Agenda of Ordinary Council Meeting - Monday, 13 December 2021

UNCONFIRMED Ordinary Council meeting Minutes

8 November 2021

MINUTES

Ordinary Council meeting

Monday, 8 November 2021

Order of Business

1 Opening Karakia. 3

2 Apologies. 3

3 Public Forum.. 3

4 Acceptance of late items. 4

5 Confidential business to be transferred into the open. 4

6 Change to the order of business. 4

7 Confirmation of Minutes. 4

7.1 Minutes of the Council meeting held on 18 October 2021. 4

8 Declaration of conflicts of interest 4

9 Deputations, Presentations, Petitions. 4

Nil

10 Recommendations from Other Committees. 4

Nil

11 Business. 4

11.1 Representation Review - Deliberations on submissions to Initial Proposal and adoption of Final Proposal 4

11.2 Water Conservation Strategy Update. 15

12 Discussion of Late Items. 15

13 Public excluded session. 15

13.1 The Pacific Apartments, 8 Maunganui Road, Mount Maunganui 16

14 Closing Karakia. 16

MINUTES OF Tauranga City Council

Ordinary Council meeting

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

ON Monday, 8 November 2021 AT 10.30am

PRESENT: Commission Chair Anne Tolley, Commissioner Shadrach Rolleston, Commissioner Stephen Selwood, Commissioner Bill Wasley

IN ATTENDANCE: Paul Davidson (General Manager: Corporate Services), Barbara Dempsey (General Manager: Regulatory & Compliance), Susan Jamieson (General Manager: People & Engagement), Nic Johansson (General Manager: Infrastructure), Christine Jones (General Manager: Strategy & Growth), Gareth Wallis (General Manager: Community Services), Peter Bahrs (Team Leader: Water Services), Coral Hair (Manager: Democracy Services), Robyn Garrett (Team Leader: Committee Support)

Acknowledgment

Commission Chair Anne Tolley acknowledged the sudden passing of kaumatua Huikakahu Kawe. Mr Kawe had been an advisor and kaumatua to Tauranga City Council for a number of years, had chaired the joint Tangata Whenua/Tauranga City Council standing committee and had assisted at citizenship ceremonies. The Commission wished to pass on their condolences to family and whanau.

Commissioner Rolleston acknowledged Mr Kawe’s whakapapa and noted his contribution to Tauranga Moana with the mahi undertaken in both Tauranga Moana and the Waikato. He had played a significant role in the community as a mediator and a leader, contributed both to TCC and the wider community, and would be sadly missed.

1 Opening Karakia

Commissioner Rolleston opened the meeting with a Karakia.

2 Apologies

Nil

3 Public Forum

Nil

4 Acceptance of late items

Resolution CO21/21/1

Moved: Commissioner Stephen Selwood

Seconded: Commissioner Shadrach Rolleston

That the following items be included in the agenda:

11.2 Water Conservation Strategy Update

13.1 The Pacific Apartments, 8 Maunganui Road, Mount Maunganui (public excluded)

Carried

5 Confidential business to be transferred into the open

Nil

6 Change to the order of business

Nil

7 Confirmation of Minutes

7.1 Minutes of the Council meeting held on 18 October 2021

Resolution CO21/21/2

Moved: Commissioner Bill Wasley

Seconded: Commissioner Shadrach Rolleston

That the minutes of the Council meeting held on 18 October 2021 be confirmed as a true and correct record.

Carried

8 Declaration of conflicts of interest

Nil

9 Deputations, Presentations, Petitions

Nil

10 Recommendations from Other Committees

Nil

11 Business

11.1 Representation Review - Deliberations on submissions to Initial Proposal and adoption of Final Proposal

Staff Coral Hair, Manager: Democracy Services

Key points

· 50% submissions agreed with the initial proposal; 49% were against.

· Submissions made around the establishment of a Māori ward were outside the scope of the review; submitters on this topic could not appeal the commissioners decision on the initial proposal.

· Te Rangapū had gifted the name Te Awanui for the Māori ward. Adoption of a name for the Māori ward was considered an amendment to the initial proposal.

· There was no one-size-fits-all model to follow; each community must choose the model that best fitted that community; to provide for fair and effective representation of the communities of interest.

· Submitters in support generally discussed the advantages of a single member geographical ward system.

· Submitters against the initial proposal generally noted the advantages of at large or mixed model systems; many wished to vote for the majority of councillors and to have a wide range of candidates to vote for.

· The legislation did not allow for a fully at large model in Tauranga.

· Option 2 was the closest to an “at large” model but was inequitable in terms of Māori vs general roll vote.

· Submitters suggested a variety of mixed model variants and multi member options. One five-ward model was supported by a number of submitters but was non-complying in terms of the +/- 10% requirement. A variation of a 5-ward system was modelled but required significant boundary changes from those proposed by the submitter to make compliant. Non-complying proposals tended to be for isolated or rural areas, not in a clearly defined urban setting such as Tauranga.

· A number of submissions were received regarding community boards. If there was a groundswell of support from a particular community in support of a board, establishment could be considered at any time.

· Noted the submitted ward boundary changes to the Pāpāmoa and Arataki boundaries; the change could be adopted as submitted and be complying.

· A decision was required on the name of the Matua ward.

· Summarised the options available to the Commissioners for their decision.

· Reasons for rejecting submissions must be included in the resolutions.

· Outlined the next steps in the process.

In response to questions

· The information that would be provided to the Local Government Commission if there were appeals/objections was clarified.

