AGENDA

 

Ordinary Council meeting

Monday, 21 February 2022

I hereby give notice that an Ordinary Meeting of Council will be held on:

Date:

Monday, 21 February 2022

Time:

10am

Location:

Bay of Plenty Regional Council Chambers

Regional House

1 Elizabeth 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

 


Terms of reference – Council

 

 

Membership

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

Role

·             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.

Scope

·             Oversee the work of all committees and subcommittees.

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

·        The powers Council is legally prohibited from delegating include:

o   Power to make a rate.

o   Power to make a bylaw.

o   Power to borrow money, or purchase or dispose of assets, other than in accordance with the long-term plan.

o   Power to adopt a long-term plan, annual plan, or annual report

o   Power to appoint a chief executive.

o   Power to adopt policies required to be adopted and consulted on under the Local Government Act 2002 in association with the long-term plan or developed for the purpose of the local governance statement.

o   All final decisions required to be made by resolution of the territorial authority/Council pursuant to relevant legislation (for example: the approval of the City Plan or City Plan changes as per section 34A Resource Management Act 1991).

·        Council has chosen not to delegate the following:

o   Power to compulsorily acquire land under the Public Works Act 1981.

·        Make those decisions which are required by legislation to be made by resolution of the local authority.

·        Authorise all expenditure not delegated to officers, Committees or other subordinate decision-making bodies of Council.

·        Make appointments of members to the CCO Boards of Directors/Trustees and representatives of Council to external organisations.

·        Consider any matters referred from any of the Standing or Special Committees, Joint Committees, Chief Executive or General Managers.

Procedural matters

·        Delegation of Council powers to Council’s committees and other subordinate decision-making bodies.

·        Adoption of Standing Orders.

·        Receipt of Joint Committee minutes.

·        Approval of Special Orders.

·        Employment of Chief Executive.

·        Other Delegations of Council’s powers, duties and responsibilities.

Regulatory matters

Administration, monitoring and enforcement of all regulatory matters that have not otherwise been delegated or that are referred to Council for determination (by a committee, subordinate decision-making body, Chief Executive or relevant General Manager).

 

 


Ordinary Council meeting Agenda

21 February 2022

 

Order of Business

1         Opening Karakia. 7

2         Apologies. 7

3         Public Forum.. 7

4         Acceptance of Late Items. 7

5         Confidential Business to be Transferred into the Open. 7

6         Change to the Order of Business. 7

7         Confirmation of Minutes. 7

Nil

8         Declaration of Conflicts of Interest 7

9         Deputations, Presentations, Petitions. 7

Nil

10       Recommendations from Other Committees. 7

Nil

11       Business. 8

11.1         Draft Annual Plan 2022/2023. 8

11.2         2022/2023 -  Draft User Fees and Charges. 15

11.3         Proposed 2022/23 Development Contributions Policy. 88

11.4         Annual Plan - Rating Policy Proposals. 105

11.5         Long-term Plan Amendment Update. 116

11.6         Civic Precinct Options for Long Term Plan 2021-31 Amendment Consultation. 122

12       Discussion of Late Items. 149

13       Public Excluded Session. 150

13.1         TCC's Infrastructure Funding and Financing proposals - TSP and Tauriko West 150

14       Closing Karakia. 151

 

 


1          Opening Karakia

 

2          Apologies

 

3          Public Forum

 

4          Acceptance of Late Items

 

5          Confidential Business to be Transferred into the Open

 

6          Change to the Order of Business

 

7          Confirmation of Minutes

Nil

 

8          Declaration of Conflicts of Interest

 

9          Deputations, Presentations, Petitions

Nil

 

10        Recommendations from Other Committees

Nil


Ordinary Council meeting Agenda

21 February 2022

 

11        Business

11.1       Draft Annual Plan 2022/2023

File Number:           A13191607

Author:                    Josh Logan, Team Leader: Corporate Planning

Tracey Hughes, Financial Insights & Reporting Manager

Kathryn Sharplin, Manager: Finance

Authoriser:              Paul Davidson, General Manager: Corporate Services

 

Purpose of the Report

1.      To seek direction/approval of the Annual Plan 2022/23 draft budget and provide an update on the development of the annual plan.

Recommendations

That the Council:

(a)     Receives the report ‘Draft Annual Plan 2022/2023’.

(b)     Approves the 2022/23 capital programme of $304 million.

(c)     Approves the high-level financials in this report as the baseline for the draft 2022/23 Annual Plan with an overall rate increase of 13% after growth.

(d)     Resolutions (b) and (c) be reflected in a draft Annual Plan Consultation Document for approval by Council on 24 March 2022.

 

Executive Summary

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

3.      This report provides the high-level financials for the draft Annual Plan for 2022/23 following completion of a further budget update that includes updates to the capital programme and financials.

4.      The capital programme update includes changes to timing and the addition of some new projects relating to the Civic Precinct which is to be consulted on through a Long-term Plan Amendment along with additional projects the most significant of which relates to the Cambridge Road intersection as part of the Tauriko West programme of work. 

5.      Issues and options reports were considered at Council on 8 February and decisions to include additional capital and operational funding have been included in this report.

6.      Overall, the proposed rates increase is 13% after growth. This is 1% above the Long-term Plan (LTP) budgeted figure of 12% and consistent with the overall figure presented at the December 2021 annual plan meeting.  There have been various budget adjustments since that meeting but overall, the rates increase has been maintained at 13%.

7.      It should be noted that the LTP assumed an inflation impact of 2.9%.  Latest Treasury forecasts estimate inflation will be in excess of 5%.

8.      Based on investigations on the transportation activity and who benefits and following the Strategy Finance Risk Committee recommendations, a change to rating structure has been considered to increase the general rate commercial differential from 1.6 to 2.1, phased in over two years.  For 2022/23 the proposed increase in differential under this option would be an increase from 1.6:1 to 1.9:1.

Background

9.      On 13 December, staff presented the Annual Plan 2022/23 indicative budget for Council’s consideration. Council resolved that it:

(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 and B.

(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.

Events since December

Changes to capital expenditure budgets

10.    Since the December Council meeting several updates have occurred which have implications for the 2022/23 budget. Overall capital budgets for 2022/23 have reduced from $370m in LTP to $304m.  This revised programme primarily reflects timing delays as delivery has been slowed in 2021/22, and a portion of the 2021/22 budget will be carried forward into 2022/23 in addition to this $304m. This excludes vested assets ($22m). Further detail on capital programme movements and the overall capital programme for 2022/23 is included in Attachment A.

11.    It has been signalled previously that Council’s capital programme is experiencing significant cost increases.  Increase are driven primarily by supply chain issues including material and labour, land prices and COVID-19 impacts particularly at the construction stage.  Most of the large cost increases identified to date on large multi-year projects impact later years of the LTP.

 

Decisions through Issues and Options Papers

12.    Since December Council has agreed to include in 2022/23 budgets (subject to final approval) additional capital projects and initiatives including:

(a)     Omanawa Falls - An additional $2.72 million underwrite over what was budgeted for 2022/23 to fund the full scope of the project. This increases the total project cost to to $6.6 million. Council is in the process of seeking funding from potential funding partners, including the potential for revenue from tourism operations, which if successful will reduce the rates impact of this project.

(b)     Destination skate park – That the budget be increased by $1.38m, to a total of $2.05m, to facilitate the desired outcome of delivering a destination skatepark in 2023.

(c)     Mulching around trees - Increases the operational budget by $175,000 in 2022/23, and $140,000 per annum from 2023/24 onwards, to support a higher level of service for tree mulching.

(d)     Elizabeth Street Streetscape Upgrade - Increasing the project budget by $575,000 to ensure there is adequate contingency for the delayed programme. Council will also defer $174,847 of budget from 2021/22 to 2022/23.

(e)     Civic Precinct Project - Additional costs of a Civic Programme project team which will be established to implement the agreed Civic Precinct Project as agreed in a previous report on this agenda.

 

Impact on Year Two of the 2021 – 2031 LTP

13.     The budgeted rates increase for year two of the LTP (2022/23) is 13% after growth.  This compares to 12% in the LTP based on the lower inflation assumption. 

14.     Expenditure increases from year two of the current LTP have been recognised across areas such as insurance, maintenance contracts, employee and consulting costs. The December indicative draft report noted the main areas of cost movements from the LTP.  Since December there have been some operating expenditure adjustments but the rates impact of these have been held within the 13% rates increase presented in December 2021.  Attachment B summarises the expenditure changes from the LTP.

15.     There has been some loan funded operational expenditure included in the budget.  The Civic Precinct report recommends loan funding of certain aspects of the operational expenditure in 2022/23 that has a long-term benefit. 

Other matters

16.    Inflation was budgeted at 2.9% for year two of the LTP.  However, actual inflation has more than doubled on the LTP assumptions.  Annual inflation (CPI) to 30 September 2021 was 5.4% with projections through 2022 continuing to be high. Budgets for 2022/23 have not increased overall to the extent of inflation. But taking into account the higher inflation the overall rates increase proposed of 13% after growth, compares favourably with the 12% increase included in the LTP. However, ongoing cost pressures across capital and operational areas of the business are expected to continue and prioritising expenditure to managing these costs will be a focus for the organisation.

17.    The impact of Omicron on council operations has not been specifically included in all costs of providing services in 2022/23. Revenue assumptions and levels of activity have assumed an increase in activity from the last two years. At this stage council is expecting to manage within the budgets set in the draft annual plan and has considered business operations through its business continuity planning.  However, it is acknowledged there remain risks to budgets for revenue and costs from continued COVID-19 disruption.

Financial Summary

18.    The key financials for the draft Annual Plan are shown in Table 1 below

Strategic / Statutory Context

19.    In accordance with the Local Government Act 2002 (LGA), Council is required to produce and adopt an annual plan, by 30 June 2022. The purpose is to identify variations from the financial statements of the second year of the current LTP.

20.    Council must consult on changes that are significantly or materially different from the adopted LTP.

Options Analysis

21.    Council has the option to accept the proposed budget and implications for rates and debt or to request further work to be undertaken on the draft budgets.

22.    The extent of further work may affect timeframes for adoption and consultation of the draft annual plan and the proposed Long-term Plan Amendment

Financial Considerations

23.    The draft budgets are consistent with the LTP.  The levels of capital expenditure along with the operational budgets proposed are financially sustainable and continue to deliver on agreed levels of service. The rating structure decided in an earlier report of council along with decisions on user fees will affect how the budgets are paid for and by which ratepayers and users of council services.

Legal Implications / Risks

24.    In accordance with the LGA, council must consult with the community if the annual plan includes significant or material differences from the content of the LTP for the financial year to which the proposed annual plan relates.

Consultation / Engagement

25.    Under the proposed approach, consultation on the annual plan will occur in March and April 2022 alongside consultation on the Long-term Plan Amendment, draft Development Contributions Policy (DC Policy) and draft Schedule of User Fees and Charges.

26.    The DC Policy and Schedule User Fees and Charges form part of the annual plan. The draft documents have been presented as separate reports on this agenda.

Significance

27.    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.

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

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

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

(c)   the capacity of the local authority to perform its role, and the financial and other costs of doing so.

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

ENGAGEMENT

30.    Taking into consideration the above assessment, that the decision is of high significance, officers are of the opinion that the following consultation/engagement is suggested/required under the Local Government Act 2002.

Next Steps

31.    Following Council’s decisions relating to this report, staff will prepare the following documentation for approval and adoption by Council on 24 March 2022:

(a)     Draft Annual Plan including the financial supporting information

(b)     Consultation document for the Annual Plan and Long-term Plan Amendment

(c)     Statement of proposal for the User Fees and Charges

(d)     Statement of proposal for the Development Contributions policy.

Attachments

1.      Attachment A - Annual Plan Report Feb 21 - Supporting Capex Information - A13223407

2.      Attachment B -  Operating Budget Annual Plan variance from LTP Draft Feb 2022 - A13223609   


Ordinary Council meeting Agenda

21 February 2022

 

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Ordinary Council meeting Agenda

21 February 2022

 

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Ordinary Council meeting Agenda

21 February 2022

 

11.2       2022/2023 -  Draft User Fees and Charges

File Number:           A13162402

Author:                    Josh Logan, Team Leader: Corporate Planning

Kathryn Sharplin, Manager: Finance

Authoriser:              Paul Davidson, General Manager: Corporate Services

 

Purpose of the Report

1.      The purpose of this report is to present the proposed draft user fees and charges schedule for Council to consider for adoption to form part of the supporting information for the consultation on the 2022/23 Annual Plan.

Recommendations

That the Council:

(a)     Receives the report.

(b)     Approves the draft user fees and charges as set out in Attachment 1, in order to form part of the supporting information for consultation on the 2022/23 Annual Plan.

 

 

Background

2.      User fees and charges are updated by staff on an annual basis. Changes to pricing may be necessitated by one or more of the following influences: changing costs of providing the product or service, inflationary adjustments, new or removed fee requirements, statutory requirements, or alignment with market prices.

3.      Significant or material changes are consulted on annually alongside the Long-term Plan (LTP) or annual plan (as applicable in any given year). The financial implications of proposed fee changes have been included in the draft annual plan revenue figures.

4.      Attachment 1 to this report sets out the current fees and the proposed fees going forward.

Discussion

5.      Tauranga City Council’s user fees and charges enable the actual and reasonable costs of council’s services to be suitably contributed to by those who directly benefit from the service.

6.      The current revenue and finance policies guide the determination of funding sources for council activities. These five key principles include:

·    Accessibility

·    Affordability

·    Benefit

·    Exacerbators

·    Practicalities

7.      Council must apply judgement in assessing many options to determine the appropriateness in its development of budgets.

8.      Council’s general approach is to reduce the burden on the ratepayer by utilising a ‘user pays’ approach. Therefore, where a service user can be identified, and efficiently charged, they will pay for that service through a user fee or charge. This approach requires a greater percentage of the costs of an activity to be recovered from service users.

9.      Fees and charges forecast revenue for 2022/23 totals $60 million, (this total excludes water by meter and Bay Venues Ltd fees revenue) which is 17% of the total operating revenue budget for 2022/23.

