Agenda of Ordinary Council meeting - Monday, 24 July 2023

UNCONFIRMED Ordinary Council meeting minutes

3 July 2023

MINUTES

Ordinary Council meeting

Monday, 3 July 2023

Order of Business

1 Opening karakia. 3

2 Apologies. 3

3 Public forum.. 3

4 Acceptance of late items. 3

5 Confidential business to be transferred into the open. 3

6 Change to the order of business. 3

7 Confirmation of minutes. 3

7.1 Minutes of the Council meeting held on 19 June 2023. 3

8 Declaration of conflicts of interest 4

9 Deputations, presentations, petitions. 4

Nil

10 Recommendations from other committees. 4

Nil

11 Business. 4

11.1 Council-Controlled Organisation Board Remuneration Review, June 2023. 4

11.2 Traffic & Parking Bylaw Amendment No.45. 5

11.3 Transport System Plan Transport System Operating Framework (TSOF)v2 Endorsement 6

12 Discussion of late items. 8

13 Public excluded session. 8

13.1 Public Excluded Minutes of the Council meeting held on 19 June 2023. 9

13.2 Appointment of Additional Urban Design Panel Members. 9

13.3 Progression of the Dam 5 and Wetland 5 stormwater project 9

13.4 Construction of Car Parks 160-176 Devonport Road. 10

14 Closing karakia. 10

MINUTES OF Tauranga City Council

Ordinary Council meeting

HELD AT THE Bay of Plenty Regional Council Chambers, Regional House, 1 Elizabeth Street, Tauranga

ON Monday, 3 July 2023 AT 9.30am

PRESENT: Commission Chair Anne Tolley, Commissioner Shadrach Rolleston (via Zoom), Commissioner Stephen Selwood, Commissioner Bill Wasley

IN ATTENDANCE: Marty Grenfell (Chief Executive), Paul Davidson (Chief Financial Officer), Manager: Strategy, Growth & Governance), Christine Jones (General Manager, Strategy, Growth and Governance), Anne Blakeway (Manager: City Partnerships), Brendan Bisley (Director of Transport), Coral Hair (Manager: Democracy & Governance Services), Anahera Dinsdale (Governance Advisor), Janie Storey (Governance Advisor)

1 Opening karakia

Anahera Dinsdale 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

7.1 Minutes of the Council meeting held on 19 June 2023

Resolution CO11/23/1

Moved: Commissioner Bill Wasley

Seconded: Commissioner Shadrach Rolleston

That the minutes of the Council meeting held on 19 June 2023 be confirmed as a true and correct record.

Carried

8 Declaration of conflicts of interest

Nil

9 Deputations, presentations, petitions

Nil

10 Recommendations from other committees

Nil

11 Business

11.1 Council-Controlled Organisation Board Remuneration Review, June 2023

Staff Anne Blakeway, Manager: City Partnerships

Key points

· Anne Blakeway noted that she had an interest in this item as her husband was a Member of the Tourism Bay of Plenty Board.

· Figures in recommendations (f), (g) and (h) were incorrect and had been amended in the resolution.

In response to questions

· The methodology used for the schedule was the same framework that had been used in the past.

· The remuneration was reviewed every three years in line with the Long Term Plan cycle.

· No remuneration was allocated to the Te Manawataki o Te Papa Charitable Trustees.

Resolution CO11/23/2

Moved: Commissioner Bill Wasley

Seconded: Commissioner Stephen Selwood

That the Council:

(a) Receives the report "Council-Controlled Organisation Board Remuneration Review, June 2023".

(b) Agrees to increase the remuneration for trustees of the Tauranga Art Gallery, with the new base fee set at $7,500 per annum.

(d) Agrees to increase the remuneration for the Tauranga Art Gallery Trust Deputy Chair to $9,375 per annum.

(e) Agrees to increase the funding grant for Tauranga Art Gallery by $25,625 from the 2023-24 financial year onwards, to be funded through the existing City Partnerships council-controlled organisation budget (effective from 1 July 2023). Going forwards, this increase will be included in the Long-term Plan 2024-2034.

(f) Agrees to increase the remuneration for trustees of Tourism Bay of Plenty, with the new base fee set at $13,500 per annum.

(g) Agrees to increase the remuneration for the Tourism Bay of Plenty Chair to $27,000 per annum.

(h) Agrees to increase the remuneration for the Tourism Bay of Plenty Deputy Chair to $16,875 per annum.

(i) Noting that Western Bay of Plenty District Council have agreed that $10,000 of the increased total cost of trustee remuneration of $10,875 will be funded out of their opex budget and the remaining $875 would come from Council’s existing City Partnerships council-controlled organisation budget (effective from 1 July 2023). Going forwards, this increase will be included in the Long-term Plan 2024-2034.

(j) Agrees to increase the remuneration for the directors of Bay Venues Limited, with the new base fee set at $35,000 per annum.

(k) Agrees to increase the remuneration for the Bay Venues Limited Chair to $70,000 per annum.

(l) Agrees to increase the remuneration for the Bay Venues Limited Deputy Chair to $43,750 per annum.

(m) Agrees that the increased total cost of director remuneration of $14,500 will be funded out of Bay Venues Limited’s operational budgets, to be included in the Long-term Plan 2024-2034.

(n) Agrees that the remuneration for the directors of Te Manawataki o Te Papa Limited is currently, and remains set at, $40,000 per annum.

(o) Agrees that the remuneration for the Chair of Te Manawataki o Te Papa Limited is currently, and remains set at, $80,000 per annum.