· Responses to submitters were planned to be emailed on Friday with an individual response to each submitter and a copy of the Public Notice.

Discussion points raised

· Noted that the option included in the report of the remodelled five-ward system, based on the submission received by the Sustainability Trust, had not been seen by the public or passed by the submitter; and as such would not be included as part of the substantive decision.

· The commissioners had undertaken a number of discussions with a large range of people and organisations, and thanked the submitters who attended the hearing.

· Noted the findings of the Review and Observer Team, particularly around mandate and leadership of the Mayor and effective operation of the Council.

· Numbers of submitters was quite small with the majority from a narrow demographic in the city; it was a challenge to get wide representation of views from the city. The number of submitters aged under 50 was minimal. Local government affected the day to day lives of every member of the city.

· Considered the initial proposal was equitable in terms of number of votes per voter, whether Māori or non-Māori, with one vote for councillor and one for Mayor.

· Considered that having a number of smaller wards would require collaboration and promote a greater cooperation/need for coalitions across council.

· The initial proposal gave a clear mandate to the Mayor as the only member voted for across the whole city.

· Greater consistency of mandate and defined communities of interest should facilitate better citywide decision making. Although a representative for a ward, a councillor must act in the interests of the whole of the city and take collective responsibility for council decisions.

· Commissioners needed to ensure an effective form of democracy for the transition back to elected democracy for Tauranga.

· Noted the challenge of getting a range of views from a wide selection of the city’s residents. Recognised the number of submissions that supported an at large structure, but a true at large system was not available.

· Possible capture of ward councillors by ward constituents was mitigated by the number of ward members – each one would need to collaborate with other councillors and must act in the interests of the wider city.

· There was no unanimity amongst submitters that opposed the single member ward model; no one solution was particularly supported.

· Supported a reduction in the number of councillors; considered this would enable more efficient decision making.

· Equity and fairness for voters was important, both for the Māori community and the wider community. Noted the previous significant decision to establish the Māori ward.

· Noted that Christchurch City Council had this representation arrangement for a number of years.

· Tauranga was a compact city so did not see such a need for community boards; there had been challenges in terms of policy directive and strategy for overall council and city-wide decisions where community boards were used.

· Noted the submission on the use of community juries as a form of engagement; would support a trial of this being adopted for an upcoming Council process such as the Annual Plan.

Resolution CO21/21/3

Moved: Commissioner Stephen Selwood

Seconded: Commissioner Shadrach Rolleston

That the Council:

(a) Receives the report “Representation Review – Deliberations on submissions to Initial Proposal and adoption of Final Proposal”.

(b) Having considered all submissions received on the Initial Proposal and in accordance with sections 19M and 19N of the Local Electoral Act 2001, determines that the following changes be made to the Initial Proposal: the name of the Māori ward to be Te Awanui, the name of the Matua ward to change to Matua-Otūmoetai and changes to the ward boundaries of the three coastal wards; and the following proposal will apply for the Tauranga City Council for the elections to be held on 8 October 2022:

(i) The Tauranga City Council shall comprise a Mayor and nine councillors.

(ii) Eight of the proposed members of the Tauranga City Council are to be separately elected by the electors of eight general wards and one member is to be separately elected by the electors of one Māori ward. The Mayor will be elected at large by all the electors of Tauranga City.

(iii) The name of the Māori ward will be “Te Awanui” as gifted by Te Rangapū Mana Whenua o Tauranga Moana.

(iv) The proposed names of the wards, the number of members to be elected by the electors of each ward, and the population each member will represent are set out in the table below together with the compliance with the fairness population rule for the general wards.

Ward Name	Number of Members to be elected	Population Per Member	+/- 10%
Te Awanui Ward	1	15,300	N/A
Mauao/Mount Maunganui	1	15,650	-8.24
Arataki	1	17,050	-0.04
Pāpāmoa	1	17,800	4.36
Welcome Bay	1	18,000	5.53
Matua-Otūmoetai	1	18,050	5.83
Bethlehem	1	17,550	2.89
Te Papa	1	16,400	-3.85
Tauriko	1	15,950	-6.49
Total	9

(v) In accordance with section 19V(2) of the Local Electoral Act 2001, the population that each member of a general ward represents is within the range of 17,056 +/- 10% (15,350 to 18,762)

(vi) The proposed boundaries of each ward are those set out in the map below.

(vii) That in accordance with section 19T of the Local Electoral Act 2001, the wards provide effective representation of the following communities of interest:

