Agenda of Ordinary Council Meeting - Tuesday, 24 May 2022

Ordinary Council meeting Minutes

9 May 2022

MINUTES OF TAURANGA CITY COUNCIL

ORDINARY COUNCIL MEETING HELD ON

Monday, 9 May 2022 at 10am Bay of Plenty Regional Council Chambers, Regional House, 1 Elizabeth Street, Tauranga

Wednesday, 11 May 2022 at 10am Huria Marae, 1 Kaponga Street, Tauranga

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

IN ATTENDANCE: Marty Grenfell (Chief Executive), Tony Aitken (Acting General Manager: People & Engagement), Paul Davidson (General Manager: Corporate Services), Barbara Dempsey (Acting General Manager: Community Services), Nic Johansson (General Manager: Infrastructure), Christine Jones (General Manager: Strategy & Growth), Steve Pearce (Acting General Manager: Regulatory and Compliance), Gareth Wallis (General Manager: Central City Development), Robyn Garrett (Team Leader: Committee Support), Sarah Drummond (Committee Advisor), Anahera Dinsdale (Committee Advisor), Janie Storey (Committee Advisor)

Monday, 9 May 2022 at 10am

1 Opening Karakia

Commissioner Rolleston opened the meeting with a karakia.

2 Apologies

Nil

3 Public Forum

Nil

4 Acceptance of late items

Nil

5 Confidential business to be transferred into the open

Nil

6 Change to the order of business

Nil

7 Confirmation of Minutes

Nil

8 Declaration of conflicts of interest

Nil

9 Deputations, Presentations, Petitions

Nil

10 Recommendations from Other Committees

Nil

11 Business

11.1 Long-term Plan Amendment / Annual Plan 2022/23 - Hearings 9 and 11 May 2022

Resolution CO8/22/1

Moved: Commissioner Bill Wasley

Seconded: Commissioner Stephen Selwood

That the Council:

(a) Receives the written submissions to the draft Long-term Plan Amendment and Annual Plan 2022/23.

(b) Receives and accepts submission numbers 1189-1196 that were received after submissions closed at 5pm on 26 April 2022.

Carried

The following members of the public spoke to their submission to the draft Long-term Plan Amendment / Annual Plan 2022/23.

A copy of all presentations and documents tabled at the draft Long-term Plan Amendment / Annual Plan 2022/23 submission hearings can be viewed on Tauranga City Council’s (TCC) website.

(1) Submission 931 - George and Shirley Marriott

Key points

· Concerned with costs to be incurred with development of Tauriko West, the destruction of quiet and rural amenity and the impacts on their property.

· Closure of PYO blueberry business, which was anticipated to be retirement income, as a result of the development.

· Would now have to try and recoup part of that income by selling part of land as residential sections.

· Noted that rates costs, Infrastructure Funding and Financing (IFF) levy costs and development contributions made it very hard and expensive to develop as a private landowner.

· Requested exemption from IFF levies and considered these should be borne by developers.

· Those that lose value from growth should not have to bear costs of that growth.

· Only recourse for them would be to sell sections as hundreds of homes were built around them.

(2) Submission 472 - Raymond Ellis Lowe

Key points

· Concerned with transportation within the city.

· Roading should be for ratepayers and not for private enterprise around the city as roads are becoming maxed out.

· The number of trucks was in the thousands every day and port expansion would continue to put more and more pressure on the roads.

· Council needed to be planning for this now, as the port could not help where it was located, but provision needed to be made for that expansion and the impacts it would create.

· Port needed to invest in the local road network and not rely on ratepayers.

· Suggested an inland port with rail carrying freight the rest of the way e.g., at Rangiuru or at the base of the Kaimai Range.

· Maungatapu/Matapihi SH29A would be under pressure. Submitter considered that the Maungatapu bridge was precarious and the risk was increasing under pressure.

· People would still use vehicles so there was still a need for carpark buildings.

· Traffic to and from schools added hundreds of vehicles to the roads each day.

In response to questions

· Supported shifting a share of roading costs to the commercial sector.

(3) Submission 1191 - Peter Cooney - Classics Group

Key points

· Generally in support of IFF funding.

· Need full transparency of the information before anyone could give full commitment to the process.

· Had concerns that spending needed to be capped; concerned that there would be substantially increased costs of housing for prospective buyers.

· Needed to be methodology where costs could be recouped at a later stage over all sections developed.

· Commercial risk that this product may not be accepted by the market; some commercial developers had concerns. Had only been tested once in the market with Milldale which was capped at $1000.

In response to questions

· Costs of financing impact on viability of IFF – if IFF not used and development contributions model used, that price was included in the price of the house which a buyer would need to cover in their mortgage.

· CPI of over 2% over a number of years could be an issue; this would be more acceptable in a rising market but not in a decreasing market.

· Concern that a huge number of developments would leave the city and go to fringe towns like Matamata as costs increased significantly.

(4) Submission 445 - Nigel Tutt, Priority 1

Key points

· CBD blueprint to be launched on what the city would look like in 2030, significant billions of investment involved. There would be many more people living, working and studying in the city.

· Council investment in the city centre was vital and would not be out of place.

· Any short term wins around the city centre would be good as civic precinct development was a long-term project.

· The plan needed to minimise disruption of development in the city centre as much as possible.

· Transport was vital for development and growth – there was work needed on ways roading network was developed.

· Transport System Plan (TSP) – look after and partner in the right way as it was important to deliver this large transport project.

· Funding – rates were a blunt mechanism. Important to develop better funding mechanisms that were more equitable to local businesses as not all commercial traffic was local, much of it came from outside the area.

In response to questions

· Talent was one of the largest challenges for the Tauranga economy, with current job growth forecasts and also an aging demographic.

· Sufficient attraction and retention plans were needed to be in place or would end up with funding for projects/development but no one to do the work.

· Tauranga was already behind on infrastructure and more spend needed to be applied; use of more funding mechanisms than rates.

· Consideration should be given to how to capture the road users that do not live here e.g., have a form of road user pricing that captured all users of the road network.

(5) Submission 1194 – Norman Sutton

Key points

· Challenges facing the city in terms of funding - rates increases would be a big issue for ratepayers, especially the aging population on fixed or limited income.

· Suggested rationalising governance across the city and the region by amalgamating the Tauranga and Western Bay Councils.

· What was good for Tauranga was also good for the wider Bay of Plenty and would provide better access to funding and leverage of the income from the Port to fund city projects.

· There was a need to get people out of cars by providing an efficient bus service, as it was currently very fragmented.

· Need to be able to capture people from Papamoa/Te Puke and a dedicated bus line through Matapihi. Would also need to provide park-n-ride facilities and Council should be securing land for those now.

· Could utilise a ferry service, especially for Omokoroa as an alternative to SH2. Also create a triangular link to Tauranga, Mount Maunganui and Omokoroa.

· Supported one person one vote and not sure that co-governance or the Three Waters reforms were appropriate mechanisms for Tauranga.

· Need for transparency in the city and a duty of care to provide full disclosure for all decisions made.

In response to questions

· Three Waters was a Government proposal through legislation, therefore Council had no choice, the change would be done to us. Ratepayers, through the councils, would still be owners of the assets.

· TCC would make a submission on the legislation. It would be a significant transition into any new entity.

· TCC have shared contracts with Western Bay of Plenty District Council (WBOPDC).

· Amalgamation may be considered as part of the future of local government reform process.

· 55% of Port of Tauranga was owned by Bay of Plenty Regional Council (BOPRC), 45% was listed publicly. TCC does not receive any dividend/income from the Port.

(6) Submission 851 - Terry Molloy

Key points

· Supported the concept of road pricing.

· Supportive of the work done by the Commission, and the two-year extension to 2024.

· Previous councils had not kept up with infrastructure and social infrastructure costs.

· Ratepayers did not have to pay for everything, suggestion to look at other funding mechanisms.

· Connection with the waterfront and acknowledgement of the importance of the coast and moana appreciated.

· Be mindful of impacts of development and growth on small businesses; make sure the foot count does not drop in the central city.

· Supports the Memorial Park walkway.

In response to questions

· Would like the museum to be on Cliff Rd though understand rationale for its proposed location.

· Council chamber should also be located in the civic precinct.

(7) Submission 566 - Chris Pattison

Key points

· Museum was an ill-conceived proposal and should not be located in the civic centre, it should be elsewhere.

· City centre design was ugly with no greening visible, and would not be attractive for families to come into.

· Suggested an architectural competition be held to get best design.

· Considered Three Waters money should not be used on the civic centre project and should be borne by the residents. Work within our means not max out with the cost.

· Agreed with the commercial rate increase proposal as it would bring the city on a level with other metro areas.

· Hard to understand the proposal for Tauriko without relevant maps available.

· Was a need to widen main roads and bridges and supported a Kaimai tunnel.

· TCC should have control over bus service; supported use of park-n-ride facilities.

· Concerned about spending priorities – how can you spend $2m on a skate park rather than on tsunami sirens.

· Opportunity to benefit the city; but must be responsible with its spending.

· Noted the amount of vandalism on the buses.

In response to questions

· Three Waters money was not from selling the assets, it was an offer from the government regardless of whether councils agreed with the reforms.

· Three Waters was a Government proposal through legislation which was yet to be seen. Council had no choice, the change would be done to us. Ratepayers, through the councils, would still be owners of the assets.

· Many of the city’s roads were owned by the Crown. The Commission was working with central government regarding road developments in the city.

· All Commissioners understood how growth had impacted the city, and how the development of the city centre would affect the whole city.

(8) Submission 581 - Colin Lawrence - Residents Group of Springfield in Hairini

Tabled document

Key points

· The road resurfacing policy of a single coat of stone chip for streets with less than 10,000 vehicle movements a day amounted to vandalism of roads in subdivisions.

· While stone chip was a requirement for obtaining Waka Kotahi funding, the residents viewed it as a downgrade.

· The cost of stone chip was more than the initial cost of applying the surface; it also impacted on the standard of living for residents and the aesthetic and functional value for residents living in these subdivisions.

· Questioned the cost to Council of dealing with the continual complaints from affected and upset residents in a number of subdivisions within the city.

· Suggested other surfaces, such as a new product called Enviroshield, could be as cost-effective and give a much better result.

· Council may be treating everybody equitably but the result was they were being treated poorly.

· Tabled photos to support his submission and a petition representing 100 of the 104 houses in the subdivision formally requesting the Council to carry out an independent assessment of the road seal in the subdivision. Staff considered it satisfactory but residents disagreed.

In response to questions

· Council was limited by cost with asphalt being up to 10 times what it was currently costing.

· TCC was considering areas like this subdivision where residents were prepared to pay extra for a better surface; also considering Enviroshield.

· Agreed that road seal did make a significant difference to the quality of life of the residents.

(9) Submission 999 - Element IMF, Grant Downing, Tauriko West Ltd

Key points

· Follow on from Classic Group submission.

· Funding of infrastructure was costing very big dollars with standards increasing all the time to service these trunk assets and corridors throughout the city.

· Understood Council had to play a part in cost of development and growth and supported the increases in development contributions and commercial rates.

· Urged Council not to slow down on the infrastructure development as there were very long lead times on these projects.

· Encouraged by the way alternative funding was starting to come through e.g., IFF funding.

· Conscious of affordability and apportionment of the wider IFF funding package, but needed to fully understand how that model worked.

· IFF levy proposed over first 2000 units at Tauriko, but raised a query about the subsequent 2000 units.

· Would like to continue to be involved in the development of the IFF model and levy and for transparency on how the model worked.

· Noted the enabling works business case confirmed by the Waka Kotahi Board recently was a notable milestone and provided some certainty.

· Supported SH29 freight corridor and noted the importance in providing link to the Port as did not want Tauranga ending up like Auckland with no port access.

· Access to the port was one of the reasons why big companies like Winstone Wallboards chose to locate in Tauranga. There should be an acknowledgement of that by central government with longer term solutions/options for SH29.

In response to questions

· Agreed with importance of SH29 for the Port and further development for Tauranga.

· Still more detail to come and public consultation needed before final commitment to the IFF funding model.

At 11.20am the meeting adjourned.

At 11.40am the meeting reconvened.

(10) Submission 277 - Jennie Arns

Key points

· Wanted to be notified by email when services like refuse collection changed from the normal service.

· It was good to readjust the rates burden between residential and commercial properties.

· Had an issue with the rates burden being apportioned on property values as these were increasing. Many owners were on a fixed income and were paying a disproportionate level of the rates burden with the possibility of being rated into oblivion.

· Focus should not be simply on adjusting the rates burden between residential and industrial/commercial but also needed to consider lessening the rates burden set on higher value residential properties.

· Commercial rates increases often got passed onto tenants, many of which were business owners who had already suffered economically because of Covid.

· Many long-term residents were unable realise any value from their property until death, and if they lived in an area which became desirable and ended up with a higher value property, the rates often became unaffordable.

In response to questions

· The Council was bound by privacy legislation and needed to obtain permission from the user with regard to contacting people via email. Work was currently being done around this.

· Concerns around the impact on high value properties/low income ratepayers were understood and were being considered by Council which was looking at a balance between user fees and charges as well as rates differential proportionality.

At 11.52am the meeting adjourned.

At 2.03pm the meeting reconvened.

(11) Submission 903 - Alan Sciascia

Tabled document

Key points

· In 2018 a household travel survey indicated half of homes had a bike; this had increased each year and was now a popular means of exercise and transport.

· Comprehensive cycling strategy noted that people regularly used cycle paths and ride to school programmes.

· There was an increased use of e-bikes, but options to secure these expensive bikes were limited, especially in the city centre. Sought consideration to installing more racks in key locations like the new Farmers building, library and cafes in city and suburbs as a way to encourage more bike use.

In response to questions

· Staff would make connection with submitter and hold conversations about the work being done to encourage the use of bikes.

· Council was currently seeking feedback on a project in Otūmoetai and it would be helpful for the submitter to respond.

(12) Submission 847 - Doug Barnes

Key points

· Thanked Commission for the work being done in Tauranga, their engagement with and for the community.

· Agreed, in principle, with the plan for city precinct as it would be great for the city centre.

· It was essential to have a museum and downtown was the appropriate place. Many smaller places had museums where you could learn about the overall history of an area.

· Sought reconsideration of the cost for the redevelopment when there were many other things that needed to be done like a Community Centre at Gate Pa.

· Some of the buildings to be demolished were only 20 years old and Council needed to determine whether the expense was justified.

· Questioned the need to spend $300m as it was a lot of money. Realised that there was an opportunity to do it now and that lessening it may result in lost funding options.

· The project needed more grass and less concrete; hoped that the buildings would be built to green building standards and public transport options increased.

· Supported the use of IFF funding for infrastructure and roading costs as it would save debt load on council.

In response to questions

· The submitter was thanked for the work he did within the community and with the Community Centre.

· There had been a lot of comments received on the inclusion of more greenery and shade at the civic precinct and there was general agreement to do so.

(13) Submission 1047 - Scott Adams - Urban Task Force for Tauranga (UTF)

Key points

· Strong support for Option 1 of the civic precinct as it was needed and showed an investment trigger for private investor confidence. Pleased to see government grants being sourced and the cost of individual components seemed reasonable and fair.

· Transparency needed to identify non-core assets sales.

· Supported an IFF levy for Tauriko but it must be set at a sustainable and affordable level.

· Congratulations on funding received for shovel-ready projects.

· It was questionable whether housing additions would be realised; the area’s biggest problem was lack of housing.

· Adding 12,000 new dwellings along with the existing highway infrastructure already in place was questionable. Once you were on the highway you could not get off for a long distance and it was a long way to go back.

· Kainga Ora noted that housing could only become affordable when provided in volume. Suggestion there were other funding sources available and that discussions should be reopened with Crown Infrastructure Projects.

· Increasing city wide development contributions could lead to a problem with supply.

· Transport rate differential should not proceed as the state highways carried most of the commercial traffic not the local roads.

· The commercial sector faced an increase in cost of 24% with the differential; add to that the impact of Covid and inflation and it would deflate the commercial sector further. Need to consider cumulative cost pressures before imposing differentials.

In response to questions

· Agreed the differential rates required further work.

· Submitter would support transport rate differential and commercial rate differential if they were fair and equitable and not in place where there were other potential sources of funding.

· Submitter would potentially support a shift of transport funding to road user pricing.

(14) Submission 1075 - Mike Williams

Key points

· Option 1 was going to cost $300m that the city did not have and was marketed to be the preferred choice. There were no clear plans, only concepts, and no cost vs benefit analysis.

· Growth in the city should be upwards or outward.

· There was no clear mandate to spend the funding and it was morally wrong. Defer and hold a mandate referendum in conjunction with 2024 election so local body candidates could campaign.

· Easy to spend others’ money and feel good but need to consider the impact on those paying the bills.

· Considered a new museum should be located in the Historic Village.

· There were a number of commercial centres throughout the city, but Covid had changed the way staff work with many now working remotely.

· The final cost of the redevelopment would be more than $300m.

· The ratepayer was the city’s biggest partner, but it appeared the decisions had already been made. Council was moving ahead with no clear mandate which was wrong and poor governance. Should reconsider and ask the community what they really wanted.

In response to questions

· The consultation process was open to the whole of the community and no decision would be made until the submissions had been heard.

(15) Submission 824 - Richard Hart

Key points

· Supported Option 1 but watch the costs and get on with it.

· Had been submitting to Council processes for 10 years to get regional parks in the city, and now would likely end up in the courts.

· Projects were driven by vested interests and captured by process. Did not want to stop residential development as was needed - the question was how far development went and what boundaries were around it – good city planning was needed not more of the same.

In response to questions

· Submitter supported better urban designed greenspace, more use of parks and passive spaces especially around the beaches and rivers. Housing and highways packed beside these was not good planning and needed to be revisited.

· Suggested expansion of open space to make people feel like they were out of the city.

· Campgrounds were getting harder to find and places were needed to park caravans and motor homes off the streets.

· Provide for environment by stepping away from making the focus on how to deliver, and take it back to the community when developments were being planned.

(16) Submission 953 - Jesse James and John Robson

Key points

· Sought serious consideration to assist pensioners living at Kamahi Crescent Lifestyle Village at Papamoa.

· Rates were a tax. Two types of principles: horizontal, where those in a similar situation should pay the same; and vertical, which was progressive and those with the most paid more.

· TCC should look at lowering fixed charges and move to variable for the area. With a valuation of $16m/ha it was high and differed from other neighbourhoods.

· Residents did not own the land so were in a different situation and asked Council to consider whether there were ways of addressing inequity. Mr Robson noted that he was happy to pay more for rates so others could pay less.

(17) Submission 661 - David Holland

Tabled documents

Key points

· Two large road block areas outside the CBD would have been a far more productive use of shovel ready funding.

· Noted that 11 points were included in the submission, some of which concerned complex problems such as flooding.

· Council should take lead in the design and construction of the buildings and counter CO2 emissions - e.g., the NZ Post warehouse provided solar panels and water tanks within their 13ha development.

· Challenged the Council that the finished civic precinct would be completed at no more than $303m.

· Suggested a more realistic concept plan which was included with his submission.

In response to questions

· Supported grey water control to support more greenery and more planting around the city.

· Submitter considered that planting native trees should become a requirement to be imposed when developments were undertaken.

· Submitter suggested planting native trees on public and private land and noted that areas like the foreshore in Papamoa could be planted. Palm or pine trees did not absorb as much CO2 as natives.

(18) Submission 897 – Greg Brownless

Key points

· Considered the three options for CBD spend included in the consultation were reasonably flawed with no reasonable grounds for the extension.

· No general consultation on the matter and no mandate to make such major changes to Tauranga City Council and load the costs on its citizens into the future.

· Living in Tauranga was becoming unsustainable with the budget likely to blow out.

· Citizens were not relied upon to elect council but could elect parliamentary members. The continued lack of democracy was a loss to the city.

· Problems continued such as the Cameron Road works having already blown the budget by $45m; the selling of greenspace; the increasing anti-social element. Considered Council was not really in right space to deliver a project of this size and should be left to a democratic society.

In response to questions

· The decision to continue with Commissioners was the Minister’s, not the Commissioners.

· The cost of green fields growth would be met by developers not ratepayers. A number of submitters had commented on other opportunities within the legal frameworks that the greater proportion be met by developers. The problem was there was always the threat of legal action especially if overcharged; and, while the problem needed government intervention to get real costs, it was difficult under current legislation.

(19) Submission 1072 - Brian Berry – Mainstreet Tauranga Incorporated

Key points

· Overall support for LTPA. Congratulations to the Commissioners being reappointed and their current focus on an aspirational vision for Tauranga and an undertaking to support the vision.

· City centre vibrancy had suffered in last few years with earthquake strengthening, failed development projects etc.

· There was a proliferation of large suburban shopping centres and, with the loss of the cruise ship industry bringing 21,000 people into the city, the city centre had suffered more than most.

· While supporting the move to have the commercial sector pay more; however, as they had recently suffered more than most, requested a form of rates rebating be applied to the CBD for a period. With a 1.6 rates differential the tenants had already been paying rates increases of 26% and was estimated to go 33%.

· Need to recognise the disruptions the city centre would face with the developments planned over the next few years. The city centre was a wider community asset for benefit of all not just those operating a business there.

In response to questions

· Valuations had just been completed recently with lower percentages in the CBD than other areas.

· If the decision was made to go ahead with the city centre redevelopment, it would commit the CBD to extensive disruption over a long time. For any proposal to have a rates remittance plan, consideration would need to be given to operating in entirety or in more versatile way across areas.

· Submitter suggested the exclusion of the University and Cameron Road.

· Speaking with a number of businesses the concern was with the construction disruption and the sequencing of works within the next 5-10 years.

· Traffic management and getting around the city was front of mind for Council, and would work with parties on the developments. Many indicated that that the end gain would be fantastic.

(20) Submission 885 – Jan Polley

Key points

· Focus and insight into the needs of youth needed to be considered going forward within the civic plan as this would be the group to bring a vibrancy to city.

· Questioned what plans were in place for hearing the voice of the many and varied groups of rangatahi in the city e.g., bible groups, Māori, Pacifica, disabled and rainbow youth.

· Questioned how Council would acknowledge the vulnerabilities around some of these groups and what was the Council’s view for incorporating their needs.

· The redevelopment was a great opportunity to reflect on what had been and to take this into the future.

In response to questions

· Important points raised which the Council was very conscious of. Reaching out through means including social media.

· Recognised it was sometimes difficult to get rangatahi involved and realise the importance of this when developing the wider city plans.

· Last year a large group petitioned for sports facilities and a skatepark. With 250 people helping with the design this showed that Council wanted rangatahi to be involved with the things that involved them.

