Survey supports non-financial reporting by measuring the perceptions of residents regarding various aspects of services that Council provides.

29. The survey is conducted in four waves across the year. Each wave's mail out quotas are applied according to age, gender and ward, to ensure that a representative sample of Tauranga City’s population is achieved. The data is weighted to account for variances in the achieved quotas and to ensure that the sample reflects the population profile achieved.

30. The overall results have an anticipated margin of error of +/- 4.6% at the 95% confidence level. Scores for the reporting periods exclude 'Don't know' responses.

31. The results for 2021/22 wave one are interim and based on the sample of n=191. Data collection has taken place between 14 August to 28 August 2021. Due to the data capture period coinciding with the latest AL4 lockdown the response rate was high.

32. A summary of the highlights of the first wave are attached at Attachment 4. The summary helps provide an insight into how different elements of Council’s core service deliverables, reputation and the perception of value for money contribute to respondents’ perception of Council’s overall performance.

33. Under overall performance, the wave one result is that 32% of respondents are satisfied or very satisfied with Tauranga City Council in general, up from 28% in wave three 2020/21. The result is equal to the full year for 2020/21 in which 32% of respondents were satisfied or very satisfied.

34. Reputation measures the community’s perception of four key areas – leadership, faith and trust, financial management and quality of services/facilities. Under reputation, the wave one result is that 27% of respondents are satisfied or very satisfied, up from 11% in wave three of 2020/21. The full year result for 2020/21 was 19%.

35. Within reputation, there is the measure in terms of respondent’s faith and trust in Council, the wave one result is that 27% of respondents are satisfied or very satisfied, up from 13% in wave three of 2020/21. The full year result for 2020/21 was 19%.

36. In this year’s survey an additional question was added asking the respondents’ awareness that a Crown appointed commission had taken over the governance responsibilities of Tauranga City Council.

37. The result was that 80% of respondents are aware and 20% unaware, with age being a main factor. Further breakdown of awareness results by age is as follows:

18-24 = 54% aware

25-34 = 59% aware

35-44 = 80% aware

45-54 = 83% aware

55-64 = 87% aware

65+ = 95% aware

38. Another additional question was added asking how the respondents rated the Commissioners’ leadership with the Wave one results being 58% of respondents stating they are satisfied or very satisfied.

39. The next wave is due to be collected during November 2021 with the results scheduled to be reported to this committee in February 2022.

Options Analysis

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

Financial Considerations

41. The financial results to budget for the first quarter provide information on trends and risks. At the corporate-wide level at this stage of the year no amendments have been made to forecast budgets. Trends and revisions to forecasts will be considered further in the 6- monthly report.

Legal Implications / Risks

42. This monitoring report has no specific legal implications or risks.

Consultation / Engagement

43. This report is made public.

Significance

44. 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.

45. 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.

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

ENGAGEMENT

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

Next Steps

48. This report ensures monitoring of Council performance to ensure compliance with Council’s budgets, policies and delegations.

Attachments

1. Attachment 1 - September 21 Financial Report - A12993528 ⇩

2. Attachment 2 - Top 25 Capex Projects & Programmes - Sep 2021 - A12994162 ⇩

3. Attachment 3 - Non-Financial Performance Measures - Q1 2021_22 - A12974098 ⇩

4. Attachment 4 - Wave 1 2021-22 Performance Report - A12974396 ⇩

Strategy, Finance and Risk Committee Meeting Agenda

1 November 2021

9.12 Treasury Strategy

File Number: A12939916

Author: Mohan De Mel, Treasurer

Authoriser: Paul Davidson, General Manager: Corporate Services

Purpose of the Report

1. Treasury Policy requires strategies to be approved on a six-monthly basis. This report seeks approval for strategies for treasury risk management activities, debt issuance, investments, and foreign exchange exposures management.

Recommendations

That the Strategy, Finance and Risk Committee:

(a) Receives the Treasury Strategy report.

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

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

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

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

Executive Summary

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

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

Background

Debt Management

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

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

Borrowing margins for short vs long-term

Investor demand including bank funding

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

Compliance with LGFA covenants

Housing Infrastructure Fund (HIF) drawdowns

Existing maturity profile

Available undrawn bank facilities

6. The graph below shows the debt maturity profile as at 30 September 2021 (years ending September) together with planned debt issuances.