Ward Name	Description of communities of interest
Te Awanui	This ward reflects the community of interest for Māori electors and those in the Māori community across the entire Tauranga City.
Mauao/Mount Maunganui	This ward includes Mount Maunganui, Omanu, Bayfair and Matapihi. It forms part of the coastal strip and recognises the unique feature of Mauao which is an important cultural, historic, and geographical feature. This ward has a focus on leisure and tourism, faces increased tsunami risk, sea level rise and coastal hazards due to its location. Improved transportation links to the City via state highways are of importance to residents.
Arataki	This ward includes Arataki, Te Maunga, Palm Beach and Kairua. It forms part of the coastal strip. Like the Mauao/Mount Maunganui ward, the residents have strong links to the unique feature of Mauao and the ward has a focus on leisure and tourism, faces increased tsunami risk, sea level rise and coastal hazards due to its location. Improved transportation links to the City via state highways are of importance to residents.
Pāpāmoa	This ward includes Pāpāmoa, Golden Sands, Wairakei and Te Tumu. This coastal strip area will continue to have accelerating population growth. In the next 10 years an estimated 2-3,000 new homes will be built in the areas already zoned for housing and 7-8,000 homes once Te Tumu is zoned for housing. It also faces increased tsunami risk, sea level rise and coastal hazards due to its location. Improved transportation links to the City as well as the construction of a direct link to the Tauranga Eastern Link via the Pāpāmoa East Interchange are of importance to residents.
Welcome Bay	This ward includes Welcome Bay, Maungatapu, Kaitemako, Poike and Ohauiti. These areas have a reliance on services and facilities located in other suburbs and transportation to the city centre is an important issue for local residents. More rural based residents have specific needs related to rural living.
Matua-Otūmoetai	This ward includes Matua, Otūmoetai, Bellevue and Brookfield. With a large population living close to the city centre, the residents of this ward are impacted by the increase of infill housing, are interested in safer transport options and the development of community facilities.
Bethlehem	This ward includes Bethlehem and Judea. With a large population living close to the city centre, the residents of this ward are impacted by the increase of infill housing, are interested in safer transport options and the development of community facilities.
Te Papa	This ward includes Te Papa Peninsula, Sulphur Point, CBD, Fraser Cove, Gate Pa, Tauranga South, Merivale, Yatton Park and Greerton (north of Chadwick Road). The Te Papa Spatial Plan, with its focus on increased density and city-living type housing, is estimated to increase the number of residents on the Te Papa Peninsula by 15,000 by 2050. The Cameron Road redevelopment project with improved passenger services and transport choices will have a major impact on residents. The development of community facilities, spaces and places and the inner-city revitalisation are of importance to residents.
Tauriko	This ward includes Pyes Pa, Hairini, Oropi, Greerton (south of Chadwick Road), The Lakes and Tauriko. The expansion of the city to the west has seen boundary changes with Western Bay to facilitate the development of business, industry and residential growth. It is estimated in the next 10 years that 3-4,000 new homes will be built, improvements will be made to SH29 and connections to it, and an additional 100-150 hectares of business land will be provided creating an additional 2,000 jobs. This ward includes rural based residents that have specific needs related to rural living.

(viii) That no community boards be established.

(c) As required by sections 19T and 19W of the Local Electoral Act 2001, the boundaries of the nine wards coincide with the current statistical meshblock areas determined by Statistics New Zealand.

(d) Notes that Tauranga City has experienced a crisis in leadership, such that the Minister of Local Government in February 2021 appointed a Commission to replace the elected Council. This representation review is focused on ensuring the city can return to an efficient and effective representative Council, and takes into account the Review and Observer Team’s comments and observations on representation.

Peter Winder, Chairperson of the Review and Observer Team, recommended that all councillors, except the Māori councillor, be elected from a larger number of smaller wards, with boundaries that reflected communities of interest. This would, in Mr Winder’s opinion “create a clear and certain mandate from the public and provide a better than even chance of delivering a functional council than the one the Team observed”.

(e) In accordance with section 19N of the Local Electoral Act 2021, the reasons for the Final Proposal are:

(i) This proposal recognises the distinct communities of interest in the City based on geographical areas and provides for fair and effective representation of those communities of interest.

(ii) This proposal is seen as more equitable as both general and Māori electors vote for one councillor.

(iii) This proposal has a more even distribution of persons per councillor for the general wards.

(iv) This proposal has the potential for a more efficient governance model with a reduction in the number of councillors from ten to nine.

(v) This proposal is more easily understood than other representation arrangements and has a direct relationship between electors and the ward councillor.

(vi) This proposal has the potential for less costs for candidates standing in general wards.

(vii) This proposal may address the concerns and issues raised by the Review and Observer Team.

(viii) This proposal provides the Mayor with a clear leadership role across the city as the Mayor is elected at large (by all voters).

(ix) The structure provides for greater clarity and simplicity which will make the process more approachable and easier to engage with for the community and remove the potential for power imbalance amongst Councillors.

(x) The structure encourages a culture of collective responsibility. With greater consistency of mandate and responsibility, the proposed structure will support a collaborative environment within elected members.

(xi) Alongside this structure, the Commission recommends additional steps, outside of the representation review, to enhance local democracy including:

a. Enhanced briefings for incoming Council

b. Greater collaboration with community

c. Continue the increased Council focus on community

d. Initiatives to encourage voter participation and more diversity of candidates standing for office.

(f) In accordance with section 19N of the Local Electoral Act 2021, the reasons for the rejection of submissions are included in the public notice and are set out below:

Category of submission objecting to the Initial Proposal	Number of submitters	Reason for rejecting matters raised in submissions
At large councillors – wanted to vote for councillors city-wide	17	An ‘at large’ only option is not permitted by the Local Electoral Act 2001 when a Māori ward is established. Option 2 in the pre-engagement survey is the closest to an at large model for people enrolled on the general electoral roll.
Option 2 in the pre-engagement survey to be chosen (10 councillors plus a mayor, with one general ward of nine councillors and one Māori ward with one councillor)	9	Option 2 does not provide for geographical representation of separate communities within the City. It is the most inequitable model of representation for Māori as voters on the general electoral roll would each be voting for eight of the nine councillors plus the mayor and the voters on the Māori electoral roll would be voting for one of the nine councillors plus the mayor.
Mixed model with councillors elected by wards and at large	16	The mixed model includes councillors of different status, some elected by wards and some at large; and the Review and Observer Team believed that this model contributed to the dysfunction of the previous council. The Council agreed with the Review and Observer Team’s opinion and considered that, on balance, the disadvantages of a mixed model outweighed the advantages.
Multi-member ward model with 5 general wards with 2 councillors and 1 Māori ward with 1 councillor	6	The multi-member ward model with five general wards has less geographical coverage of communities of interest than the Initial Proposal. This representation model has not been seen by the public and its acceptance as a representation model has not been tested; however, the multi-member ward model in the pre-engagement survey was the least popular option. The original submission was substantially non-complying; substantial amendments were made to the submitted boundaries in an attempt to achieve compliance. On balance, the Commissioners are of the view that even a modified model would not be optimal from an efficiency or effectiveness view. Suggested ward boundaries for this model were amended from those proposed by the submitter to achieve compliance with the fairness rule. This proposal only just achieves compliance with the +/- 10% rule, with some communities of interest being split to achieve this compliance. These changes may be unacceptable to the submitter.
Ward councillors captured by ward interests	10	The Council recognises the perception that ward councillors could be captured by their ward interests, and that this was a potential disadvantage of any ward-based model. The Council also noted the perception that councillors elected at large could be captured by interest groups if they stand for office representing a particular group or stand on a single issue. However, the Council gave greater weight to the fact that all councillors make a declaration when they take office that they will act in the best interests of Tauranga City, and took into account the Bay of Plenty Regional Council evidence that their councillors, though elected from geographic wards (called constituencies), take a region-wide view and effectively represent the entire region.
Ward boundaries – requested amendments to ward boundaries	7	The Council considered a number of changes to the ward boundaries as suggested by submitters, and agreed to move the boundary between the Mauao/Mount Maunganui and Arataki wards to Girven Road, and to move the boundary between the Pāpāmoa and Arataki wards to include Pāpāmoa Plaza, Fashion Island and surrounding residential areas, as these changes better reflect the communities of interests in those wards, and still enables the proposal to comply with the +/- 10% rule. The Council made no other changes to the remaining ward boundaries. The Council considered the submission to create a separate Greerton ward; however, that would result in a non-complying proposal and distortions of other ward boundaries. The Greerton community will be represented by two councillors, from the Te Papa and Tauriko wards.
Ward names	6	The Council received submissions to change the name of the Matua ward to Otūmoetai. The ward name will be Matua-Otūmoetai.
Proposing another option	11	Various scenarios for mixed model representation were proposed and one for a multi-member ward. The reasons for rejecting these options are the same as those outlined above in the sections on mixed model and multi-member ward.
Community Boards – requested these be established	14	The Council confirmed its decision not to establish community boards for the following reasons: (a) Tauranga City has not previously established community boards and, given the Local Government Review underway that will consider the future of local government over the next 30 years, it is considered premature to introduce community boards at this time. (b) There has been no significant demand from one or more specific communities to establish a community board. The Council can consider a demand from the community at any time to establish a community board. (c) Fair and effective representation for individuals and communities would be provided through the proposed representation arrangements without the need to establish community boards. (d) The Remuneration Authority’s conclusion, following its review of community board remuneration, that it was timely for a central government agency to review the functions, representation levels and associated characteristics of community boards. (e) Establishment of a further tier of local government bureaucracy will add an additional burden in terms of administration and efficiency; and may detract from achieving a Tauranga City vision on fiscal strategy and other potential policies. (f) Alternative options are available to the Council following the 2022 elections to ensure local community views are heard and advocated for. These include establishing community committees or setting up place-based community groups for particular projects.
Number of councillors and uneven number of elected members	14	The Council considers that the complex issues raised by governing a rapidly growing city could be reasonably met by a reduction from ten councillors and a mayor to nine councillors and a mayor; and noted that the Commission was modelling the efficiencies and effectiveness of smaller governance for the City. The request for an uneven number of elected members was rejected. A casting vote is provided for in the Council’s Standing Orders for the Mayor or chairperson of a committee to use in the case of an equality of votes.
Increase Māori representation	8	The number of Māori members is set through a formula in Schedule 1A of the Local Electoral Act 2001 and, at present for Tauranga City, is one Māori member. To have two Māori councillors requires either an increase in the Māori Electoral Population or an increase in the number of ward councillors to 15.
Māori ward – disagree with establishment	21	The representation review does not provide an opportunity to revisit the decision to establish a Māori ward.
Commissioners – retain Commissioners	4	This representation arrangement is not available to the Council under the Local Electoral Act 2001. The Minister of Local Government has the power to decide on the term of the Commissioners. Legislative changes would be required for a hybrid model of representation to include appointed Commissioners and elected councillors.
Quality of candidates	7	The representation review does not provide for the Council to consider restricting candidates from standing for office. The Local Electoral Act 2001 sets out the criteria for standing for council. The Electoral Officer is required to take nominations from any person wishing to stand as a candidate who meets that criteria.
Other Mayor elected by councillors. The second highest polling mayoral candidate be appointed as the Deputy Mayor. Limit candidates to stand for mayor or councillor, not both. Appointments Committee be set up with 50% councillors appointed and up to 50% elected. Councillor to represent commercial ratepayers. Address population growth Citizens’ Assemblies to be established	12	The Local Electoral Act 2001 (LEA) does not provide for the Council to give relief to any of these submissions. The Mayor is required to be elected by the voters of the city. The Local Government Act 2002 sets out the process for the appointment of the Deputy Mayor and any changes would require legislative change. Candidates can stand for both positions of mayor and councillor. Voters elect the mayor and councillors. The Minister of Local Government has the power to appoint Commissioners. Legislative change would be required for a hybrid model of appointed Commissioners and elected members. A councillor to represent commercial ratepayers is not provided for as the legislation is focused on fair and effective representation of people. Ward boundaries must be physically mapped on a boundary using Statistics New Zealand mesh blocks. The LEA requires the Council to use either census data or the latest population estimates when completing the review. The representation review has used the 2020 population estimates as these provide more up to date population data. Establishing Citizens’ Assemblies sits outside the scope of the representation review. The Council may establish Citizens’ Assemblies at any point.