10.    Of the $60m of projected user fee revenue mentioned above, more than half of the fees and charges revenue is attributed to the following 4 activities:

·    Building services ($15m)

·    Airport ($9m)

·    Parking ($5m)

·    Environmental Planning ($4m)

11.    Detailed below is a summary of the key user fee movements from current 2021/22 to those proposed for 2022/23. The commentary also compares Tauranga City Council’s user fees to similar charges for other entities.

12.    Most of the fees set are comparable to those charged by other, similar, organisations.

13.    Only those fees that contribute over 5% of the activity revenue are included. 

14.    Most fees are increasing at least in line with what the LTP estimated for inflation (2.9%).  The actual inflation is tracking at almost double this, but budgeted expenditure increases and therefore user fee increases have been held below the inflation level. In many cases, the impact of COVID-19 on Council’s revenues has caused deficits in the previous and current year. Therefore, several of the activities are expecting a significant improvement in operating revenues without the need for a large increase in individual charges. 

15.    For many activities, volumes are predicted to return to pre-COVID levels, which has caused both costs and revenues to increase without the need for significant increases in user fees.

Airport

·    Airport parking was often at full capacity prior to COVID-19. A project to construct a multi-level carpark is included in the LTP for the 2023-2025 years. Airport parking fees, in particular the short term car parks have been increased to encourage those living within a close proximity to the airport to use taxis or other means to get to the Airport rather than using the parking facilities, whilst still making it a viable option for those living further afield.

·    Airport parking fees are still comparable with the average fees of five other regional airports and the majority of the increases result in fees that are less than the average of the other five regional airports.

·    Short term fee increases of 50% represent increases of $1 to $5 in total and are still $3 to $6 less than the average of the five regional airports.

·    Long-term fees are slightly higher than the average of the regional airports, but the highest of these – the fee for six-day parking – is more than the average of the other regional airports. Once 10 days is reached, the fees are less than the average of the comparison airports.

·    Landing charges for light aircraft are due for review in 2023.  At present, we are 20% above the average price of regional airports.

·    A regular review of landing fees is carried out every 5 years and the review is not due this year.

·    Charges for regular passenger transport aircraft are agreed upon with operators based on an industry recognised pricing model based on individual airport costs.

·    It should be noted that the airport generates significant revenue from the leasing of land.  These leases incorporate escalations which are included in budgets.



Beachside Holiday Park

·    With the AL4 lockdown and COVID-19 in the community, general occupancy has dropped this year and so costs had decreased. The forecast cost increases for 2022/23 (15%) are driven by increased security, increased casual staff and the cost of the cleaning contract. Therefore, to bring this back in line a fee increase (4.7% average) is proposed. The increase in revenue (10%) includes fee increases, projected new cabin revenue and projected occupancy increases.

·    Fees are in line with other Holiday Parks in surrounding areas.

Building Services

·    Building services is 10% rates funded, which recognises the public good element of this activity. The remainder of activity funding comes from user fees.  The user fee revenue is modelled to recover costs over time based on estimated application volumes, the amount and complexity of work associated with applications and budgeted costs.

·    Regarding plan processing fees increasing – as different entities charge on different bases (e.g. fixed price vs hourly rates) it is difficult to compare.  However, Tauranga hourly rates for Building Officers ($240) compares with Hamilton charges of $185 per hour, Western Bay $170 and Christchurch $210.

·    Tauranga’s residential charges for inspection fee increase compares with other councils at $195 per 0.75 hours, compared to Hamilton $200 per hour, and Christchurch $210 per hour (charged after $200 - $255 base fee charge which covers the first hour). 

·    For Issue Code of Compliance Certificates increase, (Project value $100,000 - $499,999) it is difficult to compare directly to other councils due to different pricing structures, however, Council’s pricing is comparable to other councils.  Tauranga charges $563 compared to Western Bay $500, and Christchurch $550 plus $180 for additional time. Hamilton charge $250 per hour.

Environmental Planning

·    The sole purpose of a Resource Management Act 1991(RMA) charge is to recover the reasonable costs incurred by the Council in respect of the activity to which the charge relates. Section 36 of the RMA enables these charges to be set. The charges set are in most part deposit fees (unless otherwise stated as fixed fees), with a refund granted if the total deposit is not used or additional charges are invoiced based on the hourly rate included.

·    There was an extensive review of all Environmental Planning fees and charges done as part of the LTP process. For 2022/23, all fees are increasing in line with LTP assumed inflation at 2.9%.

Marine Precinct

·    No change to user fees. At present there is little capacity for further increases, due to a competitive market. Cost increases are due to an anticipated return to pre-COVID levels.

·    User fees have recently been reviewed in consultation with the marine industry and are in-line with market rates.

Parking Management

·    Parking activity has no rates included so that the costs of the activity, including provision of new parking facilities and upgrades, must be funded through user fee revenue.  The last increase in parking pricing was in the 2019/20 Annual Plan. In recent years parking prices have been held, and free parking periods maintained, as part of the COVID-19 response. This has further contributed to operating deficits in the activity.

 

·    Parking management charges are proposed to increase on average by 20% for 2022/23 for both on and off-street parking. This is largely due to the activity being in deficit with current revenue insufficient to cover operating costs. It should also be noted that the revenue forecasts show an increase of 50%, which is higher than the price increases averaging around 20%. This is because the revenue model assumes the removal of the free trial parking which has been in place in 2022. The new price levels proposed for 2022/23 would bring the cash balance in parking back to positive over about 10 years.  Higher increases would build a surplus faster, which would enable funding of further investment over time.

·    The value of our carpark buildings depends on the projected revenue streams or potential revenue streams from the buildings. Current parking pricing, if maintained even at the 20% increase proposed, would impact the value likely to be received in the event of their sale.  It also affects the business case for establishing further carparking investment.  Work is being undertaken to consider parking pricing that would reflect an appropriate value of the buildings if sold to a third party.  It is likely prices would need to be significantly increased above the prices proposed for 2022/23.

Off Street Parking

·    As part of the analysis we compared our off-street parking fees to Hamilton and Wellington councils. In Wellington, only looking at council owned buildings, pricing is $5/hr up to $20/day during the week ($3/hr in weekends). However, in Hamilton it depends on the location but is a tiered system (similar to ours) based on time, starting at $4 up to 2 hours, to $12 over 4 hours. 

·    For our tiered system - Current rates start at $2 for 1 hour up to $14 for the day.  The proposal is to increase this to $2.50 for the first hour then $17 for the day.

On street Parking

·      Again, as part of the analysis we have compared our off-street parking fees to Hamilton and Wellington councils. Currently Tauranga and Hamilton both offer 2 hours free, however, in the LTP it is assumed the 2 hours free in Tauranga will cease. Hamilton is $6/hr up to 4 hours (so max $24/day). Wellington is variable upon location but on weekdays can range from $3/hr to $5/hr and fees apply from 8am-8pm. Weekends price is $3/hr 8am to 8pm. Tauranga is currently $2.50/hr but proposing $3.00/hr for weekdays, and weekends are free.

Water Supply and wastewater

·    Volumetric water charges are charged under the Rating Act so are a rate rather than a user fee and are presented in the Statement of Comprehensive Revenue and Expense as a rate. A much smaller share of water funding comes from user fees.  For both the volumetric charge (rate) and other water user fees the proposed user fees for 2022/23 are in line with what was forecast in the LTP. There is an 11% increase in the volumetric charge per m2. For most water users this will increase it from the current charge of $2.90 per m2 to $3.22 per m2

·    Similarly, most wastewater funding comes through a targeted rate with a small portion from user fees, primarily trade waste charges. Most trade waste increases for 2022/23 are in line with inflation assumed in the LTP at 2.9%.

·    Tauranga's combined Water and Wastewater revenue per customer per 200m3 treated is approximately 30% lower compared to the average between Auckland, Western Bay of Plenty, Hamilton, Dunedin, Whangārei, Christchurch & Wellington councils.

Strategic / Statutory Context

16.    Setting fees and charges at the correct level enables the funding of council’s activities.  These activities help deliver out community outcomes and facilitate improved quality of life, quality of economy and sound city foundations.

Options Analysis

Option 1: Council approves the draft user fees and charges schedule

17.    The Council approves the draft fees and charges as proposed in Appendix 1.

Advantages

Disadvantages

·    Managers have reviewed the fees and charges and have made recommendations based on actual and reasonable costs

·    Proposed fees and charges align with the current draft annual plan budgets

·    Preparation of the Statement of Proposal and engagement planning can begin.

·    Potential opportunities for other fees and charges may not have been considered.

 

 

Key risks

Further opportunities for fees and charges may have to wait until the 2023/24 Annual Plan.

Recommended?

Yes, noting flexibility in option 2.

 

Option 2: Council requests further changes to the draft user fees and charges schedule

18.    The Council does not approve the draft fees and charges and either rejects suggested changes or requests further analysis be undertaken.

Advantages

Disadvantages

·    Potential opportunities for fees and charges may be raised and considered.

·    Delays to the development of the Statement of Proposal

·    Delays in finalising the draft annual plan budgets.

 

 

Key risks

Potential delays in preparing the draft annual plan financial forecasts.

Recommended?

This option allows flexibility to consider variations to the fees noting that significant changes and the introduction of new fees may delay adoption of a draft fee schedule.

 

Financial Considerations

19.    The financial implications of the proposed fees and charges are included in the initial drafting of the 2022/23 Annual Plan.

Consultation / Engagement

20.    The user fees and charges schedule represent fees proposed to be charged to the community.  They will be consulted on alongside the 2022/23 Annual Plan.

Significance

21.    The Local Government Act 2002 (LGA) 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.

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

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

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

(c)   the capacity of the local authority to perform its role, and the financial and other costs of doing so.

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

ENGAGEMENT

24.    Taking into consideration the above assessment, that the decision is of medium significance, the draft user fees and charges is scheduled to be adopted as supporting material alongside the annual plan consultation document in March 2022. After that adoption it will be consulted on with the community in accordance with sections 82 and 150 of the LGA. 

Next Steps

25.    Draft fees and charges schedule and a Statement of Proposal will be brought back to Council for approval to consult as part of the supporting information for the 2022/23 Annual Plan.

26.    Once finalised, updated fees will come into effect on 1 July 2022.

Attachments

1.      Draft User Fees and Charges Schedule - A13219429   


Ordinary Council meeting Agenda

21 February 2022

 

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Ordinary Council meeting Agenda

21 February 2022

 

11.3       Proposed 2022/23 Development Contributions Policy

File Number:           A13163026

Author:                    Ana Blackwood, Development Contributions Policy Analyst

Authoriser:              Christine Jones, General Manager: Strategy & Growth

 

Purpose of the Report

1.      To present to the Council the proposed changes to be incorporated into the Draft 2022/23 Development Contributions Policy.

Recommendations

That the Council:

(a)     Receives this report; and

(b)     Approves the proposed changes to the operative Development Contributions Policy and incorporate changes into the Draft 2022/23 Development Contribution Policy for public consultation. 

 

 

INTRODUCTION

2.      This report sets out key changes proposed to the Development Contributions Policy (“DCP”) for the 2022/23 year.

3.      If approved, these changes will be reflected in a draft 2022/23 Development Contributions Policy which will be brought before Council in a separate report on 24 March 2022.

4.      Council will have the opportunity to review the wording of the proposed changes before the draft DCP is published for public consultation alongside the Annual Plan 2022/23 and Long-term Plan Amendment.

5.      Following submissions, an updated DCP will be prepared for adoption by Council in June 2022 to take effect from 1 July 2022.

 

BACKGROUND

6.      Council endorsed a development contributions work programme in late 2021.  This set out the key priorities for amendments to TCC’s Development Contributions Policy.  Staff have actioned several of the top priority projects for inclusion in the Draft DCP. 

 

DISCUSSION

7.      Staff are proposing several changes to the operative DCP.  These are to:

(a)     Amend the citywide and local development contributions charges to reflect the conclusion of funding for some projects in the DCP (e.g. Links Ave Active Reserve) and updated costings for projects already included in the DCP (e.g. Domain Rd, Papamoa);

(b)     Introduce collection of development contributions for a wider range of community facilities and updates to relevant sections of the policy to explain these changes; and

(c)     Several more minor changes to improve the operational performance of the DCP.  This includes updating growth projections, small changes to formatting to make DCP easier to read and use online, and minor tweaks to the rules for when development contributions fees are charged (required to correctly apply charges). Other necessary changes will also be made to sections that highlight and discuss the differences between this years and last year’s policies along with the section which discusses future changes.

The changes described at (a) and (b) above are discussed in more detail below.

Proposed Increase in Development Contributions

Annual increase in citywide and local DCs

8.      Staff are proposing changes to both citywide and local development contributions.

9.      Citywide development contributions for residential developments are forecast to increase by approximately 15% or $4,200 (including GST) or a typical residential dwelling with 3 or more bedrooms.

10.    The table below shows the movement within each of the asset types based on the charge for 3-bedroom dwellings.

11.    The increase in citywide fees are largely within the area of community infrastructure which have increased by nearly $4,600. This increase is partially offset by a decrease in the charge for water supply. Whilst the capex for water projects has increased, the amount of inflation charged has decreased as significant portions of the project are completed and thus no longer need to be inflated and because some projects are being delivered earlier which also reduces the inflation impact.

12.    Whilst not shown in this table it is worth noting that the citywide development contributions for non-residential developments will decrease by about 1%. This is because non-residential developments do not pay fees for community infrastructure or reserves. The decrease is reflecting the same drop in water charges shown in the table above.

13.    The table below shows the proposed local development contributions and movements compared to last year. 

(a)     Most of the movement in the local development contributions are relatively minimal. The only movements of significance are in Pyes Pa West and West Bethlehem.

(b)     The change in Pye Pa West relates to an increase in land valuations for two land purchases outstanding in Hastings Road and Keenan Road development areas that will be used for development of neighbourhood reserves. This charge for reserves only applies to development in those two areas (Hastings and Keenan Road areas) and does effect housing development in the rea usually referred to as the “Lakes” as developers in that area provided the neighbourhood reserves in lieu of paying development contributions for them.

(c)     The increase in fees in West Bethlehem is an annual increase as development contributions are subsidised and the value of the subsidy decreases each year.