7. As at 30 September 2021 debt outstanding was $677m of which $42m was issued during August and September 2021. These recent issuances have been set aside as pre-funding for debt maturing during April 2022.

8. It is planned to issue $20m during October 2021 to manage ongoing near-term cash flow requirements. The above chart includes a further $100m to be issued by 30 June 2022.

9. The above chart is based on closing net debt of $730m as at 30 June 2022, the Long-term Plan is based on $763m. The new debt requirements on the chart above will be adjusted based on actual spending during the last quarter of this financial year.

10. In addition, short-term debt may be issued to manage intra year cashflows.

11. Debt duration (i.e. average maturity) is now at 5.63 years and it is planned to maintain duration above 5.0 years while ensuring compliance with the Treasury Policy criteria of ‘no more than 33% of debt shall be subject to refinancing an any rolling 12-month period’.

12. During 2021-22, $66m of long-term debt is due to mature.

Bank Facilities

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

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

15. Bank Facilities have now been increased to $100m from $70m. This facility matures on 31 October 2024. Generally, the maturity date is extended by 1 year each year. It is planned to maintain the facility maturity within the ‘2 to 4 year’ maturity band.

16. In general, bank facilities are available to be drawn down at short notice, in the event they are drawn on, and they are able to be repaid on a quarterly basis.

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

18. Current annual facility costs are 0.20% ($200k for $100m). Generally, pricing on facilities are reviewed on an annual basis.

Liquidity Risk

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

20. Two key liquidity risk management indicators are:

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

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

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

Local Government Funding Agency (“LGFA”)

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

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

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

24. As at 30 September 2021, total LGFA bonds (long-term) on issue were $14,465m, of which $555m have been on-lent to Tauranga City Council.

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

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

1 Year 1.32% 6 Year 2.43%

2 Year 1.75% 8 Year 2.56%

3 Year 1.98% 10 Year 2.78%

4 Year 2.18%

5 Year 2.32%

Security

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

Interest Rate Risk Management

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

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

· Minimise large concentrations of interest rate risk.

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

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

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

30. As at 30 September 2021 the fixed interest position was $491m which was 72.5% of debt. The graph below shows the existing fixed interest rate positions (fixed rate debt and interest rate hedging) over the next 2 years on a monthly basis:

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

32. The chart below shows the fixed interest rate positions relative to forecast debt over time. The fixed interest rate positions include fixed rate debt issued, planned drawdowns from HIF and existing interest rate hedging. Forecast debt levels have been adjusted to recognise future cashflow capital delivery / carry forwards at the end of each year throughout the LTP period, these adjustments range from $30m to $300m. This adjustment is required to ensure interest rate hedging is maintained at the appropriate level and not over hedged.

33. Over the last six months (since May 2021 Treasury Strategy report), new fixed rate exposures of $52m have been entered:

(a) New fixed rate debt $22m and

(b) Interest rate hedging $30m.

34. Analysis of debt levels and associated interest rate hedging positions are reviewed on a monthly rolling basis.

35. As consistent with previous approval, it is recommended to maintain an interest rate hedging profile target of between 50% to 60% at 2 years forward and 30% to 40% at 5 years forward. It is planned to gradually increase the interest rate hedging levels over the next 6 months.

Net Interest Budget

36. Net interest is forecast based on closing net debt of $730m as at 30 June 2022. The average interest rate as at 30 June 2022 is forecast at 3.05% (2.99% at 30 June 2021).

37. The table below shows the net external interest position for the current year. A small favourable variance is forecast for the current year based on external debt less income from money market investments. This forecast includes three 0.25% Official Cash Rate increases by the Reserve Bank.

Net External

Interest

Budget

Forecast

Variance

Fav (Unfav.)

2021/22

$20.7m

$20.6m

$0.1m

38. The graph below shows the actual and forecast average interest rates.

Investments

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

Foreign Exchange

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

Currently there are no outstanding foreign exchange contracts.

Strategic / Statutory Context

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

Options Analysis

42. Option1: Approve Recommendations

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

Option 2: Do not Approve Recommendations

Council may decide not to approve the recommendations. This may risk Council not complying with its Treasury Policy and may lead to increased interest rate and funding risks, and sub-optimal net interest costs.

Consultation / Engagement

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

Significance

45. 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.