· There would be opportunity to incorporate cultural needs and the youth voice with some elements when going through the civic precinct design.

· The library was well advanced with iwi providing advice on cultural elements and being very much involved in concept planning.

· A full business case was carried out for each part of the design with involvement from wide groups with expertise to cover all aspects.

· Council was mindful of involving young people and adults to create a vibrant area where people could engage, connect and learn about history, recreate and connect the civic redevelopment and through parks, cafes, bars and the waterfront.

· There would be various spaces across the development and down to the waterfront, with huge opportunities to get youth engaged in these spaces and projects.

(21) Submission 934 – Ross Crowley – Tauranga Ratepayers Alliance

Key points

· The consultation document did not pass muster with lack of definitions and no measurable criteria for public transport or the civic centre redevelopment; did not pass the most basic management test of value for money.

· Most of the features proposed were in the city centre which was a place that did not draw crowds as most of those functions had now gone online, including the library, art gallery, museum etc.

· There was nothing about Baycourt that would attract more people, nor would new paving help with that.

· Council indicated in the document that a museum was essential. The submitter considered that the true public sentiment was that it would not draw crowds, would be a dark and confronting place and would not be a compelling venue to attend. It was a venue that someone may visit once and not go back again.

· The civic area was repelling crowds at the moment and the plan of bringing people back to the heart of city would not happen. Understood that Council had to do something but considered this renewal was not a valid expenditure of money.

· Ratepayer funding was not a bottomless trough with the Council facing the highest rates in NZ.

· The project must go through better management tests, measuring quantifiable alternatives with quantifiable outcomes as there was currently no accountable data to support it.

In response to questions

· The submitter noted that everyone was facing uncertain times and exposing budgets and asset base to additional debt should be taken only under highly qualified circumstances; especially with the loss of water-based assets if three waters was taken from the council.

· It was noted that this was one way to have the funding to do the transport projects. Councils were not allowed to take into account the water assets as nothing had been seen of the proposed legislation as yet. Council was looking for alternative funding so the burden was not on ratepayers.

(22) Submission 861 - Kelvin Jones - Bay Oval Trust

Key points

· Enjoyed a busy summer with lots of cricket and the area being cemented as a premium venue, receiving huge local and domestic audiences and many hours of tv coverage in contrast to top rugby games which were usually at night.

· There were a number of international events coming up with the 5 Nations competition in 2022, the FIFA Women’s World Cup 2023, a polo event, the opportunity to host large concerts and T20 Men’s World Cup in 2028.

· Acknowledged Council’s assistance with projects, but were unable to fund components due to increasing pricing.

· An indoor training facility was a key part of their plans and would cement the facility as a key training hub and world class centre for world class cricketers. On match days it could be used to host spectators out of the sun and could also be hired out as a top facility.

· The Bay of Plenty Places and Spaces strategy recognised the Bay Oval was a priority project to be completed within the next three years.

· Grateful for funding support from Council for both operational costs and capital projects but, compared to other competing venues, it was a challenge with machinery over 10 years old needing to be replaced and replacing cricket wicket covers etc on an annual basis.

· It was a race to raise money for everything including staffing or tractor breakdown when there was a huge game on.

· Compared to the civic centre it was hard to argue that it would be a bang for bucks when the Bay Oval was completed.

In response to questions

· Congratulations for putting the area on the international stage with the cricket games this season.

· Highlighted that being a community trust and sitting outside of normal machinery of Council did not provide the advantages of maintenance, depreciation, the sharing of resources and had long term ongoing effects on the organisation.

· Originally fundraised to create the Oval; 10 years down the track the finance provided for operating and maintenance costs but the pavilion still needed $2m and the indoor training facility would require $3m, 50% of the total cost of $6m.

· Submitter agreed that an indoor training facility could be located on Blake Park as part of that redevelopment but was separate to a high performance area and noted that the Bay of Plenty Sevens and hockey had also considered added value to the park. It was important to speak with all users and understand each other’s needs.

(23) Submission 1002 – Logan Rainey and Catherine Wilson – Property Council New Zealand

Key points

· Property was the largest industry in the Bay of Plenty.

· The civic centre redevelopment was a step in the right direction, with a preference for Option 1, as it would unlock the Council’s potential.

· Requested access to information on the proposed funding and recommended the Council implement a targeted rate to make up the shortfall.

· In favour of other developments and happy to work with council to unlock Tauriko.

· Disappointed with proposed differentials increase as it was inequitable, and property would end up paying far more when it was already a struggling sector. With the current range of external pressures now was not the time to turn down business.

· Recommended Council did not implement differentials or a transport rate.

· Did not support 15% increase in development contributions as there were better alternatives such as a targeted rate with everyone contributing.

· Strong support for civic precinct.

In response to questions

· Recognised that business had gone through tough times and cost of inflation and rising interest rates would add more pressure – the dilemma was how to get everyone to pay their fair share and who should pick up costs if more development, services and facilities were wanted.

· Agreed there did need to be investment and who paid needed to be considered with fairness and equity – every sector had a part to play in increasing infrastructure investment.

· Transport funding was hard and an ongoing conversation was needed with all.

· Development contributions graphs for other areas did not show any remissions other councils offer to developers – Commissioners noted the good points raised and would continue to talk more with submitter.

(24) Submission 171 - Charlie Sherratt

Key points

· Nice to focus on progress not politics.

· Speaking for his two young daughters with regards to the redevelopment of the civic centre. Supported the integrated civic space as it would draw a crowd and the family would likely go there every weekend.

· The city centre was lacking a heart but was improving and was excited about what was going there.

· Young kids were under-represented; lots of parents shared this view.

· Buildings in the master plan did not have a wow factor.

· Area needed to include shade and be more ambitious with greenspace rather than looking like a concrete jungle.

· Greenspace reduced temperatures rather than concrete which was a heat source.

· There needed to be distinct spaces to sit and read a book, for food trucks to park and more water integrated into the green spaces.

· Suggested the museum included STEM areas/projects.

In response to questions

· Getting people to go to a museum depended on the type of exhibitions and how they were managed.

· Council should hold conversations with families at times and places that best suited them e.g., sports fields when games were being played.

(25) Submission 783 - Marcus Knight

Key points

· 12 years old and 5^th generation to live in the city.

· Heritage runs deep and asked where was the museum to tell our stories.

· Wanted a museum to hear his stories told and learn about his history.

· Favourite was the Rotorua Museum.

In response to questions

· Thanks for taking time to come in and talk to the meeting.

(26) Submission 1024 - Lorin Waetford - Ngāi Tukairangi Trust

Key points

· Appreciated workshops being provided and having options to choose from – the process was easily accessible.

· The Trust had the capability and capacity to see phenomenal growth on its orchards and the Trustees were increasing their learning and understanding.

· Water culture industry was just as successful off as on orchard and the Trust strived to become leaders in the industry.

· Acknowledged tupuna and successful development remained within whanau.

· Strong and open lines of communication must be fostered at every opportunity allowing the Trust to participate in processes with relation to climate change, resource management, freshwater management etc.

· Beautiful design of precinct area. Was time for it to become a cultural beacon as it was important to Trustees.

· Do not want commercial rates to increase as they had doubled from 2007 to 2022 with no tangible benefits which was unsatisfactory. The Trust was advocating for minimal commercial rate increases, but did not want these to be passed on to residential ratepayers either.

· The plans did not acknowledge the collective frustration of ratepayers who had participated in conversations.

· The Trust was committed to doing the mahi to understand the Council and to strengthen the lines of communication.

· Invitation to Commissions to visit Matapihi and talk more with Trustees.

In response to questions

· The Council used a range of opportunities in terms of engagement including the option to talk kanohi to kanohi or online.

· Submitter noted that the involvement of the Māori perspective would be with the Trust Chairperson and CEO and filter down on a needs basis.

(27) Submission 993 - John Robson

Key points

· Requested that Council did not go into a budget deficit and was prudent with debt levels.

· Acknowledged the recognition that the burden being placed on residential and commercial ratepayers was amiss.

· While the commercial differential was causing some concern for those having to pay it, would be a worse local government management system if decided not to have it.

· Requested that when the Council met with the Property Council it be in a public meeting, not offline.

· Noted that his rates would fall this year, yet there were many people who were struggling.

· Council needed to look at where the money was and what that funded, look at what the city needed and stop confusing financing with funding.

· Tighten up on the funding of the civic development or the cost would fall on ratepayers.

· Noted in 2018 a move to put $20m in the budget for a museum failed, but the amount was sufficient to build it then.

In response to questions

· Development contributions and the legislative framework provided what could and could not be done with regards to developments.

· Submitter suggested looking at what other authorities did and to collect everything possible at the point of subdivision, thereby pushing the impact on the seller of the land not the builders.

(28) Submission 957 - Stephen Cleland - Tauranga Art Gallery

Key points

· Supported the civic centre development and saw it as the one chance to have a major revitalisation within the CBD.

· Art gallery could be world class but concerned at the pace of the development putting art at risk with the proposed exhibition centre.

· A larger benefit for the precinct to deliver could be lost unless the gallery was made bigger. The current gallery was bursting at the seams; more space was needed to deliver programmes and would allow more to be delivered.

· The lack of a governance model in the proposal was a concern.

· The art gallery was well placed to lead art exhibitions but opportunities would be lost if they still only had the same space.

· Cost benefit analysis showed greater returns for the city than costs and would result in the gallery being able to have a larger impact and stage much larger exhibitions. While they saw potential, there was not the confidence the development would deliver what had been promised in terms of design.

· Suggested a vital step may have been missed and wanted to see synergy across all areas, including art.

In response to questions

· Submitter noted that many exhibitions were attracting major crowds. The reputation of the space and the staff in the team made securing the shows happen.

· With regard to the concerns on mixed use spaces, the submitter noted that it started with the design and who owned the space – if it was the art gallery there would be some confidence with what could happen there.

· Submitter questioned the savings if the purpose was a genuine mixed-use model. It was a massive investment in the infrastructure, but was an area that needed to have control and leadership and to give full confidence that any show would be one of quality rather than what could be a confused space.

· The submitter optimally sought double the space they currently had which would allow them to include much needed education facilities, to be able to devote a space to specialist exhibitions and have more back of house space. Services like the lift could be shared.

(29) Submission 831 - Bryan Norton

Key points

· Iwi did not have much sway in the town so it made sense to include their history in the civic precinct.

· Considered it was not the right space for the museum as people would only go once or twice. Make that area an administration area rather than a museum.

· It was hard to get behind and support the project when it was only an artist’s impression.

· Opposed to Three Waters as it would muzzle Council.

· Many iwi do not live within their rohe, with his own being at Picton, but he had lived in Tauranga for 35 years.

· The cost of co-governance was wrong and would cost everyone.

· Continue with a rotation of artefacts and storytelling within the civic precinct.

· Would rather the Council spent $300m on a gondola system as the city needed that more with many of the roads being choked.

In response to questions

· Reassurance that Council would not be muzzled with the Three Waters reform. Government had indicated legislation would be in Parliament by the end of year. The Council had accepted the Three Waters working group recommendations and these were being reviewed to ensure what was being recommended met the concerns that the community had raised. This would be used as a basis of the Council’s submission. Council needed to work constructively with the DIA and make sure staff were well prepared. This did not stop the Council raising the concerns that the community were raising.

· Funding might be used to contribute to the civic redevelopment site, but it was a complex process to meet the government’s criteria.

(30) Submission 1019 - Nikki Hansen - Tauranga Arts Festival

Key points

· Supported Option 1, having attracted over 550,000 people into the area since 1999 they had a keen interest in what the area would look like as it would directly impact on them.

· Disruption would be a big thing but, taking a long-term view, this would hopefully be minimised with a timely delivery of much needed equipment and fit for purpose spaces.

· Opportunity to celebrate Tauranga as an arts and culture destination with the mandate of 3/5^th of residents recognising support in arts.

· Already had a number of missed opportunities due to lack of space.

· As a partner with Council the group were well placed to support and deliver outcomes – the development would see an increase in delivery.

· Ensure engagement was held with mana whenua and arts and the embedding of arts policy at the start was essential.

· Adopting a 1% for art policy was applied in Rotorua, Palmerston North and on the Gold Coast.

· Iwi agreed that the art policy helped with cultural improvement.

· Change, celebrate, connect and understanding diversity would provide local and national recommendations for arts with arts and culture taking a rightful place for future generations.

In response to questions

· Submitter noted that the 1% policy for arts had been part of discussions and in conjunction with Creative NZ for the submission.

· It would be critical to have lots of activity throughout the build to continue to draw people into the city.

(31) Submission 862 - Graham Holloway

Key points

· Cannot afford the civic precinct redevelopment when people including pensioners were affected by rates increases; Council should not be considering them as rates were going through the roof.

· The submitter had cancelled his rates payment to Council as protest about Council not doing things properly. Existing issues should be fixed before spending more money.

· Proposed rates increases would result in an increase of $230 for his property.

· Council was not capable of budgeting and prices were always over.

· Questioned the calibre of staff; noted that he was still waiting for remediation for water entering his property because council work in the area was not designed properly. Noted the repair work had failed again and was only a band aid - it was facing the wrong way, was not deep enough and was filled with aggregate.

· Questioned why money was being spent on a museum when there were so many other issues that needed to be fixed, like roading at Greerton and the Mount parking building.

· There was an issue with road speed close to his house; had requested a barrier be installed but it was taking too long – a fence was fine for pedestrians but not for cars.

· A person had a right to his or her land and no one adjacent should be able to do anything to affect your land.

In response to questions

· Commissioner Rolleston had been working with the submitter.

· The issues raised with the road, width of footpath and parking would feed into the speed review work currently being undertaken and parking plans being developed over the next year.

· Aware of difficulties of increasing rates for many people with fixed incomes; working on rates remittance and working nationally to find a way to bring relief, but Council’s hands were tied by legislation.

(32) Submission 1193 - Jordan Hansen

Presentation

Key points

· Provided a presentation on his architecture thesis - Connecting the City; which incorporated a new library and laneway.

· He explained how the library could act as a catalyst for the city centre, with the design incorporating many city icons of Tauranga, Mauao, the Port, Kaimai ranges, cultural involvement and richness.

· Design included connection with the waterfront via a laneway incorporating a number of active parts.

In response to questions

· Thanked for sharing excellent presentation and complimented on work done.

· Concepts were in sync with way the commissioners were thinking with the civic precinct redevelopment plans.

· Submitter noted he was top in class for the project and graduated with 2^nd distinction honours.

At 5.35pm the meeting adjourned.

Continuation of meeting – Wednesday, 11 May 2022 at 10.41am

Chair Tolley reconvened the hearing at Huria Marae at 10.41am.

The meeting was opened with a karakia from Peri Kohu.

12 Business

11.1 Long-term Plan Amendment / Annual Plan 2022/23 - Hearings 9 and 11 May 2022

Resolution CO8/22/2

Moved: Commissioner Bill Wasley

Seconded: Commissioner Shadrach Rolleston

That the Council:

(a) Receives and accepts further late submissions number 1206 and 1207 that were received after submissions closed at 5pm on 26 April 2022.

Carried

(33) Submission 164 - Matire Duncan - Te Rangapu Mana Whenua o Tauranga Moana

Key points

· Supported the annual plan and retention of autonomy of all rohe and tribes.

· Acknowledged Commissioners who were building trust and confidence in the city with their work.

· Supported Option 1 for the redevelopment subject to 50% of the funding coming from sources other than rates.

· Conversations should have eventuated many years ago – the project would transform the city centre and tell stories incorporating culture and history into the spaces.

· Supported IFF funding on all eligible properties, but it would need clear outcomes to achieve the results.

· Current issues included people driving alone and the moving of freight which severed communities from opportunities. Construction areas caused congestion in other areas because of avoidance.

· Ensure Māori were connected and do not treat Māori land as path of least resistance - respect and build their principles into key documents.

· Supported IFF funding for Tauriko West development as it would bring more houses into the Western corridor. Te Rangapū Mana Whenua o Tauranga Moana had an interest in the project, having been involved in the process, and supported the upgrade. Need to ensure the protection and enhancement of the Wairoa River area with any development.

· The location of each marae was missing from the Transport Strategy.

· Suggested installation of bus shelters outside each marae for people waiting to catch the bus.

In response to questions

· Perspective around affordability - Te Rangapū considered affordability of housing first rather than transport. Whetu Marae was looking at helping whanau into papakainga housing.

· Current transport investment programme was still not keeping pace with the need to improve. There were no public buses in some areas and insufficient consideration of the best way to move vehicles and freight.

· Continued mana whenua engagement was important to ensure that they were involved.

· Staff had been requested to look at the Transport Strategy for network, arterial and collector roads, as many like Ocean Road had not been upgraded for 15 years, but vehicle use had increased extensively.

· Te Rangapū had housing aspirations but there was no public transport provision around potential housing areas so people could only get there if they had a car. It was requested that Council consider connection to these areas.

· A bus shelter programme was underway, but was reliant on BOPRC. Council was trying to get more funky shelters to encourage people to use buses. The submitter was asked to note priority areas where people were waiting and standing for buses.

(34) Submission 838 - Mary Dillon, Laura and Fiona - Envirohub Bay of Plenty

Presentation

Key points

· Supported vision for the redevelopment in collaboration with mana whenua to create a vibrant city centre.

· Protect and restore Māori moana and make it the first national park city by adding value to nature in urban spaces.

· Now working to reverse the impact on environment by evolving and creating a CBD designed for nature including planning and building for natural resources.

· A sponge city had positive flow on effects, reducing other effects such as heat waves which were now a big killer. Heat could be elevated by 10° with buildings which was a disadvantage to all.

· Create a city that improved health of every living thing, decreased rodents and increased birds in some areas.

· Ensure the delivery of the four well beings and sustainability were being incorporated in any developments.

In response to questions

· Agreed not enough green shown in the plans and was being addressed.

· There was a 14m drop from Durham Street to the hub and access was critical in that area.

· Recognised that people want more areas of shade and more use of rainwater, recycling and the like.

· Submitter indicated that being sustainable was using today’s resources in a way that there was enough for the future; noted the need to acknowledge that we live in a finite natural environment and everyone needed to be connected to that. There was an intrinsic value to green space. People cannot continue to take and not give back anymore and everyone has to do with what they have.

· Submitter noted that biophilic design principles depended on the situation but could include vertical walls and green areas. This was a big transformation and it was a mistake for the city to become all about growth - it needed to be growth in context and sustainability to be intrinsic in what we think and what we do. Highlighted the importance of inclusion of history and culture in building culture e.g., Māori history embedded in architecture.

· Aware that costs for green star buildings could be more expensive to build and a decision had to be made to make compromises, provide more money or not do some components.

· Cameron Road was key to the development but the submitter considered that the first part was not quite right and needed to keep that in mind and not replicate mistakes as the works move further on.

· With regards to intensification the submitter noted that it was important that the community understood that strategy and government direction and limited the number of houses allowed on properties. The issue went back to three waters and stormwater where greenspaces were all stormwater reserves.

(35) Submission 1150 - Jo Wills

Key points

· Endorsed what Envirohub had said as they provided opportunities to put Tauranga on the map by doing something significant with the design and plan of city.

· Option 1 was a traditional investor-heavy development with no responsibility to build for the future.

· Emissions had increased, as had deprivation; public transport provision had decreased.

· Invest into buildings that produced their own energy and waste using a biophilic way to build for increased living standards – provide shade, food, reduction of heat etc and return eco benefits for all.

· Opportunities to increase public transport were not in the plan. Investment must be taken for access from all parts of the city. People were stuck in congestion and not able to find a park, therefore the way people move must be a focus or development would be a failure.

· Considered there was no demonstration of reductions or delivering to the urgent needs of now and into the future.

In response to questions

· Agreed regarding the comments on taking transport links to the whole city into account.

· Submitter noted that there were a lot of layers and investment in one area, which may not provide people the opportunity to access amenities in their own environment; this was as important as the city centre. People also missed out if they do not have a car or access to public transport.

· Submitter said that costs should be lower now for construction so the costs were not being passing on to future generations. Access to nature and integrating it in a public space was vital as not all people have access to it.

(36) Submission 481 - Stephen Lasslett

Presentation

Key points

· There was still no sport and recreation facilities in The Lakes after 18 months of meeting with Council and 12 months of talking with staff. There was still no mention of these facilities in the 10-year plan.

· Residents had received nothing, not even a picnic table or barbecue and could not get any commitment out of anyone to get some equipment.

· There were five skateparks within the network from Mount Maunganui to Papamoa East and zero in the Lakes area. The same applied to sports fields; enough in the city network with the Lakes getting nothing.

· Considered Council did not listen in spite of repeated conversations. A basketball court or playground would be great.

· Submitter was the last man standing as the other residents had given up trying to get facilities, and did not want to be seen as an idiot for continuing to ask for things to change, but wanted to believe that something would change.

· Wants to see a plan with merit; well done was better than well said.

In response to questions

· Apology offered to submitter - Commissioners had assumed after the last LTP that things were happening. Anticipated that next year would be a different situation.

· Confirmed that a pump track and a basketball half-court were due to be installed, with work to start in two weeks’ time.

(37) Submission 491 - Mike Goff - Carlton Street Reserve Playground Facebook Group

Key points

· Council had done some great jobs on playgrounds in the city but Carlton Street were asking for one that was better than the poorly designed and poorly maintained safety hazard one that they currently had.

· Over 3000 children went to school in the area and the reserve was underutilised with only two swings, two slides and what used to be pirate ship. It was located in an area that was prone to flooding and became a tub after rain as the water did not drain away.

· The equipment had protruding nails, it was graffitied and there had been a car parked there for a while. Other parks looked nice and were well maintained but not this one.

· Requested that the area be upgraded, noting that even old equipment from other playgrounds would be considered an upgrade.

· The whole area needed to be redesigned and reconstructed with a soft rubber type of surface installed.

(38) Submission 725 - Brian Hodge and Sandra Scarow - Sydenham Botanic Park Advisory Group

Key points

· Thanked the Council for the support in the past year for the park and paths.

· There had been an increased use of the park as with the new paths it was easier to walk through.

· The original five-year life for the Trust was now 11 years and Council needed to consider how to continue to maintain the area.

· Sought a change in zoning to open space rather than the current residential zoning.

· A more formal path was needed to the stormwater area as it was regularly used by people going to and from the supermarket.

· The pergolas were flourishing and the planting was taking hold and would increase over winter. There were a further six kauri and pohutakawa trees and flaxes to plant.

· The maintenance contractor had struggled to keep the park to standard recently due to Covid, and members were working with staff to help bring it back to how it should be. The open area reduced as the planting grew bigger.