14.    We note all amounts set out above are subject to change through the submissions and deliberations process and may vary from the development contributions proposed above in the final DCP 22/23.

15.    The amounts proposed above are significantly lower than the estimate of $11,000 – $16,000 communicated to the public from November 2021.  This is because:

(a)     Our initial forecasts did not include assumptions regarding the supply of external funding sources for community infrastructure projects (thereby lowering the burden on development contributions);

(b)     The review of active reserves development contributions has been postponed for one year to incorporate the impact the outcome of the active reserves strategic review;

(c)     Inflation and increasing construction costs have had a less significant impact than anticipated on projects for which development contributions are currently collected.  While inflationary pressures are high across council projects, not all projects are funded through development contributions and projects we are collecting are either already constructed or in in progress and so inflationary pressures do not impact on their price; and

(d)     The funding mechanism proposed for community infrastructure (as explained below and in Attachment A) creates a shorter than usual payback period for this asset type.  This reduces the term of the debt used to fund the asset and thereby lowers the interest costs associated with each project.  Ultimately this makes each project less expensive to fund.

Introduction of collection for community facilities

16.    The most significant change proposed in this year’s DCP is the introduction of development contribution funding for several community infrastructure projects.  TCC had previously largely stopped collecting development contributions for this type of infrastructure as a prior law change had narrowed the scope for what could be funded under this category. A subsequent legislative reversal has meant TCC can again collect development contributions for a wider range of infrastructure projects.

17.    Community infrastructure is now defined in the Local Government Act 2002 as “land or development assets on land owned, or controlled by the territorial authority for the purpose of providing public amenities”. 

18.    As set out in Attachment A we are proposing to start collecting citywide development contributions for libraries, aquatic facilities, and indoor courts. One of the key recommendations and inputs into the funding modal in Attachment A is that we only collect contributions for one project within each of these categories at a time. Once a project is fully funded then we would start collecting contributions for the next project to be delivered. This method reduces the funding period of the projects and thus also reduces high capital costs often associated with extended funding periods.

19.    Based on this approach the community infrastructure charges shown above have been calculated as below:

The details of how the community infrastructure development contributions set out above have been determined is set out in Attachment A alongside the proposed content to include in the draft DCP for consultation.

20.    It is also important that we are also proposing to stop collecting contributions for Baywave and the ASB Arena.  These projects are now at capacity and so we could not continue to collect for these projects whilst also funding the new growth projects. The previous charge for community infrastructure projects was roughly $500 and so offsets the new charge minimally.

21.    The staff working group have also considered charging for Community Halls via the community infrastructure category but are not yet recommending that Council start charging for these in 2022/23 financial year. Community halls are undergoing a strategic review and outcomes of this work will help inform funding decisions. Further work will be undertaken I regards to community halls and will be incorporated into amendments to the 2023/24 DCP.

22.    There are three key risks associated with the community facility projects above:

(a)     Risk of project cost rises – These numbers are largely based off the cost estimates generated during the Long-Term Plan development throughout the course of 2020 and 2021.  While this is standard practice, we have seen particularly high levels of inflation in the infrastructure construction sector during this time.  Consequently, projects are likely to cost more than the estimates recorded in the DCP.  Should this risk occur, council will have under collected development contributions and the shortfall is likely to be funded through general rates.

(b)     Risk of external funding not materialising – a significant portion of funding for a number of community infrastructure projects (e.g. central library, Memorial pools and indoor courts) has been assumed to be sourced from third parties.  It is important to recognise that if external funding:

(i)      does not eventuate; and/or

(ii)     is not directed to projects in accordance with the assumption in the DCP (i.e. if external funding is secured but is directed to one project only rather than split across multiple projects),

any given project may suffer from a significant funding shortfall.  Should this occur, TCC is likely to have to rely on general rates to cover the funding gap.  It is possible this could have a material impact on rates.  As seen in previous years, individual projects with material rates impacts can impact on community acceptability and consequently may face delay or cancellation. 

(c)     Risk of project not proceeding - Should a project be cancelled TCC will likely be required to refund any development contributions collected towards each project – a time-consuming and difficult exercise.

23.    If risks (a) or (b) above materialise, it is likely to result in a rise in development contributions to reflect the need for growth to fund the same portion of a higher cost or a greater portion of the same cost.

24.    If risk (c) of project cancellation (or also significant deferral / delay) then there may be a need for full or partial refund of contributions collected. In our experience projects of this nature are more at risk of change arising from response to community sentiment. The approach recommended by staff of only charging for one project of each type at a time will reduce this risk somewhat as projects being collected for are intended to be delivered in a close timeframe but it is still a risk to conscious of as refunds can be time consuming,  expensive and can put the integrity of DCP at risk.

 

Future changes to DCP

25.    Looking ahead to 2023/24 DCP, staff intend to provide Council with an updated DCP work program in the next financial year.  This will set out the next series of priorities for DCP amendments and is likely to include provision for:

(a)     Adding a new Te Papa catchment and a therefore a new local development contributions catchment. This was signalled as being a change to be incorporated into the 2022/23 DCP but has been delayed due to the uncertainty surrounding TCC’s Infrastructure Acceleration Fund application, Infrastructure Funding and Financing proposal, and the nature and costing of some Te Papa infrastructure projects. Further certainty is required to enable justifiable assumptions to be made within the Te Papa catchment DC calculation.

(b)     The addition of community halls to new and existing local development contribution catchments. As mentioned within the report staff have not recommended started collecting for community centres this year as outcomes from the strategic review relating to community halls are likely to provide information which will be important in making funding recommendations.

(c)     An updated approach to funding active reserves as part of citywide development contributions. This will be dependent on work being done this year as part of a strategic review of TCC’s active reserves stock and future needs.

Strategic / Statutory Context

26.    The Local Government Act 2002 requires council to have a DCP.  Development contributions are a significant and strategic revenue source for the council and are critical to funding capital expenditure associated with providing for growth in Tauranga. 

Options Analysis

27.    Council may either resolve to include these changes in the draft DCP for consultation, or not.

Option 1: Include proposed changes in the draft DCP for public consultation (preferred option).

Advantages

Disadvantages

·    Expands the range of infrastructure funded by development contributions, thereby better ensuring those who cause and benefit from the investment fund the costs of this investment.

·    Lowers the impact of growth-related costs on ratepayers.

·    Raises the cost of citywide development contributions by approximately 10% thereby raising building costs.

 

 

Option 2: Do not include proposed changes in the draft DCP for public consultation

Advantages

Disadvantages

·    Retains the lower, existing citywide development contributions.

·    Does not ensure the costs of growth are equitably borne by those who cause and benefit from new infrastructure.

 

Financial Considerations

28.    As set out above, the changes proposed to the DCP provide for increased funding through development contributions.  If this is not approved and the relevant infrastructure projects proceed, these will rely on funding through rates which is likely to have a material impact on existing ratepayers.

Legal Implications / Risks

29.    The key legal implications and risks of the proposed actions in this report are:

(a)     If we do not continue to improve the quality of the DCP, community confidence in its efficacy and robustness will reduce.

(b)     We will lose an opportunity to collect funding towards growth-related infrastructure projects from those who cause and benefit from the projects; and

(c)     The risks set out at paragraph 22 above.

Consultation / Engagement

30.    If approved, the matters set out in this report will be carried through into the draft DCP for public consultation alongside council’s 2022/23 consultation document.   This will include communication of the development contribution workplan and the likely consequential future increases in the DCP.

Significance

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

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

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

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

(c)   the capacity of the local authority to perform its role, and the financial and other costs of doing so.

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

ENGAGEMENT

34.    Taking into consideration the above assessment, that the matter is of low significance, consultation on the proposed changes to the DCP will be consulted on with the public alongside the public consultation for council’s annual plan and long-term plan amendment.

Next Steps

35.    The next steps are as set out in the introduction section at paragraphs two to five.

Attachments

1.      Attachment A - Section 5 - Community infrastructure  - 8 Feb 2022 - A13224759   


Ordinary Council meeting Agenda

21 February 2022

 

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Ordinary Council meeting Agenda

21 February 2022

 

11.4       Annual Plan - Rating Policy Proposals

File Number:           A13221690

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 present options on the preferred approach to the Rate Policy changes for the 2022/23 Draft Annual Plan.

Recommendations

That the Council:

(a)     Receives the report Annual Plan – Rating Policy Proposals; and

(i)      Approves the recommendation that Option 2 be included in the 2022/23 Draft Annual Plan to initiate the change for the commercial and industrial sector to contribute a higher share of the rate funding for the transportation activity

(ii)     Approves the recommendation that Option 2 takes full effect by 2023/24 so the commercial and industrial general rate differential moves to 1.9 in 2022/23 and then to 2.13 in 2023/24 and for the transportation targeted rate differential to move to 3.33 in 2022/23 and then 5 in 2023/24.

(iii)     Acknowledges staff will continue to look at further options for the appropriate rating of the commercial and industrial sectors.

 

Executive Summary

2.      The Strategy, Finance and Risk Committee considered a report on 14th February “9.3 Rating Policy Review”, which presented a range of scenarios to bring into effect the Commissioners’ request for a fairer split of the rate funding required to be invested in the transportation network.

Background

3.      The Council meeting on the 15th December and the SFR Committee meeting on the 14th February have considered the Rating Policy Review.

4.      The Commissioners resolved at the Council meeting on 15th December to

(a)     Confirm 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.

Note – The triennial City-wide revaluation has now been approved for release to the community.  The capital value of the city has increased by 50% with commercial properties rising on average by 33% while industrial properties on average have risen by 70%.

Not every sector has seen increases in their valuation at the same level.  Retail and hospitality properties in the CBD and other areas have increased in value at much lower rates. The outcome being that almost 30% of properties in the CBD could have no rates increase and 63% could have only single digit increases.

As signalled previously to Council the utility sector which has a different basis of valuation from the commercial and industrial sector has only single digit percentage increases which will result in further significant reductions in the rates this sector will pay despite there being no change in the level of service provided by Council.

Overall, the relationship between the value of the residential sector and the value of the commercial and industrial sector has remained similar with that following the 2018 revaluation.  This means the 2021 revaluation will be neutral to each of these specific sectors from any changes made to the rating policy through this review.

Properties with an above average valuation increase will pay a higher share of the rates and those below this average will pay a lower share of the rates.

A rates calculator will be available for individual properties once the draft Annual Plan is adopted and being consulted on with the community.

(b)     Endorse 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.

Note – the report to Council on the IFF is also relevant to this allocation as well as the proposal to split of the funding needed for the Transport System Programme (TSP) between the residential sector and the commercial and industrial sector on a 50:50 basis.

(c)     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 expenditure to ensure the rate funding mix is better balanced across all its activities.

Note - Early engagement has been arranged for February and March with the commercial and industrial sector through Priority One and the Chamber of Commerce with meetings arranged with their members.

 

5.      At the Strategy, Finance and Risk Committee on the 14th February the following resolutions were approved

(i)      Note that the report provides evidence from internal and external sources that the commercial and industrial sector should contribute a higher share of the rate funding for the transportation activity

(ii)     Note that comparable Councils use general rate differentials rather than targeted rates to fund their transportation activities

(iii)     Agree that the extent and quantum of any amendments to the rating policy could be a mix of differential general and targeted rates

(iv)    Confirm that further consideration will be given to a suitable proposal for the rating policy being included in the draft 2022/23 draft Annual Plan on 28th February.

The Committee provided guidance that Option 2 was a preferred option.  The committee also expressed support for continued investigation into additional land rating categories for the commercial and industrial sectors.

Strategic / Statutory Context

6.      The preparation of an annual plan is required under the Local Government Act 2002 and the rating policy review under the Rating Act 2002.

Research and Analysis

7.      To inform council’s requests regarding higher levels of funding to be provided by the commercial and industrial sector we have undertaken specific research through Insight Economics along with internal review and analysis of the transportation activity.  Work on other activities will have to be conducted separately to better understand the specific benefits received by this sector from each activity.

8.      Insight Economics has provided expert external advice on the groups that benefit from transportation or contribute to the costs of transportation services. The key findings from this work are summarised in Table 1.  The complete report is yet to be finalised with key sections of the report to be tabled as Supplementary Information to this report in addition to Attachment 1 to this report.   Attachment 1 contains the Insights Economics summary that was provided to SFR.  The final report will be presented to Council prior to adoption of the consultation document.

9.      Table 1 shows that residents pay a much higher share of transport rates than their estimated shares of causation/benefits, and vice versa for business ratepayers.

10.    Accordingly, the recommendation is that the relative shares of transport funding paid by residential and non-residential properties be reviewed.

11.    Moreover, while the relationship between funding and causation/benefit shares differs within the commercial ratepayer group (ie between commercial vs industrial vs retail) and hence splitting that group up may be justifiable, this must be weighed against other considerations, such as policy simplicity and administrative ease.

12.    Overall, the recommendation is that the existing commercial and industrial group be kept, but the corresponding differentials reviewed.  This may be amended in future should evidence support a more equitable rating allocation by the creation of additional rating categories.

Table

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13.    In addition to this work by Insight Economics there are various internal studies and asset management planning by TCC which supports their analysis on the commercial and industrial sector’s impact on council’s transportation services. TCC’s 2021-31 Transport Asset Management Plan (TAMP) is an extensive document that presents three problem statements, the first of which is the response needed to manage the risk that

 “increased travel and reliance on a few key routes threaten the future viability and productivity of the Port and other commercial areas”.

14.    Long term forecasts on the use of the Transportation network (sourced from UFTI and Smartgrowth) also provide relevant evidence on the impact that commercial growth in Tauranga has on key journeys.  The Deloitte Freight Demand Study predicts 50-80% more heavy vehicles on the network over the study period of 30 years.

15.    Long-Term Plan budgets for the transportation activity are proposed to be $35 Million for 2022/23 rising to $179 Million (non-inflation adjusted) by 2030/31 reflecting the substantial investment in the transportation network over the next ten years.  In the 2021-31 Transportation Asset Management Plan (TAMP), forecast operational and maintenance expenditure is $91.5 million on average each year for ten years.  The renewal expenditure is expected to be a further $17.9 million per annum.