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

Next Steps

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

Attachments

Nil

Strategy, Finance and Risk Committee Meeting Agenda

1 November 2021

9.13 Local Government Funding Agency AGM Matters November 2021

File Number: A12980602

Author: Mohan De Mel, Treasurer

Authoriser: Paul Davidson, General Manager: Corporate Services

Purpose of the Report

1) Local Government Funding Agency’s Annual General Meeting is being held on 23 November 2021. Proxy Form requires execution to vote and approval to attend meeting.

Recommendations

That the Strategy, Finance and Risk Committee:

a) Receives the Local Government Funding Agency AGM Matters November 2021 report.

b) Approves the following resolutions to allow voting for the Local Government Funding Agency annual general meeting:

i) Approve the re-election of Craig Stobo as an Independent Director (Proxy Form Resolution 1(a));

ii) Approve the election of Alan Adcock as a Non-Independent Director (Proxy Form Resolution 1(b));

iii) Approve the re-election of Christchurch City Council as a Nominating Local Authority (Proxy Form Resolution 2(a));

iv) Approve the election of New Plymouth District Council as a Nominating Local Authority (Proxy Form Resolution 2(b));

v) Approve the changes to the Foundation Policies (Proxy Form Resolution 3);

vi) Approve the changes to the Shareholders Agreement (Proxy Form Resolution 4);

vii) Approve the following increases in directors fee payable (Proxy Form Resolution 5 (a) to (d)):

1) With effect from 1 July 2021, the director acting as chair of the board of directors of $6,000 per annual, from $102,000 to $108,000 per annum;

2) With effect from 1 July 2021, each of the other directors acting as members of the audit and risk committee, an increase of $4,000 per annum, from $59,000 to $63,000 per annum;

3) With effect from 1 July 2021, the director acting as chair of the audit and risk committee, an increase of $4,000 per annum, from $63,000 to $67,000 per annum and

4) With effect from 1 July 2021, each of the other directors an increase of $3,000 per annum, from $57,000 to $60,000 per annum.

c) Authorises by way of proxy, a nominated member of staff to attend the AGM as shareholder representative of Tauranga City Council or appoint Chair of Local Government Funding Agency to vote on behalf of Tauranga City Council.

Executive Summary

2) The Local Government Funding Agency (LGFA) Annual General Meeting provides Council the opportunity to vote on management issues arising.

3) The report seeks approval for the LGFA Annual General Meeting (AGM) matters and approval to attend the meeting on 23 November 2021.

4) Council’s shareholding in the LGFA is 7.46% (paid up capital).

Background

Election of Directors

5) The Shareholders’ Agreement (SHA) provides that each year, two Directors comprising one independent and one Non-independent Director shall retire. A retiring Director is eligible for re-election.

6) As per the SHA, both Craig Stobo (Independent) and Michael Timmer (Non-Independent) shall retire. Craig Stobo has offered himself for re-election. Michael Timmer the sole non-independent Director, has retired from his role at Greater Wellington Regional Council and also retiring from LGFA Board and not offered himself for re-election.

7) Alan Adcock has been nominated by Whangarei District Council to the position of Non-independent director being made available by Michael Timmer’s retirement.

Nominating Local Authorities

8) The Shareholders’ Council is represented by nine local authorities and the Crown to monitor performance of LGFA and make recommendations to shareholders on matters that require decisions.

9) As per the SHA, the shareholders shall ensure that two Nominating Local Authorities retire on a rotation basis at the AGM each year.

10) Both Christchurch City Council and Whangarei District Council retire by rotation. Christchurch City Council have offered themselves for re-election. Whangarei District Council did not offer themselves for re-election as Alan Adcock is seeking election as a non-independent director to the LGFA Board.

11) The only nomination received (apart from Christchurch City Council) has been from New Plymouth District Council.

Foundation Policies

12) Foundation Policies are set out in the SHA and amendments are required to be approved by Ordinary Resolution.

13) An independent review of the Treasury Policy and Foundation Policies was undertaken by Deloitte in mid-2021. The recommendations from the Deloitte Review concluded that:

Ø Refine the Foundation Policy to focus on the controls relating to lending to Councils and Council Controlled Organisations including financial covenant compliance and

Ø All other controls should be consolidated into the Treasury Policy.

14) The Treasury Policy has been re-written to ensure it is fit for purpose and aligned to good practice and approved by the Board subject to shareholders approving the changes to the Foundation Policies.

15) The Shareholders’ Council were consulted on the review of the policies and are comfortable with the process undertaken, the decisions made to amend the policies and the final form of those changes.