In response to questions

· Appreciation for all that the Trust did in the area.

· In response to a query if the group had discussion with staff on potential options, the submitter noted that none had been held in any detail. There was a group of volunteers who provided 4-5 hours a week on maintenance and this would need to be picked up. Some trees may need to be pruned or removed in due course.

(39) Submission 1065 - Sustainable BOP Charitable Trust

(40) Submission 918 - Glen Crowther

Key points

· Sustainability was a challenging space at present with the SmartGrowth strategy being an example of that. The fundamentals were not being addressed in the bigger picture – CO2 emissions, water, social issues etc.

· The $4.5b plan became a $5b plan which equated to spending 2.5% more per capita than Wellington City was spending. It did not include climate change action funding, housing and sustainable water use so would not meet government targets.

· There was no investment yet on paper nor any public consultation which was an issue as other Councils had done a lot on climate change and spatial planning - there was no buy-in from people who needed to be brought into it.

· Civic redevelopment - there had been many comments but the consultation document was difficult to understand and was biased to Option 1. There were no financial details included and a lack of a business case for the museum, exhibition centre etc. This was back to front as many wanted to see the cost and benefit analysis before making a comment.

· Questioned the specific outcomes for the wharf redevelopment, did not understand what the city would get for the money set aside, also inflation would push the cost up.

· Queried why people did not get given a choice to spend $300m in the city centre or look at the area in parts and invest money in other initiatives such as cycleways or improved housing. No big conversations had been held about all those things in total.

· Ownership around the city centre was a huge issue with nothing in the consultation document. People needed to know the implications.

· Queried how operating costs for the library and city centre would be paid.

· Requested the plan be changed to make it more sustainable.

In response to questions

· Agreed there were still a lot of questions to be answered and at this stage there were two options. In order to include the civic precinct redevelopment as an amendment to the LTP, the project proposal and design was put together quickly and did not address some issues.

· Inflation and increasing cost of materials would be built into the cost.

· Unable to access the Government’s Three Waters funding for Option 2.

· Submitter considered there was potential to access funding from government for all sorts of the community facilities and infrastructure. Suggested the Council look at what others were doing in the city like the heritage centre as there were a whole range of options with business cases and costings already put together.

· The Commissioners were aware of groups that were proposing projects.

· Need to focus on the bigger picture and raise the vision beyond the detail in seeking to invest in city that was investing in it. Waikato University were investing $100m which helped to make investment in the city centre worthwhile. Need to focus on the bigger picture rather than continue to make incremental decisions.

· Submitter considered investing $300m in CBD would risk no investment in the environment.

(41) Submission 855 - Liz Davies – SociaLink

Key points

· Increase in rates - supported Council doing work on how to address the increases for those unable to afford them.

· Tauranga had the highest food prices and power costs in New Zealand - these were non-negotiable costs and it was important to support ratepayers who could not afford the rates.

· Acknowledged the contestable grant funding but felt there should be a fairer distribution across the four well beings.

· Requested information on how social, cultural and environmental well beings were being considered in Council’s procurement process. Without assessment, risks were not undertaken and opportunities were lost to improve social well beings.

· Welcomed partnership with Council and had put a proposal forward to ensure an improvement of social issues over time, telling stories of community organisations to raise their profiles so they could access donations, sponsorship and volunteers.

In response to questions

· Submitter noted that the arts and sports sectors received lots of funding with no distribution of funds to the environment and little to the social sector. A review would enable a fairer distribution; however, need to be mindful that cutting a supply from one area to give to another would take time.

· Commissioners noted they were keen to have a conversation on the well beings measurement in procurement and how to capture and report it.

· Submitter noted that there was a link to procurement and impact assessment by looking at procurement for social and wellbeing.

(42) Submission 955 - Marcus Wilkins - Capitalism for the Many not the Few and Democracy for the People by the People and of the People

Key points

· Concerned around city centre with the statement that other stakeholders included Willis Bond and mana whenua without clear definition.

· Preferred Option 3.

· Excited when first came to town but now wanted to know how the civic centre project would be run – what is collaboration; was it manufactured consent; who were the other stakeholders and how were they selected?

· Considered that submitting when the project was light on detail provided an advantage as submitters leaned towards selecting Option 1.

· Fan of genuine, deliberate engagement with community but the plan did not involve the people in a genuine engagement process.

In response to questions

· The Willis Bond contract was signed with the previous Council - the Commissioners had looked at the master plan and continued on with it, but took out the administration offices which would now be built in Devonport Road.

· Had worked in a collaborative way to date, recording the history of site and area and working with the Otamataha Trust as iwi who also worked with Willis Bond and would continue to do so as it was developed further.

(43) Submission 837 - Liz Cooper

Tabled document

Key points

· Lived here three years. Considered that the Commission’s methods of communication were working as felt had a voice and that people were listening.

· As a working artist, people want to work together; noted that publicly funded art had a huge emphasis on public wellbeing.

· Supported Option 1 and asked that Council adopt the full plan. The city deserved better arts and had to think in big terms for the future. The civic centre reputation and facilities could culturally be bigger; the taonga treasures of the city centre should be a platform and meeting place for objects that tell a story.

· Have pride in the city’s treasures and remember the need to think about these not just business.

In response to questions

· Speech tabled as there were a number of items raised in the submission that were important to note.

(44) Submission 1118 - Julie Andrews

Key points

· Supported Option 3 for sustainability and questioned whether there was a vision focused on the bigger picture or was it being driven by Willis Bond, a big developer with a 12-year contract with influence on the proposals that came forward.

· Suggested a scale down but still see visuals and costs for the feasibility study for culture.

· Rich history was exciting but did not support the amount to be spent to achieve what Council wanted to do.

· Museum referendum was held a few years ago with the majority result that the city did not want a museum.

· Process flawed with a lot of people not having time to engage.

· With regards to the $48.4m available from Three Waters funding being only available for Option 1, Minister Mahuta’s comments focused on money and it was a clear trade off to spend on the civic centre rather than resilience or environmental planning.

· Funding would only be available once so need to spend it wisely and represent the people fairly.

· Cannot see that this process was a mandate to go ahead with Option 1.

(45) Submission 1111 - Heidi Hughes

Presentation

Key points

· Council had an opportunity for a unique point of difference and to showcase and take the community to a sustainable future for the city.

· Put green roofs on all the new buildings, could be extended throughout the whole city. The library café could be a reading garden; there could be a discovery garden on the museum with a native walk that talked about the natural history; the exhibition centre could have beach volleyball and have business house volleyball; there could be tussock planting and provide people a place to go in their lunch hour.

· Green roofs had points of improvements, enhancements and reductions and would free the use of land.

· There was too much concrete in the plans at present, there was a need to be careful as permeable land surfaces were needed.

· Need respect for the harbour; could incorporate play areas and soft spaces for children.

· The Tuhoe Headquarters at Taneatua was based on using all elements of design and showed a regenerative way of working - could this be pulled off for the city centre?

· Implement a good procurement process. There was no framework for the green star rating system and to provide accountability for sustainability. An agency was needed to oversee it so it was driven throughout.

In response to questions

· An exciting concept that created huge greenspace areas in the city.

(46) Submission 1187 - Carole Gordon

Presentation

Key points

· A bolder design was needed for the civic centre. The city did not need a fortress, it needed to link harbour and pedestrian environments. More engagement was needed in the design process and reflection of the need to get buy-in from the people. Need cultural history moving forward.

· Encouraged Option 1 but now lived in a world of significant change, the design needed to be able to grow and be flexible.

· Notes was getting more difficult to source and supply materials.

· Supported an evolving concept that addresses the people and their needs in an intergenerational manner.

· Use public spaces as drivers of equity – they were currently full of cars so could do better.

· Restoration of people – give attention to nature and restore mauri, essence of land and peace making.

· Place solar lighting in Pilot Bay and bring connectivity and happiness and link back to solar fountains in city.

· Embrace botanical gardens in the area to provide colour, greenery and connectivity.

· Council had an opportunity to integrate a transport centre as a people place and integrate a smart city, sustainable, age friendly design with integrity and botanical emphasis.

In response to questions

· Submitter noted that the Wharf Street design did not have a lot of things that were needed.

(47) Submission 1026 - Carole Gordon - SmartGrowth Social Sector Forum

Presentation

Key points

· Tauranga had a housing crisis and there was an urgent need for 2000 1-2 bedroom units within three years.

· Urban longevity was occurring with people now living to 90 or 100 who needed to live out their lifetime in suitable housing.

· Smaller households were 70% of the overall growth so there was a need to make decisions on housing and communities as liveable communities.

· Queried how to manage public participation in the civic centre space.

· There was growing social inequality in the city with increased demands which Council needed to address.

· An alternative time was requested to discuss key questions raised in the submission that needed answers.

In response to questions

· Some of the questions were unable to be answered at present. It was agreed to set up a meeting with the submitter.

(48) Submission 1017 – Nathan York and Craig Batchelar - Bluehaven Group

Key points

· Fastest growing populace area in the city was Papamoa East.

· Continued to advocate investment in that area balanced along with other areas in Tauranga.

· There was a challenge of balance to growth and fixing growth issues - if Council did not manage growth it would become a problem in 10 years.

· Wanted to see new pool facility in the eastern area. The swimming community wanted a 50m pool and could not wait 8-10 years for it. Would work with council to help deliver a pool out east.

· Deep dive on development contributions policy wording and reiterate the point of a staged approach for large non-residential development scale projects. Also give equity with residential developments.

· While it was important to have a working heart in the city, do not lose parts of other areas.

· Would like to discuss the town centre development levy policies and detail around these.

In response to questions

· Council was aware that Golden Sands had the ability to bring housing into play quickly and the work being done out there was appreciated.

(49) Submission 187 - Michael Batchelor

Key points

· Considered Commissioners exceeded their brief with regards to the civic centre proposal and overplayed hand with the ugly and overly expensive proposals in Options 1 and 2 with no basis for the grandiose proposal.

· Role was to deliver a robust LTP with adequate priorities, engage in existing initiatives and to deliver a clear and comprehensive plan to council.

· Analysis of work programme for 2022-25 was 14 pages long and had the civic precinct included in it.

· The civic centre master plan total cost was $500m not $300m with the risk status recorded as high.

· Rent and rates burden were main concerns of people and questioned how the document addressed these concerns.

· Did not support spending $300m on pretty buildings and open spaces when the city centre had been declining for 20 years and would continue for a while yet.

· The debt level at $458m was the 3^rd highest in NZ and equated to $8.5k for everyone in the city. It staggered belief that the Council was considering further debt.

· A smooth transition back to the elected council was needed, and leaving them with either Options 1 or 2 would be a recipe for another disaster. Only option was the sale of Willow Street to reduce the people’s debt and then rational decisions could be made by the people.

In response to questions

· The entire project was $500m. However, the development of the hotel and TV3 site was never intended to be paid by council so was not consulted on. The master plan for the TV3 site to Masonic Park was done by the previous council.

· The new Commission had new terms of reference with instructions to develop the 2022-2024 Annual Plan.

(50) Submission 29 - Lianne Pepperell

Key points

· Had lived in the city for 19 years and was a paramedic, and as such she was a last resort and support for people if they should need a shoulder to cry on. The people were the most important thing in world – he tangata, he tangata, he tangata - and many do not like change.

· Gone were the days of free parking, of parking outside a store, and a bustling downtown – need people to come to the city centre to be able to move forward.

· Emphasised the importance of working with tangata whenua and arts groups going forward.

· Putting the brakes on spending would only make the civic centre project more expensive - do it once and do it right.

At 1.28pm the meeting adjourned.

At 2.04pm the meeting reconvened.

(51) Submission 445 – Shane Stewart - University of Waikato and Nigel Tutt – Priority One

Tabled document

Key points

· Joint work programme as the tertiary institution would be growing from 1000 to 5000 students which would have an impact on transport etc. Need to provide offerings for people to want to come to Tauranga.

· Many businesses were short of people so it was a win-win for the area.

· Support for buses, the redevelopment of the CBD and Council creating a hub for urban development and planning.

· Having a group of staff and students focusing on and integrating into the city would create benefits to employers - the cost of a new hire was $10,000 but replacement of a staff member was $24,000.

· Proposed an ‘enrolment to employment’ pathway with the Council, recruiting and undertaking initiatives such as scholarships, internships, work experience which would create a flow of graduates. Would start to see the positive impact next year.

· Intention was to start small, focus and learn.

· A similar city studio in Vancouver had seen students and staff been involved in 550 projects within the city over 10 years.

· The programme would establish Tauranga as a global destination which would provide various areas of talent.

In response to questions

· Numbers depended on the nature of how the programmes filled out. The first year included five scholarships and summer placements; anticipated that other organisations would get involved so would likely be 100+. Would also provide research funding and international students so leverage of each dollar spent increased.

· Conversation would be held on whether to fund one year or commit to three years.

(52) Submission 1207 – Anne Pankhurst - Tauranga Business Chamber

Tabled document

Key points

· Important that Council delivered on promises - do not over promise and under deliver.

· Supported city centre master plan and considered it would lead to other things.

· Museum seemed to be taking over narrative and should not be seen in isolation - remove narrative to make sure it was part of the overall project.

· Important to move ahead with a hotel and venue centre as currently the city only had Baycourt. The sweet spot for conferencing was 200-250 people.

· Operational and capex costs needed to stay within the envelope.

· Western Bay of Plenty transport system – agreed with the need to look at other funding options but the implications around 30-year funding were not clear to the public.

· The differential for Tauriko West would set the suburb apart as no one else had to pay up to $2.5k for up to 30 years. It was a big commitment for each property. Queried whether there were other policies like deferment that could be used.

· Need to consider implications of a very tight labour market on programme delivery.

· Need to also look at providing school transport as it was noticeably easier to move more freely around the city during school holidays.

· Business community was shy about spending at present after a bad two years. Although some had done well, suggested that the commercial targeted rate be spread and made lighter for 18 months. While business supports the rate they would like to see these funds be targeted and not go into the general bucket.

In response to questions

· Aware that developers in Tauriko had concerns but work could not be deferred as it did not sit on Council balance sheet; there was still a lot to do before committing to IFF including the need to see commercial return of private investors. Council was seeking agreement for the concept and where it was proposed to be used. It was a significant agreement for new homeowners to sign up to.

(53) Submission 1067 – Anna Bones and Adrienne von Tunzelman – Age Concern Tauranga

Key points

· Civic centre project could become a place for older citizens to participate.

· Commended Council on the age friendly policy that was completed; noted it was due for review next year.

· Demography pointed to a time frame where 1 in10 people would be over 65. There was an increase in the number of people reaching an older old age and it was hoped that designers would keep that in mind with the importance of access – streets and pathways needed to be navigated easily, seating suitable for older and limited mobility and young parents with children to manage.

· The Office for Seniors had a friendly open spaces guide which covered the technical aspects of urban physical design for older people. Would be great to see a change to future proof the age demographics and make it a great place for all ages.

· Rates postponement – concerned older adults on fixed incomes and, while there was assistance with the rates rebates scheme, the maximum claim was $665.

· It was noted that Council may have removed some of the criteria to qualify for rates postponement, but mortgage reversal may not be option for some. Age Concern were working at a national level to develop a standard for rates postponement schemes.

· Age Concern requested involvement in future discussions with the Council.

In response to questions

· Council would look at seniors policies.

· A lift would be installed for access from Durham Street to the waterfront and the greenway path would zig zag to make mobility easier.

· Bringing people into the city would activate the space - keen to see intergenerational

concept to bring people together in one space.

(54) Submission 845 - Greg Bayliss

Key points

· Had rental properties and was shocked at the number of people living in houses with their parents. Sometimes there were 4-5 families living in tents, caravans, cars etc with their relatives. When having an open home 100-150 families desperate for a place turned up.

· Felt offended when reading that $300m was being spent on a civic centre ‘monument’ when people needed housing.

· The people he dealt with would be unlikely to go to a museum or an art gallery; the cost to run these would feed half of those families.

· Suggested that the project would cost $500m by the time it was done and considered it demonstrated ability or lack of it to make progress.

· Alternative suggestion was to knock down the derelict shops along Grey Street and Devonport Road and put up a mall as many people’s main pastime was now shopping.

· Every dollar on rates would need to be paid for by the renters.

(55) Submission 808 – Ashleigh Yates

Key points

· Motivation for the video was the result of a post on the Tauranga and Mount notice boards asking for ideas for the city centre.

· Having spent a lot of time living in the city centre while studying at Waikato University, the submitter was concerned with how quite the city centre was on a Saturday afternoon. The area had much potential to be a cultural hub of awesome people.

· Not sure why people were not making contact with the Council, so wanted to do in a different way and created a poetry video.

In response to questions

· Commissioners replied with their own poetic video response.

· Complimented submitter for the video that captured what makes the heart and soul of a city.

· While the result might not see all of what was requested, it was about people and what things they wanted to see in the city.

· Submitter noted that there were only restaurants open in the evening, which did not provide options for people on a budget that also wanted to hang out in the city. Recently her 17-year-old cousin came to visit and wanted to do something for teenagers that did not involve alcohol, and there were very few options.

(56) Submission 943 - Oscar Nathan - Tourism Bay of Plenty

Presentation

Key points

· Cruise ships would be returning to New Zealand from 28 October 2022.

· Noted that many cities were ‘8-16’ cities with a lot to do during the day but not much in evening - bringing life into the inner city would move Tauranga to a ‘16-8’ city.

· 100% supportive of city centre redevelopment and excited where it was heading.

· Had a close working relationship with Council and mana whenua and noted there were lots of opportunities coming from there.

· Wayfinding and storytelling – an urban centre could really make a statement globally casting a regenerative lens on a sustainable city –not just a better experience but creating experiences to sell and for people to become involved with.

· Distinctiveness of wayfinding opportunities important e.g., a journey from walking and wayfinding signage from a walking or cycling perspective.

· Intended to put a wayfinding committee together – Napier was a good example with art deco and how to bring culture to storytelling.

· Sustainable cities included greening buildings, water to cool buildings and urban farming; there were ways to bring ownership and life into the city.

· There were programmes in a number of cities around the world – six key steps – make it easy to get around without a car, add EV stations, provide access to public resources and green spaces, implement green architecture and support urban farming, improved water conservation and waste management.

In response to questions

· Chairperson noted that she had been involved in the Napier wayfinding and agreed the development provided huge opportunities.

· Potential around technology and opportunities for story telling - even on a bus advancements like this were important.

13 Discussion of Late Items

Nil

14 Public excluded session

Nil

15 Closing Karakia

The Chairperson thanked Huria Marae for the use of the premises for the meeting, it was an excellent venue and they were the perfect hosts.

Commissioner Shadrach Rolleston gave the closing karakia.

The meeting closed at 5.03 pm.

The minutes of this meeting were confirmed as a true and correct record at the Ordinary Council meeting held on 23 May 2022.

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

CHAIRPERSON

Ordinary Council meeting Agenda

24 May 2022

11 Business

11.1 Long-term Plan Amendment/Annual Plan 2022/23 Deliberations

File Number: A13423792

Author: Josh Logan, Team Leader: Corporate Planning

Kathryn Sharplin, Manager: Finance

Tracey Hughes, Financial Insights & Reporting Manager

Authoriser: Paul Davidson, General Manager: Corporate Services

Purpose of the Report

1. This report is presented to Council to deliberate on the issues raised and feedback received throughout the consultation period and hearings.

Recommendations

That the Council:

(a) Receives the report.

(b) Includes in the final drafting of the Annual Plan 2022/23 the resolutions relating to the following reports:

(i) Executive Report to the Annual Plan

(ii) Annual Plan 2022/23 Deliberations - Issues and Options other feedback and suggestions

(iii) Rating Policy Proposals

(iv) Tsunami Sirens

(i) Long-term Plan Amendment Deliberations - Civic Precinct Issues and Options Report

(ii) Transport System Plan - Infrastructure Funding and Financing Proposal

(iii) Tauriko West - Infrastructure Funding and Financing Proposal

(d) Notes staff comments on submissions relating to user fees and charges in Attachment 2.

(e) Notes that the final User Fees and Charges 2022/23 document will be reported for adoption to Council at its meeting on 27 June 2022.

Executive Summary

2. The 2022/23 draft Annual Plan had rate requirement of $270m and a total capital budget of $303m. The rate increase was similar to what was in year two of the Long-term Plan (LTP) which had a rate requirement of $268m and a capital budget of $370m. The 2022/23 Annual Plan updates are based around the re-phasing of projects agreed in the LTP and operational cost and revenue adjustments in delivering the level of service in the LTP. Therefore, the annual plan consultation focused predominately on Tsunami sirens and the proposed rating policy changes to the commercial differential on the general rate and transport targeted rate.

3. At its meeting of 24 March 2022, Council adopted the consultation document and supporting documents for the proposed Long-term Plan Amendment (LTPA) and Annual Plan 2022/23 with the consultation period between 25 March and 26 April 2022. The consultation document presented three key areas for consideration outlined in the discussion section below.

4. Council received 1,181 submissions. Noting that submissions are numbered sequentially when they are processed and that they run from 1 to 1197. The difference between the two numbers is because there were duplicates, or administrative errors upon entering submissions, or the submission was withdrawn by the submitter. Nine of those submissions were ‘late’. All submissions received have been analysed in the reports on the consultation topics.

5. This report is presented to Council to deliberate on the issues raised and feedback received throughout the consultation period and hearings. There are various issues and options reports and an executive report. From the Executive Report various minor changes have been made to the budgets. With the rates requirement remaining as per the consulted draft with minor adjustment to the capital programme to $298m.

Background

6. On 6 December 2021, Council considered two reports on the Civic Precinct Masterplan and the key issues and proposed approach to the Annual Plan 2022/23. As part of the Civic Precinct Masterplan report council approved the preparation of a Long-term Plan Amendment alongside the annual plan.

7. In the second report on the Annual Plan, in addition to agreeing on the approach and timeline Council, also resolved to:

· Agree to redirect $1.1m debt retirement proposed for stormwater debt in 2023 to instead retire $1.1m of debt associated with existing unfunded liabilities

· Note that in future Annual Plan processes the portion of stormwater debt retirement above $1.3m per annum proposed in subsequent years of the LTP could be diverted to retire debt associated with unfunded liabilities until that debt is extinguished.

· Note that the review of aspects of the rating structure agreed as part of the 2021-31 Long-term Plan deliberations is continuing with a view to implementing changes to the current rating approach in the 2022/23 year.

· Note that there is increased supply and cost pressures since the 2021-31 Long-term Plan was adopted that will be factored into the upcoming Annual Plan.