(g) In accordance with section 19N of the Local Electoral Act 2001, the Council will give public notice of this proposal on 12 November 2021; and that those persons or organisations who made submissions on the Initial Proposal may appeal the final proposal and those who have not submitted may object to the final proposal, with appeals and objections closing at 5 pm on 13 December 2021.

(h) Approves the recommended responses to submitters on the Initial Proposal as set out in Attachments 4 and 5, subject to any amendments as determined by the Council.

Carried

11.2 Water Conservation Strategy Update

Staff Nic Johansson, General Manager: Infrastructure

Peter Bahrs, Team Leader: Water Services

Key points

· The new water conservation strategy was to be pushed from this week; this report had been brought to the meeting to bring the new stricter view on water conservation into the public arena.

· Outlined the restriction regime proposed.

In response to questions

· Regular updates on how water sources were tracking would be provided regularly, monthly or by exception, with an early alert if things were not tracking as expected. A seven-day rolling average was provided on the website.

· The December – March regime would start on 1 December, with some minor restrictions in place from 22 November. It was planned to move down to a lighter version of restrictions from April, depending on the community response during the December-March period. The aim was to build an ongoing behavioural change to get people to value water and use it wisely.

Resolution CO21/21/4

Moved: Commissioner Bill Wasley

Seconded: Commissioner Stephen Selwood

That the Council receives this late report on the water conservation strategy update.

Carried

12 Discussion of Late Items

Discussed as part of business.

13 Public excluded session

RESOLUTION TO EXCLUDE THE PUBLIC

Resolution CO21/21/5

Moved: Commissioner Shadrach Rolleston

Seconded: Commissioner Bill Wasley

That the public be excluded from the following parts of the proceedings of this meeting.

The general subject matter of each matter to be considered while the public is excluded, the reason for passing this resolution in relation to each matter, and the specific grounds under section 48 of the Local Government Official Information and Meetings Act 1987 for the passing of this resolution are as follows:

General subject of each matter to be considered

Reason for passing this resolution in relation to each matter

Ground(s) under section 48 for the passing of this resolution

13.1 - The Pacific Apartments, 8 Maunganui Road, Mount Maunganui

s7(2)(a) - The withholding of the information is necessary to protect the privacy of natural persons, including that of deceased natural persons

s7(2)(g) - The withholding of the information is necessary to maintain legal professional privilege

s7(2)(i) - The withholding of the information is necessary to enable Council to carry on, without prejudice or disadvantage, negotiations (including commercial and industrial negotiations)

s48(1)(a) - the public conduct of the relevant part of the proceedings of the meeting would be likely to result in the disclosure of information for which good reason for withholding would exist under section 6 or section 7

Carried

14 Closing Karakia

Commissioner Rolleston closed the meeting with a Karakia.

The meeting closed at 12.05pm.

The minutes of this meeting were confirmed as a true and correct record at the Ordinary Council meeting held on 13 December 2021.

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

CHAIRPERSON

Ordinary Council meeting Agenda

13 December 2021

11 Business

11.1 Adoption of Tauranga City Council Annual Report 2020/21 for the year ended 30 June 2021

File Number: A13016645

Author: Kathryn Sharplin, Manager: Finance

Josh Logan, Team Leader: Corporate Planning

Tracey Hughes, Financial Insights & Reporting Manager

Authoriser: Paul Davidson, General Manager: Corporate Services

Purpose of the Report

1. To adopt the Tauranga City Council Annual Report 2020/21 for the year ended 30 June 2021.

Recommendations

That the Council:

(a) Receives Report – Adoption of Tauranga City Council Annual Report 2020/21.

(b) Receives the Audit report on the Annual Report 2020/21.

(c) Adopts the Audited Tauranga City Council Annual Report 2020/21 pursuant to the provisions of the Local Government Act 2002.

(d) Authorises the Chief Executive to make any necessary minor numerical, drafting or presentation amendments to the Annual Report 2020/21 prior to final printing.

(e) Notes the audited summary annual report will be published using summarised material from the approved annual report. It will be presented to council for information in February 2022.

Executive Summary

2. The Annual Report is presented for adoption by Council.

3. Audit New Zealand has audited the Annual Report 2020/21 and will present its report to this meeting after which it is recommended that Council adopt the audited Annual Report for the year ended 30 June 2021.

4. The draft annual report was presented twice to Strategy, Finance and Risk Committee (SFRC) on 20 September and 1 November 2021. There have been some changes to the financial results after further discussions with Audit New Zealand, and review of the revaluation of three waters assets. The net effect of these changes is an increase in weathertight and other provisions expense to $26.4m from $7m and a reduction of $3.5m in expenditure, primarily depreciation. The consolidated surplus after tax is $66.4m

5. The financial results for Tauranga City Council and Group are as follows:

Tauranga City Council
$790m rates surplus with $695k interest surplus transferred to an interest rate management reserve.	$65m surplus before tax
$586m net debt – 209% debt to revenue ratio	$182m capital expenditure
Tauranga Council (Group)
$64m consolidated surplus before tax	Net Debt $586m, debt to revenue ratio 203%

The non-financial results for the year include:

53%	37%	10%
78/148 measures achieved.	55/148 measures not achieved.	15/148 measures unable to be assessed.