16) The amendments to the Foundation Policies (copy attached) are supported by the Shareholders’ Council.

Shareholders’ Agreement

Director Appointment Process

17) Following a Board Review, the Shareholders’ Council requested that the Board size be increased by one to seven and minimum number of independent directors be set at five. The rationale being to facilitate better Board succession planning and rotation of directors as well as workload expected from the proposed Three Waters Reform Programme.

18) An amendment to the SHA (copy attached) is required to set the number of Independent Directors to five (rather than a majority).

19) The current director rotation system requires the longest standing Independent and Non-Independent Directors to retire annually and this basis is not considered best practice. Accordingly, it is proposed to appoint directors on a three-year term.

20) Both the increasing in the number of directors and the three-year term appointments are expected facilitate better succession planning, director rotation and annual appointment process.

Director Remuneration

21) The Shareholders’ Council engaged Board Dynamics to undertake a LGFA director remuneration review and the previous review was undertaken in 2019.

22) Board Dynamics recommended the following annual fees be set effective 1 July 2021:

a) Independent Chair $108,000

b) Director with Audit and Risk Chair role $67,000

c) Director $60,000

d) Director with Audit and Risk Committee membership $63,000

These proposed fee increases are 5.9% from 2019.

Board Dynamics report is attached.

Strategic / Statutory Context

23) Council’s involvement in the LGFA allows access to long-term funding and lower debt servicing costs.

24) The LGFA supports the local authority sector and adds depth to the New Zealand’ debt capital markets.

Options Analysis

Option 1: Approve Resolutions

25) Amendments to SHA and the Foundation Policies provides operational flexibility and better alignment between the Board and shareholders responsibilities. These amendments are supported by the Shareholders’ Council.

26) Letter attached from David Bryant, member of the Shareholders’ Council outlining recommendations for Council’s decision making for AGM matters.

Option 2: Do Not Approve Resolutions

27) Council may decide not to approve amendments to SHA and Foundation Policies recommended in the report. This is not a recommended option as it restricts the LGFA Board’s risk management framework.

Significance

28) Matters in this report are not significant in terms of Council’s Significance and Engagement Policy. The LGFA AGM is open to the public to attend.

Attachments

1. Attachment A - LGFA AGM Agenda 23 November 2021 - A12987180 ⇩

2. Attachment B - Proxy Form - LGFA AGM 23 November 2021 - A12987184 ⇩

3. Attachment I - Notice of LGFA AGM November 2021 - A12987662 ⇩

4. Attachment C - LGFA Directors' Fees Review Aug 2021 - A12987185 ⇩

5. Attachment D - LGFA SC Recommendations - 23 November 2021 AGM - A12987186 ⇩

6. Attachment E - LGFA Foundation Policies - Proposed Changes- Mark Up - A12987187 ⇩

7. Attachment F - LGFA Foundation Policies - Amended - A12987188 ⇩

8. Attachment G - Shareholders' Agreement Proposed Changes - Mark Up - A12987189 ⇩

9. Attachment H - Shareholders' Agreement (2021 Amendment and Restatement) - A12987190 ⇩

Strategy, Finance and Risk Committee Meeting Agenda

1 November 2021

9.14 Rating Policy Review

File Number: A12984080

Author: Malcolm Gibb, Project Manager - Rating Review

Jim Taylor, Transactional Services Manager

Kathryn Sharplin, Manager: Finance

Authoriser: Paul Davidson, General Manager: Corporate Services

Purpose of the Report

1. To provide an update on the rating policy review requested by Commissioners as a result of submissions and deliberations on the long-term plan and seek confirmation from the committee on the areas of review to focus on for the 2022-23 Annual Plan.

Recommendations

That the Strategy, Finance and Risk Committee:

(a) Receives the report rating policy review.

(b) Approves a focus on priority topics for review of rates and rating structure for the 2022-23 year, being:

(i) commercial and industrial differential rates, focussing on the funding of the transportation and related stormwater activities.

(ii) new targeted rates for different levels of service for kerbside waste and recycling services.

(iii) council’s remission and postponement policies.

(c) Agrees that the 2022-23 year review of rates will not include short term online accommodation, higher levels of service for road sealing and options for charging for wastewater services.

(d) Notes that consideration of options for variable water by meter charges to address demand issues, may be considered further during the year.