8. On 13 December 2021, Council considered the indicative draft budget for the Annual Plan 2022/23. Council endorsed, in principle, the Annual Plan draft budget for capital and operations as summarised in the attachment to the report.

9. In addition, Council

· Confirmed 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

· Endorsed 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.

· 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.

10. On 8 February 2022, Council was presented with issues and options papers on matters relating to budget decisions for the annual plan. Decisions considered through these were amendments to budgets for capital projects for the Spaces and Places activity and also a decision was made to consult on the Tsunami Sirens project.

11. On 21 February 2022, Council was presented with reports on the following items:

· Draft Annual Plan 2022/2023

· 2022/2023 - Draft User Fees and Charges

· Annual Plan - Rating Policy Proposals

· Long-term Plan Amendment Update

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

12. In relation to the Annual Plan for 2022/23, along with receiving the report Council resolved the following:

(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, subject to confirmation of user fees including volumetric water charges.

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

13. The 2022/2023 - Draft User Fees and Charges report was left to lie on the table and asked that further work be undertaken to consider a higher rate of inflation (as 2.9% had been used as per what was in the Long-term Plan) and also ensure that those using the services paid their fair share. This work was to be reported back at the next meeting on 28 February 2022.

14. A report on rating policy proposals was then considered and through this Council resolved to:

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

15. The Long-term Plan amendment update agreed 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 28^th 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.

16. Finally, the Civic Precinct Options for Long Term Plan 2021-31 Amendment Consultation were considered, and Council resolved to:

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

(b) Agree 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) Approve 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) Approve $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) Note 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) Note that staff will report back with a full cost refresh prior to the deliberations on the Long-Term Plan Amendment following the consultation process.

17. On 28 February 2022, the final reports prior to the preparation of the consultation material were considered. Included were:

· Long-term Plan Amendment Financials

· 2022/2023 - Draft User Fees and Charges

18. The first report on the Long-term Plan Amendment Financials considered the effect on Council financials and the financial strategy of the proposed 2021-31 Long-term Plan Amendment for the Civic Precinct and Infrastructure Funding and Financing initiatives. Through this Council agreed to:

(i) Proposed updates to the draft financials for the proposed 2021-31 Long-term Plan Amendment,

(ii) Include the proposed Crown Infrastructure Partners Levies within the Long-term Plan amendment with offset adjustments to transportation targeted rates applying from 2025,

19. The updated user fees and charges report was considered again with a higher rate of inflation (5.9%) applied. Council approved the user fees for consultation and also agreed to include in the annual plan an overall rates increase, including water volumetric charging of 13.7%. Noting that excluding water volumetric charging the overall rates increase is 13%.

20. The Long-term Plan Amendment and draft Annual Plan 2022/23 have been produced in line with the above resolutions. In addition, further debt retirement has been able to be reduced across other activities as well as transportation as a result of improved balance sheet capacity across early years of the LTPA. This improvement has been enabled by a combination of a rephased capital programme, additional subsidies and grant revenue and IFF off balance sheet arrangements.

21. A consultation document has been produced accordingly which aims to consult with the community regarding Council’s preferred approach for Civic Precinct Master Plan, Infrastructure Funding and Financing Act proposals, proposed changes to the commercial differential (within the general rate and transport targeted rate), Tsunami sirens project and the proposed budget for 2022/23.

22. Finally, noting that the above recommendations for 2022/23 have resulted in a median residential rate increase of 9.2% and median commercial rate increase of 24%. Also included in the changes are the changes in the commercial general rate differential to from 1:1.6 to 1:1.9 and the transportation targeted rate differential move from 1:1.6 to 1:3.33 in 2022/23.

23. On 24 March 2022, Council resolved to consult from 24 March to 26 April 2021 on the Long-term Plan Amendment and draft Annual Plan.

24. 1,181 submissions were received from individuals and organisations.

25. A total of 55 submitters spoke at hearings between 9-11 May 2022 in support of their submissions.

Discussion

26. Community consultation on the Long-term Plan Amendment was undertaken from 25 March to 26 April 2022, in conjunction with consultation on the draft Annual Plan 2022/23. A Consultation Document was developed to form the basis of community consultation on both processes, with the Long-term Plan Amendment section of the Consultation Document including an independent Audit Report.

27. The consultation document presented three key areas for consideration:

i. For the Long-term Plan Amendment

a. Options for the civic precinct development

b. Applying for IFF funding for:

i. Western Bay of Plenty Transport System Plan

ii. Tauriko West urban growth area

ii. For the Annual Plan 2022/23

a. How quickly should we change the commercial differential on the general and transportation targeted rate

b. Preferred option for Tsunami preparedness

iii. Any other comments

28. During the consultation phase, Council undertook a total of 15 events (mixture of public and targeted) from 30^th March to 13^th April. These events were preceded by an all-staff session on 29^th March hosted by the CE and the Commissioners.

The public events took place in the following communities/places:

· Matua

· Matapihi

· Greerton

· Welcome Bay

· Crossing Mall/Lakes

· Papamoa (at the markets and surf lifesaving club)

· As well as an online session via live Teams event.

The targeted events took place with the following groups/stakeholders:

· Mount Residents, Retailers and Businesses

· Export NZ Committee

· Business community

· Tauranga Māori Business Association

· Envirohub

· Tauranga Migrant Settlement Network

· Socialink

· Papamoa Residents and Ratepayers Association.

29. Feedback received on these issues is presented further below.

External Submissions

30. In total 1,181 formal submissions were received on the two planning processes during the month-long consultation. A total of 55 submitters spoke at hearings between 9-11 May 2022 in support of their submissions. Further community feedback, including informal feedback received at community events and via social media is included in a report titled “Engagement Insights” on this agenda.

31. From the 1,181 submissions received, 627 provided a response to question one regarding which option was their preference for the development of the Civic Centre.

32. 549 submitters did not choose an option on the form but provided their feedback. Of these 549 submitters, 419 submitters were in support of the Tauranga Ratepayers Association submission which rejects both option 1 and option 2.

33. The key themes from submissions are further outlined in report titled “Long-term Plan Amendment Deliberations - Civic Precinct Issues and Options Report” on this agenda.

34. These submissions have been categorised as presenting the following positions:

Question	Count
Option 1 (preferred option): Option 1: Te Manawataki o Te Papa (Civic Precinct) Masterplan (Refreshed 2021) at an estimated capital cost of about $303 million, subject to achieving 50% of the required funding from sources other than rates-funded debt. Estimated net cost to ratepayers of $151.5 million.	450
Option 2: Civic precinct projects and services currently included in the Long-term Plan 2021-31 (modified status quo option with updated costings) at an estimated capital cost of just under $127 million.	128
No Opinion	50
No Response (419 in support of Tauranga Ratepayers Alliance which rejects both options)	553
Total	1,181

35. From the 1,180 submissions received, 595 provided a response to question two regarding which option was their preference for funding the Western Bay of Plenty Transport System plan.

36. The key themes from submissions are further outlined in report titled “Transport System Plan Infrastructure Funding and Financing Proposal” on this agenda.

37. These submissions have been categorised as presenting the following positions:

Question	Count
Option 1: (preferred option) Apply for IFF funding to contribute $200 million to the delivery of Western Bay of Plenty Transport System Plan projects, funded by an annual levy on all eligible properties (subject to competitive financing and Government approval).	481
Option 2: Status quo - Do not proceed with an IFF arrangement and retain the higher transport targeted rate and other rating for debt repayment, as presented in the 2021-31 Long-term Plan.	115
No Response	585
Total	1,181

38. From the 1,180 submissions received, 599 provided a response to question three regarding which option was their preference for funding Tauriko West.

39. The key themes from submissions are further outlined in report titled “Tauriko West - Infrastructure Funding and Financing Proposal” on this agenda.

40. These submissions have been categorised as presenting the following positions:

Question	Count
Option 1: (preferred option) Apply for IFF funding to contribute to Tauriko West infrastructure, funded by an annual levy on the properties which benefit from that investment (subject to a competitive finance rate and Government approval).	501
Option 2: Status quo: do not proceed with an IFF arrangement and fund the development, when possible, via the council’s usual funding methods (development contributions).	99
No Response	581
Total	1,181

41. From the 1,180 submissions received, 604 provided a response to question four regarding which option was their preference for how quickly we should change the commercial differential on the general and transportation targeted rates.

42. The key themes from submissions are further outlined in report titled “Rating Policy Proposals” on this agenda.

43. These submissions have been categorised as presenting the following positions:

Question	Count
Option 1: Increase over one-year (from current 1:1.6 differential to 1:2.13 (general) and 1:5 (transport targeted rate) for 2022/23).	95
Option 2: (preferred option) A phased increase over two years (from current 1:1.6 differential to 1:1.9 (general) and 1:3.33 (transport targeted rate) for 2022/23).	345
Option 3: A phased increase over three years (from current 1:1.6 differential to 1:1.8 (general) and 2.51 (transport targeted rate) for 2022/23).	106
Option 4 (status quo): No change (keep the general and targeted commercial differential at 1:1.6 for 2022/23)	59
No Response	576
Total	1,181

44. From the 1,180 submissions received, 626 provided a response to question five regarding which option was their preference for Tsunami preparedness.

45. The key themes from submissions are further outlined in report titled “Tsunami Sirens on this agenda.

46. These submissions have been categorised as presenting the following positions:

Question	Count
Option 1: (preferred option) continue investing in education, awareness and supporting community networks to ensure more isolated or vulnerable members of the community are supported.	493
Option 2: Implement a tsunami siren project, at a total cost of $3.9 million in capital expenditure and $209,000 per annum in ongoing operating expenditure.	133
No Response	555
Total	1,181

47. The remaining submission responses that require a decision of council are on this agenda as an Issue and Options paper in a separate report. All submissions that only required a comment response from Council are being worked on separately and will be presented for review and adoption at the meeting on 27 June.

current FINANCIAL POSITION

48. Following the revisions to operational and capital costs proposed in the executive report, the Annual Plan budgets show some expenditure movements from the annual plan consultation document. The rates level remains at $270m overall, including water by meter revenue of $39m. The total OPEX has been increased by $21m from the draft which includes:

· carryforward expenditure and

· adjustments to employee costs, interest and electricity to reflect changes in market conditions and requirements to deliver

· various other minor changes outlined in the executive report.

49. The expenditure increases have not resulted in an increase in rates requirement due to the use of loan funding and prior year surpluses where appropriate, and some activities being self-funded through user fees.

50. The total capital budget is $298m which is a reduction of $5m from the draft.

51. The key financials are below:

52. No changes have been made to the LTPA financial position from that consulted on.

User Fees and Charges

53. There were four (4) submissions that related to the proposed user fees and charges. These are presented along with a proposed Council response in Attachment 2.

54. The first submission (#37) that made broad comments were that user fees should be amended to support the businesses, persons financial situations to make it fairer and cost effective for the user(s) as not to cause financial hardship to the user(s).

55. The second submission (#858) requested that fee for commercial markets on public open space at $250 rather than the proposed increased fee of $300.

56. The third submission (#951) queried why the charge for landing a helicopter at the airport was cheaper than the 3–4-hour car parking charge.

57. The fourth submission (#1072) requested that stronger monitoring and enforcement is undertaken for inner city parking.

58. Council staff have made no amendments to the user fees and charges as a result of submissions received.

Strategic / Statutory Context

59. This report is prepared in response to submissions on the consultation document on the Long-term Plan Amendment and Annual Plan 2022/23. The process for preparation of a Long-Term Plan Amendment and the Annual Plan is set out under the Local Government Act 2002.

Legal Implications / Risks

60. The Long-term Plan Amendment must be prepared in accordance with the Local Government Act 2002

61. The Annual Plan is Council’s resource-allocation document for the year ahead.

62. Legally, the purpose of the Annual Plan is set out in section 95(5) of the Local Government Act 2002 (“the Act”) as being to:

(a) contain the proposed annual budget and funding impact statement for the year to which the annual plan relates; and

(b) identify any variation from the financial statements and funding impact statement included in the local authority’s long-term plan in respect of the year; and

(c) provide integrated decision making and co-ordination of the resources of the local authority; and

(d) contribute to the accountability of the local authority to the community.

63. The Act also requires, at section 95(6), that the Annual Plan be prepared in accordance with the principles and procedures that apply to the 2021-31 Long-term Plan.

SIGNIFICANCE

64. 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.

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

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

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

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

ENGAGEMENT

67. Taking into consideration the above assessment, that the decisions are of high significance, but are part of a formal consultation process so that officers are of the opinion that no further engagement is required prior to Council making a decision.

Next Steps

68. Following Council’s decisions, the Long-term Plan document will be amended including any changes as a result of deliberations and will be audited and then presented for adoption by Council on 27 June.

69. Concurrently, the final Annual Plan 2022/23 will be prepared, including any changes as a result of deliberations, and will also be presented for adoption by Council on 27 June.

Attachments

1. Annual Plan Summary Financials - A13496912 ⇩

2. Fees and Charges - A13475462 ⇩

Ordinary Council meeting Agenda

24 May 2022

11.3 Long-term Plan Amendment Deliberations - Civic Precinct Issues and Options Report

File Number: A13428780

Author: Mike Naude, Director: Civic Developments

Authoriser: Gareth Wallis, General Manager: Central City Development

Purpose of the Report

1. This report presents the results of consultation on options for Te Manawataki O Te Papa, the Civic Precinct Masterplan implementation, through the Long-term Plan 2021-31 Amendment. It recommends that the Council approve Option 1 of the Long-term Plan Amendment Consultation Document for the implementation of Te Manawataki O Te Papa.

Recommendations

That the Council:

a) Receives the report Long-term Plan Amendment Deliberations – Civic Precinct Issues and Options Report.

b) Approves Option 1 – Te Manawataki O Te Papa (Civic Precinct) Masterplan (Refreshed 2021) at a capital cost of $303.4 million, for inclusion in the Long-term Plan Amendment 2021-31.

c) Notes that whilst the total project cost is the same as the draft budget consulted on, there are a number of changes outlined in this report, including the addition of a temperature controlled archive within the library and community hub (not previously budgeted within the programme), and the removal of $8 million for a waterfront playground, which is now budgeted as part of a separate Dive Crescent and Waterfront Reserve upgrade project.

d) Notes that the programme of works is subject to achieving 50% of the required funding from sources other than rates-funded debt, with an estimated net cost to ratepayers of $151.5 million. Each project will be subject to gateways recognised in resolution (e), prior to proceeding.

e) Reconfirms that the Civic Precinct project is required to have appropriate governance arrangements, business cases, funding mix, and decision gateways for each key facility. Specific consideration before gateway approval is to be given to the following matters raised by the community through the Long-term Plan Amendment submissions process:

· Size and scale of the individual facilities.

· Opportunities to deliver facilities which are exemplar in terms of sustainability; and

· Less concrete and softer, greener design elements.

Executive Summary

2. Following an extensive engagement process from 25 March to 26 April 2022, the Council has received 1181 formal submissions to the proposed 2021-31 Long-term Plan Amendment (LTPA) and draft 2022/23 Annual Plan. One of the key questions posed through the Consultation Document sought the communities’ views on the implementation of Te Manawataki O Te Papa.

3. The Council has received and read the full submissions received during consultation. This report outlines the views expressed by the community in submissions, including a summary of key themes both in support of and opposed to Council’s preferred proposal. Public hearings on these submissions were also held on 9 and 11 May 2022.

4. This report seeks to present the information available so the Council can make a decision for inclusion in the final LTPA, for adoption on 27 June 2022. It is recommended that the Council approve option 1 for Te Manawataki O Te Papa at a capital cost of $303.4 million. Whilst the Council is asked to agree to the LTPA, it is noted that further programme gateways will allow for ongoing oversight and approval processes, as business cases and final designs are prepared.

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, 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 of $82.5m in the Long-term Plan (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.

7. 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, to reflect the history and cultural significance of the site to tangata whenua, and to tell the stories of Tauranga Moana.

8. 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, exhibition and events centre, 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.

9. Te Manawataki O Te Papa was formally adopted by the Commission at the Council meeting on 6 December 2021. At the same meeting, Council requested a further report by February 2022 to enable the Commission to make a decision on inclusion of the full Civic Masterplan in a Long-term Plan Amendment (LTPA). Acknowledging that components of the Masterplan, to develop a new library and community hub, and associated urban space enhancements, had already been resolved through the LTP 2021-31, and work on these components was already commencing.

10. On 21 February 2022, the Council approved the development of an LTPA for the implementation of Te Manawataki O Te Papa, including public consultation from 25 March to 26 April 2022. The focus of consultation was intended to inform an understanding of the community’s views regarding the delivery and timeframes for the additional components of the Civic Precinct Masterplan, not those components already consulted on and agreed through the LTP 2021-31.

Community consultation

Consultation Process

11. Community consultation on the LTPA was undertaken from 25 March to 26 April 2022, in conjunction with consultation on the draft Annual Plan 2022/23. A Consultation Document was developed to form the basis of community consultation on both processes, with the LTPA section of the Consultation Document including an independent Audit Report.

12. During the consultation phase, Council undertook a total of 15 events from 30 March to 13 April 2022. These included a mixture of meetings, drop-in sessions, online events, and stalls around the city. Some events were intended to seek the views of the general community, whilst others were targeted at key stakeholders.

13. The LTPA consultation sought to gather the views of the community specifically regarding the implementation of components of Te Manawataki O Te Papa (Civic Precinct) Masterplan not currently included in the LTP. The Consultation Document, utilised as the basis of community engagement, included the following question to garner community feedback:

1. Which option do you prefer for the development of the Civic Precinct?

1. Option 1 (preferred option): Te Manawataki O Te Papa (Civic Precinct) Masterplan (Refreshed 2021) at an estimated capital cost of close to $303 million, subject to achieving 50% of the required funding from sources other than rates-funded debt. Estimated net cost to ratepayers of $151.5 million.

2. Option 2: Civic Precinct projects and services currently included in the 2021-31 Long-term Plan (modified status quo option with updated costings) as an estimated capital cost of just under $127 million.

3. No opinion.

Overview of Submissions

14. In total, 1176 formal submissions were received during the month-long consultation, with five additional late submissions being received after the 26 April 2022 deadline. Council has resolved to receive these late submissions.

15. Of the total 1181 submissions received, 628 submitters provided a specific response to the question posed in the Consultation Document regarding Te Manawataki O Te Papa implementation (see Chart 1 below).

Chart 1: Formal feedback on Te Manawataki O Te Papa through the submission form

16. Of the 628 submitters who provided a response, 450 submitters (72%) supported Option 1 (Council’s preferred option), 128 submitters (20%) supported Option 2 and 50 submitters (8%) chose ‘no opinion’.

17. 549 submitters did not choose an option on the form but provided their written feedback on the topic. Of these 549 submitters, 419 submitters were in support of the Tauranga Ratepayers Association (TRA) submission, which rejects both Option 1 and Option 2.

18. The key themes from submissions are outlined in summary in the following section, and in more detail in Appendix 1. It should be noted that this report provides a summary of key points only and is not intended to replace or represent fully the submissions received by the Council. In addition, the summaries are broken down by either support or oppose Option 1 as this was the focus of the majority of submissions received on this topic.

Key themes from submitters in support of Option 1

19. Support for City Centre rejuvenation

Overall, there was a range of comments that show that some of the community are very supportive of the concept of revitalising the Civic centre. Comments included themes such as:

· Do it once, do it right

· Willingness to pay

· Concern about current CBD

· Upgrades needed for a vibrant CBD

· Build it and they will come

· Silent majority support

· A history of underinvestment.

20. Support for a museum and art gallery

Many comments were received from submitters in favour of the museum and art gallery, with key themes including:

· Showcase, preserve and share our history

· Delivering community wellbeing

· Alternative museum location options

· National museum and art gallery facilities.

21. Feedback on the design of Te Manawataki O Te Papa

Submitters who were in support of Option 1 had feedback regarding the design of the Civic Precinct, including feedback specifically regarding the ‘artist impression’ provided:

· A vibrant city centre

· A softer, greener, more sustainable design

· Connection to water

· A sustainable and resilient CBD

22. A range of amenities and facilities proposed

Submitters suggested a number of ideas that they believe will enhance the Civic Precinct proposal:

· Specific community facilities and activities

· Prioritising the movement of people

· Enabling living in the city

23. Concerns regarding accountability and process

Some submissions referenced the process undertaken for the LTPA, and the structure and reporting in place around the proposal of Option 1:

· Project accountability and reporting

· Engagement process shortcomings

· Affordability for the community

Key themes from submitters opposed to Option 1

24. Concern regarding the financial impact of Option 1

Many submitters opposed to Option 1 shared concern about the proposed cost of the project and the cumulative impact on rates:

· Cost increases beyond budget

· Fiscal prudence

· Affordability for the community

· Impact on ratepayers

25. Different perspective on prioritisation

For many submitters there are other priorities that need to be addressed, before Council invest in a project that is considered by some to not be core Council business:

· Core infrastructure a priority

· Museum not a priority, or not in that location

· Waterfront rejuvenation a priority

26. Engagement process not genuine

In addition to views on the proposal, some submitters shared thoughts on the LTPA process:

· Consultation not sincere or appropriate

· Further consultation required

27. Lack of accountability for a significant project

Some submitters identified concerns regarding the robustness of a project of this scale, and the Council’s ability to prudently manage and measure the outcomes of the project:

· Historic non-performance of Council

· Lack of business case or measure of success

· Accountability for project delivery

· Uncertainty of funding

28. Fundamental flaw in proposal concept

For some submitters, the proposal is not fit for future needs and the design is flawed. Additionally, the concept of creating a city precinct with centralised community facilities is fundamentally flawed in today’s society:

· Call for significant redesign of look, scale and sustainability

· Lack of value for ratepayers

· City centre less relevant than suburban centres

· Question the relevance of Te Manawataki O Te Papa

· Impact on CBD during construction

· Fundamental transport problems

Overview of informal feedback

29. A comprehensive breakdown of informal feedback received at community events and via social media is included in the Long-term Plan Amendment Deliberations - Engagement Insights report on this agenda. The following outlines key feedback pertinent to the Civic Precinct consultation question.

30. At some events, attendees had an opportunity to place a marble in a jar to show whether they preferred Option 1 or Option 2; only two options were provided. The feedback is provided in Chart 2 (below) for information purposes.