16.    Asset Management investment analysis provided by the Transportation team, which covers the last ten years of investment activity, shows the extent of investment needed to maintain and renew the parts of the network, most used by commercial and industrial vehicles.  The analysis reveals that it is considerably more expensive and requires more frequent interventions to maintain the levels of services which are consistent with the TAMP and LTP than for other roads in the network.

17.    For these proposed investment levels to be supported by the community and to be financially sustainable, changes to current funding contributions are necessary to recognise the benefits received by this future capital work, specifically a greater contribution by the commercial and industrial sector.

18.    As presented in the December report, Council has a significantly lower share of rates paid by the commercial and industrial sector than other Metro councils.

19.    In the Productivity Commission Report dated May 2019, prepared by Insight Economics, the analysis on the use of a business differential by Councils illustrated that all Metro councils use this funding tool and the average differential was 2.26.  Provincial councils generally use this tool less frequently (39%) but the average differential was 2.99.

20.    Table 2 below provides more detailed analysis by Council.  The table compares the rating differentials and shares of general rates or transport targeted rates that are paid by the commercial sector for each of these councils.

Table 2: Comparison of Metro Councils Rating differential and proportion of rates collected from Commercial Sector

 

Options Analysis

21.    The following options were presented as scenarios for the Strategy Finance and Risk Committee meeting on 14 February.  The options are based on recognising through rating differential the more than 50% benefit share of transportation activity received by the commercial sector relative to the residential sector.  The options consider both the commercial differential on the general rate (which funds most of the transportation activity) and the differential on the transport targeted rate which targets the operating costs of large new capital projects.

22.    Status quo – no change to current commercial and residential rating mix

This would see not change to the commercial differential from the existing level of 1.6.  The rating mix would remain approximately 23%/77% commercial/residential with the share of rating from the commercial sector below comparable cities.

Advantages

Disadvantages

·    Maintain the current balance of funding

·    Rates rises are consistent across all sectors

·    Residential sector continues to pay more than the benefit received

·    Inconsistent with direction signalled in Long Term Plan

 

 

Key risks

-  Community response likely to be more limited

-  Not achieving fairness and equity in the rating policy

-  Infrastructure Finance and Funding levy differential not set at the right level

Recommended?

No

 

23.    Option 1: Increase in rating mix to commercial over a one-year period.

If the proposed change to funding the transportation activity to 50/50 on the residential and commercial sectors was implemented in one year the differential on the general rate would increase from 1.6 to 2.13 and the differential on the transportation targeted rate would increase from 1.6 to 4.93. The overall rates allocation would be 27% commercial / 73% residential. The impact on residential ratepayers would be a lower increase than the status quo in rates of between 2-7% and the impact on commercial ratepayers would be a higher increase than the status quo.

Advantages

Disadvantages

-  Immediately resets the transportation targeted rate and general differential to a recommended level and funding mix 27:73

-  Bigger re-balance to reduce rate impact (2-7%) to residential sector

-  Aligns with Metro councils

-  Large rate revenue rise (+30%) for the commercial and industrial sector

 

 

Key risks

-  Greater impact on the commercial and industrial sectors

Recommended?

No

 

24.    Option 2: Increase in rating mix to commercial phased over a two year period.

If the proposed change was implemented over two years, the differential on the general rate would increase in the first year from 1.6 to 1.9 and the differential on the transportation targeted rate would increase from 1.6 to 3.33. The overall rates allocation would be 25% commercial / 75% residential in year one. The impact on residential ratepayers would be between 5-9% and the impact on commercial ratepayers would be between 24-28% in the first year. In year two, the transportation targeted rate would move to 5 and the general differential to 2.13.

 

Advantages

Disadvantages

-  Provides a lead in time to move to a better funding mix

 

-  Provides the re-balance in funding by Year 2

-  More moderate rate rise to all sectors

-  Aligns more with Metro councils over a two year period

-  Large rate rise (+24%) for commercial and industrial sector albeit phased over a two year period

 

 

Key risks

-  Impact on the commercial and industrial sectors albeit phased over a two year period

Recommended?

Yes

 

25.    Option 3: Increase in rating mix to commercial phased over a three year period.

If the proposed change was implemented over three years, the differential on the general rate would increase in the first year from 1.6 to 1.8 and the differential on the transportation rate would increase from 1.6 to 2.51. The overall rates allocation would be 25% commercial / 75% residential. The impact on residential ratepayers would be between 7-10% and the impact on commercial ratepayers would be between 21-23% in the first year.  In year two, the transportation targeted rate would move to 3.33 and then 5 in year three.  Similarly, the general differential would move to 1.9 in year two and then 2.13 in year three.

 

Advantages

Disadvantages

-  Provides a longer lead in time but does get to the desired higher differential and overall funding mix

-  Higher rate rise (+7%) for residential sector in earlier years

-  Lag before alignment with Metro councils

-  Least rate rise (+21%) for commercial and industrial sector which places more pressure on the residential rate increase

 

 

Key risks

-  Higher rating increase to the residential sector in early years

-  Lack of alignment with the proposed Infrastructure Funding and Financing levy

Recommended?

No

 

26.    Option 4: Increase in rating contribution of commercial sector to 30%

This scenario considers the higher differential needed to reflect benefit across other areas of council expenditure in line with other cities. If the proposed change was implemented in one year, and the commercial sector allocation was increased to 30% of all rates (the average of the other metro’s) the differential on the general rate would increase from 1.6 to 2.67 and the differential on the transportation rate would increase from 1.6 to 4.93. The overall rates allocation would be 30% commercial / 70% residential in year one. The impact on residential ratepayers would be between -3% and 4% and the impact on commercial ratepayers would be between 44-56% in the first year.

 

 

 

Advantages

Disadvantages

-  Provides a 30:70 funding split which best matches the benefits received

-  Lowest rate rise for residential sector (minus 3 to 4%)

-  Best alignment with other Metro councils

-  Largest rate rise (+44%) for commercial and industrial sector

 

 

Key risks

-  Large initial impact for the commercial and industrial sector in particular given current economic forecasts and cost pressures

Recommended?

No

 

Recommended option for the 2022/23 Draft Annual Plan

27.    The recommended option for inclusion in the 2022/23 Draft Annual Plan is option 2 which provides for a phase-in period of two years and provides a funding split which is consistent with the intentions of the Commissioners.  It is also largely consistent with comparable Councils in NZ who are facing similar funding challenges.

Financial Considerations

28.    This report forms part of the process of preparing a draft budget for the 2022/23 financial year.  This draft will be consulted with the community during March and April 2022. More detailed information on the impact on ratepayers will be presented as part of the consultation material and in supporting documentation.

Legal Implications / Risks

29.    Council is required to ensure compliance with the relevant sections of the Local Government (Rating) Act and Local Government Act to progress these proposals through the Annual Plan process.

Significance

30.    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.

31.    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.

ENGAGEMENT

32.    Consultation on the draft 2022/23 Annual Plan will be in accordance with the requirements of the Local Government Act. The engagement process has already commenced with stakeholders in the commercial and industrial sector regarding proposed changes to aspects of the rating policy.

33.    Taking into consideration the above assessment, that the matter is of high significance, officers are of the opinion that the planned consultation and engagement will meet the requirements of the Local Government (Rating) Act and Local Government Act.

Next Steps

34.    The draft 2022/23 Annual Plan and budget will be approved on 28 February for public consultation.

 

Attachments

1.      Annual Plan report - Attachment 1 Rating Proposal - A13231013   


Ordinary Council meeting Agenda

21 February 2022

 



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Ordinary Council meeting Agenda

21 February 2022

 

11.5       Long-term Plan Amendment Update

File Number:           A13213685

Author:                    Josh Logan, Team Leader: Corporate Planning

Kathryn Sharplin, Manager: Finance

Tracey Hughes, Financial Insights & Reporting Manager

Frazer Smith, Manager: Strategic Finance & Growth

James Woodward, Delivery Manager

Authoriser:              Paul Davidson, General Manager: Corporate Services

 

Purpose of the Report

1.      The purpose of this report is to provide an update on the progress of the proposed Long-term Plan Amendment (LTPA) and endorse Council’s preferred option for consultation.

Recommendations

That the Council:

(a)     Receives the report.

(b)     Agrees that the Long-term Plan Amendment preferred option for consultation will include:

(i)      The LTPA preferred option for the Civic Precinct (Te Manawataki O Te Papa)

(ii)     Additional financial options to be finalised in the Council meeting of 28th February including a potential Infrastructure Funding and Financing (IFF) levy for the Transport System Plan (TSP) and Tauriko West

(iii)     Further work to support sale of the Marine Precinct and Elizabeth Street and Spring Street Carparks, noting that no adjustment has been made to budgets pending further analysis and decisions around user fees.

(iv)    Grant funding levels as proposed for the Civic Precinct report on this agenda, with additional risk analysis around lower grant funding levels completed

(v)     NZTA funding assumed at full subsidy for core IFF projects but with some risk analysis around wider TSP programme

(vi)    Include as a reduction in debt the proposed government grant to councils for better off funding of $48m proposed as part of three waters reform

(vii)    The assumption remains within the LTPA that council will retain ownership of three waters infrastructure assets

(viii)   A review of capital programme delivery timeframes and significant known cost changes.

 

Executive Summary

2.      As indicated throughout the 2021-2031 Long-term Plan (LTP) Tauranga City is a growth city with a legacy of underinvestment to cater for both its existing and future communities.  It is experiencing a significant deficit in housing supply, transport infrastructure, community amenity, wastewater and water capacity.  This is negatively impacting on the well-being of our community.  The recently adopted LTP provided the opportunity for Council to define a clear pathway forward to address these issues and to support this with an investment plan which is transparent for our community.

3.      Whilst the LTP included a significant project to provide a new central library and community hub on Willow Street, it also acknowledged the need to invest in the city centre to enable it to become the major civic, cultural, business, educational, residential, and commercial hub for the region. 

4.      On 6 December 2021, Council approved that preparation of a Long-term Plan Amendment (LTPA) be undertaken alongside the Annual Plan 2022/23. The amendment to be consulted on alongside the 2022/23 Annual Plan and to include options regarding the civic precinct site. Since December, further work has been done to progress the Civic precinct project and the accompanying LTPA.

5.      The LTPA will also include proposals to fund part of future capital investment through the Infrastructure Funding and Financing legislation to take some of the borrowing for new investment away from Council’s balance sheet.

6.      A further option is to investigate the sale of non-core assets to reduce debt and realise value.  Assets identified for investigation include the two parking buildings at Spring Street and Elizabeth Street and the Marine Precinct.

Background

7.      The Council must follow the decision-making provisions of the Local Government Act 2002 (LGA). In particular, a decision to significantly alter the intended level of service provision for any significant activity must be explicitly provided for in the Council’s Long-term Plan.

8.      On 6 December 2021, Council approved the preparation of a Long-term Plan Amendment (LTPA). The amendment is to be consulted on alongside the 2022/23 Annual Plan and to include options regarding the civic precinct site.

9.      The Financial Strategy of the LTP outlined Council’s challenge to deliver the substantial amount of required infrastructure for the city when Council’s borrowing levels are already moving close to the borrowing limits set by the Local Government Funding Agency (LGFA).  The limit that constrains council is its debt to revenue ratio as Tauranga City Council (TCC) is one of New Zealand’s most indebted Councils.

10.    In the LTP council included additional targeted rates for debt retirement across various core activities.  For transport and community services the targeted rates were to fund the debt and operating costs generated by a portfolio of new capital projects. At the time the Financial Strategy noted that Council is continuing to work on alternative options for funding and financing its capital programme. This includes investigating use of Government’s Infrastructure Funding and Financing (IFF) legislation, which provides for financing new city infrastructure without using Council’s balance sheet. 

11.    The LTPA will include consultation on alternative financing arrangements using IFF for some investments across the transportation activity and Tauriko West new growth area. The transportation IFF funding would replace some of the targeted rates proposed in the LTP. The IFF levy for city wide transportation projects will be further considered in a wider financial paper to Council on 28th February.

12.    Since the December Council meeting approving the commencement of an LTPA several updates have occurred which have implications for the 2022-2031 long-term budget.  The most significant of these are briefly detailed below.

 

Progress on the 2021/22 Capital programme and implications for LTPA

Transport Projects

13.    For the current year the transport capital programme is currently forecasting delivery of $65m, which is 80% delivery of budget.

·    There are a number of significant projects underway in the construction phase, including Cameron Rd Stage 1, Totara Street Improvements, Te Okuroa Drive and Maunganui Road Upgrade. These construction projects are proceeding well.

·    The renewals programme is now picking up under the new maintenance contract.

·    The balance of the programme is still in the business case (option development) and design phases with progress made on Cameron Road Stage 2 (in tender phase), 15th Avenue/Turret Road/Welcome Bay Road (in tender phase), Arataki bus facility (in option development phase), the Public Transport Services & Infrastructure business case (in pre-tender phase), and Te Tumu (in pre-tender phase) and Hewletts Road sub-area (in pre-tender phase) business cases.

14.    The revised 2022/23 (Annual Plan) Transport capital programme has been reset with some of the programme rephased into 2023/24. The LTP budget of $124m has been rephased to $82m in the Annual Plan, with most of this moved to the 2023/24 and 2024/25 years.  There will be further rephasing through the LTPA to ensure realistic delivery timeframes.

15.    There have been some cost revisions included in the LTPA:

·    Cameron Road Project - Costs for Stage 2 of the project have been increased by $54m which affects years 2023/24 - 2025/26. Costs were revised after the costs for Stage 1 were known and were higher than expected due to the impacts of COVID-19 (20% increase in 12 months). Other factors increasing costs on the project are ongoing inflation impacting the construction sector, which is due to delays in materials, a tight labour market and availability of resources.

·    Tauriko West - Costs of $71m have been included for intersections with the state highway.

 

Civic Precinct (Te Manawataki O Te Papa)

16.    The Civic Precinct report also on this agenda presents two options to be the basis for consultation from March to April.  The first option, Te Manawataki O Te Papa, is a $303.4m (capital costs) programme consisting of a set of co-dependent projects that will deliver the civic and cultural heart for the city.  The second option presented is proceed with the Civic precinct projects and services currently included in the LTP 2021-31 (modified status quo option with updated costings) at an estimated capital cost of $126.8 million.