Executive Summary

2. Staff will present council with an issues and options paper for the rating review topics in December 2021 to be included in the draft 2022/2023 Annual Plan for consultation with our community.

3. The review will focus on how council could fund the transportation activity, and the related parts of the stormwater activity that support the transportation network.

4. The review could result in potential increases in the commercial and industrial differential in the general rate and possibly other targeted rates.

5. The review will also include options for different levels of service for bin sizes for the second year of the operation of the kerbside waste and recycling service, and the possible introduction of new targeted rates to fund these different levels of service.

6. Changes to the Remission and Postponement Policies will be undertaken for consultation with the community through the 2022/23 Annual Plan process.

Background

7. Commissioners adopted the 2021-2031 long term budget which included significant capital investments in transportation, stormwater, resilience and community infrastructure. The commissioners were concerned that council needed to ensure it fairly allocated the funding of this infrastructure over our community.

8. Council has the lowest commercial differential on the general rate, and other targeted rates, when compared with other NZ metro Councils’ rating policies. In the Long Term Plan, Council resolved to set the commercial differential at 1:1.6 which is the ratio that would make rates equitable with residential ratepayers if they were able to claim GST and include their rates invoices as an expense for tax purposes.

9. Commissioners also considered increasing the general differential in 0.1 increments each year to more fairly allocate funding for better future social, economic, environmental, and cultural well-being outcomes for the community.

10. In July 2021, during the LTP deliberations, Council requested 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 could potentially include future changes to differential levels across these rating categories and could likely lead to proposals which could result in higher commercial rates in future years.

11. Staff were also asked to undertake work on rates postponement through a review of Council’s rates postponement policy including their financial implications, and to broadly support the proposed development of a national rates postponement scheme or other third-party schemes before February 2022.

12. The Local Government (Rating of Whenua Maori) Amendment Bill requires Council to review their rates remission and postponement on Maori Freehold Land Policy to ensure that it meets the intent of the Te Ture Whenua Maori Act 1993 by 1 July 2022, and further all other statutory remission or postponement documents at the next opportunity.

Proposed Focus of the 2022-23 Rates Review

13. Staff have considered the various areas of rates where a review of rating was identified during the LTP deliberations and submission process, and through the Rating Amendment Bill regarding rating of Whenua Maori.

14. The review of TCC’s policies on Rates Postponement and Rates Remission and Postponement on Maori Freehold Land will be developed as part of the review and consulted on concurrently with consultation on the Annual Report.

15. The decision to review of levels of differentials and possible new rating categories as requested through deliberations has been reset in accordance with the requirements of the Local Government Act 2002. The Act (section 101(3)) sets out the process for reviewing rates and the requirement that council must first undertake a funding needs analysis of the expenditure or activities to be considered before deciding who should contribute to funding these costs.

16. The funding needs analysis takes account of:

(a) the community outcomes to which the activity primarily contributes; and

(b) the distribution of benefits between the community as a whole, any identifiable part of the community, and individuals; and

(d) the extent to which the actions or inaction of particular individuals or a group contribute to the need to undertake the activity; and

(e) the costs and benefits, including consequences for transparency and accountability, of funding the activity distinctly from other activities

17. Based on this approach activities were identified with a potential rationale for differential rating, or targeted rating. The main area of expenditure proposed for the current review is Transportation (including transport-related stormwater).

Transportation

18. To perform a funding needs analysis of council’s transportation activity Council has engaged Fraser Colegrave from Insights Economics to draw on high level available information, including our transportation modelling and asset management data to gain insight into the relative use of our transportation network by particular categories of users or for particular purposes. This will be compared to the LTP budgets for the activity and how it is funded and what other funding options may better represent equitable funding.

19. Attachment 1 shows maps of council’s key transportation routes by volume of traffic and category of road (based on predominant road users such as heavy vehicles commercial or residential vehicles). These maps show condition and new investment requirements. There is significant past and proposed investment by council in the maintenance of roads used primarily by heavier traffic, including buses, and traffic from outside of the city or from the industrial areas within the city, on journeys to the Port of Tauranga and its surrounding areas. The costs of these industrial and commercial roads are significantly higher than establishment maintenance and renewal of predominantly residential roads.

20. Category 1-3 roads which are built to be suitable for heavy vehicles, or heavy traffic volumes, cost three times the cost of residential roads (category 4-5) to build and maintain. There is much higher incidence of maintenance and inspection of these roads, and the associated stormwater systems which protect these roads, than there is on other category roads. Future investment and maintenance is increasing.