Chart 2: Informal feedback provided on Te Manawataki O Te Papa at events

31. There were 15 Facebook posts on the Council’s Facebook page between 24 March and 23 April 2022. This included a mixture of promoted posts (paid ads) and non-promoted posts, static posts and video, including vox pops featuring the community sharing their views. In total the Civic Precinct posts reached 232,407 people and received 716 pieces of feedback and 721 ‘likes’, 103 ‘loves’, 115 ‘haha’, six ‘wow’, four ‘sad’ and 15 ‘angry’ reactions

32. Table 1 (below) outlines some of the common themes raised via informal feedback at events and on social media:

Table 1: Summary of informal feedback received on Te Manawataki O Te Papa

Theme	Summary of feedback
Agreement the city centre needs to be revitalised	In general, people agreed the city centre needs to be revitalised. There were lots of comparisons to European cities, and lots of great feedback and ideas for how people would improve the CBD, and what life would be like once it was complete.
Get on and do it	Quite a few people commented that we’ve been through this exercise lots of times already and nothing happens. From these people, there was a general ‘vibe’ of just get on and do it before prices rise again. Comments included the need to be bold and to do it once and do it properly.
Lack of trust in council to deliver	Some people referenced previous failed projects and voiced scepticism that the council would have the capability to successfully pull off a project of this scale. Some were sceptical that the proposal would make a difference and wanted to see more of a business case around how the proposal would bring investment into the city centre. These people weren’t against the intent of the proposal, just concerned about successful delivery of the project.
Security of funding	There were some questions about security of funding. People were concerned that funding for Option 1 wasn’t guaranteed and that by looking for investment, we could lose our autonomy. Concerns were raised from some that accepting the Three Waters Reform Better Off Funding could tie us into the reform programme.
Staying relevant	Some people cautioned that the concept of a vibrant CBD may be outdated. People are choosing to shop online or visit malls and that perhaps we should be adapting too and investing in the suburbs rather than in the central city.
Money better spent on other things	Some people saw the proposal as extravagant and thought council should focus on transport and parking first. Comments made included how will people get to the city centre and where will they park? Others asked what we were doing to make the city better to live in and were keen to see more investment in air pollution, climate change, better roads and services.
The bigger picture	There was a lot of interest in the holistic view of the city and how everything would be interconnected.
Heritage and culture	Some were opposed to the museum on the grounds that we’d already held a referendum. Others were very interested in understanding more about the city’s past and sharing those stories with visitors, and with their children and grandchildren.
Ensuring a wide range of views	Some people noted that there’s been an influx of professionals with young children to Tauranga and they wanted to know how we would capture those views, and the views of younger people.

Strategic / Statutory Context

33. The LTP 2021-31 articulates Putting the community at the heart of everything we do as the foundation of the document. Whilst the LTP 2021-31 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.

34. 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.

35. A summary of how the delivery of Te Manawataki O Te Papa supports LTP 2021-31 community outcomes is provided in Table 2 (below).

Table 2: 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 BOP 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.

36. 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 for 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 be presented to Council for adoption in July 2022. Development of this strategy will occur in tandem with further work on Te Manawataki O Te Papa to ensure alignment, and it will reflect key themes and the outcomes of the Civic Precinct proposals.

· 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.

Options Analysis

37. Two options were provided within the LTPA Consultation Document:

· 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 (with updated costings).

38. A full analysis of each proposal, including a cost benefit analysis, was included in the Council report on 21 February 2022 entitled Civic Precinct Options for Long Term Plan 2021-31 Amendment Consultation (see Appendix 2). Since that report was received by the Council, further information has been developed to help inform a final decision by the Council (see Appendix 3).

Updated information for Option 1 – Te Manawataki O Te Papa (Civic Precinct) Masterplan (Refreshed 2021)

Project costs

39. Further enhanced costings have been undertaken to reflect the progression of the concept design (see Appendix 3). These costings have resulted in a number of changes to various components of the programme, with increases in some components being off-set by decreases in other areas (see Table 3 below).

40. For example, some costs have been added to the Site A Establishment budget (e.g. relocation of high-voltage power cable), and a temperature controlled archive has been added to the scope of the library and community hub facility, with an estimated cost of $3 million.

41. The budget used for consultation also included components of playground development under the Waterfront Reserve project, within the wider Te Manawataki O Te Papa programme. However, development of the playground is one component of a wider project to develop the Waterfront, which is now more accurately included in a new programme of works for Dive Crescent and the Tauranga Waterfront Reserve. This new programme is explained in an Issues and Options Report on this agenda entitled; Issues and Options – Dive Crescent and Waterfront. To reflect the change in scope of Te Manawataki O Te Papa programme to remove the playground, $8m has been removed from the Waterfront Reserve project.

42. As a result of changes made to the budget post-consultation, including updated cost estimates and the scope changes identified above, the overall programme budget for Te Manawataki O Te Papa remains at $303.4m.

43. Table 3 (below) outlines project costs for key elements of the Te Manawataki O Te Papa programme. Costs proposed through consultation are included as well as updated project costs resulting from more detailed design planning. Project costs (including cost escalation) total $303.4m and are delivered over the 2022-28 timeframe.

Table 3: Project costs for Te Manawataki O Te Papa^{^[2]}

Project	Proposed Completion Date	LTPA Public Consultation – March 2022 ($mil)	Revised costs from Enhanced Concept Plan – May 2022 ($mil)
Library and community hub	Sep-25	$82.9	$88.2
Public amenity space – staged	Aug-28	$13.3	$15.7
Museum and exhibition/events	Aug-28	$106.4	$42.6
Exhibition/events centre	Sep-27	$106.4	$61.6
Civic whare	Sep-27	$21.2	$15.4
Masonic Park upgrade	Jun-27	$9.3	$10.9
Baycourt upgrade	Dec-25	$11.3	$11.0
Waterfront Reserve	Jul-26	$15.5	$7.5
Willow shared space	Oct-28	$13.1	$8.9
Durham Street upgrade	Jun-26	$4.8	$9.2
Wharf	Jul-26	$25.6	$25.4
Site A establishment*	Mar-25	-	$7.0
*Note: the Site A Establishment costs are included within the individual project cost items in the LTPA Consultation Document. These have been separated into their own project line for the Enhanced Costs presented.
TOTAL		$303.4	$303.4

Financial considerations

44. The total cost of delivering Option 1 is $303.4m. Early indications suggest that the average annual operating costs will be ~$21.4m once construction is complete. These operating costs are continually being refined and updated as the programme progresses and in particular, as all of the function, use and design permutations are resolved.

45. Delivery of the Civic Precinct programme of work will be supported by a dedicated team from 1 July 2022. The additional opex cost required to resource this team is ~$800k in financial year 2022/23, which will be offset by savings across the organisation resulting in no additional impact on rates.

46. Figures are based on the costings provided in the Masterplan by Rider Levett Bucknall (Quantity Surveyors). These costs have been confirmed through enhanced concept plans (see Appendix 3) and the current costs are based on the following assumptions:

· Cost escalation of 18% of construction costs across the six years, totalling $31.6m

· Contingency of 13% of total cost across six years, resulting in $34.9m total contingency

· Programme of works commencing with design in 2022, and construction staged over the following six years

· Programme completion by June 2028.

47. Budgets from two projects approved in the LTP have been transferred to the programme:

· Te Papa CBD community hub budget – $11.8m transferred to the library project, which now includes the community hub

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

Funding considerations

48. Te Manawataki O Te Papa proposed funding is a mix of TCC debt and a variety of external funding sources. Table 4 (below) provides a summary of the indicative funding mix based on earlier expert advice from the Giblin Group. The current programme funding mix shows external funding of $107.8m and TCC funding of $195.6 incremental over the next six years.

Table 4: Te Manawataki O Te Papa indicative funding mix

49. As shown in Table 4 (above), external funding is estimated at ~16% for the library and community hub, ~71% for the museum and exhibition centre, ~86% for the Civic Whare, ~37% for the Civic Plaza and ~11% for the Baycourt upgrade. All other projects are expected to be 100% loan funded, with the exception of the central library which is expected to attract 12.5% DC funding.

50. The commencement of construction of the projects that rely on external funding is dependent on receiving the level of external funding reported, or sourcing alternative funding (other than further rates increases).

51. To achieve the desired 50% external funding target, other funding opportunities for the programme have been identified, including revenue from asset realisation and a central government grant related to the Three Waters Reform.

52. Noting the risks and assumptions in the LTPA funding report ‘Long Term Plan Amendment Financials’ (A13215931) presented to the Council on 28 February 2022, it is estimated that asset realisations at book value may generate $30m to $40m, and that the Three Waters Reform government grant can be expected to be $48m. These revenue sources will be used to offset some of the ~$44m still required to ensure the overall programme of work is at least 50% funded from sources other than rates.

Additional considerations from submissions

53. In response to submissions received on the Civic Precinct programme of work, Table 5 (below) outlines the actions that are currently underway.

Table 5: Actions taken in response to submissions received

Submission theme	Actions undertaken
Suggestions on design elements for the range of amenities and facilities proposed	Requests from submitters for a varied range of amenities and facilities have been forwarded to the relevant Programme Steering Groups for consideration for inclusion in final designs. Where additional funding is required, external funding will need to be sought.
Feedback on the design of Te Manawataki O Te Papa	Submission feedback on the design of Te Manawataki O Te Papa has been forwarded to the design team for consideration in the final design. Recommendations will be brought back to Council for consideration for inclusion and where additional funding is required, external funding will need to be sought.
Fundamental transport problems	Further work is currently underway to address the transport issues of the city including the City Centre Strategy, major upgrades to key routes, and facilities to embrace alternative transport options.
Lack of accountability for a significant project	Each steering group has been tasked with the development of Key Performance Indicators (KPIs) for the project as it progresses. An extensive governance and reporting structure has been established, as has the development of staged gateways requiring Council approval prior to commencing next steps, which will ensure the appropriate level of oversight is provided for this significant project. A number of KPIs have been set for Council’s project partners.

Cost increase beyond budget	Contingencies and escalation costs are included in the revised cost estimates based on the current economic climate, totalling $66.5m or 22% of the total programme budget. The governance and programme management structures approved by the Council in February 2022 are designed to ensure appropriate contingencies and oversight.
Impact on CBD during construction	Work is underway to plan the construction phase of the development to minimise impact on the local business and the wider community.
Delivering community wellbeing	A report has been commissioned to provide a Wellbeing Benefit Assessment of Council and private investments in the CBD, and the wider city.
A sustainable and resilient CBD and Civic facilities	Steering groups have been instructed to consider sustainability and climate change resilience in all final designs, with options to be brought to the Council for final consideration and approval. Where additional funding is required, external funding will need to be sought.

54. Additionally, a range of enhancement options including different construction materials, 6 green star buildings and sustainability initiatives have been costed by Willis Bond for further consideration (see Appendix 3). Recommendations will be brought back to Council for consideration for inclusion in final designs and where additional funding is required, external funding will need to be sought.

Options Analysis

55. Key benefits, disadvantages and risks for each option presented are outlined in the Council report from 21 February 2022 (attached as Appendix 2).

56. Following community consultation, Te Manawataki O Te Papa (Option 1) is the recommended option for the amendment to the LTP 2021-31. Option 1 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 1 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.

57. 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.

58. 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.

legal implications / Risks

59. The Local Government Act 2002 (LGA) enables a local authority to amend its Long-term Plan 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).

60. 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 has therefore consulted on this amendment through the special consultative procedure required by the LGA (section 93(5)), to reach decisions on the amendments to the LTP.

61. For a description of key risks, please refer to the ‘Options Analysis’ section of the attached Council report (see Appendix 2).

Significance

62. The 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.

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

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

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

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

ENGAGEMENT

65. Taking into consideration the above assessment, that the proposal is of high significance, community consultation was required.

66. The proposal to implement Te Manawataki O Te Papa (Civic Precinct) includes a significant change in level of service for a significant activity, and therefore requires an amendment to the Council’s LTP 2021-31 under the Local Government Act 2002.

67. An LTPA requires the use of the Special Consultative Procedure, under section 93(5) of the Local Government Act 2002. As such, a full consultation process has been undertaken from 25 March to 26 April 2022.

Next Steps

68. This report seeks to reach a decision regarding the finalisation of the LTPA. The Civic Precinct development programme is subject to a partnering agreement with Willis Bond that provides the key processes and approval stages for the delivery of the programme, including multiple approval gateways and procedures throughout the programme.

69. This diagram summarises the key gateways and approval processes that are being followed:

70. At each significant approval stage/gateway, the programme steering groups will make recommendations to Council. This will provide the opportunity for Council oversight of final design stages and provide for further consideration of incorporating submitter recommendations into future stages of the project. Approval of final business cases for each component of the programme will ensure greater accountability and governance.

71. A comprehensive programme of next steps for each project can be progressed, once funding and programme certainty has been provided through the LTPA process.

Attachments

1. Submission summary - key themes - A13459073 ⇩

2. Council 2022-02-21 [11623] Report - 11.6 Civic Precinct Options for Long Term Plan 2021-31 Amendment Consultation - A13211597 ⇩

3. Te Manawataki o Te Papa - Enhanced Costings Report - 17 May 2022 - A13480048 (Separate Attachments 1)

Ordinary Council meeting Agenda

24 May 2022

11.4 Transport System Plan – Infrastructure Funding and Financing Proposal

File Number: A13429837

Author: Ben Corbett, Team Leader: Growth Funding

Authoriser: Christine Jones, General Manager: Strategy & Growth

Please note that this report contains confidential attachments.

Public Excluded Attachment	Reason why Public Excluded
Item 11.4 - Transport System Plan – Infrastructure Funding and Financing Proposal - Attachment 1 - Confidential Attachment - Transport System Plan	s7(2)(b)(ii) - The withholding of the information is necessary to protect information where the making available of the information would be likely unreasonably to prejudice the commercial position of the person who supplied or who is the subject of the information.

Purpose of the Report

1. The purpose of this report is to provide feedback on the public consultation that has occurred through the LTPA process on the utilisation of the Infrastructure Funding and Financing (IFF) mechanism to fund the Transport System Plan TSP) projects

Recommendations

That the Council:

(a) Approve the Long-Term Plan Amendment reflecting Infrastructure Funding and Financing Levy (IFF) as a means of funding for Transport System Plan (TSP) Projects.

(b) Approves the addition of the following projects to the TSP IFF project schedule:

(i) Tauranga Crossing Bus Facility Improvements

(ii) City Centre Transport Hub

(iii) Barkes Corner to Tauranga Crossing Multi-modal local road components

(iv) SH2 Revocation – Cameron Rd to Bethlehem

(c) Receives a further report on the outcome of finance proposals and further advice on the status of Waka Kotahi Funding to enable a final decision to be made on whether to proceed with a IFF Levy to finance and fund the 14 identified TSP projects.

(d) Supports the drafting of a Levy Proposal and associated documentation in preparation for seeking Ministerial approvals should the IFF Levy be fully endorsed.

Executive Summary

2. On 28 February 2022, Council resolved to consult through its Long-term Plan Amendment (LTPA) on whether to use an Infrastructure Funding and Financing (IFF) model to finance delivery of infrastructure at Tauriko West.

3. Submissions were received from residents with a range of feedback on the proposal. This report summarises the submissions received and responds to the main themes and questions raised by submitters.

4. Staff have put two options to Council, either to:

(a) Continue pursuing an IFF opportunity; or

(b) Remain with the status quo of TCC’s financing model and continue to recover costs for the LTPA through a targeted rate, other rating for debt repayment and some reliance on development contributions

5. This report notes that there is significant uncertainty with Waka Kotahi funding. To address some of this risk, the TSP project list has been extended with four additional projects which could be used within the overall TSP program.

6. It is important to note that the decision-making processes for IFF, FAR and State Highway funding streams are not aligned. Due to the legislative framework, funding constraints, and business process within Waka Kotahi operates, a non-standard pathway will require greater levels level of certainty. Work is underway to explore this pathway however this has not yet been completed.

7. Staff recommend that Council continue to pursue the IFF opportunity as it provides the best option for maximising the range of funding sources open to TCC and preserves TCC’s balance sheet capacity to provide flexibility of choice for future investments. This option ensures IFF remains a realistic opportunity for TCC while also providing time to resolve outstanding uncertainties.

8. If resolved by Council, the TSP IFF will be incorporated into the LTPA. A finance tender process will be undertaken to understand the cost of finance and refine the levy model. Staff will revert to Council with the draft levy proposal for approval before submitting a levy proposal to central government for approval.

Background

9. TCC is facing constrained borrowing capacity as it looks to deliver on its Long-term Plan 2021/31 and Long-term Plan Amendment. To relieve this constraint TCC is investigating utilising the Infrastructure Funding and Financing Act 2020 (IFF) to raise funds that do not increase its net borrowing position.

10. Through the IFF, a Crown owned company borrows money from the private sector and makes the proceeds available to TCC to fund certain infrastructure projects. The borrowings are then repaid by the Crown owned company levying certain properties in Tauranga annually. This means that nearly all properties would pay an annual statutory charge for a period of 25 – 30 years to fund projects. This approach of private sector lending avoids TCC needing to borrow money to fund the projects itself.

11. TCC is proposing to use an IFF model to fund:

(a) $200m of costs towards 10 projects within the approved Transport Systems Plan. This would partially replace the targeted rate previously proposed in the 2021/31 Long-term Plan with a citywide IFF levy; and

(b) $60m of the costs of delivering infrastructure at Tauriko West. This would be repaid by a levy on properties within the Tauriko West urban growth area (this proposal is covered in a separate report to Council).

12. The original ten TSP projects are:

*Uninflated project costs

13. For TCC, the key advantage of using an IFF model is that it enables this infrastructure to be financed and funded without increasing TCC’s debt levels. TCC can then use its financial capacity to borrow to deliver other projects in the Long-term Plan and Long-term Plan Amendment. The 2021 – 2031 included a debt retirement levy of $500 million in order to manage balance sheet debt levels.

14. Without this IFF arrangement, TCC would have to recover costs for the TSP program through the targeted rate, general rates and development contributions or may delay or postpone projects in order to remain within its debt cap.

15. While the rates burden is shifted from the targeted rate through to levy under the IFF, this results in a lower yearly cost in the first ten years of the levy schedule to property owners through spreading out the cost of debt repayment over a longer period of time. This is due to the need to charge debt retirement rates levy to manage the balance sheet. Should this need for a debt retirement rate change in future due to wider fiscal considerations, then the benefits of IFF also change.

16. The final decision whether any IFF proposal proceeds will ultimately be made by the Minister of Housing. The numbers in this report represent the current uninflated project costs and proposed IFF structure for TSP which will need to be signed off with officials.

17. Further background on the IFF funding mechanism is contained within a report brought to Council on 28 February 2022. At that meeting Council endorsed the proposal to consult with the public on the two IFF proposals discussed.

18. TCC has now consulted with the public on the IFF opportunity as part of the Long-Term Plan amendment (LTPA) and Annual Plan consultation process. This report discusses the outcome of this consultation and its implications.

Strategic / Statutory Context

Public Consultation on TCC’s TSP IFF Proposal

19. TCC undertook public consultation on the TSP IFF proposal as part of the LTPA.

20. Submitters were asked their preferred option for funding the Transport System Plan. Of the 1,181 submissions received on the LTPA, 596 responded on the TSP IFF proposal and 585 did not.

(a) 481 (being 81%) who responded supported TCC applying for IFF funding for the Transport System Plan; and

(b) 115 (being 19%) who responded supported not proceeding with the IFF and maintain the status quo of using traditional methods, when possible.

21. Comments from respondents who support using the IFF had the following themes:

(a) There is a need to improve the transport system as quickly as possible in order to improve the functioning of the city.

(b) There is a need to invest in the transport network in order to catch up on a perceived infrastructure deficit.

22. Comments from respondents who did not support using the IFF had the following themes:

(a) Further discussion with the community was needing to be held in future Annual Plans/Long-term Plans about the development of Tauranga’s transport network.

(b) Concern at overall rising debt levels.

(d) With the growing labour shortages and overall construction costs, questions were raised whether the city would be getting a good deal overall.

Response to Public Consultation TSP IFF proposal

23. In regard to the responses in support of the status quo approach rather than the IFF proposal it is important to note that:

(a) There has already been engagement with the public, including tangata whenua, on Tauranga transport requirements through the Smart Growth partnership. This engagement led to the creation of the TSP. The TSP projects which TCC is seeking to deliver were consulted on publicly through the 2021-2031 Long Term Plan. There will also be further engagement through each projects’ business case stage. This will give the community the opportunity for further discussion and input into Tauranga’s transport network.

(b) The TSP IFF will not increase TCC’s debt level but will create an opportunity to reduce debt from TCC’s balance sheet.

(c) The TSP IFF creates the ability to reduce the yearly rates burden to business and residential ratepayers through spreading the payment of the TSP over a longer period of time.

(d) TCC will make the final decision taking into account the overall costs for landowners (including consideration of the competitiveness of the finance rate) and the broader benefits of utilising IFF. Value for money will also be pursued through the business case stage, competitive procurement processes and tendering

Financial Considerations

24. Securing other funding sources including the FAR subsidy from Waka Kotahi will be key for projects within the TSP program to proceed. Significant progress has been made on this t recently with Tauriko West Waka Kotahi Funding secured, along with $147m from the Infrastructure Acceleration Fund (IAF) to cover both transport and water infrastructure costs.

25. Table 1 below summarises the 10 TSP projects proposed to be partly funded through IFF together with assumed funding sources from Waka Kotahi and other Central Government agencies as well as TCC based on current project cost estimates.

Table 1 – TSP Funding Snapshot

26. Of the $798m of uninflated project costs from 10 TSP projects, approximately $215m has been secured for these projects from a mix of funding sources including CIP, IAF, and Waka Kotahi.

27. This funding is associated with Cameron Rd stage 1&2, Tauriko West Enabling Works Package and Cameron Rd Corridor Connections. These four projects make up over half of the TSP total program and constitute 53% of these four projects funding requirements.

Waka Kotahi FAR Subsidy

28. For the expected total Waka Kotahi funding request of $317m for the TSP projects, Table 2 provides a summary of the different stages of funding for these projects.

29. Waka Kotahi allocates funds using the following funding priorities (see below table) to assess whether a project will be included in the National Land Transport Programme (NLTP), (in this case, the 2021-2024 NLTP). These priorities are developed using the Waka Kotahi investment prioritisation method.

30. Table 2 – Waka Kotahi Funding Status

* Cameron Rd Stage 1 is largely funded via $45m CIP shovel ready grant.

** Tauriko West Enabling Works Package has allowed for additional funding for inflation

*** PEI to utilise Housing Infrastructure Fund (HIF) interest free loan.

**** Cameron Rd Corridor Connections being funded via low cost, low risk program

31. In total $126m is registered as either approved or probable for approval within the 2021-2024 NLTP, with a further $7m approved for low cost, low risk projects. The remaining funding from Waka Kotahi is yet to be formally submitted due its current stage in the business case process.