Background

6. The Annual Report (Attachment 1) is presented for adoption by Council.

7. The Summary Annual Report will be completed using sections from this report. and presented to Council at a later date for information.

8. The draft Annual Report was presented to SFRC on 20 September with key themes for the year discussed.

9. While the key themes remain as discussed at SFRC, there have been amendments to the financials agreed with Audit New Zealand. The main change affecting the statement of comprehensive revenue and expense has been a change to provision expense relating to a weathertight claim. The provision has been increased from $7m to $26.4m to reflect an agreed settlement. Offsetting this change, the contingent liability (note 41) has been decreased. In addition, there was a reduction in depreciation associated with a lowering of the upward revaluation in three waters assets ($3.5m). The consolidated surplus before tax is $64m.

10. A number of issues have made this year’s audit more challenging and time consuming than usual. These include impacts of a new finance system, revaluation of three waters assets ahead of their normal three-yearly valuation cycle, and the extra work pressures and time constraints since Covid19.

11. This is the first year using the SAP financial system and teething problems with the system, the lack of some reports in formats suitable for audit as well as staff not sufficiently familiar with the system have all led to significant challenges and delays for both TCC staff and the audit team. The finance team and digital services will prioritise some process change, documentation, and report development to address these issues.

12. Three waters reform and increasing costs in our recent three waters investments meant TCC chose to bring forward the revaluation of three waters ahead of its normal three-yearly revaluation. This put both our valuers and TCC under additional time pressure and the revaluation was completed very late in the year. It has been subject to a number of amendments in consultation with Audit NZ and the valuers. Staff are currently considering whether to undertake a further three waters revaluation as at 30 June 2022 to reflect ongoing increases in costs.

13. Resource challenges exist both within TCC and Audit NZ, which arise from the delays to annual plans and annual reports since Covid19 first impacted in 2020. This pressure will continue into next year. The workload related to assets, revaluation and financial reporting requirements continues to increase for TCC particularly with the large and increasing capital programme. Additional finance resources are being recruited to support this work.

14. Audit NZ has completed its audit and various amendments have been reflected in the financials and the notes to the accounts. The Audit Director will provide the audit opinion at the meeting.

15. Once Audit New Zealand has presented its audit opinion, Council adopts the audited financial report. The audited Annual Report will be made publicly available.

16. The Summary Annual Report 2020/21 has yet to be finalised and audited. This summarises financial information, along with extracts from the front sections of the Annual Report. The summary report is also required to be audited and published within one month after adoption of the Annual Report. The summary does not require specific adoption by council as it is a summary of the adopted annual report material. It will be presented to council for information in February 2022.

Strategic / Statutory Context

17. The Annual Report must be prepared each year in accordance with generally accepted accounting practice in New Zealand and compliant with the requirements Section 98 of the Local Government Act 2002. The annual report must be completed, and the audited annual report adopted by Council. As per Section 98 (3), usually this adoption must occur within four months of the end of the financial year.

18. However, due to the impacts of COVID-19 on the reporting cycle, the Local Government Act 2002 was amended to add Section 98 (7) which extends the timeframe for adoption of annual reports to 31 December for the 2020/21 and 2021/22 financial years.

19. Council must also make publicly available within one month of adoption of the annual report, both the report and a summary report prepared under section 98 (4)(b) of the Local Government Act 2002.

Options Analysis

20. No options are presented.

Financial Considerations

21. The annual report provides a report to the community of Councils performance against the proposed services and capital investment set out in the annual plan and long-term plan.

Consultation / Engagement

22. Within one month of adoption, Council must make publicly available the annual report and a summary of the information contained in the annual report.

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. The adopted report will be loaded to the TCC website and copies of the summary annual report distributed once this has been completed and audited.

Attachments

1. Draft Annual Report - A13008026 (Separate Attachments 1)

2. Annual Report Summary - A13074149 (Separate Attachments 1)

Ordinary Council meeting Agenda

13 December 2021

11.2 Annual Plan 2022/23 - Indicative Draft Budget

File Number: A13015539

Author: Josh Logan, Team Leader: Corporate Planning

Kathryn Sharplin, Manager: Finance

Tracey Hughes, Financial Insights & Reporting Manager

Authoriser: Paul Davidson, General Manager: Corporate Services

Purpose of the Report

1. In accordance with the Local Government Act 2002, Council is required to produce and adopt an annual plan, by 30 June 2022.

2. This report seeks your approval of the indicative Annual Plan 2022/23 budget identified in this report and seeks your direction on the issues and options relevant to the budget.

Recommendations

That the Council:

(a) Receives the report Annual Plan 2022/23 - Indicative Draft Budget

(b) Endorses in principle the Annual Plan draft budget for capital and operations as summarised in Attachments A.

(c) Confirms the funding mix for general rates, stormwater, resilience and community targeted rates between the commercial/industrial sector and the residential sector will at least be maintained at 76%/24% once the property revaluation process on capital values is completed for the 2022/23 financial year

(d) Endorses the principle that the benefits provided by the transport activity be further considered in February 2022, to more fairly allocate rate revenue funding between the commercial/industrial sector and residential sector, for inclusion in the draft 2022/23 draft Annual Plan.

(e) Plan to consult with the community during the 2022/23 Annual Plan process on how best to transition to a higher differential for the commercial/industrial sector to align with benefits received from council investment to ensure the rate funding mix is better balanced across all its activities.