SUSTAINIBILITY AND WASTE

21. Council is planning to provide ratepayers with a choice of small, standard and large waste (80L, 140L, 240L) and recycling (140L, 240L) bins, which will have new different targeted rates for each option. This will assist with the affordability and fairness for ratepayers with low use of either or both of the current waste or recycling services.

22. Council is planning to commence the bin choices campaign in November 2021.

WATER

23. Council is looking at water pricing signals to incentivise water demand conservation, particularly over the drier months of the year. Water restrictions have been needed in previous years and will again be required over the summer period. Water pricing may also be used as a mechanism to manage demand and further information will be presented to Council on this issue.

REMMISION AND POSTPONEMENT

24. As part of the LTP, in the light of significant rates increases, Council proposed a review of TCC’s postponement policy.

25. Under the existing policy there is an opportunity to postpone rates. To date there has been a very small uptake of postponement. In councils where there is a postponed rate scheme the uptake has also been very low. Banks currently offer a reverse mortgage option which could be utilised to postpone rates. Council would not be able to fully recover costs on a postponement scheme for lower charges than currently charged by banks.

26. Tauranga City Council is collaborating with other metro cities to investigate setting up a National Rates Postponement scheme for all New Zealand ratepayers. This would provide an equity release option that would not reside on council’s balance sheet as debt. A national scheme would have scale that would be more cost efficient and less expensive for ratepayers. It is unlikely that Tauranga City could compete with local banks on costs if all costs relating to a localised postponement scheme were fully recouped from the group of applicants.

27. Acknowledging that a national scheme may not be available right now, staff will provide options for criteria in council’s existing rates postponement policy, which is essentially a safety net for ratepayers, who have been unable to secure funding arrangements with a private sector provider.

28. The existing postponement policy also provides options to postpone rates on productive agricultural land whose valuation has increased due to a change in zoning from rural to commercial or residential zoning. Not all land in the recent boundary changes is used for productive agriculture purposes and it could be worthwhile to look at the criteria for postponed rates on rural land when there are zoning changes that would allow residential and commercial use on that land as the highest and best use.

29. The Office of the Valuer General has issued guidelines on the valuation of kiwifruit orchards with a licence to grow the gold variety of kiwifruit. This will substantially increase the capital value of around 15 orchards. Although these orchards have been underrated relative to their real value, the new rules could mean triple digit rates increases. Staff will provide options for phasing in these increases over a period.

Other Rates Topics for review

Other rates review topics were raised by submissions to the 2021/31 Long Term Plan. These include:

(a) Wastewater funding

(b) Short-term online accommodation to be identified as commercial

30. These items are discussed below and for the reasons identified are not recommended to be included in the 2022-23 rates review

Wastewater Funding

31. The wastewater activity is funded through a targeted rate that uses a toilet pan as a proxy for charging for this service. Each residential use has a maximum one charge regardless of the number of toilets and each commercial property is charged one targeted rate for each toilet or urinal. An industrial and commercial rating unit which discharges water that requires additional treatment is charged trade waste charges.

32. Horizontally, the residential and commercial sectors pay about the right share of the wastewater charges. Vertically there are inequitable charges for example where a superannuant who doesn’t use much water and does not put much water into the wastewater reticulation system pays the same as a factory with one toilet, or a large family home with three toilets. Commercial businesses such as large hotel or private hospitals pay for every toilet even when all those toilets are often underutilised.

33. Options for charging wastewater could include capital value, however this does not address equity around consumption of water. E.g. A superannuant in a high value home would pay more under a capital value base rate. Businesses that use little or no water could also pay for a service that they don’t receive directly.

34. The most equitable way for charging for wastewater would be as a percentage of the water that comes into a property. This is not available under the Local Government (Rating) Act; however, council could charge a fee based on water volumes outside the rating act. At this stage, given current water reform work, it would be pre-emptive to consider amending wastewater charging outside the Rating Act.