32. The Papamoa East Interchange is being assessed at the Waka Kotahi’s May Board meeting. Their share of funding for this is proposed to be made available via an interest free loan from the Housing Infrastructure Fund which TCC has also submitted an application for funding.

33. Projects that are less advanced through their business case process include Hewletts Rd Sub Area (Totara, Hull, Maunganui), Turret Rd and Primary Cycle Route Area B (Otumoetai / Bellevue / Brookfield). $2m has been approved for business case or pre-implementation work. $29m is registered as probable for pre-implementation or implementation work within Waka Kotahi’s system indicating current support from Waka Kotahi to progress these projects to their next stages, but subject to further assessment following completion of the business case phase, and subject also to the availability of NLTF funding at the time the funding application is received.

34. Projects that that have not yet had a business case approved include Welcome Bay multi-modal upgrade and Primary Cycle Route Area A (Mount/Papamoa/CBD). These projects are however rated as either 2 or 3 within WK’s prioritisation system which indicates current support to progress these projects through the business case phase, with support through the next phase of the funding process contingent on business case outcomes and availability of NLTF funds.

35. TCC has sought to clarify with WK what the likelihood is on funding for projects within the TSP IFF that have not yet gained formal approval through WK’s business case process. (Refer paragraphs 31 and 32).

Financial Risks

36. Based on the current moderately high overall ranking of the TSP projects within WK’s approval system, the risk related to WK FAR subsidy relates more to the timing of when funding would be available rather than if funding would be available at all. However, the impact of the recently released Emissions Reduction Plan is yet to be assessed, and this may impact on funding likelihood. Similarly, changes in government policy or changes to the total funds available may impact on future funding approvals.

37. There are also risks of one or more of the ten proposed TSP IFF projects not proceeding either due to Waka Kotahi funding not being secured or a decision that the project is not required to proceed for some reason. To mitigate the risk of this occurring, and there being insufficient TSP projects to utilise the $200 million IFF, it is recommended that four additional projects are included within the TSP IFF package. These are:

(i) City Centre Transport Hub - $48m

(ii) Tauranga Crossing Bus Facility Improvements - $tbc

(iii) Barks Corner to Tauranga Crossing Multi-modal local road components - $tbc

(iv) SH2 Revocation – Cameron Rd to Bethlehem - $tbc

38. These four projects are all in early stages of the business case lifecycle with the City Centre Transport Hub the only project with an indicative estimate of $48m (and that estimate will likely change as the form of the public transport facilities in the city centre is further progressed). Work is on-going to get greater clarity on cost of these projects if they will be prioritised for funding within the pool of fourteen IFF projects

39. Risk also relates to the alignment of funding mechanisms. The funding mechanisms and decision-making processes for Council and State Highway projects often require multiple funding sources including NLTF funding, developer contributions, Council rates (general and targeted), Crown funding (IAF/HIF etc) and more recently, IFF levies. All these different funding sources have separate and oftentimes unaligned, application and approvals processes. This creates a variety of challenges and uncertainties for Councils when assembling ‘funding stacks’ to support a project. This matter has been raised with senior government officials and Ministers. Despite all these financing and funding streams being under the control of government they are treated as separate and distinct processes with minimal connection and integration. This places TCC in the difficult position of needing to progress all in parallel in an effort to secure a complete ‘funding stack’ to deliver each project, yet not having certainty when some decisions are required to be made.

40. For Tauriko West Enabling Works Waka Kotahi and Council have to date worked together to remove some of the uncertainty that exists between aligning NLTF funding with IFF funding– Council supports more work being done to align broader Crown-based funding sources for the delivery of the TSP (including SH29 long term).

41. TCC and Waka Kotahi have engaged on the need for Council to have a level of certainty around WK funding, before Council is able to commit to a TSP levy. The requirements of the Land Transport Management Act and the phased funding approvals process that is used to allocate NLTF funding, and the uncertainties generated through that process, can make aligning NLTF funding with an IFF levy (which requires certainty of other funding sources at the time of its establishment), difficult. The legislative framework, and processes which Waka Kotahi operates within mean that a non-standard pathway is in some cases required to achieve this level of certainty. While work is underway to explore and progress these non-standard decision pathways for TSP, this has not yet concluded. Effort is being made for this to be complete in a timeframe to be presented to Council when the CIP market response is considered, which will enable Council to be informed prior to making a final decision on whether to proceed with the TSP IFF.

42. We note that two of the fourteen projects are going to be delivered by Waka Kotahi. These are the Hewletts Rd Sub Area (Totara, Hull, Maunganui) and the Tauriko West Enabling Works Package. This means that they will not be disclosed as capital projects within TCC’s financial statements but as operational grants (an expense) payments to Waka Kotahi for $59.7M (Hewletts Rd Sub Area (Totara, Hull, Maunganui)) and $99.5M (Tauriko West Enabling Works). Work on this structure is on-going to ensure we are still able receive funding streams such as IFF funding and / or future development contributions.

43. We note that Council will have one final point of decision in relation to the IFF funding. This will be after the:

· Competitive finance process is completed by Crown Infrastructure Partners and the final cost of the IFF solution to ratepayers is understood.

· Waka Kotahi funding commitment is further clarified.

Council’s decision will be limited to an accept/ reject decision in relation to taking up the IFF.

44. While the final decision will be made by Commissioners, based on the facts available at the time, we considered that it may be useful for Crown Infrastructure Partners to have an understanding of our expectations as to the final cost of finance outcomes likely to be acceptable.

45. We have outlined our expectations in the confidential attachment to this report. This has been included as confidential so that it does not impact Crown Infrastructure Partners market tender process.

46. The reason that TCC might accept an IFF solution with an overall cost to ratepayers that is higher than the cost we currently borrow at via the LGFA (currently all TCC borrowing is through LGFA) relates to:

· IFF is fixed for 30 years (LGFA current maximum term is 15 years) and therefore provides greater certainty of cost over time and aligns more closely with the life of assets

· There is additional value to TCC of having this debt off our balance sheet (does not restrict TCC’s capital program)

· Highlights to Central Government that TCC is endeavouring to use all possible funding sources (potentially more favourable view of other TCC funding applications)

· Improves our positioning for these key projects when attempting to lock in Waka Kotahi funding.

47. There is potential for Council’s debt levels and financial ratios to change significantly over the next few years if changes, such as water reforms come into effect. However, given the potential changes (particularly in the climate change, emissions, etc space), and the likely additional capital costs for future investment required (including infrastructure in the Western /Keenan corridor and community facilities in the eastern corridor), creating greater capacity on balance sheet avoids the need to increase debt retirement charges in future years. Alternatively, we may be able to reduce the level of debt retirement charges included in the current LTPA and stay within our debt covenants.

48. A material driver of the total cost of the IFF funding is the cost of the private finance which the IFF structure accesses. This will be significant factor within the financial consideration. Market conditions have changed recently from a historic low in the interest rates environment to one where interest rates are rising due to global tightening of monetary policy.

49. TCC is currently reviewing its long run cost of capital in order to be in a position to compare market rates on offer through the IFF mechanism compared to TCC’s likely costs of capital through traditional TCC financing.

Options Analysis

50. There are two options before Council. Option one is to continue to pursue this IFF opportunity while option two is to remain with the status quo. Below are set out the advantages and disadvantages of each option.

51. In the February Report, Council considered the advantages, risks and current unknowns involved with this proposal. These have not materially changed and so have not been repeated in this report.

Option one: Include TSP IFF in the Long-Term Plan. Continue to progress the TSP IFF proposal and revert to Council for approval to submit a levy proposal to HUD once the IFF finance process is complete and Waka Kotahi funding advice has been received. (Recommended)

Advantages

Disadvantage

· This option aligns with the overarching sentiment of public feedback while providing an opportunity to address the concerns raised by some submitters

· IFF is the most viable finance solution available to TCC to reduce the targeted rates currently used to fund the TSP program

· Development fair share is likely to be a condition of TCC being able to access IAF funding for some projects within the TSP program.

· Continuing to pursue this opportunity adds resilience to the overall mix of funding sources for TCC

· Continuing to pursue this opportunity does not compel TCC to submit its levy proposal to HUD or commit TCC to a finance option so flexibility of choice in time is not compromised

· There are no disadvantages to continuing to pursue this option as there are no material costs incurred through further preparation of the TSP IFF

Option two: Do not include TSP IFF in the LTPA and do not progress the TSP IFF proposal

52. Don’t continue with the TSP IFF and continue to recover costs for the LTPA through a targeted rate, other rating for debt repayment and some reliance on development contributions, as per the current status quo funding arrangements.

53. This is the opposite course of action to option one and so the advantages and disadvantages are reversed. Traditional funding and financing approaches will see debt remaining on Council’s balance sheet and whilst this position may improve going forward uncertainties remain hence the creation of greater balance sheet capacity remains a key objective.

Legal Implications / Risks

54. TCC is receiving independent legal advice on the arrangements and legal documentation associated with the IFF transaction.

Significance

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

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

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

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

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

ENGAGEMENT

58. Taking into consideration the above assessment, that the matter is of high significance, and that public consultation has occurred through the LTPA process, staff are of the opinion that no further engagement is required prior to Council making a decision.

59. As noted elsewhere in this report, consultation and engagement will occur as part transport projects as they progress through the business case process

Next Steps

60. If the recommendations of this report are adopted the next step would be to report back to Council on the outcome of the:

· CIP market process and the commercial terms which are available; and

· Waka Kotahi funding decision processes.

61. In the interim TCC staff will work with Crown Infrastructure Partners to develop a robust IFF levy proposal. Should Council decide to proceed with the TSP IFF, the framework and levy model will be submitted to the Ministry of Housing and Urban Development (MHUD). If satisfied with TCC and CIP’s proposal, MHUD will then recommend the proposal to the Minister for IFF who may approve or decline the proposal after consultation with various other ministries.

62. An indicative timeframe is set out below:

(a) Indicative non-binding financing proposals received– Late May

(b) Short listed lenders notified – Late June

(d) TCC adopts LTPA & Annual Plan – 27th June

(e) Binding financing proposals due from potential lenders – Mid July

(f) Consideration of outcome of financing market process. Decision by Council on whether to proceed with TSP IFF. If approved, delegation to TCC CEO to sign documentation – Late July

(g) Exclusive mandate awarded to preferred financier – Late July

(h) Prepare IFF & finance documentation – Late September

(i) Reconfirmation of credit approved terms – Late September

(j) Signing of IFF Funding and Administration Agreement (IFFFAAA) – Mid October

(k) Contractual close (execution of lending documentation & ancillary finance documentation) – Mid October

(l) Financial close – Mid November

Attachments

1. Confidential Attachment - Transport System Plan - A13499378 - Public Excluded

Ordinary Council meeting Agenda

24 May 2022

11.5 Tauriko West – Infrastructure Funding and Financing Proposal

File Number: A13429889

Author: Ben Corbett, Team Leader: Growth Funding

Authoriser: Christine Jones, General Manager: Strategy & Growth

Purpose of the Report

1. The purpose of this report is to:

· Update Council on the progress of TCC’s draft Infrastructure Funding and Financing (IFF) Act proposal for Tauriko West since the February Council report.

· Report to Council on the outcomes of the Long-term Plan Amendment and Annual Plan 2022/23 consultation as it relates to the Tauriko West IFF proposal.

· Seek a Council decision on progressing Tauriko West IFF arrangements.

· Signal to TCC’s partners its intention to pursue the Tauriko West IFF proposal.

Recommendations

That the Council:

(a) Approves the Long-Term Plan Amendment reflecting an IFF Levy as a means of financing and funding for the Tauriko West growth area infrastructure

(b) Approves a levy proposal being prepared to introduce an Infrastructure Funding and Financing levy at Tauriko West.

(d) Continues to engage with relevant stakeholders, including landowners and developers in Tauriko West, to understand their views on the acceptability, or otherwise, of the proposed finance package; and

(e) Receives a further report on completion of the finance process with a final levy proposal for Council’s consideration including details of the proposed levy model, the cost to levy payers over the levy period, and outcome of the landowner/developer engagement.

(f) Supports the drafting of a Levy Proposal and associated documentation in preparation for seeking Ministerial approvals should the IFF levy be fully endorsed.

Executive Summary

3. Submissions were received from a range of stakeholders. Broadly, residents of Tauranga and large developers at Tauriko West were in favour of pursing the IFF model subject to resolving a number of uncertainties prior to entering into any IFF arrangement. Residents at Tauriko West were mixed in their support and held a wide range of views as to what they would like to do with their land over time. This report summarises the submissions received and responds to the main themes and questions raised by submitters.

4. Staff have put two options to Council, either to:

(a) Continue pursuing an IFF opportunity; or

(b) Revert to TCC’s traditional finance model and repaying debt using development contributions over time.

5. Staff have recommended Council continue to pursue the IFF opportunity as it provides the best option for maximising the range of funding sources open to TCC and preserves TCC’s balance sheet capacity to provide flexibility for future investments. This option ensures IFF remains a realistic opportunity for TCC while also providing time to resolve outstanding uncertainties.

6. If resolved by Council, the Tauriko West IFF will be incorporated into the LTPA.

7. Crown Infrastructure Partners (CIP) will then undertake a finance tender process to understand the cost of finance and refine the levy model. TCC staff will revert to Council with the draft levy proposal in the final quarter of the year for approval to submit a levy proposal to central government for approval.

Background

8. TCC is facing constrained borrowing capacity as it looks to deliver on its Long-term Plan 2021/31 (LTP) and Long-term Plan Amendment (LTPA). To relieve this constraint TCC is investigating utilising the Infrastructure Funding and Financing Act 2020 (IFF) to raise funds that do not increase its net borrowing position.

9. Through the IFF, a Crown owned company borrows money from the private sector and makes the proceeds available to TCC to fund certain infrastructure projects. The borrowings are then repaid by the Crown owned company by levying properties in Tauriko West annually. This means that nearly all properties in Tauriko West would pay an annual statutory charge for a period of around 30 years to fund infrastructure projects in that area. This approach of private sector lending avoids TCC needing to borrow money to fund the projects itself.

10. TCC is proposing to use an IFF model to fund:

(a) $200m of costs towards as subset of 14 projects within the approved Transport Systems Plan. This would partially replace the targeted rate previously proposed in the LTP with a citywide IFF levy (this proposal is covered in a separate report to Council); and

(b) $60m of the costs of delivering infrastructure at Tauriko West. This would be repaid by a levy on properties within the Tauriko West urban growth area.

11. The infrastructure projects proposed to be funded through this IFF levy are set out at Attachment A.

12. For TCC, the key advantage of using an IFF model is that it enables this infrastructure to be financed and funded without increasing TCC’s debt levels. TCC can then use its financial capacity to borrow to deliver other projects in the LTPA, and future projects which will be included in subsequent LTP’s. TCC has not assumed the use of either IFF proposal in its current 2021 - 2031 LTP.

13. TCC’s LTP includes debt retirement of $550m funded by a levy. This was introduced to manage TCC’s debt capacity and ensure TCC remains within its borrowing covenants. By introducing IFF levies, TCC can replace some of the debt retirement levies with the IFF. This enables the debt to be repaid over a longer period. By doing so, the cost of debt may be higher, but repayment is spread over a longer period of time and among those residents who benefit from the infrastructure funded by debt.

14. Without this IFF arrangement, TCC would have to recover costs for Tauriko West infrastructure through development contributions.

15. The final decision whether any IFF proposal proceeds will ultimately be made by the Minister responsible for the Infrastructure Funding and Financing Act (the Minister for Housing and Urban Development) (considering advice from a number of government departments). The numbers in this report represent the current proposed IFF structure for Tauriko West and are subject to approval by the Minister.

16. Further background on the IFF funding mechanism is contained within a report brought to Council on 28 February 2022 (the February Report). At that meeting Council endorsed the proposal to consult with the public on the two IFF proposals discussed.

17. TCC has now consulted with the public on the IFF opportunity as part of the LTPA and Annual Plan 2022/23 consultation process. This report discusses the outcome of this consultation and its implications.

Consultation outcomes

Public Consultation on TCC’s Tauriko West IFF Proposal

18. TCC consulted on a LTPA regarding the Tauriko West IFF. Three key three stakeholder groups where identified being the:

(a) residents of Tauranga;

(b) residents and property owners who live in the area of the proposed development at Tauriko West; and

19. We note, significant engagement has been previously undertaken and remains on-going with tangata whenua regarding the development of Tauriko West.

Consultation with the Residents of Tauranga

20. In the LTPA consultation document, submitters were asked their preferred option for funding infrastructure to enable housing at Tauriko West. Of the 1,181 submissions received on the LTPA, 600 responded to this question. Of these:

(a) 501 (84%) supported TCC applying for IFF funding to contribute to Tauriko West infrastructure costs; and

(b) 99 (16%) supported not proceeding with the IFF and funding Tauriko West using traditional methods, when possible.

21. Comments from respondents who support using the IFF had the following themes:

(a) Community support a ‘user pays’ or ‘growth pays for growth’ principle with a strong desire to see developers paying their fair share of infrastructure costs.

(b) Housing supply is an urgent and current issue locally and nationally.

(c) Status quo isn’t working and thus the country needs this innovative thinking to enable us to plan and deliver infrastructure for the present and future.

(d) Ensure the use of the levy results in lower house prices to account for a reduction in development contributions and the imposition of an IFF levy.

22. Comments from respondents who did not support using the IFF had the following themes:

(a) Disagreement with prioritising new land supply in Tauranga over supporting existing residents.

(b) Preference for intensification of current urban areas over developing more rural land.

(c) Negative sentiment regarding the possibility of increased traffic congestion as the result of development inn Tauriko West due to the distance between Tauriko West and Tauranga city centre.

(d) The cost of the levy is too high for residents to afford

23. All comments received relating to the Tauriko West IFF proposal have been collated and can be viewed on TCC’s website at https://www.tauranga.govt.nz/council/council-documents/long-term-plans/long-term-plan-2021-31-amendment/long-term-plan-amendment-consultation-responses.

24. TCC agrees with the sentiments shared by the community at paragraph 21. TCC is working with CIP and developers to plan how an IFF may be best implemented at Tauriko West and how this might impact house prices. TCC, the community and the government have a shared priority to see cost savings being passed on to the homeowner.

25. TCC acknowledges the concerns of the community shared at paragraph 18. Points regarding the location of development and its impact on amenity in the city will be investigated and addressed through the City Plan change process.

26. The price point of the levy is subject to ongoing analysis as discussed below.

Consultation with Residents of Tauriko West

27. TCC undertook more intensive consultation with a number of smaller landowners at Tauriko West who are not commercial developers (e.g. lifestyle block owners). This was to recognise that the development and funding of Tauriko West is highly relevant to them and their land going forward.

28. TCC invited all landowners living in or close to the proposed development at Tauriko West to a workshop to explain how IFF could work at Tauriko West. Six landowners of the approximately 30 invited, chose to attend. Of these, about half are likely to be highly impacted by the first stage of development at Tauriko West to which a levy would apply (with the others sitting outside the likely boundaries of the first stage of development).

29. At the workshops TCC set out two possible options of how the IFF levy could apply to these existing properties:

(a) Option A: The levy is charged to existing landowners but remitted entirely. These landowners have the chance to develop their land for residential purposes and a levy would become payable on each additional dwelling added to their property at the time of development. The existing landowners would not pay a levy on their current house even after developing the remainder of their land; or

(b) Option B: The existing landowners are not levied and do not have the opportunity to develop their land as part of the first stage of development.

30. Much of the discussion at these workshops was focussed on the nature of the development itself and how it would impact the access, services and amenity of those living in this area and the value of their land and any consequential ratings impact. These issues are outside the scope of this report but will be addressed by staff through the planning and development process.

31. With the caveat that all of the respondents at the workshops generally prefer the area not to be developed, participants’ views were mixed:

(a) some resident’s preference is to remain rurally zoned and have no intention to develop their land;

(b) some are broadly supportive of having the option to develop although each differed in the time horizon for development. These landowners were broadly supportive of Option A or a variation thereof in that it enabled flexibility of choice for these landowners and enabled them to access some of the potential financial benefits of developing their land;

(d) some landowners shared their concern at the risk to them of being ‘forgotten’ by TCC and did not want their interests to be subsumed by those of the larger developers.

32. One participant has asked for Option A to be extended so that a levy would not be charged on any house developed at that submitter’s property.

33. Participants were keen to understand the detail of Option A. Staff will continue to flesh out this option with these landowners to understand whether it is a viable option supported by the relevant landowners or whether it is more appropriate for these landowners to be excluded from the IFF levy entirely (Option B).

34. TCC and the relevant landowners have agreed to coordinate regular informal meetings to continue engaging as any development progresses and to be kept informed of landowners preferred development objectives.

Large Landowner Feedback

35. There are three large landowners at Tauriko West who are looking to develop their land to support housing and associated services (like community facilities, parks and roads). These are Kainga Ora, the Classic Builders group and the Element IMF group.

36. Kainga Ora chose not to submit through the LTPA consultation process.

37. Classic Builders and Element IMF each submitted on the LTPA. Both submissions expressed broadly positive support for using IFF to finance infrastructure costs but raised a number of concerns or questions regarding the model, as set out below.

Lack of Transparency as to the Nature of the Levy

38. These two submitters have asked TCC not to approve moving forward with this IFF proposal until TCC and developers have greater visibility over:

(a) Specifics of the IFF lending terms (for example the interest rate, the levy amount at the start of the levy period and how much it will increase each year); and

(b) Quantified decrease in development contributions if the IFF proposal is used.

39. TCC agrees it is not possible to fully commit to the IFF proposal until the specifics of the IFF lending terms are known. To provide greater clarity to developers, TCC and CIP have modelled a wide range of scenarios to help illustrate the likely range of the levy. TCC has to continue with the finance process and preparing the levy proposal in order to accurately answer these questions. The recommendations to Council made in this report are to pursue the finance process and drafting the levy proposal to assist further engagement with these parties and to enable Council to make an informed decision.

40. TCC has addressed the likely reduction in local development contributions with developers directly. While it is difficult to assess the exact amount at this stage, it is likely to be a reduction of between $35,000 to $40,000.

41. If Council adopts the recommendations proposed in this report, there will be a subsequent further report to Council for a decision on whether to approve submission of the levy proposal to the Ministry of Housing and Urban Development (HUD). At that time, staff anticipate TCC’s Tauriko West IFF proposal will be significantly further progressed giving greater visibility over the likely finance costs associated with this proposal. Once the finance process is complete, Council will make the final decision taking into account the finance costs and benefits of utilising IFF. Developers and residents of Tauriko West will be given an opportunity to provide feedback to Council on the structure of the levy model (including the amount of funding IFF provides, the starting level of the levy, the period over which it is paid and how much it increases in each year) prior to Council’s decision.