17.    It is recommended that both options are presented to the community for feedback as part of a LTP 2022-31 amendment with Te Manawataki O Te Papa as the preferred option. 

 

Infrastructure Funding and Financing Act proposals

18.    Council is in the process of investigating options for leveraging off-balance-sheet debt using the IFF.  The IFF permits TCC to work with central government to establish a special purpose company to raise money from New Zealand’s debt market.  The money raised can then be used by TCC to fund infrastructure to support housing development.  The debt is repaid by levying beneficiaries of the infrastructure.  This levy will be similar to a targeted rate and will be administered on behalf of the holders of the debt (Crown Infrastructure Partners) by Council along with its rating charges.

19.    In a separate report, staff are seeking Council endorsement to:

(a)     continue progressing two IFF proposals relating to the Transport Systems Plan and Tauriko West for a total of $260m in financing across both projects; and

(b)     to engage with the public through the LTPA consultation document to understand the community’s views.

20.    The LTPA financials will be prepared on the basis these two applications will proceed and be successful and so this debt (and associated rates revenue) will move off TCC’s balance sheet.  This will be confirmed in the Council meeting on 28th February where the full financial impacts of the Long Term Plan Amendment will be tabled.

Asset Realisation

21.    Council holds some non-core assets in the form of two carparks in the CBD and the Marine Precinct which have commercial value and could be sold to reduce debt and refocus council on more core operations.  The current revenue charges would not support the commercial sale of parking assets and further work is required on the changes required to these activities in order to realise a meaningful sale value for these assets.  The Marine Precinct also requires further work to determine an appropriate sales value.  Council will consult on the broad principle of sale in the LTPA but have not at this stage included a sale value in the financial impacts.

 

Assumed Grant Funding

22.    The LTPA includes higher assumed grant funding over the years of the LTP which includes the assumed additional funding associated with:

·    the broader Civic Precinct option of $73.8m

·    grant funding assumed is the three waters reform “better off” funding of $48m; and

·    full Waka Kotahi funding on the extended transportation capital works programme. 

23.    These assumptions of additional funding improve the financial situation and the debt to revenue ratio limits by reducing debt and increasing revenue in the years of the grant.

24.    If the assumed grant funding is not received Council’s proposed expenditure would not be financially sustainable and Council would need to review its investment proposals to remain within financial limits.

 

Civic Precinct 

25.    Based on previous advice the external grant funding is considered realistic, however, an updated funding report is currently being completed by the Giblin Group and this will be presented to Council as part of the LTPA process.  If this grant funding is significantly lower than that consulted upon in the LTPA (particularly the earlier projects) TCC will need to consider how we will approach this change, either

a)   Amend budgets and continue with programme

b)   Amend budgets and reconsult

c)   Reduce the scope of the programme of works

d)   Delay projects until additional funding is achieved.

 

Better off Funding Grant

26.    Government has announced that it will provide to councils grant funding it is calling “Better off” funding as part of its water reform programme.  The funding criteria originally proposed in its announcements on 15th of July 2021 was as follows:

i)    Supporting communities to transition to a sustainable and low-emissions economy, including by building resilience to climate change and natural hazards. 

ii)   Delivery of infrastructure and/or services that: -

·    Enables housing development and growth, with a focus on brownfield and infill development opportunities where those are available,

·    Support local place-making and improvements in community well-being.

27.    Several of TCC’s proposed investments in the LTPA would qualify under the above criteria.  In January Government announced that updated guidelines are expected to be published in late February 2022, with the intention that councils will be able to access the first tranche of funding in 2022-23.  TCC’s portion of “better off” funding grant is $48.4m with 25% of this potentially available from 2022-23 subject to approval of projects.  As the projects to be covered by this grant have not been decided, in the LTPA it is proposed to include this funding as an offset to debt.

 

Waka Kotahi Subsidy

28.    Council has a significant amount of Capital Expenditure that relates to the transportation activity.  We have assumed that all projects that are eligible for Waka Kotahi funding will receive the full subsidy.  This funding is not able to be confirmed by Waka Kotahi for many of these projects at this stage.  This is due to the level of funding available within Waka Kotahi budgets and the Waka Kotahi three-year approval cycle. 

29.    If the assumed grant funding is not received Council’s proposed expenditure would not be financially sustainable and Council would need to review its investment proposals to remain within financial limits.  This risk may be able to be reduced for projects funded under the IFF programme as interim funding for the Waka Kotahi subsidy may be possible through this agency at no cost to the ratepayer.

Strategic / Statutory Context

30.    As this report identifies a proposal that varies significantly from that included in the LTP, this decision cannot be made without public consultation, in accordance with Section 97 of the LGA. The intent of this legislative requirement is to ensure that the community is involved in the decision-making process. As such, before making a decision on additional investment in the Civic Precinct, Council is required to undertake a thorough consultation process.

Options Analysis

31.    Options for the LTPA and their financial implications will be discussed in the LTPA financials Report to Council on 28 February 2022.

Financial Considerations

32.    The financial consideration of options for the LTPA will be presented in a report on LTPA Financials to the Council meeting on 28 February.

Legal Implications / Risks

33.    The Local Government Act 2002 (LGA) enables a local authority to amend its Long-term Plan (LTP) at any time (section 93(4)).  It also sets out that a decision to significantly alter the intended level of service provision for any significant activity undertaken by a local authority triggers a long-term plan amendment (section 97).

Consultation / Engagement

34.    Significant matters relating to this report will be outlined in the consultation document and supporting documentation and consulted on as per the requirements of the Local Government Act 2002.

35.    A comprehensive Communications and Engagement Plan will be produced to support the development of a LTPA. Staff will also prepare a combined Annual Plan and LTPA Consultation Document for adoption by Council on 24 March 2022.

Significance

36.    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.

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

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

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

(c)   the capacity of the local authority to perform its role, and the financial and other costs of doing so.

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

ENGAGEMENT

39.    Taking into consideration the above assessment, that the decision is of high significance, officers are of the opinion that the following consultation/engagement is suggested/required under Section 93 of the Local Government Act 2002.

Next Steps

40.    Staff will report back to Council on 28 February with a paper titled “Long-term Plan Amendment Financials” that considers the effect on Council financials and the financial strategy of the proposed LTPA for the Civic Precinct and options to be consulted on in relation to financial strategy as part of the amendment. It will also discuss the impacts of introduction of the IFF to the LTPA and creating further balance sheet capacity by realisation of assets in order to fund Civic Precinct.

41.    Following Council’s decisions relating to that report, staff will prepare the following documentation for approval and adoption by Council on 24 March 2022:

(a)     Consultation document for the Long-term Plan amendment and the Annual Plan.

(b)     Supporting documentation detailing the parts of the current LTP that are changing as part of the amendment.

Attachments

Nil


Ordinary Council meeting Agenda

21 February 2022

 

11.6       Civic Precinct Options for Long Term Plan 2021-31 Amendment Consultation

File Number:           A13211597

Author:                    Mike Naude, Programme Manager - Civic Redevelopment Projects

Authoriser:              Marty Grenfell, Chief Executive

 

Purpose of the Report

1.      This report seeks approval to consult on options regarding the future of the civic precinct site.

 

Recommendations

That the Council:

(a)     Receives the report ‘Civic Precinct Options for Long Term Plan 2021-31 Amendment Consultation’.

(b)     Agrees to consult on the following options regarding the future of the civic precinct, via the Long-Term Plan 2021-31 Amendment consultation process.

·    Option One:  Te Manawataki O Te Papa (Civic Precinct) Masterplan (Refreshed 2021) at an estimated capital cost of $303.4 million.

·    Option Two:  Civic precinct projects and services currently included in the LTP 2021-31 (modified status quo option with updated costings) at an estimated capital cost of $126.8 million.

(c)     Approves Option One ‘Te Manawataki O Te Papa (Civic Precinct) Masterplan (Refreshed 2021)’ as the preferred option for Long Term Plan 2021-31 Amendment consultation.

(d)     Approves $600,000 of Te Manawataki O Te Papa operational costs in 2022/2023, to be loan funded over five years, including costs relating to the completion of business cases.  

(e)     Notes that, while future external funding is uncertain, it is Council’s intention that no more than 50% of the financing for the preferred Option 1 project is via ratepayer-funded loan.

(f)      Notes that staff will report back with a full cost refresh prior to the deliberations on the Long-Term Plan Amendment following the consultation process.

 

 

Executive Summary

2.      The Local Government Act 2002 (LGA) enables a local authority to amend its Long-Term Plan (LTP) at any time (section 93(4)).  It also sets out that a decision to significantly alter the intended level of service provision for any significant activity undertaken by a local authority triggers a long-term plan amendment (section 97).

3.      Due to the introduction of a museum and exhibition/events facility into the civic precinct proposal, resulting in a significant change in level of service for a significant activity, a decision to implement the civic precinct refreshed masterplan programme (Te Manawataki O Te Papa) requires an amendment to the Council’s LTP 2021-31.   Consultation on this amendment is required under the LGA (section 93(5)). 

4.      Two options are presented in this report for consultation purposes.  First, Te Manawataki O Te Papa, a $303.4M (capital costs) programme consisting of a set of co-dependent projects that will deliver the civic campus and cultural heart for the city.  Second, a modified status quo option based on the delivery of the more limited civic precinct projects as currently set out in the LTP 2021-31 (with updated capital costs totalling $126.8M).  It is recommended that both options are presented to the community for feedback as part of an LTP 2021-31 amendment with Te Manawataki O Te Papa as the preferred option.  It is considered that delivery of Te Manawataki O Te Papa will have wide reaching sub-regional, city and city centre benefits.  It is also recognised as a catalyst unlocking further investment in the city centre. 

Background

5.      In 2018, the Council adopted the Civic Precinct Masterplan, following extensive community consultation. The plan provided direction for the future development of the Council-owned site bounded by Willow, Hamilton, Wharf and Durham Streets; and the Council-owned site at 21-41 Durham Street, formerly known as the TV3 site.  The 2018 masterplan included a hotel and conference centre and a performing arts centre on the site at 21-41 Durham Street and the Civic Administration building, Library and Museum on the Willow Street site, with connections through to Masonic Park. Extensive community consultation took place, but for various reasons, the Civic Precinct Masterplan was not implemented at this time.

6.      More recently, the Council included a budget in the LTP 2021-31 for the development of a new library and community hub on the civic precinct site, to promote learning and education, and an enhanced urban space to promote activation and entertainment.  Following the adoption of the LTP 2021-31, the Council issued a design brief to Willis Bond to prepare a Civic Masterplan Refresh to reflect the strategic decisions the Council had made as part of the LTP process, including a decision to lease a new Civic Administration building at 90 Devonport Road; respond to public submissions in favour of a museum located on the Civic Precinct site; and to reflect the history and cultural significance of the site to tangata whenua and to tell the stories of Tauranga Moana. 

7.      Te Manawataki O Te Papa (Civic Precinct) Masterplan (Refreshed 2021) was prepared by Willis Bond in collaboration with mana whenua, including representatives from Ngai Tamarāwaho, Ngāti Tapu and Te Materāwaho, as represented by the Otamataha Trust.  The refresh is an updated version of the Civic Masterplan developed in 2018 and includes facilities such as a civic whare (public meeting house), museum, library, hotel and a performing arts and conference centre.  As part of the refresh, the masterplan has been expanded to include the waterfront reserve, between Hamilton and Wharf Streets, linking the water with the civic precinct via Masonic Park.

8.      Te Manawataki O Te Papa was formally adopted by the Commission at the Council meeting on Monday 6 December 2021.  At the same meeting, Council requested a further report in February 2022 to enable the Commission to make a decision on inclusion of the Civic Masterplan in a Long-term Plan Amendment which addresses:

i)          Operating costs for Site A community facilities and amenity projects; and

ii)         Further refinement of capital expenditure costs if any; and

iii)        Balance sheet impact of delivery of Site A community facilities and amenity projects; and

iv)        Rating impacts, and any other funding impacts, over the Long-term Plan period associated with delivery of the Civic Precinct Masterplan; and

v)         Alternative funding and financing options including the use of private equity and or building lease arrangements in accordance with the partnership agreement and any other off-balance sheet treatment; and

vi)        The financial impact of different project staging options.

9.      These matters are addressed within this report.

 

Strategic / Statutory Context

10.    The LTP 2021-2031 articulates Putting the community at the heart of everything we do as the foundation of the document. Whilst the LTP included a significant project to provide a new central library and community hub on Willow Street, it also acknowledged the need for wider investment in the city centre to enable it to become the major civic, cultural, business, educational, residential, and commercial hub for the region. 

11.    Te Manawataki O Te Papa will begin to address this need for wider investment with clear strategic alignment with the various key council documents and work programmes that set the direction for our city centre, including our community outcomes.

12.    A summary of how the delivery of Te Manawataki O Te Papa supports LTP 2021-31 community outcomes is provided in Table 1.

Table 1:  Alignment of Te Manawataki O Te Papa with community outcomes

 

Community Outcome

Te Manawataki O Te Papa alignment with community outcomes

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

·    Well planned civic facilities that seamlessly interconnect with each other and the environment, creating improved amenity, accessibility and vitality.

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

·    Stimulating vibrant and sustainable economic activity, including events, in the city centre that will attract new business and commercial activities as well as a talented and skilled workforce.

We are an inclusive city – Tauranga is a city that recognises and promotes partnership with tangata whenua, and values culture and diversity, and where people of all ages and backgrounds are included, feel safe, connected and healthy.

·    Creation of ‘sense of place’ and ‘pride’ for Tauranga

·    Increase in wide range of community facilities that aim to connect our communities

·    Partnership approach with mana whenua in all aspects of design

·    Acknowledgement and celebration of the cultural significance of the civic site and the telling of Tauranga Moana stories.

 

We value and protect our environment – Tauranga is a city that values our natural environment and outdoor lifestyle, and actively works to protect and enhance it.

·    Integration of natural assets into all aspects of design to ensure appreciation of the natural beauty of the civic site.

·    Showcasing the waterfront through the creation of viewshafts and improved accessibility for all to value and enjoy.

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

·    Improved accessibility and mobility within the civic centre, both between buildings and to the waterfront area.