Short-term On-Line Accommodation

35. Submitters to the Long-Term Plan suggested that rates on short term online accommodation properties were inequitable compared to rates on commercial accommodation properties. There are a number of factors that make this option complex and guidance is sought from council as to whether to pursue this proposal further as part of the 2022-23 rating review. These factors include:

(a) Difficulty and complexity to enforce - Auckland City Council have established targeted rates on the apartments surrounding their events centre but this approach is subject to a judicial review. The administration to identify and track online accommodation means that this is a complex rate to administer and possibly inefficient

(b) Unclear gain in revenue or equity of outcome as the average unit rates on motels and hotels with multiple units are substantially lower per unit than the average rates paid on a residential use.

(c) Impact on the availability of on-line accommodation for visitors to the city and the impact on tourism numbers. - Tauranga has the least available accommodation of all the New Zealand metropolitan cities. Charging commercial rates on the units which are available for our major events may disrupt the availability of accommodation for these events.

Targeted Rate for like for like Road Resealing

36. Various submitters requested a like for like road resealing policy to support community choice for a change to the current level of service for road resurfacing which includes the replacement of asphalt with chip seal on neighbourhood roads (road categories 4 and 5);

37. Chip seal road surfaces cost substantially less than asphalt and meets the technical requirements of category 4 and 5 roads for residential areas.

38. The introduction of a targeted rate to pay for this option has been proposed for review. There would be significant work to establish areas to apply this rate to and secure full ratepayer agreement to the targeted rate for an existing area. This proposal would be complex and time consuming to pursue, and guidance is sought from commissioners about further considering this option.

Strategic / Statutory Context

39. The Local Government Act 2002 sets requirements for Council to assess the options for fair and equitable contributions to the funding of Council’s activities.

40. To comply with the Local Government (Rating of Whenua Maori) Amendment Bill.

Options Analysis

41. At this stage of the rates review process there are no options proposed.

Financial Considerations

42. Changes to rating policies could have an impact on the level of rates for all ratepayers.

43. The 2021 City wide revaluation to take effect from July 2022 could have an impact on the allocation of rates revenue across the community. This information will be available from our provider early in 2022 for staff analysis and review and then presentation to council.

Legal Implications / Risks

44. Staff will engage with Simpson Grierson to ensure legal compliance with the Local Government Act 2002 and Local Government (Rating) Act 2002.

Consultation / Engagement

45. A communication plan will be developed to ensure that council engage with key stakeholders and our community throughout the rating review and 2022/23 Annual Plan process.

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 proposal

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

ENGAGEMENT

49. Taking into consideration the above assessment, that the proposal is of high significance, staff are of the opinion that a comprehensive consultation/engagement is required under the Local Government Act. This will be compiled if the resolutions in this report are approved.

Next Steps

50. Issue and Options workshop/council meeting scheduled for December 2021 followed by decisions on Annual Plan in early 2022.

Attachments

Nil

Commercial roads

Industrial roads

Bus Routes

[1] Setting the Strategic Direction for the Long Term Plan, Agenda Item 8.2: Agenda TCC Policy Committee 16 June 2020

[2] Report ‘Strategic Framework for Tauranga City Council’, Agenda item 9.2: TCC Strategy Finance and Risk Committee Agenda 28 June 2021

[3] Report ‘Strategic Framework Refresh Project Update’, Agenda item 11.4: Tauranga City Council Agenda 13 September 2021

[4] Link to Tauranga City Council’s community outcomes and six guiding principles: TCC community outcomes and principles


AGENDA Strategy, Finance and Risk Committee Meeting Monday, 1 November 2021
I hereby give notice that a Strategy, Finance and Risk Committee Meeting will be held on:
Date:	Monday, 1 November 2021
Time:	10.30am
Location:	Tauranga City Council Council Chambers 91 Willow Street Tauranga
Please note that this meeting will be livestreamed and the recording will be publicly available on Tauranga City Council's website: www.tauranga.govt.nz.
Marty Grenfell Chief Executive

Type of Requester	Number of Requests
Individual	55
Media	7
Organisation	15
TOTAL	77

Type of Request	Number
LGOIMA	74
Privacy	3

General Theme	Number of Requests	Percentage of Total
Rates and/or financial information	4	5.2%
CCTV – number and locations of cameras	3	3.9%
Kerbside collections – requests pertaining to individual situations or streets, as well as general questions	3	3.9%
Three Waters	2	2.6%
Staff numbers and organisation chart	5	6.5%
Cameron Road Project	3	3.9%
Commissioner related requests i.e., costs, correspondence	4	5.2%

Outcome	Number
Cancelled	8
Partial Withhold	11
Provided	46
Withheld/Refused	6