42. TCC will include an analysis of the affordability of the levy from the perspective of the future homeowners at Tauriko West as part of its levy proposal. This work is currently in progress. Early indications are that the levy is likely to be approximately the same price to homeowners as if TCC had utilised development contributions to fund the cost of infrastructure (assuming the collection of development contributions results in a higher sale price for each property). This is discussed further at paragraph 47.

Limit / Cap the Value of the Levy Payable Per Dwelling

43. Submitters have asked Council to investigate the lowest possible levy per household with one submission suggesting Council should not proceed with the IFF proposal if the levy is materially above $1,000 per year.

44. The starting point of any levy is currently uncertain and will be subject to the terms offered by financiers and the funding provided from other sources.

45. Council is working with developers and CIP to determine a levy design which ensures the levy is affordable while supporting an efficient amount of IFF funding. Discussions on this matter are ongoing. At this stage, it seems unlikely a levy of $1,000 per dwelling in year one would support sufficient IFF funding to make a worthwhile contribute to the cost of the required infrastructure. TCC, CIP and developers are committed to working together to build a workable levy design that addresses each party’s objectives.

46. Staff have explored the option of packaging up the Tauriko West debt with the Transport System Plan IFF debt and tendering both proposals to financiers as one larger package. Council has been advised this is not a viable path forward as financiers are likely to price the debt for each proposal differently due to their differing risk profiles. Consequently, packaging the two together is unlikely to be appealing to financiers.

47. TCC have undertaken a basic affordability analysis model which highlights that an annual levy is theoretically more affordable when compared to a traditional development contributions (DC) style charge assuming the DC amount would lift the asking price of the house by increasing costs incurred by developers. We recognise that house prices are set by a range of factors and that all developer cost savings may not be passed on to customers. However TCC expects the developer will be able to offer a house at a lower sale price if an IFF levy is used given the developer has paid a materially smaller development contribution. TCC has engaged an external consultant to provide further advice on this matter and will include this analysis in the future report on the levy proposal for Council decision.

Commercial Risk and Realities for Lenders

48. One submitter has raised two points regarding the risk associated with this model:

(a) Using IFF is relatively untested and so Council, and developers have little concrete evidence as to how the housing market will react to a levy; and

(b) Levy may have a negative impact on buyers’ capacity to borrow to purchase homes at Tauriko West.

49. TCC acknowledges that the model is new and has only been tested once in Auckland (a practically similar financing solution which was implemented through contractual arrangements rather than under the IFF legislation). This does come with risk, some of which sits with the developer. While this is model new, TCC’s financial position demands new approaches be investigated. Developers are investigating novel funding solutions also and each will come with its own level of risk. It is appropriate that developers share in this risk given they are also exposed to the rewards of development. Government has recognised the risk associated with this project and has progressed a significant Infrastructure Accelerator Fund (IAF) support package for Tauriko West in the form of substantial grant funding. That funding de-risks the project for all stakeholders, including developers.

50. TCC has investigated multiple funding sources to support this development. Other than the significant IAF funding package currently under negotiation, TCC is also utilising DCs, significant Waka Kotahi NZTA subsidies towards the cost of transport projects and progressing this IFF proposal. These funding sources are either likely to eventuate or certain. TCC has also investigated whether an interest free loan might be made available by the government. This has not been supported by government at least in part because IFF is available for this purpose.

51. The table below summarises the proposed funding stack for the Tauriko West development. Each funding source has been categorised by likelihood of success. This illustrates both the range of funding sources TCC has investigated, and the high level of government support proposed for this development.

Table 1: Certainty of Funding Sources

Funding source	$M	Likelihood
Development contributions	13	*Certain* – TCC is empowered to collect development contributions
Waka Kotahi NZTA subsidy	86	*Certain* – the Waka Kotahi board has committed to funding a share of the transport infrastructure
Infrastructure Accelerator Fund	75	*Highly likely* – TCC is in the closing stages of negotiating IAF funding
IFF – Transport System Plan	11	*Likely* – subject to the matters set out in the report to Council on 24 May 2022
IFF – Tauriko West	60	*Likely* – subject to the matters set out in this report
Total	245

52. Currently, the total cost estimate for Tauriko West is $245m (albeit in an environment of significant cost rises). Further refinements to the funding sources above will continue over time to ensure the appropriate level of funding is provided.

53. The comparative model used at Milldale in Auckland started at $1,000 per household and escalates by 2.5% annually. We understand the developer has seen no material impact on sales in the levy area as compared to similar areas to date. Furthermore, early discussions with a large residential bank lender suggest the levy will not have a material impact on buyers borrowing capacity. It is likely to be treated as an annual expense similar to rates or body corporate fees.

Number of Households Expected to Contribute

54. In time, Tauriko West may accommodate up to 4,000 dwellings. At this point in time, only the first stage of development (2,000 dwellings) is considered sufficiently certain to plan funding sources. The second stage of the development will progress subject to a number of hurdles including provision of the long-term State Highway 29 solution. The second stage of development is not expected to come online in the next 10 years at a minimum – it may be substantially longer before development is possible. This high degree of uncertainty makes it very difficult to allocate costs to the second stage of the development.

55. If costs were to be allocated to the latter 2,000 dwellings, the following considerations arise:

(a) Water infrastructure: water infrastructure delivered for the first stage of housing will be delivered to support both stage one and two of Tauriko West. The costs relating to the first stage will be borne by the first 2,000 houses through the IFF levy (or another financing mechanism). The costs relating to the second stage are anticipated to be met entirely by an IAF grant fund. In this way, the residents of the first 2,000 houses will not subsidise the costs associated with the second 2,000 homes.

(b) Transport infrastructure: the transport infrastructure to enable the first stage of Tauriko West has been designed to support 2,000 houses only. To develop the second stage, further upgrades will be required to the state highway and local road networks. While the second stage homeowners will not contribute to these enabling transport works, the first stage residents are not expected to contribute to the costs of these further upgrades. The first 2,000 houses are also not funding the full cost of enabling transport networks. Along with significant funding from Waka Kotahi NZTA and IAF, a portion of the cost of these works is proposed to be met by the citywide TSP IFF levy. This will be paid by houses in the both stages of Tauriko West. This is more appropriate for the second stage given the additional works required above to unlock the latter development.

56. Considering the above considerations, and the inherent uncertainty surrounding the second stage of development, staff recommend allocating the net transport costs and waters costs (after the deduction of funding from Waka Kotahi NZTA, IAF, development contributions and the TSP IFF) relating to stage one of development to the first 2,000 houses.

Central Government Funding

57. One submitter encouraged TCC to continue working with central government to secure greater financial support for Tauriko West infrastructure.

58. TCC has been working, and will continue to work, with central government to advance all available funding sources for Tauriko West. Staff note:

(a) Central government is likely to fund approximately two thirds of the total costs of the enabling infrastructure at Tauriko West through the Waka Kotahi NZTA transport subsidy and IAF funding; and

(b) Central government has been explicit that it will not provide any further funding for this project, and it is for developers to contribute the remaining financial component. TCC, government and the residents of Tauranga have communicated a strong desire for developers and those benefiting from the infrastructure to pay their fair share of costs. Development fair share is a condition of the IAF funding.

59. Throughout the development of the Tauriko West levy model TCC has been open to investigating and receiving alternative funding and financing opportunities from developers. None have been forthcoming to date. Staff are aware that developers are continuing to explore options and Council has advised that we would be willing to consider those if they are presented prior to a final decision on IFF being made.

Strategic / Statutory Context

60. The Infrastructure Funding and Financing Act 2020 (the Act) has established a new funding and financing model to enable private capital to support the provision of new infrastructure for housing and urban development. HUD is responsible for administering the Act. In addition, HUD has been appointed to the roles of “recommender” and “monitor” established by the Act. The Act provides opportunities for local councils and developers to partner and deliver infrastructure, free of the council’s debt limits in a way that does not result in charging high upfront costs to developers.

Financial Considerations

61. For context, this report comes to Council alongside a number of other reports regarding TCC’s LTPA and Annual Plan including a report relating to TCC’s second IFF proposal relating to the Transport System Plan.

62. Staff have included the financial consequences of the Tauriko West IFF (and the Transport System Plan IFF) in TCC’s LTPA and Annual Plan financial forecasts. The LTPA has been prepared on the basis that TCC’s preferred option is to progress both IFFs. As such, the proposed financial forecasts incorporate these two projects going ahead and being partially funded using an IFF structure. Currently, the only other funding option under investigation is to use debt on TCC’s balance sheet and funding debt repayment through collection of development contributions from developers at Tauriko West.

63. TCC’s alternative to using IFF is to borrow from its traditional financier (the Local Government Funding Agency or LGFA) and to repay the debt by collecting development contributions as resource consents and building consents are issued at Tauriko West. Using this method requires TCC to hold and service debt on its balance sheet until development has been completed at Tauriko West. Due to TCC’s constrained balance sheet, this option was given limited consideration during the course of 2021 as this debt would have been likely to result in TCC breaching its financial covenants.

64. However, during the course of 2022 TCC has secured a series of alternative funding sources and realistically expects further alternatives to arise in time. As such, TCC’s overall financial position has improved to the point where it is likely TCC could use development contributions to fund development at Tauriko West without breaching its financial covenants.

65. Using IFF to finance development at Tauriko West remains TCC’s preferred option. This is because TCC values retaining balance sheet capacity at prudent levels to enable it to fund possible significant expenditure to mitigate for the effects of climate change, tackle carbon emissions and other projects which benefit the city as a whole.

66. Further, even with both the Tauriko West and Transport System Plan IFFs, TCC has retained a level of debt retirement levies in its LTPA. By using IFF in combination with possible future grants and water reform it makes it more likely TCC will be able to further reduce or remove these levies entirely.

67. The table below illustrates the two different methodologies. The first option – using IFF – matches that set out at Table 1 above. The second option shows the impact of funding development using development contributions in place of IFF.

Table 2: Indicative funding options

Funding source	IFF model ($M)	DC model ($M)
Development contributions	13	73
Waka Kotahi subsidy	86	86
Infrastructure Accelerator Fund	75	75
IFF – Transport System Plan	11	11
IFF – Tauriko West	60	0
Total	245	245

68. There are a number of considerations relevant to TCC funding choices:

(a) Further work is required to understand the financial viability of utilising development contributions and any broader contextual impact. By utilising greater development contributions funding TCC is using up debt capacity on its balance sheet. This requires:

· sufficient balance sheet capacity; and

· willingness to utilise debt capacity to prioritise benefit to Tauriko West relative to investment of other parts of the city.

(b) Council is aware the upcoming 2024 – 2034 LTP will include investment which is currently not reflected in the 2021 – 2031 LTP. Financial capacity will be required to enable these investments to proceed. This includes:

· Better cost estimates for key TSP projects once the business case process has been substantially progressed, (currently early estimates prior to the preferred option being identified have been included)

· Infrastructure to enable the urban development of the Keenan Road / Western Corridor area.

· Community facilities in the eastern corridor. Land acquisition is included in the current LTP for library and aquatic facilities. Facility construction needs to be considered as part of the next LTP.

· Council is currently completing a Strategy Refresh and Action Plan project. This will identify desired outcomes and programmes of work to achieve these outcomes. Investment will be required to give effect to these programmes of work

(c) In order to secure IAF funding, it is essential that developer pay their ‘fair share’ of the costs of development and housing is seen to be delivered as quickly as reasonably possible. TCC understands some form of developer funding will be a pre-condition of TCC securing IAF for this development. We understand the government is willing to explore the use of DCs in place of IFF but one or the other is certain to be necessary (subject to an alternative form of developer funding being identified).

(d) While this proposal is at an earlier stage of development than the Transport System Plan IFF, it is worth noting that the funds received through IFF may have higher underlying costs than what TCC can access through its usual financiers. TCC will clarify the levy of IFF funding available through the levy design.

(e) TCC is currently reviewing its long run cost of capital in order to be in a position to compare the cost of financing which underpins the IFF funding to TCC’s likely costs of capital through traditional TCC financing (from the LGFA). Staff note both the IFF financier and the LGFA will be subject to the same base rate movements over time. The margin charged by each financier and the associated costs of each finance option will be interrogated as part of the choice of whether or not to proceed with IFF.

(f) There is a greater undercollection risk with development contributions, with the shortfall landing with the ratepayer. This is because development contributions by nature require assumptions on interest rates and timing of development. In comparison under the IFF arrangement the IFF funding is known, developers are incentivised to develop quickly and the timing risk is removed.

(g) TCC anticipates the costs incurred in establishing an IFF are likely to be significant. These costs will be recouped over time from levypayers through collection of the levy. TCC anticipates significant costs because this is a complex arrangement that has not previously operated in New Zealand. Consequently, TCC and CIP require significant technical expertise which neither organisation holds ‘in-house’.

Options Analysis

69. There are two options before Council. Option one is to continue to pursue this IFF opportunity while option two is to not pursue further. Below are set out the advantages and disadvantages of each option.

70. In the February Report, Council considered the advantages, risks and current unknowns involved with this proposal. These have not materially changed and so have not been repeated in this report.

71. Option One: Include Tauriko West IFF in the Long-Term Plan. Continue to progress an IFF proposal for Tauriko West and revert to Council once the finance process is complete for a decision to whether to approve submission of a levy proposal to the Ministry of Housing and Urban Development (recommended)

Advantages

Disadvantage

· This option aligns with the overarching sentiment of public feedback while providing an opportunity to address the concerns raised by some submitters

· IFF is the most likely finance solution available to TCC to raise sufficient capital to fund the developer share of infrastructure costs

· Using IFF (subject to another form of developer funding becoming available) is likely to be a condition of TCC being able to access IAF funding

· Continues to demonstrate to all parties that Council is pursuing all available funding sources

· Continuing to pursue this opportunity does not compel TCC to submit its levy proposal to HUD or commit TCC to a finance option

· This option would allow further engagement with landowners in Tauriko West to continue to address remaining concerns and provide time for the larger landowners to suggest alternative funding approaches.

· IFF financing may be fixed for a longer period than traditional TCC finance options which provides certainty of cost for levypayers (but possibly at a higher cost than shorter term debt may achieve). Both options will be subject to movements in base rates.

· There is value to TCC in having the debt off its balance sheet and thereby creating capacity for alternative uses

· Investigating IFF signals to central government that TCC is endeavouring to use all available funding sources which may cast TCC’s other funding applications in a positive light

· There are no disadvantages to continuing to pursue this option.

72. Option Two: Do not include Tauriko West IFF in the LTP and do not progress the Tauriko West IFF proposal. Investigate funding Tauriko West development using development contributions

If Council chooses to pursue development at Tauriko West without IFF, development contributions will be required to supplement the other funding sources (as detailed above).

Advantages

Disadvantage

· This option aligns with the overarching sentiment of public feedback while providing an opportunity to address the concerns raised by some submitters

· Development contributions are a viable method of funding the developer share of infrastructure costs

· Using development contributions is likely to satisfy relevant IAF funding criteria

· Continues to demonstrate to all parties that Council is pursuing all available funding sources

· Continuing to pursue this opportunity does not compel TCC to implement a development contributions model

· Not pursuing IFF may undermine TCC’s alternative funding sources (in particular, IAF)

· Not pursuing IFF will require leveraging TCC’s balance sheet thereby constraining use of debt for other priorities

· Greater risk of undercollection with the shortfall landing with ratepayers.

Staff Recommendations to Council

73. Staff recommend that Council continue to progress the Tauriko West IFF. This will demonstrate to TCC’s stakeholders and partners:

(a) TCC’s support and intention to pursue this IFF proposal;

(b) TCC’s openness to exploring alternative methods of funding in place of IFF, should any become available;

(d) that TCC will make a final decision as to whether or not to submit a levy proposal once the final cost of the IFF proposal and the structure of the levy (including the amount of funding IFF provides, the starting level of the levy, the period over which it is paid and how much it increases in each year) is known.

74. If these recommendations are adopted, Council will maintain momentum in its Tauriko West IFF preparations while also retaining flexibility to assess the competitiveness and appropriateness of the final proposal before submitting to HUD.

Legal Implications / Risks

75. There are risks inherent to both options.

76. The risks identified for option one, were set out in the February Report. The key considerations relevant to the choice between option one and two are:

(a) The assumptions made to date around the cost and terms of finance and the structure of the levy model may not hold true. This may result in a levy which is not acceptable to TCC or its stakeholders.

(b) The landowners at Tauriko West may not be able to come to an agreement as to their preferred funding methodology.

(c) Central government feedback on the IFF may require substantial revisions (outside the parameters consulted on) which are not acceptable to TCC or its stakeholders.

77. Additionally, there is a risk that the levy model is agreed by TCC and developers and approved by central government but is not supported by prospective house buyers. This may be because buyers consider the terms of the levy to be unappealing (for example the price or term of the levy). Therefore, development at Tauriko West may be slower than anticipated or possibly stagnant altogether as developers pursue alternative opportunities. This would result in a high level of investment in infrastructure which does not lead to greater housing delivery.

78. TCC is acting to mitigate these risks by:

(a) Maintaining regular, collaborative conversations with its developer and central government partners

(b) Structuring planning to ensure regular oversight by Council to test the content of the levy proposal as it develops and provide for final Council-approval once the specifics of the levy proposal are known.

79. Option two also comes with risks:

(a) TCC’s projected balance sheet capacity may not materialise (due to changes in funding priorities at central government and/or TCC not securing anticipated funding). A lack of capacity would result in TCC re-examining the IFF opportunity (i.e. option one).

(b) TCC may use up balance sheet capacity by choosing to fund Tauriko West using development contributions thereby restricting its ability to raise debt to meet other objectives like responding to climate change or enabling development in more challenging areas of the city (for example brownfield development with highly fragmented land ownership). (Refer also paragraph 68(b) above).

(c) Using development contributions may result in a reduction in central government support through existing and future government funds.

80. Pursuing option two without a strongly viable alternative funding source is likely to jeopardise TCC’s IAF grant funding. This is likely to undermine the surety of the wider Tauriko West funding package thereby jeopardising the feasibility of the development as a whole.

Consultation / Engagement

81. TCC has undertaken significant consultation with affected communities, as described above.

82. TCC will continue to engage with the residents and landowners at Tauriko West.

83. Further, community consultation will continue regarding development at Tauriko West through the plan change and zoning process which will provide opportunities for the public to submit on Tauriko West development more generally.

Significance

84. 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.

85. 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.

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

87. TCC has undertaken a special consultation process as part of consultation on its LTPA. This has been supplemented with further ongoing, targeted consultation with directly affected landowners. No further consultation is considered to be required.

Next Steps

88. Staff will bring a report to Council upon completion of the competitive finance process once a preferred financier has been identified. This report will detail the material terms of the levy including the amount of the levy, the term of levy payment and the amount the levy will increase each year as well as the views of the directly affected parties in Tauriko West following further consultation and engagement. It is expected staff will report on these matters in early 2023. At that time, Council will make the substantive decision as to whether to proceed with the Tauriko West IFF proposal.

89. The final decision whether any IFF proposal proceeds will ultimately be made by the Minister responsible for the Infrastructure Funding and Financing Act. TCC is working with CIP, to develop a robust IFF levy proposal for consideration by Council. This will be submitted to HUD. If satisfied with TCC’s proposal, HUD will then recommend the proposal to the responsible Minister who may approve or decline the levy proposal after consultation with other Ministers including the Minister of Finance.

Attachments

1. Tauriko West infrastructure programme - A13493898 ⇩

Ordinary Council meeting Agenda

24 May 2022

11.7 Executive Report to the Annual Plan

File Number: A13459723

Author: Kathryn Sharplin, Manager: Finance

James Woodward, Delivery Manager

Authoriser: Paul Davidson, General Manager: Corporate Services

Purpose of the Report

1. The purpose of this report is to seek council approval on amendments made to budgets by the executive since the draft annual plan, and the proposed funding of these investments

Recommendations

That the Council:

(a) Receives the Executive report to the Annual Plan

(b) Approves the amendments to the draft annual plan budget as proposed in this report

(i) a grant to Gordon Spratt Tennis Club of $118,750 as part share of the costs of installing lights, with the loan to be retired over 10 years through the spaces and places activity

(ii) note that previously agreed loan funded opex does not require additional approval

(d) Agrees to transfer rates surplus from 2022 of $7.1m to fund carried forward expenditure and additional costs of interest, revisions to Waka Kotahi revenue and the risks around expenditure budgets

(e) Agrees to the carryforward of loan or reserve-funded expenditure of $4.9m from 2021-22 to cover grants and infrastructure planning work and completion of minor projects.

(f) Agrees to the revised capital programme (for TCC delivery and reimbursement) of $298m after a capital programme adjustment of $55m

(g) Notes the capital figure above does not include $54m of costs for Tauriko West projects that were sitting in the LTP. This cost along with land sales and vested assets brings the total capital programme to $320m.

(h) Delegates to the CE the ability to bring forward projects approved as per the LTPA 2021-31 to manage deliverability across the capital programme subject to consistency with borrowing limits and the borrowing resolution.

(i) Notes, only $250K of the $750 budget is allocated to 2023. The remainder including funding external funding is recommended to be budgeted in 2024.

Executive Summary

2. Since the adoption of the draft annual plan for consultation, there have been further updates to operational revenue and expenditure and the cost and timing of capital projects. Significant changes requiring council decision have been summarised below. All these items have been included in the draft financials presented in the attached report The bulk of the changes have been minor, have expenditure offsets, or are otherwise neutral in terms of rates funding requirement.

3. Overall, the financial impact of these executive changes is a net increase in total expenditure of $21m and a reduction in operating revenue of $0.2m. (This excludes finance revenue which is discussed under net interest expense in this report). There has been no increase in the level of rates consulted on in the draft as most of this expenditure and funding is either carried forward from 2022, has utilised loan or reserve funding, or used general rates surplus from 2022 which has been carried through to offset general rates requirement in 2023. The cost and revenue movements are summarised below:

4. Additional expenditure budgeted in 2022 now carried forward ($6m) as follows:

(i) Expenditure of $4m on grants to other organisations (community partnerships BVL, and Bay Oval) carried forward to be completed in 2022 (funded by loan and reserves)

(ii) Infrastructure consultancy e.g., planning carried forward of $1m (funded by loan)

(iii) City events budget carried forward from 2022 including CBD activation $0.45m

(iv) Mount Maunganui Parking Management Plan of $0.5m (funded by loan in parking activity)

(v) Various minor ongoing operational projects ($0.1m funded by carried forward rates).