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

·    Providing community and cultural facilities that are commensurate with being the fifth largest New Zealand city that enable Tauranga to attract major international and national events and activities.

 

13.    Te Manawataki O Te Papa has clear strategic alignment with various other strategic documents, including:

·        Urban Form and Transport Initiative (2020) – At the centre of the Urban Form and Transport Initiative (UFTI) is the Connected Centres Programme for the western Bay of Plenty.  This programme is built around four high frequency and dedicated public transport corridors, linking centres for work, learning and play.  This report strongly aligns with city civic development outlining that an increase in people living in the CBD and improved access to the harbour and amenities will help create a city centre that has “ vibrancy and is a destination for residents and visitors alike[1]”.

·        Te Papa Spatial Plan (2020-50) – This plan sets the strategic direction on how we manage growth to meet future needs, opportunities, and challenges in Te Papa over the next 30 years. Specific projects for the city centre include streetscape improvements, waterfront redevelopment, civic amenities, library and community hub and museum.  Many of these outcomes and projects will be achieved through the Te Manawataki O Te Papa project, including assisting to achieve many of mana whenua’s cultural aspirations outlined in the Spatial Plan. In the business case sitting behind the plan, a key outcome (for the preferred way forward) was for an “immediate focus on on-going city centre regeneration”.  As part of the business case development, a social infrastructure assessment was carried out. In essence, it showed that the greater investment in social infrastructure would have the most support for the business case benefits sought. In the city centre, this specifically included a new library, performing arts centre, streetscape, waterfront and civic space improvements (recognising funding limitations).

·        City Centre Spatial Framework (2017) – This document highlights the civic precinct as a key move for the city centre, and surrounding investment in streetscape.

·        City Centre Strategy – This strategy is currently being refreshed and will reflect key themes and the outcomes of the Civic Precinct proposals. Development of this strategy will occur in tandem with further work on Te Manawataki O Te Papa to ensure alignment.

·        Marine Facilities Strategy – This strategy is currently under development and will guide the way our community and visitors access Tauranga Harbour, Te Awanui, in the future. Development of this strategy will occur in parallel with further work on the waterfront amenity projects that form part of Te Manawataki O Te Papa.

 

Alignment with our communities’ views

14.    Key messages from our communities confirm the need to regenerate the civic precinct as provided for in Te Manawataki O Te Papa option.  Some of the relevant themes from our communities include the need for the following[2]:

Environment

·    Increased interaction and connections with water and the natural environment

·    Tauranga’s natural environment is highly valued by its residents and visitors, people love its landscape, access to the beach, mountains and bush, and view it as a beautiful place to live

·    People want green space, trees, coastal reserves and natural landscapes and conservation land protected.

Social

·    Increased interaction and connections with others in their community,

·    A shared sense of pride in being part of a culturally rich and diverse community.

Cultural

·    Genuine partnership with tangata whenua

·    Celebration of Tauranga’s strong identity and long and rich history

·    The history and culture of local Tangata Whenua is elevated /celebrated e.g. integrate cultural art and imagery into areas in the Tauranga CBD, protect and celebrate cultural heritage sites, stories are shared via curriculums, amenity and physical spaces

·    More events, including international events, and better facilities e.g. new conference centre, stadium, museum

Economic

·    A city that is smart, innovative and productive

·    A city that is attractive to visitors, new businesses and new talent

·    A balance between sustainability and prosperity

·    More events/activities and/or a museum.

 

15.    Interim findings from the ‘My Tauranga Vibe’ campaign (as part of the City Vision process) also support the need for wider investment in the civic precinct, with 10 percent of participants identifying that “city centre” improvement needed to happen.  Many participants focused on the lack of energy in the city centre and the lack of connection with the waterfront/environment:

“The Heart of the city needs serous attention.  It has a lack of soul”

“Give some personality to the city . . . give space for people to be creative”

“Here in Tauranga, we feel at one with moana . . . could we bring moana to the city centre, or the city centre to moana?”

Options

16.    Two options have been identified for consultation purposes ahead of the LTP (2021-31) amendment process:

·    Option 1: Te Manawataki O Te Papa (Civic Precinct) Masterplan (Refreshed 2021) as it was formally adopted on 6 December 2021 at the Council meeting. 

·    Option 2: Civic precinct projects as currently planned for in the LTP 2021-31.

 

Option One -Te Manawataki O Te Papa (Civic Precinct) Masterplan (Refreshed 2021)

17.    Te Manawataki O Te Papa is a re-commitment to city centre regeneration with the potential to reinstate the heart of our city centre as the civic and cultural capital of the Bay of Plenty.  It presents an opportunity to deliver the vibrant cultural and civic heart the city has been missing. It will contribute to a city that we can all be proud to live, learn, work and play in, in years to come. 

18.    Its premise is that development of a civic campus would create a new and vibrant civic heart which would engender a sense of ownership and community pride in activities and experiences which capture the essence of Tauranga Moana, while showcasing its geographical location on the harbour’s edge.

19.    A civic campus approach is used that focuses on activities and experiences that promote community wellbeing, activation of the civic precinct and revitalisation of the city centre.  Te Manawataki O Te Papa design recognises the cultural significance of the site, while promoting social cohesion and economic stimulus for the city centre.  The inter-relationship and inter-connections of activities, services and functionality of the buildings, activities and urban landscape is a key factor in the foundations of Te Manawataki O Te Papa.

20.    Te Manawataki O Te Papa will have wide reaching sub-regional, city and city centre benefits.  It is considered key to unlocking further investment as well as wide ranging social, economic, cultural and environmental benefits.  Together with investment by the private sector, these projects have the potential to reinstate our city centre as the civic, commercial, and cultural capital of the Bay of Plenty.

21.    Outcomes from the delivery of Te Manawataki O Te Papa will include initiation of the regeneration of the city centre that contains a multi-functional, mixed use civic and waterfront development at its heart.  A city heart that acknowledges, celebrates, and showcases its natural beauty and cultural significance, where city and nature and history interconnect and the stories of Tauranga Moana are told.  It will provide activities and experiences that the people of Tauranga deserve, and visitors expect. It will promote opportunities for welcoming and expression; learning and discovery; appreciating our past and shaping our future; as well as places for entertaining and hosting. Opportunities for new commercial and economic activities, tourism offerings, restoration of natural and cultural character, and improved opportunities for recreation and public access will also be promoted.

22.    Te Manawataki O Te Papa will further Tauranga’s status as the heart of the Bay of the Plenty region, providing a ‘halo’ effect or ‘uplift’ for the Bay of Plenty region and North Island.  In particular, providing a regional museum facility that celebrates and showcases Tauranga Moana’s rich and varied history, culture and taonga and providing exhibition and event spaces that can attract international and national events. 

23.    Overall, Te Manawataki O Te Papa will contribute to creating a prosperous, engaged and vibrant community – a place where people will visit, live, work and play; a city centre commensurate  with being the fifth largest city in New Zealand and the heart of the Bay of Plenty region.

 

A set of projects that collectively work together to create Te Manawataki O Te Papa (the heartbeat of Te Papa)

24.    Te Manawataki O Te Papa is a set of integrated projects that collectively work together to deliver the civic and cultural heart for the city (Figure 1).  The campus precinct approach encourages connection between different sites, services and buildings and provides efficiencies through the sharing of ‘back of house’ facilities and a consolidation of public meeting and presentation spaces.

 

Figure 1:  Diagram showing the proposed location of buildings within the civic precinct (Te Manawataki O Te Papa)

 

25.    Three sites make up Te Manawataki O Te Papa:

Site A

Site A is defined by the land bounded by Willow, Durham, Wharf and Hamilton Streets.

Projects within Site A comprise a Library, Museum, Exhibition and Events and a Civic Whare set within a civic square.  This project also includes the refurbishment of the Baycourt Theatre. 

Site B

Site B is defined as the TV3 Site located on Durham Street.  This development comprises a Conference and Performance Arts Venue and a hotel. 

Site C

Site C includes the upgrade of a section of Willow Street and a section of The Strand between Wharf and Hamilton Streets, Masonic Park and a section of the Waterfront Reserve. 

 

26.    Te Manawataki O Te Papa is a set of co-dependent projects with the various proposed projects delivering a wide range of services to our communities, meeting different community needs.

27.    With the exception of the Civic Whare and the Baycourt Theatre refurbishment, projects within Site A are typically more developed than projects contained in Sites B and C, with feasibility work and business cases complete for many.

28.    Projects within Site B are concept only with no feasibility or detailed works complete.  It is intended at this stage that a Conference and Performing Arts Venue and a Hotel would be predominantly privately developed with a high level of private sector funding, where Council potentially could enter into a long-term lease for the Conference and Performance Arts Venue.  Further options on this site will be considered as part of the Annual Plan 2023-24 process.  Site C projects relate to the waterfront and will be more fully developed alongside the Marine Facilities Strategy.

29.    Key projects are therefore at different stages of development, with some reliant on private investors (Performance Arts and Conference Centre and Hotel).  It should be noted that each individual project will have ‘checks and balances’ along the way.

30.    The Civic Precinct Governance Group was established in July 2021 to provide governance of the masterplan refresh process and the new 90 Devonport Road administration premises.   (Should the Council approve Option 1 for the Civic Precinct development, staff will report to the 28 February meeting with proposed changes to governance arrangements and Terms of Reference to reflect the preferred option.)   The governance of the Te Manawataki O Te Papa programme will include decision gateway points clearly established for each project to enable decision makers to confirm the preferred way forward.  This will include regular reporting to Council and may also include consulting with our communities along the way as appropriate.

31.    Figure 2 illustrates the indicative programme for the delivery of Te Manawataki O Te Papa as a single staged-phased development.  Project summaries for key projects for each site are provided in Table 2.


 

Figure 2:  Indicative programme for the delivery of Te Manawataki O Te Papa as a single staged-phased development[3]

Table 2:  Te Manawataki O Te Papa project descriptions

SITE A

Civic Whare

The primary functions of the Civic Whare are:

-     Council and Committee meetings

-     Citizenship and civic ceremonies / functions

-     Iwi hui and functions

 

The Civic Whare will also provide a purpose-built space for visiting dignitaries in a culturally appropriate setting.

This is the heart of the precinct and the heart of democratic leadership.  The civic site is culturally significant to mana whenua and it is therefore fitting that this central building reflects this significance. 

Library and Community Hub

The vision for the Central Library and Community Hub is “A vibrant and inspirational hub for everyone to learn, relax, create, socialise, and enjoy”.

The purpose of the Central Library Community Hub is to:

-     Provide experiences and opportunities to expand minds, foster creativity, connect with others, access information, find solitude, and have fun

-     Share and preserve the stories of Tauranga Moana: past, present and future

-     Support engagement with, and delivery of, the library network both physically and digitally

-     Contribute to a vibrant city centre that people want to visit.

 

The library is envisioned as a multi-purpose facility beyond your typical library, providing space for people to gather, play and learn[4].

Note the current Willow Street library will close to the public on 6 March 2022.  A new temporary CBD library will open in early April.  Demolition of the Willow Street buildings commences April 2022.

Museum and Exhibition Centre

The visitor experience of these two spaces would be modern; stories and experiences would be offered using digital, interactive, hands-on information and tools as well as through a rich collection of displays; its content would be kept fresh with new exhibitions, activities and events presented through the year.

The museum and exhibition centre is proposed to consist of:

•      Long-term exhibitions showcasing Bay of Plenty stories

•      Multi-purpose exhibition and cultural event space with temporary exhibitions, such as the ‘World Press Photo Exhibition’

•      Activity Rooms and educational group learning spaces to cater for workshops such as arts/craft and design e.g. pottery and ceramics

•      Discovery centre with hands on learning aimed at families and school aged children

•      Story pod and play spaces for under 5s

•      Meeting rooms and theatrette for use across the different activities and for private bookings.

 

The Museum and Exhibition Centre will provide both a destination for domestic and international visitors and an active social space for locals.  It will also contribute to enhancing peoples’ value of this unique region and their understanding of each other. The Exhibition and Events space will also support the proposed adjacent Conference and Performing Arts Centre when large scale events are held.

Baycourt refurbishment

A refurbishment of Baycourt Community and Arts Centre is proposed, to modernise the facility, improve overall functionality and use of the building, and to reflect the architectural design of other buildings within the Civic Precinct. This project will ideally include:

-     upgrades to the exterior of the building including the addition of a lift on the outside of the building, allowing 24/7 accessible access across the site (this will allow ease of access from the Civic Whare to the upper level of Baycourt);

-     upgrades to the entrance, foyer, bar and ablutions areas;

-     fixing sound transference issues between the X Space and Addison Theatre;

-     reorganisation of the loading bay area;

-     the creation of additional dressing room space; and

-     repurposing several internal spaces, subject to the final design of the new performing arts venue and conference centre.

Civic Plaza

Civic Plaza connects all facilities across the civic precinct site and is the fundamental driver to shape and support activity across the precinct. The landscape creates a series of cascading terraces and functional spaces providing a series of amphitheatres, allowing for activation by providing stages for concerts and events.  A view corridor connects the site through Masonic Park to the moana. The civic plaza includes a Ātea as an extension of the Ātea-A-Tū located inside the Civic Whare as the place of welcoming, connection and ceremony as well as providing a space for outside events, exhibitions and concerts.

Masonic Park Upgrade

Masonic Park is an extension of the Civic Plaza providing a visual link to Te Manawataki O Te Papa, the Civic Whare and promoting cultural procession from the moana (waterfront reserve).  A series of Wahoroa and pouwhenua provide landmarks and gateways through the site to further celebrate the cultural significance of the site and wider area.

The site will provide a series of amphitheatres and spaces for public events and other functions either as multiple small to medium sized events or large public events and performances.

SITE B

Performing Arts and Conference Centre and Hotel

Buildings on 21-41 Durham Street (Site B) include a circa 6,100m2 performing arts and conference centre and a 11,600m2 hotel.

The proposed design of the Conference and Performing Arts Centre will allow for large scale conferences, meetings, productions and concerts. 

Please note there is no recent detailed work for this project.  The expectation for this project is that it will be privately developed with a high level of private sector funding.  The Council may wish to enter in a long-term lease arrangement with the developer to ensure that the Performing Arts and Conference centre are available as public facilities.  As this is Council owned land, consultation with the community on land tenure options may be required prior to proceeding with the development of the site.