Executive Summary

3. This report provides a draft budget for the 2022-23 Annual plan which is year 2 of the 2021-31 Long term plan (LTP). The draft budget includes matters outlined at Council on 6 December 2021 in report 11.9 Annual Plan 2022-23 Key Issues and Approach.

4. There have been updates to capital and operating budgets to reflect resourcing requirements and timing and cost changes in the capital programme. Overall, the key financials in the annual plan include some minor variances to year 2 of the LTP. There has been a redirection of debt retirement of $1.1m for the year from stormwater to address unfunded debt from weathertight claims.

5. The draft budget includes loan funding of expenditure associated with planning and consultancy where this is of a one-off nature to support new areas of planning, design and engagement associated with the capital programme and one-off new initiatives including government initiatives.

6. Review of how rates should be allocated amongst residential and commercial rating categories has focussed on the benefits and funding of transportation investment and services. Interim findings support an increase in the commercial contribution to rates revenue over the residential contribution.

Background

Annual Plan Financials

7. The LTP identified the need to invest more in core infrastructure to address traffic and essential service demands and to provide for population growth. Further investment in community facilities and services was also agreed.

8. TCC has ramped up its resourcing to deliver the additional capital programme. However, challenges have been experienced in the form of supply constraints and increasing costs of resources – staff, consultants, and materials. Changes have been made to draft budgets to reflect these impacts on costs and timing, which affect both capital and operational costs. There are also adjustments to costs to reflect likelihood that there will be some delays or unavailability of resources including recruitment of new staff.

9. Workloads have continued to increase across areas of service provision such as planning and building services and in response to new initiatives including government reform initiatives. Revenue increases offset some of these cost increases, while other one-off areas of work, such as planning for intensification, which have long term benefits are proposed to be covered through loan funding which will be retired over a period of five years.

10. Key Financials for the Draft annual plan compared with year 2 of the LTP are set out as follows.

Financial Measure	Year 2 of LTP	Indicative Annual Plan 2022-23	Variance
Operational Expenditure $m	348	356	8
Operational revenue $M	335	341	6
Rate requirement $m	268	270	2
Overall rates increase % (after growth)	12%	13%	1%
Capital Expenditure	392	365	-27
Net debt	952	921	-31
Debt to revenue ratio% (incl BVL revenue)	220%	214%	-6%

11. More detail of variance analysis is included as Attachment A.

Review of aspects of rating structure

12. A review of aspects of the rating structure has been undertaken with an initial focus on the costs and benefits of transportation investment and services. The full analysis and report is still underway from Fraser Colgrave at Insight economics. Initial analysis included as Attachment B shows that the commercial/industrial sectors account for more than 50% of the road usage and therefore the benefit from and impact on the transportation activity (capital investment and services). At present, this commercial/industrial sector pays only 23% of the rates for funding for this activity with 77% coming from the residential sector.

13. The Insight Economic’s report will be finalised and reported to Council in February 2022 to enable consideration of rating structure changes that reflect a fairer allocation. At that time council will be provided options for the timing of any changes between different categories of users. Indications of the impact of different scenarios are included in Attachment B.

Strategic / Statutory Context

14. The preparation of an annual plan is required under the Local Government Act 2002.

Options Analysis

15. The budget has arisen from decisions around investment and levels of service. The options for these have been considered through separate council decisions and during the LTP. There are therefore no specific options presented in this report.

Financial Considerations

16. This report forms part of the process of preparing a draft budget for the 2022/23 financial year. This draft will be consulted on in March/April 2022.

Consultation / Engagement

17. Consultation on the annual plan will be in accordance with the requirements of the Local Government Act and the details of engagement will be further developed and presented at meetings in February and March 2022. This process will include early engagement with stakeholders regarding proposed changes to aspects of the rating structure.

Significance

18. The matter considered by this report, the draft Annual Plan 2022/23, is considered of high significance in terms of council’s Significance and Engagement Policy. This is because it affects all residents, ratepayers and businesses in, and visitors to, the city, and because it involves council’s resource allocation decisions and rating decisions for the next year.

19. However, the decisions to be made in response to this report are considered of low significance as they are just one interim step in the process of developing the draft annual plan.

Next Steps

20. The draft budget for consultation will be approved on 21 February after consideration of changes arising from issues and options papers being considered at 8 February 2022 and any further updates or refinement of projects and initiatives during that time.

Attachments

1. Attachment A - All of Council high level information - A13106834 ⇩

2. Attachment B - Rating Differential Changes to Align with Transportation Benefits - A13107599 ⇩

Ordinary Council meeting Agenda

13 December 2021

11.4 Update - Three Water Reforms

File Number: A13074763

Author: Cathy Davidson, Manager: Directorate Services

Authoriser: Nic Johansson, General Manager: Infrastructure

Purpose of the Report

1. This report provides an update of the Government’s Three Waters Reform, and Tauranga City Council (TCC) Three Waters Reform project.

2. Council’s feedback is being sought by Ministry of Business, Innovation and Employment (MBIE) on a discussion paper around the proposed Economic Regulation and Consumer Protection structure for Three Waters Services in New Zealand.

Recommendations

That the Council:

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

(b) Approves that Tauranga City Council provides a response to the Ministry of Business, Innovation and Employment (MBIE) on proposed economic and consumer protection regulation regime for Three Waters

DISCUSSION

Government Three Waters Reform (3WR) Update

3. The last update to Council on three water reforms was submitted 04 October 2021.

4. On 27^th October 2021, Minister of Local Government announced three water reforms would be Government mandated in order to realise national interest benefits.