(b) Reduction in revenue ($0.2m)

(i) Increase in laboratory revenue to reflect higher workload $0.5m (additional user fee revenue offsets additional costs).

(ii) Increase in property lease revenue of $0.8m (partially offsets operating expenditure Elder Housing and Marine Precinct).

(iii) The above increases in user fee revenue are offset by reduction in operational subsidy revenue by $1.5m to reflect agreements with Waka Kotahi in the 2022-23 year. Note, TCC continues to budget an additional $1m for transportation business unit subsidy from Waka Kotahi. However, we are aware that this is not currently approved by Waka Kotahi for 2023, with its funds already committed. If this subsidy is not received next year, and expenditure is to budget, at year end we would seek to loan fund the amount of funding shortfall up to $1m. We will continue to seek full subsidy on business unit costs for TCC.

(i) Additional net employee costs across the business of $3.5m to meet workload demands including:

(1) bringing walkways maintenance in house,

(2) infrastructure planning,

(3) corporate services support and

(4) capital programme delivery including significant transportation delivery requirements (funded from offsetting opex reduction, increased salary savings budgets and capitalisation, part of 2022 general rates surplus)

(ii) Additional $1.8m for three waters reform transitional work.

(iii) Additional $1m software licences for the new Watercare water asset management system.

(iv) Marine precinct removal of vessels of $0.5m and increased dredging $0.6m (funded by increase in marine activity borrowing).

(v) Additional BVL renewals grant $1.3m (reserve funded).

(vi) Increased net interest costs on borrowing primarily driven by higher interest rates $4.1m (funded through rates risk reserve ($0.7m) and rates surplus from interest in 2022 ($0.5m) and the balance applying part of 2022 general rates surplus ($3m).

(vii) Increased electricity costs ($2.1m) across the business as a result of new hedging arrangements in September replacing favourable arrangements for last three years (rates portion $0.8m applying part of 2022 gen surplus).

(viii) Various minor additional expenditure offset by reductions across the business.

5. The TCC delivered capital programme for next year is $298m which is an overall net decrease of $6m from the draft annual plan. In addition to this there is a further budget for tauriko West projects to be delivered and then assets owned by Waka Kotahi but for which TCC is required to contribute funding. There are also vested assets and land sales bringing the total capital programme to $321m. The capital programme adjustment for the year is $55m reflecting the amount budgeted to be delayed across the programme. There have not been widespread cost adjustments from the draft budget affecting 2023. The above figures exclude proposals from issues and options papers which could add up to $19m additional budget.

6. The 2023 movements can be summarised as:

(a) New projects of $5.1m

(i) Links Avenue roading renewals $1.5m

(ii) Capital investment for TCC delivered Spaces & Places Maintenance $1.7m

(iii) Minor projects in Waters and Marine Facilities activities $1.1m

(iv) Lighting the city $250K

(v) Mount Toilet Installations $500K

(b) Removal of capital expenditure relating to delivery of western corridor transport improvements now to be provided by Waka Kotahi with TCC providing funding for this work (shown as a capital payment from TCC of $54.0m). These projects are

(i) TSP009 – Tauriko West – Northern Access

(ii) TSP009 – Cambridge Rd intersection Upgrade

(iii) TSP009 – Intersection Kaweroa Dr & SH29

(iv) TSP009 – Belk Road Roundabout – Land Purchase

(c) Reduction of the Capital Delivery Adjustments to $55m (from $87.3m in draft). – This capital delivery adjustment reduces the total value of the capital programme to reflect likely delays across the total of all budgeted projects caused by factors such as consenting requirements, unforeseen ground conditions and weather impacts that will affect the timing of projects. This adjustment means that interest costs and total debt are lower in the budget than if the full programme is funded.

(d) The remaining movements are the phasing of projects, including carryforwards from 2022 and movements from 2023 into 2024, this is a net decrease in 2023 of $9.3m

Background

Operational Budget Changes

7. Since the adoption of the draft annual plan for consultation there have been further updates to operational revenue and expenditure. Overall, the financial impact of these executive changes is a net increase in total operating expenditure of $20m. and a reduction in operating revenue of $0.2m. There is no additional rates impact for 2022-23 as the changes have been funded from a combination of carried forward funding, are loan or activity cash balance funded or are offset by revenue or expenditure reductions.

8. The key changes and their funding were summarised in the executive summary above with further information provided below by activity.

Infrastructure Services

Transportation Budget Adjustments

9. The transportation budgets reflect increasing deliverables in both capital and operational expenditure. There have been some delays in delivery across transportation and infrastructure planning activities which are reflected in a forecast rates surplus in 2022 which has been transferred across to fund the work being undertaken in 2022-23. Additional employee expenditure has been budgeted to be fully offset in 2023 by other vacancies (budgeted as salary savings) and by increased capitalisation of salaries. After 2023 the intention is to seek further NZTA reimbursement of business unit costs, although there is likely to be an increase in total employee costs over time in this activity. More detail is provided as Attachment 1 to this report.

Three waters

10. Additional $1.8m for three waters reform transitional work. This work is expected to be reimbursed by central government as part of the reform. However, it is currently budgeted to be funded from waters activities balances. This conservative approach is because there has been no agreement at this stage for the transition unit to fund transition costs.

11. Additional $1m software licences for the new Watercare water asset management system, which will be funded through the waters activities’ balances in 2023. Over time this operating cost will form part of the total operating costs covered by targeted rates for wastewater and water (including by meter charges).

Electricity

12. Additional electricity costs ($2.1m) will impact across the organisation next year as a result of new tendered hedging arrangements being put in place in September replacing the existing arrangements. The new kwh rate is expected to be much higher than the rates obtained during the last three-year contract. The largest electricity users are transportation, water supply and wastewater. The waters costs are currently reflected in the costs covered by the targeted rates, while transportation costs have been offset by savings from installation of LED lights which reduce total kwh used for streetlighting.

Community Services

Heritage Collection

13. This year has seen the introduction of a programme to increase community connection with the heritage collection. This programme has proved hugely successful and is proposed to be continued through 2022-23 to continue education, exhibition display and marketing of the digital collection. An additional $100,000 per annum has been included in the budget to continue this work for the next two years in preparation for the museum development.

Sculpture Trust

14. A budget allocation of $136,000 has been set aside for public art, to include the establishment of a sculpture trust. A decision as to how this funding will be allocated will be made following the confirmation of the new public art framework. Staff are working with the Park to Park trust, an independent trust seeking to establish a public sculpture trail connecting Kulim and Fergusson Parks. The trust is at an early stage of development and staff have been providing guidance on the commissioning process for public art, including curation, project management, interpretation and ongoing maintenance. This expenditure utilises Project Tauranga reserve funds.

Walkways Maintenance

15. As the Walkways Maintenance and Roadside Accessways Mowing contracts came up for retendering this year, a review has been undertaken of the costs and benefits of contracting for these services into the future or TCC directly delivering these services. The review concluded internal delivery was preferred and processes have commenced to begin delivery of services directly by TCC for 2022-23. This has resulted in an amendment of budgets from operating costs (contract payments) to direct salary costs and other operating expenditure. Net rates impact in the first year is $220,000 including the transition costs to bring functions in-house. There has been capital expenditure of $1m to provide for vehicles, plant, and construction of a new depot ($1.7m).

Gordon Spratt Court Lights

16. In the LTP, Council agreed to deliver tennis court lights at Gordon Spratt reserve as a capital project. It has instead been proposed that Council will provide grant funding to the Gordon Spratt Tennis Club of $118,750 as a 25% contribution to funding of lights. This proposed loan funded grant replaces a previous capital project. This loan would be retired through the activity over 10 years.

Bay Venues Renewals and Grant to be Completed in 2022-23

17. Renewals programmed for 2021-22 have not been completed and are proposed to be undertaken in 2022-23. The grant funding budgeted for this work ($1.65m) will be carried forward to next year. A further $1.3m of renewals has been requested by BVL for 2023. This expenditure is funded from the BVL renewals reserve held by TCC.

Grants for Bay Oval and Community Partnerships

18. Grants to support Bay Oval capital construction of pavilion are being carried forward from 2022. There is a separate issues and options report regarding additional funding for the pavilion and other investments.

19. Grants for Community partnerships (papakainga and community housing $900,000) are being carried forward to be provided in 2022-23.

City Events Budgets

20. Due to Covid challenges some events were deferred or downsized and remaining budget from 2022 proposed to transfer to 2022-23 to deliver these key initiatives including CBD activation as part of the civic precinct development ($440,000).

Golf Road Reserve Building

21. Through the development of the Community Centres Strategic Plan and our assessment of options for the best uses of Golf Road Reserve, we have concluded that refurbishing the old bowling club to enable it to be used as a community meeting space is a good outcome for the community in the area and a cost-effective way of providing much needed additional space quickly. We are finalising our assessment of the works required, but our initial, conservative cost assessment is that $388k will be required to bring the building into sustainable use for at least the next 10-15 years. This will require an additional $161k on top of the existing budget in the 2023 FY.

Lighting the City

22. Building on the success of the Strand Christmas lights, staff are working with lighting designer Angus Muir to explore options for installations that would light up the city on a permanent basis. A feasibility study is currently underway, investigating options for lighting the City Centre using LED lights, which use half the energy of standard lighting and last five to seven times longer. The total capital cost for permanent lighting is estimated at $750k and it is assumed this project will attract $250k external grant funding. The budget has been phased at this stage with $250k in 2022-23 and the remainder recommended to be included in 2023-24 but with delegation to the CE to spend the full $750k budget in 2023 should progress on this initiative allow this.

23. The opex implications of this project are estimated at an average of $120k/annum from 2024 FY onwards to cover power, maintenance, programming costs, depreciation and financing costs. The outcome would see fixtures and fittings installed to enable year-round lighting, which could be themed for special events.

Mount Maunganui Toilets

24. Additional toilets are proposed for Mount Maunganui after toilets were vandalised at Coronation Park. A budget has been included for toilet replacement and upgrade. In 2022-23 $500k is included to commence planning and design with a further funding allocation required for 2024 to complete construction.

Marine Precinct - Demolition of vessels at bridge wharf and dredging

25. Budget in the marine precinct Activity has been included for the demolition of 2 abandoned vessels currently at Bridge wharf. The costs will be split with BOP Regional Council. The TCC share is $565k, which includes $176k of lost revenue and in-house costs. Additional dredging costs $0.6m have also been included in the budgets along with some adjustments to lease revenue. The work is expected to be completed early in 2022-23.

Corporate Services

Interest Adjustments

26. In the last 6 months there have been significant increases in interest rates with further upside risk continuing. In the draft annual plan, average interest rates for 2022-23 were calculated at 3.14%. Based on current market this has been adjusted to 3.55%, which has a $3m impact on external interest costs. There have also been adjustments to the mix and timing of the capital programme and offsetting subsidies, and a higher opening balance, which has further increased interest costs.

27. At the end of 2021 financial year, the surplus interest budget was transferred to a reserve to help to manage this uncertainty. There is also a forecast surplus for 2022 of $450,000. These surpluses will reduce the rates impact of the interest rate movement by $1.2m. Part of the stormwater operational surplus is also proposed to offset the remaining additional interest costs.

Additional Employee Costs

28. Additional net employee costs across the business of $3.5m has been included to meet workload challenges for delivery of services, including transportation capital delivery, bringing walkways maintenance in house, infrastructure planning, operational projects, corporate services (cybersecurity, human resources, legal, procurement, finance), and capital programme and funding delivery. The above figure is after capitalisation. The $3.5m increase has been offset by reduction in other operating costs, and funding carried forward from 2022. There is a risk that the additional resource costs, though funded in 2022-23, may lead to additional rates funding requirement in 2024. The extent of flow on cost will depend on the amount of vacant positions and churn (salary savings), the extent of capitalisation of salaries and Waka Kotahi and other external funding.

Review of Remuneration and Budgets

29. This years’ annual salary review aims to ensure TCC continues to attract and retain a workforce capable of delivering to TCC’s Strategic Plan. The labour market is becoming increasingly tight, and with unemployment rates predicted to go to 3% or lower with pressure on wage inflation and supply of staff. Ensuring that the levels of remuneration at TCC are appropriate is a key intervention in managing the risk of turnover and inability to attract the staff necessary to deliver to the LTP.

30. The rise in wage inflation creates a risk for TCC that our budget for salary movement is now unlikely to be able to deliver all desired outcomes of the remuneration review. Modelling work is currently underway to understand the implications and options and it is proposed that any movement in salary adjustments above budget would be managed through salary savings. This would potentially impact funding requirements in 2024.

TCC Graduate programme

31. TCC are working with Priority One and University of Waikato to establish a formal graduate programme. Priority One’s overall aim of this programme is to attract students to Tauranga as a study destination by offering study programmes that have a strong connection to business. The benefits to TCC being one of the businesses involved include exposure of TCC within the University as a potential future employer, having students working within TCC as a part of their study, access to the latest thinking, and the future ability to work with the University on the shape of programmes of study. The graduate programme is aimed to commence in the 2022-23 financial year in one discipline and will build in the following years. It is estimated that the cost of the programme in 2022/23 will be $50k which has been included in the draft budget. Additional budget required for future years will be brought to Council for approval.

Staff Training

32. In the draft annual plan, $520,000 of 2021- 2022 training budgets not spent due to impacts of covid on training opportunities was transferred to 2022-23. This will effectively fund this work using rates surplus at June 2022.

Capital Delivery Analysis

33. The capital programme consulted with the community was $303m (excluding land sales and vested assets). Since the draft further review has led to a revised delivery programme of $298m. The full capital programme including land sales vested assets and payment to Waka Kotahi for Tauriko West projects is $321m as shown in Table 1 below.

Capex	Project Delivery Category	Current 2022/23 Annual Plan	Draft 2022/23 Annual Plan	Variance to Draft Annual Plan
Capex	TCC Delivered	$278.3m	$251.1m	$27.2m
Capex	Land Purchase	$8.3m	$10.1m	($1.8m)
Capex	Developer Reimbursement	$7.2m	$3.2m	$4.0m
Capex	External Delivery	$4.5m	$38.7m	($34.2m)
Total TCC Delivered and Reimbursed Capex		$298.4m	$303.2m	($4.8m)
Other	External Delivery (Waka Kotahi)	$54.0m		$54.0m
Other	Land Sales & Vested	($31.5m)	$18.7m	($50.2m)
Total Other (Land Sales, Vested & Payments to Waka Kotahi for Tauriko West)		$22.5m	$18.7m	$3.8m
Total Capex and Other		$320.8m	$321.9m	($1.0m)

34. The key areas of investment are summarised below.

Further changes not captured

35. Through the Issue & Option papers there are a number of recommendations impacting the programme which are additional to the current 2022/23 capex of $298m. This would increase the programme a further $19m resulting in a capital programme next year of $317m

(a) Active Reserves $12.4m

(b) City Centre Waterfront Development $9.4m

(d) Sustainability Projects ($250k)

(e) Te Maunga Redevelopment ($nil additional budget in 2023)

Delivery considerations

36. A 3% inflation adjustment was made to the 2023 capital projects consistent with the LTP assumption. Based on inflationary movements to date and further supply chain risks this assumption is likely to be too low with risk of overspend on some projects.

37. There is still considerable pressure on the supply chain across all project lifecycle phases such as cost increases for project materials and longer lead times for materials both in NZ and Globally, this is expected to continue for the foreseeable future. Procurement processes may take longer to secure resources to deliver both design and construction phases, this is partially offset by the capital delivery adjustment.

38. Historic use of maintenance contractors to deliver lower value capital items are not as likely in the short/medium term as these contractors are at the limit to manage current operational requirements (i.e. Downers Waters Contract). This is partially mitigated by panels that can be utilised for the lower value projects, but there is still risk for projects in attracting suitable suppliers for projects under $1m.

39. Internal resourcing to deliver

(a) Resourcing within the business remains a challenge, resourcing levels have increased during 2022 but sourcing the optimal levels of recruitment is still challenging with a scarcity of available resource across the industry. Lack of internal resourcing in the “doing” area is a main driver of projects being delayed. As projects were reviewed there were still projects budgeted for next year that did not have a project manager allocated yet.

40. Bring forward delegation for all projects

(a) It is recommended that the current delegation for the CE to bring forward projects in the LTP is extended to all projects, subject to LTP approved budget, all funding in place and within borrowing limits. This would streamline the management of projects and make it a simple but still robust process for the business.

41. The budgets are included based on receiving external funding for a number of projects across civic, transportation and spaces and places. If external funding for projects is not realised, options for these projects will be brought back to council.

Strategic / Statutory Context

42. This executive report forms part of the material provided to Council for deliberations on the annual plan

Options Analysis

43. These budget adjustments have been incorporated in the draft prior to deliberations, but items can be removed at the request of council.

Financial Considerations

44. The impacts on financials are contained in the Long Term Plan Amendment/Annual Plan 2022/23 Deliberations Report on this agenda.

Legal Implications / Risks

45. There are no specific risks arising from this deliberations report.

Consultation / Engagement

46. No further consultation is proposed as this report forms part of the annual plan process.

Significance

47. 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.

48. 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 .

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

ENGAGEMENT

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

Next Steps

51. Include these items as part of the annual plan budget.

Attachments

1. Attachment 1. Transport Team Capital Delivery Change Proposal - A13496032 ⇩


AGENDA Ordinary Council meeting Tuesday, 24 May 2022
I hereby give notice that an Ordinary Meeting of Council will be held on:
Date:	Tuesday, 24 May 2022
Time:	9am
Location:	Meeting Room 1 Ground Floor 306 Cameron Road Tauranga
Please note that this meeting will be livestreamed and the recording will be publicly available on Tauranga City Council's website: www.tauranga.govt.nz.
Marty Grenfell Chief Executive

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

Overall number of event attendees	Option 1 marbles	Option 2 marbles
372	191	12

	Reach	Reactions	Link clicks	Comments	Shares
Non-promoted posts	181,845	815	10,136	746	61
Paid ads	164,974	398	1488	252	39
Total	346,819	1213	11624	998	100

Topic	Post date	Reach	Link clicks	Comments							Total reactions
Pre-launch video: commissioners	24/03/2022	21,367	2520	224	88	14	42	1	2	1	148
Launch video: Tauranga, it's time.	25/03/2022	21,219	1154	94	53	9	13	0	0	0	75
Launch video	1/04/2022	5038	679	91	54	8	3	1	1	11	78
Launch video - paid	1/04/2022	68,848	730	100	171	9	37	1	0	2	220
Peri Kohu video	1/04/2022	2689	275	29	39	8	2	0	1	1	51
Vox pop 1 – Business orientated	1/04/2022	3418	385	10	28	4	1	0	0	0	33
Question post 1: let’s get the heart of our city pumping	11/04/2022	6265	267	20	52	6	1	0	0	0	59
LTPA targeted paid adverts - Young professionals	14/04/2022	31,760	158	10	9	0	2	0	0	0	11
LTPA targeted paid adverts - Youth	15/04/2022	34,577	53	3	13	0	0	0	0	0	13
LTPA targeted paid adverts - Families	15/04/2022	3334	6	0	0	0	0	0	0	0	0
Vox pop 2 – Community orientated	16/04/2022	5416	680	41	35	1	8	1	0	0	45
Vox pop 3 – Business – orientated	19/04/2022	1903	94	2	15	3	0	0	0	0	18
Vox pop 4 – Community – orientated	21/04/2022	2328	202	19	9	0	1	0	0	0	10
Jordan Hansen – architect spotlight	22/04/2022	21,148	899	43	130	41	1	2	0	0	174
Vox pop 5 – Community – orientated	23/04/2022	2997	340	30	25	0	4	0	0	0	29
	Total	232,307	8442	716	721	103	115	6	4	15	964

· To ensure the effective and efficient governance of the City

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

· Oversee the work of all committees and subcommittees.

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

Agreement the city centre needs to be revitalised	In general people agreed the city centre needs to be revitalised. There were lots of comparisons to European cities and lots of really great feedback and ideas for how people would improve the CBD and what life would be like once it was complete.
Get on and do it	Quite a few people commented that we’ve been through this exercise lots of times already and nothing happens. From these people there was a general vibe of just get on and do it before prices rise again. Comments included the need to be bold and to do it once and do it properly.
Lack of trust in council to deliver	Some people referenced previous failed projects and voiced scepticism that the council would have the capability to successfully pull off a project of this scale. Some were sceptical that the proposal would make a difference and wanted to see more of a business case around how the proposal would bring investment into the city centre. These people weren’t against the intent of the proposal, just concerned about successful delivery of the project.
Security of funding	There were some questions about security of funding. People were concerned that funding for Option 1 wasn’t guaranteed and that by looking for investment we could lose our autonomy. Concerns were raised from some that accepting the Three Waters Reform Better Off Funding could tie us into the reform programme.
Staying relevant	Some people cautioned that the concept of a vibrant CBD may be outdated. People are choosing to shop online or visit malls and that perhaps we should be adapting too and investing in the suburbs rather than in the central city.
Money better spent on other things	Some people saw the proposal as extravagant and thought council should focus on transport and parking first. Comments made included how will people get to the city centre and where will they park? Others asked what we were doing to make the city better to live in and were keen to see more investment in air pollution, climate change, better roads and services.
The bigger picture	There was a lot of interest in the holistic view of the city and how everything would be interconnected.
Heritage and culture	Some were opposed to the museum on the grounds that we’d already held a referendum. Others were very interested in understanding more about the city’s past and sharing those stories with visitors and their children and grandchildren.
Ensuring a wide range of views .	Some people noted that there has been an influx of professionals with young children to Tauranga and they wanted to know how we would capture those views and the views of younger people.
Democracy	There were quite a few comments for and against the return to democracy. These more political comments tended to be self-moderated by the community.

It is still debt	Some wanted clarification on the difference between this and any other kind of debt, i.e it feels like getting another credit card from a different bank.
Paying more in the long run	There were some questions around how this looked in the longer term, i.e. is it like a longer, fixed term mortgage where we pay more in the long run?
Development contributions	Some comments related to the fairness for ratepayers to underwrite development, i.e. why are they not paid by developers upfront?
Solving one problem and causing another	There was quite a bit of conversation about how adding more housing adds to congestion by bringing more people to Tauranga.
Passenger rail	The idea of passenger rail was raised quite a few times.

#	Option	%	Count
1	(Preferred option) Continue investing in education, awareness and supporting community networks to ensure more isolated or vulnerable members of the community are supported.	78%	493
2	Implement a tsunami siren project, at a total cost of $3.9 million in capital expenditure and $209 000 per annum in ongoing operating expenditure.	22%	133
	Total	100%	626