SITE C

Waterfront amenities

Tauranga city centre has one of the most stunning waterfront settings in the country.  This project is about reconnecting the city centre to the waterfront through the civic precinct programme so that the waterfront becomes a space for all to enjoy, provides easy access for recreational and cultural water activities, and enables tourist water activities and/or potential water transport routes that service the western Bay of Plenty sub-region.

This project includes:

-     Wharewaka and waka launching ramp

-     Regional playground and waterpark

-     New wharf at the harbour-end of Wharf Street to potentially cater for water transport services to and from the city – servicing the western Bay of Plenty. This will be aligned with the Marine Facilities strategy currently under development.

-     Identifying how these projects connect to the wider city centre waterfront space to provide a comprehensive plan for the land, water and interface along the city centre water’s edge.

-     The waterfront reserve will have a visual link to the Civic Whare located on the Civic Precinct and will culturally link the moana to Te Manawataki O Te Papa.

 

Cultural elements in the design include Pouwhenua located on the Waterfront Reserve and in the design of paving and furniture.

 

32.    Discussions are underway with the Art Galley as to the implications of the Masterplan for the gallery, particularly the enhancements to Masonic Park.  The intention is to explore opportunities to maximise the benefits of the investments

33.    Further detail at a project level will be made available on the council’s website during the consultation phase.

 

Benefits of creating a civic heart

34.    A summary of key sub-regional, city and city centre benefits are provided in Table 3, themed by social, cultural, economic and environmental benefits.

Table 3:  A summary of key social, cultural, economic and environmental benefits to be delivered by Te Manawataki O Te Papa

Social

·    Improved interaction between people and communities through improved public spaces and facilities in the heart of the city that encourage people to live, learn, play and connect

·    Fostering a sense of belonging, inclusion, and city pride through provision of an active, vibrant and welcoming city centre.

·    Building collaboration through community partnerships, including a visible partnership with mana whenua through cultural design and cultural activities

·    Supporting learning, creativity and the accessibility of information through increased provision of information and services; accessibility of technology and resources; and support for study, business and personal development

·    Valuing our stories, celebrating our history and increases in understanding of the many communities that make up Tauranga

·    A dedicated community space (Civic Whare) for democratic decision-making and civic functions that encourages appropriate tikanga to be observed in a local government context

·    Increased opportunities for recreation and public access in the city centre

Cultural

·    Repositioning Tauranga’s cultural life from a modest regional centre to accessing the ‘best of the rest of the world’ through the provision of international and national events

·    Supporting and increasing the capacity of the local creative community

·    Celebration of Tauranga’s strong identity and long and rich history

·    The cultural significance of the civic site to mana whenua is acknowledged and is demonstrated through the genuine partnership approach between Council and mana whenua

·    The history and culture of mana whenua is elevated and celebrated e.g. integrate cultural art and imagery into areas in the Tauranga CBD, protect and celebrate cultural heritage sites, stories are shared via curriculums, amenity and physical spaces

·    Addressing cultural considerations and historical grievances through the civic precinct site

Economic

·    Attracting new visitors, new businesses, and new talent to our growing city

·    Growing the Bay of Plenty visitor economy by providing an improved destination with a more varied tourism offering, such as performing arts, museum and/or conferences

·    Supporting local business in the city centre by activating spaces through improved facilities, activities and events that encourage people to connect in the city centre

·    Stimulating a sustainable and vibrant economic future for the city by acting as a catalyst for further private investment within the city centre

Environment

·    Increased appreciation, interaction and connection between the city and the waterfront and water, through improved access, viewshafts and activation of different spaces to encourage movement of people between city and water.

·    Opportunity for environmentally sympathetic design to be implemented.

 

Benefits of acknowledging our past in planning for our future

35.    The Civic Precinct site is culturally significant to mana whenua of Tauranga Moana, particularly Ngai Tamarāwaho, Ngāti Tapu and Te Materāwaho. It was originally part of Te Papa, the central kāinga (village) of early Tauranga attracting people to a natural landing for waka, to access fertile cultivations, for trade, for gathering, for discussion and for interactions. It was heavily occupied and utilised pre-European arrival.   In the 1800s the area was a hive of activity, attracting people for trade, commerce, education, learning, hospitality, and entertainment. This central hub of activity eventually grew into what we know as Tauranga today.

36.    Upon arrival of the missionaries the Civic Precinct site was subject to land acquisition by the Christian Missionary Society (CMS). Between 1866 and 1867, four-fifths of the CMS land was transferred to the Crown and confirmed under the Tauranga District Lands Act 1867. Between 1885 and 1886, the Crown vested the land as reserve in the then-Borough of Tauranga, as an endowment in aid of Borough Funds. In 1930, the land changed its purpose of reserve to a site for a town hall and other municipal buildings. In 1982, the land was classified as Local Purpose (municipal buildings) Reserve subject to the Reserves Act 1977. In 1995, the land was issued to the Mayor, Councillors and Citizens of the Borough of Tauranga for Local Purpose (municipal buildings) Reserve subject to the Reserves Act 1977.  Collectively, these actions are considered by tangata whenua to amount to a confiscation of the lands.

37.    As a result of the alienation from the Church to the Crown as outlined above, mana whenua maintain that the original purpose was not upheld and have sought to be reconnected to the whenua. This has been continuously and consistently reinforced through protests, occupations and arrests throughout time. The reconciliation of the disconnection is a significant priority for mana whenua, as it is for Council.

38.    Te Manawataki o Te Papa project acknowledges the significance of the civic precinct site to mana whenua.  Inclusion of a Civic Whare in the heart of the precinct and the partnership approach to Te Manawataki o Te Papa (including collaboration with representatives from Ngai Tamarāwaho, Ngāti Tapu and Te Materāwaho, as represented by the Otamataha Trust) provides a beginning to reunite mana whenua with this site.

39.    Otamataha Trust has gifted Council the name ‘Te Manawataki o Te Papa’ for the future civic precinct.  Translated literally, Te Manawataki o Te Papa means ‘the heartbeat of Te Papa’ – intended to reflect the civic precinct’s location in the heart of Tauranga, and how the site’s history and future can be symbolised by a heartbeat or active pulse for the city.  Te Manawataki o Te Papa fittingly describes what the future civic precinct will mean for communities within the city and wider area in years to come.  It also appropriately reflects the history of the site, with the area on and around the civic precinct known as Te Papa by both Māori and early settlers. 

Benefits of a campus approach for design

Te Manawataki O Te Papa campus enables co-location of facilities across buildings. This results in a more efficient utilisation and allocation of spaces with a reduced Gross Floor Area (GFA) across the campus, as compared to the alternative more traditional independent building approach[5]. This approach allows the following facilities to be effectively co-located and/or shared across the campus:

·        Meeting rooms

·        Publicly accessible gathering spaces and facilities

·        Flexible function and education spaces

·        Shared Civic Spaces (whare and debating chamber)

·        Food and beverage offerings

·        Public toilets and associated amenities

·        Staff rooms and staff facilities

·        Administration offices

·        Catering and kitchens

·        Waste and recycling

·        Storage

40.    Staging these buildings would limit the effectiveness or ability for them to function as an interdependent facility.  A reconsideration of these as independent and future linked buildings would likely require reconfiguration of the masterplan and additional GFA.

 

Benefits of a campus project delivery methodology

41.    The holistic campus planning / delivery approach is viewed as one large ongoing project; constructing and delivering individual buildings in a staged manner, overlapping if possible, moving from one building construction to the next.

42.    This programme campus construction approach provides the opportunity to retain design and delivery teams and their shared knowledge and experience of the project and the understanding of the Client’s aspirations. In the current resource constrained market, the project is competing with projects of scale in all the major urban areas for talented consultants. By aggregating the project as a continuous pipeline the Council partners are better able to attract and retain the talent needed to deliver the project

43.    Other financial benefits include cost savings in site, plant, and heavy construction equipment establishment, coordinated design, planning and installation of civil connections to ensure minimal disruption to traffic because of multiple road openings, and correct sizing of services such as electrical transformers and supply cables to achieve a ‘do it once do it right’ outcome. The campus delivery model assumes an overlap in the design, consenting and occasionally construction stages of each building. If the design process for each building does not begin until the prior building is completed, the project is potentially exposed to construction cost escalation.

Project costs

44.    Table 4 outlines project costs for key elements of Te Manawataki O Te Papa programme.  Project costs (including inflation) total $303.4M and are delivered over the 2022-28 timeframe.

Table 4:  Project costs for Te Manawataki O Te Papa[6]

 

Financial Considerations

45.    Table 5 provides details of the individual project costs, funding and estimated annual operating costs on completion of the project (note all costs are inflated and do not include debt retirement).

46.    The total cost of delivering the preferred option is $303.4m.  The average annual operating costs are $22.6m, and results in additional rates requirement of 0.4% in 2023 with gradual rates increases over the following five years equating to a total rates requirement averaging 0.7% per annum over the period of the LTP. The programme will be supported by a specialist team from 2023 to 2029.

47.    Targeted rate options are also considered to fund these projects and will be discussed in the report Long Term Plan Amendment Financials (A13215931) to be presented to the Council meeting of 28 February 2022.

48.    Table 5 is based on the costings provided in the masterplan plan by RLB Quantity Surveyors.  These costs are currently being further refined as part of enhanced concept plans and will be presented to the Council and form part of deliberations.  The current costs are based on the following assumptions:

·   Cost escalation 5% per annum

·   Contingencies are included within the current estimations.  Further design work will refine these contingencies.

·   Programme of works commencing with design in 2023 with construction staged over the next six years,

·   Programme completion by June 2028.

 

49.    The sum of $500,000 has been provided in the 2023 operational budget to complete business cases where necessary (for example for the wharf).  Where business cases are not yet complete holding capital budgets are held in the later years, which will be refined as feasibility work progresses.  Approval is sought to loan fund $600,000 operational costs (the $500,000 above plus internal costs) as these costs provide a long-term benefit.  It is proposed that the costs are loan funded with debt retirement over five years.

50.    Budgets from two projects approved in the LTP have been transferred to the Programme, these are:

·   Te Papa CBD Community Hub $11.8m transferred to Library which now includes the Community Hub

·   Te Papa CBD streetscape budget of $6.5m transferred to part fund Willow and Durham Streetscapes.

 

Table 5:  Project costs, funding and estimated annual operating costs for Te Manawataki O Te Papa

Note that operating costs include the costs to run the facility, debt servicing costs (interest) and depreciation.   (For the library the costs in the table represent the incremental costs over the existing costs of the library service.)

 

51.    For more financial details please refer to Attachment 1.

 

Funding considerations

52.    Te Manawataki O Te Papa proposed funding is a mix of TCC debt and external grants.  Table 6 provides details of the indicative funding based on earlier advice from the Giblin Group.  The current programme funding mix is external grants $73.8m and TCC funding of $229.6m incremental over the next 6 years.

53.    Based on previous advice the external grant funding is considered realistic, however, an updated funding report is currently being completed by the Giblin Group and this will be presented to Council as part of the LTPA deliberations. 

54.    As shown in Table 6, external grant funding is estimated at 12% for the Library and Community Hub and 50% for the Museum & Exhibition Centre and Civic Whare.  All other projects are 100% loan funded.  The construction of the grant funded projects is dependent on receiving the level of grant funding reported or sourcing alternative funding (other than further increases in rates).

55.    Other funding opportunities for the programme has been identified, including revenue from asset realisation and a central government grant related to the Three Waters Reform.  These and other funding opportunities are discussed in the LTPA funding report ‘Long Term Plan Amendment Financials’ (A13215931) to be presented to the Council meeting on 28 February 2022.  Noting the risks and assumptions to be laid out in that report, it is estimated that asset realisations at book value may generate $30m to $40m, and that the government grant relates to the Three Waters Reform is $48m.  These will be used to offset some of the $229.6m noted below.

 

Table 6:  Proposed funding model for Te Manawataki O Te Papa

* by utilising asset realisations and government grants related to the Three Waters Reform, it is expected that ratepayer-funded loans will not exceed 50% of the total project financing (i.e. $151.7m based on the total costs in Table 6).

Option 2 – modified status quo – Civic precinct projects and services currently included in the LTP 2021-31

56.    Following consultation with our communities on the LTP 2021-31, Council included $76.0M in the budget for the development of a new library and community hub, to promote learning and education, and an enhanced urban space to promote activation and entertainment (this is referred to as ‘Public Amenity Space’ and ‘Masonic Park upgrade’ in Table 7).  At this time, Council Chambers were to be located in the new Civic Administration building at 90 Devonport Road.

 

Table 7:  Option Two: Civic precinct projects currently planned in the LTP 2021-31 (with updated costings), note all costs are inflated.

 

57.    Option Two broadly provides the same level of service as currently contained in the LTP 2021-31. This option includes a subset of projects contained in Te Manawataki o Te Papa:

·    New library and community hub

·    Public amenity space

·    Council Chambers / Civic Whare

·    Masonic Park upgrade

 

58.    For clarity, there is no museum, exhibition or events space, Baycourt upgrade, waterfront reserve development and wharf or civic plaza. 

59.    Option Two is a modified status quo option with adjustments to project costs totalling $126.8M. Table 7 outlines project costs as included as part of the LTP 2021-31 and updated 2022 costs for each project. Adjusted costs show a $50.8M variation from the LTP 2021-31, reflecting inflation, scope change and the relocation of Council Chambers/Civic Whare from 90 Devonport Road (originally planned to be part of the Civic Administration Building) to Willow Street on the civic precinct site. This relocation is due to inadequate space requirements and to recognise the site’s significance to mana whenua, a new Council Chambers / Civic Whare is proposed to be located on the Willow Street site.

 

Financial Considerations

60.    The updated costing of the option 2 programme is $126.8m, which is $50.8m more than approved in the 2021-31 LTP. Cost increases are attributed to:

·        The scope of design of the Library has been updated and the revised costing includes a Community Hub.