5. Tauranga City Council (TCC) response to the proposed three water reforms, as approved by Council, was sent to the Minister of Local Government. A report summarising all local government formal responses was jointly prepared by Department of Internal Affairs (DIA), Local Government New Zealand (LGNZ) and Taituarā. (See Attachment One – DIA Summary of Submissions Report)

6. The executive overview of feedback being:

(a) the governance model being complex, and not adequately providing for local authority and mana whenua influence in decision making, on behalf of their communities;

(b) the loss of local voice in the system, especially given the large size of the proposed entities;

(c) how the water services entities will interact with, and be influenced by, local government planning documents and decisions around growth and economic development;

(d) that more certainty is needed around the inclusion of stormwater in the reform proposals, and how the entities will interact with, and work alongside, councils to take an integrated approach to stormwater management, including how assets with multiple uses will be treated;

(e) that the limitations and assumptions used in the Water Industry Commission for Scotland (WICS) modelling do not reflect the situations of individual councils accurately enough;

(f) that there has not been enough engagement and appropriate information to date on the reforms, and there needs to be public consultation before decisions on the next steps are made;

(g) the three waters reforms should be better aligned with the resource management reforms and the Future for Local Government review, to create the best possible outcome for local government and communities.

(h) Minister of Local Government announced the establishment of a DIA Working Group to address local government feedback on representation, governance and accountability of the new water services entities on 10^th November 2021.

National Transition Unit (See Attachment Two – DIA National Transition Unit Update)

7. The Government has established the National Transition Unit (NTU), a new DIA business unit to execute Government decisions on Three Waters reform and through a consistent and co-ordinated nationwide approach to transition.

8. NTU will set up four local establishment entities (LEEs) to support transition within each entity’s region. It is expected that further information will be provided on the form and approach of transition prior to the end of the year.

9. The LEEs will have a Board, of three to six members, appointed by the Minister of Local Government. That process will be led by the NTU, involving consultation with councils and Iwi/Māori. The LEE Chief Executives will also be appointed through processes led by the NTU.

10. Collaboration with Councils will continue. This is to ensure Council have the opportunity to be consulted with on board appointments, technical advice, local knowledge, staffing support and reference groups.

11. The NTU will have dedicated relationship leads for councils and Iwi/Māori.

12. Workforce retention is a key priority for the industry. The NTU will be working with councils to support the workforce through the changes ahead.

Economic Regulation

13. Ministry of Business, Innovation and Employment (MBIE) have provided the opportunity to make a submission on the proposed economic and consumer protection. regulation regime for Three Waters. The opportunity to make submissions is not limited to local government, other groups or members of the public can make submissions.

14. The MBIE feedback/submission process is an open process, and submissions will be publicly available via their website.

15. The Three Waters Reform (3WR) project team, together with input from Manager Finance and Director City Waters, have drafted a submission on behalf of TCC. Further work to finalise content is underway. The deadline for submissions is 20^th December 2021. Key areas that MBIE is seeking feedback on are:

· what form of economic regulation should apply

· who should the economic regulator be, and how should it be funded

· consumer protection structures, and how those should be funded

· consumer disputes

Three Waters Reform Project Status Update

16. DIA approval has been received for CIP funding to financially support extra resource required to establish a Three Waters Reform (3WR) project team.

17. Stephen Burton has been seconded for six months to lead the Operations workstream within NTU’s Asset Management, Operations and Stormwater Group. (AMOS)

18. TCC 3WR Project team and Project Steering Group have been established, supported by an independent Chair. Regular steering group meetings are now underway. The focus of the 3WR project resources is on:

(a) establishing an information base relating to three waters business systems, workforce and water services operations

(b) understanding TCC impact of government announcements and decisions

(d) building collaboration opportunities and working relationships within Entity B and central government (DIA Steering/Working Groups and NTU/LEE)

Next Steps

19. Finalise TCC economic and consumer protection submission and submit to MBIE

20. Further detailed information is expected to be announced by the NTU, regarding the proposed transition approach in December 2021. This will likely include further details regarding the financial support available, the criteria and associated timeframes as well as further clarification on NTU and TCC’s role within the transition process.

21. The 3WR project team will continue to analyse and appraise information as it becomes available from Government, with a focus on providing accurate information to internal and external stakeholders.

Attachments

1. Council 2021-12-13 Attachment One - Three Water Reforms - DIA Summary of Submissions Report - A13102028 ⇩

2. Council 2021-12-13 Attachment Two - Three Water Reforms - DIA National Transition Unit Update - A13102014 ⇩


AGENDA Ordinary Council meeting Monday, 13 December 2021
I hereby give notice that an Ordinary Meeting of Council will be held on:
Date:	Monday, 13 December 2021
Time:	to start at the conclusion of the Strategy, Finance & Risk Committee meeting
Location:	Tauranga City Council Council Chambers 91 Willow Street Tauranga
Please note that this meeting will be livestreamed and the recording will be publicly available on Tauranga City Council's website: www.tauranga.govt.nz.
Marty Grenfell Chief Executive

Chairperson	Commission Chair Anne Tolley
Members	Commissioner Shadrach Rolleston Commissioner Stephen Selwood Commissioner Bill Wasley
Quorum	Half of the members physically present, where the number of members (including vacancies) is even; and a majority of the members physically present, where the number of members (including vacancies) is odd.
Meeting frequency	As required

· To ensure the effective and efficient governance of the City

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

· Oversee the work of all committees and subcommittees.

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