·        The Civic Whare has been included on the Willow Street site whereas the adopted 2021-31 LTP included provision for a formal Council debating chamber as part of the development of the council administration building on Devonport Road.  Because that building is to be leased by council there is no compensating offset in capital costs when relocating the chambers to the Willow Street site.  However, should the removal of the council chambers result in council requiring less space in the Devonport Road building it may be possible to sub-lease the unutilised space and thereby recoup some costs.  Such an amount is not able to be quantified at this stage.

·        Building costs have risen significantly over the last two years and Willis Bond have advised that costs will continue to rise at 5% per annum over the next 6 years or more.  The current costing for the Library has been provided by RLB Quantity Surveyors and reviewed by Willis Bond.  Further refinements to the costings and design are currently being undertaken, with budgets based on construction work commencing mid-2023.

·        The cost for the public amenity space on the Willow Street site, without the development of the Museum and Exhibition Centre will need to cover the entire site, the current costing will need to be refined should the Museum and Exhibition Centre development not be approved.

61.    For more financial details please refer to Attachment 2.

 

Funding Considerations

62.    Funding in 2021-31 was based on 9.8% of the Library being funded from external grants, and the remaining projects all being 100% debt funded.

63.    Updated costings are based on the library with the addition of the community hub attracting external funding of 12% and the Council Chamber/Civic Whare attracting external funding of 50%. These funding changes are shown in Table 8.

64.    The updated costing for the projects results in a debt requirement of $106.3m which is an increase of $35.4m compared to the LTP, and an increase of $15.3m in external grant funding compared to the LTP.

 

Table 8:  Updated costs and funding model for modified status quo option

 


 

Options Analysis

65.    Key benefits, disadvantages and risks for each option are outlined in Table 9 and 10 below. 

Table 9:  Option One: Te Manawataki O Te Papa (Civic Precinct) Masterplan (Refreshed 2021)

Description

Delivery of Te Manawataki O Te Papa from 2022-2028 at an estimated total of $303.4M.  This is a set of integrated projects that collectively work together to deliver the civic and cultural heart for the city.  A suite of projects that will together revitalise the civic centre. 

Key projects include:

·  Civic Whare

·  Library and community hub

·  Museum and exhibition centre

·  Baycourt refurbishment

·  Performing Arts and Conference Centre and Hotel

·  Waterfront amenities

·  Civic Plaza

·  Masonic Park Upgrade.

Benefits

Disadvantages

Delivers significant community, city and subregional benefits and leads to a significant change to the level of service that Council provides to the community.

Provides communities with a revitalised civic and cultural city centre (including a new museum, library and civic whare) that is commensurate with being the fifth largest city in New Zealand.

Delivery in accordance with the adopted masterplan provides a coherent and integrated plan forward for the civic site and removes the need for decisions on a staged project by project basis.

Achieves wide-ranging social, cultural, economic and environmental benefits (as described above).

Campus precinct approach encourages connection between the different sites and also the environment.  It also enables the sharing of activities and facilities, such as meeting and function spaces, and ‘back of house’ facilities such as kitchens and toilets – all providing better connection, efficiencies and cost savings.

Campus approach provides ‘economies of scale’ in design, procurement and construction, and the ability to leverage greater utilisation opportunities.

Less disruption to the CBD if works are completed within a short timeframe 2022-28.

Commitment to deliver a programme of works acts as a catalyst for further private investment in the city centre as it improves investor confidence.

Aligns with strategies and policies relating to the city centre and helps achieve the ‘connected centres’ approach outlined in UFTI.

Delivers a suite of historical projects (e.g. museum, new library) that align with community perceptions about what they would like in the city centre.

Aligns with Council’s signed partnership agreement with Willis Bond.

Some members of the public may feel confused about process matters as the LTP has recently been adopted and this LTP amendment will also need to be consulted on with our communities.

An increase in debt and rating levels to invest in these facilities (noting that the potential increase in debt is partially offset by asset realisations and government grants related to the Three Waters Reform).

 

 

Key risks

Projects sitting within the masterplan are at various stages of development and therefore may risk being stalled due to various factors e.g. lack of external funds and/or project cost escalation.  This risk is further amplified by the interconnected nature of this programme of works with many projects co-dependent on another through the sharing of spaces and/or facilities.  Checks and balances at set project milestones will be needed as well as decision gateways for each project to mitigate this risk.

Funding arrangements will need to be investigated and secured. If adequate funding is not secured this will put the overall benefits to be realised through Te Manawataki O Te Papa at risk.  As above, this risk is further amplified by the interconnected nature of this programme of works with many projects co-dependent on another through the sharing of spaces and/or facilities.  Depending on the success or otherwise of potential funding streams, this may require a level of flexibility in the timing and phasing of civic precinct projects.

Reputational risk is high with a high level of public debate expected on Te Manawataki O Te Papa.  Clarity around the level of service this programme will create in relation to the level of investment will be needed for consultation purposes.

Key financial risks

This programme of works includes capital expenditure significantly in excess of that included in the Long-Term Plan (LTP).  Those debt levels (in the LTP) meant that Council was at the limit of its prudent debt ratios.  The full financial impact of this paper will be included in a separate LTPA report (‘Long Term Plan Amendment Financials’ (A13215931)) to be presented to Council on 28 February 2022.  This will include the overall impacts on council’s debt and rates of all relevant adjustments to the Long Term Plan and the impact on councils balance sheet ratios.

As discussed above, the projects included in this programme of works include a level of contingencies.  Updated project costs are expected to be obtained during the consultation process.  If these revised costs are significantly in excess of those consulted upon, particularly as relates to earlier projects within the programme of works, consideration should be given as to whether further consultation is required.  We are currently in discussions with Audit NZ to get a better feel for what they would consider a material change but in the final analysis this will be a political decision.  This risk could be reduced by adding an additional level of contingency to the project costs, increasing the debt and rates impacts in the consultation document.

Several of the key projects (see Table 6) include a level of external funding.  An updated report on the likelihood of achieving this level of external funding will be reported upon during deliberations.  If the actual levels of external funding are significantly less than those outlined consideration should be given as to whether further consultation is required.  This risk could be reduced by reducing the level of external funding on some or all of the projects, increasing the debt and rates impacts in the consultation document.

Table 10:  Option Two – Civic precinct projects as currently planned for in the LTP 2021-31

Description

Delivery of the civic centre projects as consulted on in the recent LTP process from 2022-2026 at an estimated cost of $126.8M. Key projects include:

·  new library

·  public amenity space

·  Council Chambers / Civic Whare

·  Masonic Park upgrade.

 

Please note project costs have been updated from the original LTP 2021-31 and the Council Chambers / Civic Whare project has relocated from the Civic Administration Building at 90 Devonport Road to the civic site on Willow Street (i.e. this is not a ‘new’ project).

Benefits

Disadvantages

Delivers community benefits and leads to a positive change to the level of service that Council provides to the community.

No need to reconsult with the community as no LTP amendment is required.

Less cost to ratepayers with project costs totalling $126.8M over 5 years.

Lost opportunity to progress an integrated suite of interconnected civic and cultural projects.

Misalignment with Council’s signed partnership agreement with Willis Bond relating to the civic site.

Inefficiencies, duplication and disconnection between projects as there is no overall vision or integration between projects and their design and implementation.  This does not allow for sharing of costs relating to procurement and construction.

Potential negative impact on Council’s relationship with mana whenua if the civic campus vision, including the Civic Whare, does not proceed as there will be less scope to make the site culturally appropriate.

Potentially sub-optimal investment and cost escalation for some projects as the ability to share facilities is removed.

Potentially could disrupt the city centre for longer with project construction.

Key risks

The primary risk of proceeding with this option is the lost opportunity to realise the full extent of benefits associated with Te Manawataki O Te Papa.  In the future, it is likely that a programme of works to activate the civic heart of the city centre (similar to Te Manawataki O Te Papa masterplan) will be revisited and implemented.  If this is to occur, it is likely to be at a higher cost to the community. Extending the development of the site over an extended time will also result in the site being considered as an ongoing construction zone thereby reducing the public amenity and enjoyment of completed facilities within the site.

Key financial risks

While significantly reduced compared to Option One, the same risks in relation to overall debt levels, contingencies and grant funding still exist under Option Two.

 

66.    Te Manawataki O Te Papa (Option One) is the recommended option for consultation with our communities through an amendment to the LTP 2021-31.  Option One recognises the need for an integrated programme of investment that will help transform the civic heart of the city centre. This option has a focus on connection between projects in relation to shared spaces, shared facilities and sharing of costs.  It is steeped in cultural design providing connection with our past and with our environment, particularly Te Awanui.  It is considered that Option One clearly aligns with current strategy and policy and will provide wide ranging social, economic, cultural and environmental benefits that will have a positive impact on our communities today and in the future. 

67.    Te Manawataki O Te Papa will be a catalyst for future investment in the city centre and will help grow our visitor economy through large scale events, a museum, conferences and other tourism offerings.  Locally it will provide much needed support to business in the city centre and the local creative community; while fostering learning, creativity and support for study and personal development.  As a catalyst, it provides an opportunity to reinstate the city centre to one that we can all be proud to live, learn, work and play in. 

68.    As shown in Table 11, capital spend for Te Manawataki O Te Papa is substantially higher ($303.4m compared to the modified status quo option of $126.8m).  It is considered that the additional $176.6m provides a wide range of additional facilities within the civic precinct including the Museum and Exhibition Centre, Waterfront Reserve and Wharf, Willow Street shared space and upgrade to Durham Street between, Wharf and Harington Streets.

Table 11:  Cost comparison of options

Measure

Option 1

      $,(mil)

Option 2

$,(mil)

Variance

Capital Expenditure

$303.4

$126.8

$176.6

Funded by

 

 

 

Grant Funding

$73.8

$20.4

$53.5

Gross Debt

Other Funding Applied (incl. asset realisation)

Net Rate Funded Debt

229.6

77.9[7]

151.7

$106.4

0

106.4

$123.2

77.9

45.3

 

 

 

 

Average Operating costs on completion

$22.6

$9.0

$13.6

Average annual rates increase

0.7%

0.4%

0.3%

Number of years to reach total rates increase

8

7

1

 

69.    If Council agrees to consult the community on Te Manawataki O Te Papa (Civic Precinct) Masterplan (Refreshed 2021) as part of the LTP 2021-31 amendment process, then Option Two should be presented as the ‘modified status quo’ alternative.

legal implications / Risks

70.    The Local Government Act 2002 (LGA) enables a local authority to amend its Long-Term Plan (LTP) at any time (section 93(4)).  It also sets out that a decision to significantly alter the intended level of service provision for any significant activity undertaken by a local authority triggers a long-term plan amendment (section 97).

71.    Due to the introduction of a museum and exhibition/events facility into the civic precinct proposal, resulting in a significant change in level of service for a significant activity, a decision to implement the civic precinct refreshed masterplan programme (Te Manawataki O Te Papa) requires an amendment to the Council’s LTP 2021-31. Council will therefore need to consult on this amendment through the special consultative procedure required by the LGA (section 93(5)) to reach decisions on the amendments to the LTP.

72.    For a description of key risks, please refer to the ‘Options Analysis’ section.

Significance

73.    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.

74.    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, Te Manawataki O Te Papa (Civic Precinct) Masterplan (Refreshed 2021).

(c)   the capacity of the local authority to perform its role, and the financial and other costs of doing so.

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

Consultation / Engagement

76.    Taking into consideration the above assessment, that the decision is of high significance, officers are of the opinion that the following consultation/engagement is required under the Local Government Act 2002.

77.    Due to a significant change in level of service for a significant activity, a decision to implement Te Manawataki O Te Papa (Civic Precinct) programme requires an amendment to the Council’s Long-term Plan (LTP) 2021-31. Council will therefore need to consult on this amendment through the special consultative procedure required by the Local Government Act (section 93(5)) to reach decisions on any amendments to the LTP 2021-31. 

Next Steps

78.    Council will prepare a consultation document on this amendment through the special consultative procedure required by the LGA (section 93(5)) to reach decisions on the amendments to the LTP.  As set out in section 93D of the LGA, the content of the consultation document for amendment of the long-term plan will include:

·        a description of the proposed amendment

·        The reasons for the proposed amendment

·        The implications (including financial implications) of the proposed amendment

·        Any alternatives to the proposed amendment that the local authority may wish to discuss with its communities.

79.    The consultation document will be audited and then presented to Council for adoption in late March with the consultation period starting shortly afterwards.

80.    A full cost refresh will occur prior to the deliberations on the Long-Term Plan Amendment following the consultation process and will be reported back to Council at that time.

Attachments

1.      21-2-22 Council report - Detailed Financials - Preferred Option - A13226558

2.      21-2-22 Council report - Detailed Financials - Status Quo - A13226710  

 


Ordinary Council meeting Agenda

21 February 2022

 

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Ordinary Council meeting Agenda

21 February 2022

 

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Ordinary Council meeting Agenda

21 February 2022

 

12        Discussion of Late Items

 

13        Public Excluded Session

RESOLUTION TO EXCLUDE THE PUBLIC

Recommendations

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 - TCC's Infrastructure Funding and Financing proposals - TSP and Tauriko West

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

 

 

 

 

14        Closing Karakia



[1] UFTI Final Report (2020) page 65.

[2] (Sources: Vital Update 2020, WSP community engagement summary 2020, WSP Future Implications Report 2020, Stakeholder Strategies Strategic Conversations 2020)

[3] Extract from Civic Master Plan (refreshed) 2021

[4] There are a number of precedents of libraries being used to encourage these activities, including an Imagination Station LEGO play area at the Tūranga Christchurch library, and a technology lab with a 3D printer and VR sets at the Puke Ariki facility in Taranaki.

[5] For example, the Civic Whare toilet and catering requirements have been integrated into the Exhibition building footprint, creating a co-dependant yet efficient response.  The Museum footprint contains the public interface exhibition and discovery spaces and requires the exhibition building to provide its back of house functionality - staff, facilities, storage & technical facilities. 

[6] Note:  The ‘Performance Arts and Conference Centre and Hotel’ is not included in the project cost table as the expectation is that this will be privately developed and funded.

[7]  As noted in paragraph 55, asset realisations and government grants relating to the Three Waters Reform will reduce the ratepayer-funded debt to be a maximum of 50% of total project costs.