Carried

11.2 Traffic & Parking Bylaw Amendment No.45

Staff Nic Johansson, General Manager: Infrastructure Services

Brendon Bisley, Director of Transport

Key points

· The amendment related to changes to loading spaces, taxi stands and parking spaces due to construction.

· The restriction was only for the period of the construction and was then revoked at the end of the works.

In response to questions

· The area included three construction sites which were being built to the boundary of their sites.

· Staff prioritised which corridors could take a parking reduction and which must stay open.

· Goods vehicles coming into the sites needed somewhere to pull up and a spot was required for the crane to be located.

· Robust conversations had been held with the development site mangers to get the best compromise between all of the sites. Their building plans had been structured around the use of the carparks.

· The task force set up to co-ordinate the developments for the city centre were linked in with these proposals.

· Full payment of the per day rate was received for each carpark being used for the duration of the time.

· Completion dates had been provided with corridor access requests for each of the site applications which could be added to the amendments to the Traffic and Parking Bylaw.

Discussion points raised

· The inclusion of maps was requested in future reports of this nature.

· Members considered that as these were valuable parking spaces within the City Centre, a completion date needed to be added.

Resolution CO11/23/3

Moved: Commissioner Bill Wasley

Seconded: Commissioner Stephen Selwood

That the Council:

(a) Receives the report "Traffic & Parking Bylaw Amendment No.45".

(b) Adopts the proposed amendments to the Traffic and Parking Bylaw (2012) Attachments as per Appendix A, relating to minor changes for general safety, operational or amenity purposes, to become effective on or after 4 July 2023 subject to appropriate signs and road markings being implemented.

(c) Adds a maximum date for the changes to loading spaces, taxi stands and parking spaces in the amendments to the Traffic and Parking Bylaw.

Carried

11.3 Transport System Plan Transport System Operating Framework (TSOF)v2 Endorsement

Staff Nic Johansson, General Manager: Infrastructure Services

Brendan Bisley, Director of Transport

External Shaun Jones – Programme Manager Transport Systems Plan

Refer to the presentation as included in the agenda.

Key points

· The programme started with the Urban Form and Transport Initiative (UFTI), which was the future state of city growth areas, connected centres concepts and transport. Under that sat the transport system operating framework (TSOF) that would deliver on the outcomes of UFTI.

· The transport model that underpinned that outlined what the level of service was today, the desired level of service of all modes into the future and created a gap analysis to generate the projects needed to implement and meet the future state.

· The timing was critical with the development of the Long Term Plan (LTP) and also the development of the new Regional Land Transport Plan (RLTP) which was to be locked in by March 2024.

· This was an update of the Transport System Plan (TSP) which had been provided two years ago.

· Our Journey was the tag line and purpose statements and key messages included connecting with sustainable, safe and smart journeys and was a collaborative approach with nine partners.

· Delivers on strategic outcomes with strategic alignment with SmartGrowth, UFTI and the TSP.

· The Governance of TSP included an Independent Chair, Dean Kimpton, and the tactical delivery of the outcomes with a governance group, partner management group and then the partners delivering on the infrastructure outcomes.

· Key pressures noted included the key policy changes, constraints enabling growth affecting land supply costs and housing affordability, affordability due to construction inflation, funding availability, scope changes and cost increases.

· Process included refreshed investment objectives, reviewed the programme so it was fit for purpose, refreshed modelling costs, mapping benefits and was packaged into the updated programme to be delivered in draft to each of the councils for use in their LTPs and to develop the regional plan. It would also be used by Waka Kotahi to develop their state highway improvement plan and vehicle kilometres travelled (VKT) reduction programme.

· Objectives included access, safety, sustainable urban growth, and emissions.

· It was a 30 year $7.9B investment programme with 84 prioritised projects.

· The ten-year plan was $2.8B, plus the public transport (PT) services investment programme and 13 committed projects of $1.5B.

· The model brought in existing and future land use patterns and the programme consists of four key tables including committed projects, complementary projects, strategy, policy and studies and a proposed list of activities to be delivered and the list of plans to be collaborated with.

· Next steps included updating the TSP Executive Summary, endorsement from the governance group and combined councils’ endorsements to feed into the funding process underway.

In response to questions

· Concern was raised as to what extent the priorities of the subregion were reflected strategically and whether the development of the western corridor (SH29) was included.

· While the process may be strong there did not seem to be alignment with the urban growth strategy which brought the prioritisation into question and it was queried whether sufficient weighting had been made of that change of direction, albeit on an informal basis, until it was embedded in the SmartGrowth Strategy.

· Mr Jones noted that the western corridor had been the subject of ongoing conversations and they were consistently testing for future proofing in an informal way, however the TSP was a tactical delivery partnership with signals taken from UFTI and SmartGrowth. When a formal decision was received from SmartGrowth around the western corridor it would be a priority and the TSP would be updated at that point. The same applied with the road pricing strategies and other initiatives in the process of being worked through. They were aware of them and looked at the implications from a risk perspective, but they could not be brought into the programme at this stage.

· The TSP was initiated by Tauranga City Council to fill the gap because of the government policy statement changes and the urgent need for a programme that met government requirements to get funding. Other partners came on board to make it a total network, including state highways. For Waka Kotahi this formed part of their national planning and funding programme, as these were inter-regional routes, however these networks also provided a local roading function. It was an ongoing journey and the points raised would be picked up and incorporated into the TSP.

· The timeline for the Council was that the draft LTP budgets needed to be completed by mid-August, with the LTP consultation document adopted to go to audit on 11 September 2023.

· In response to a query on whether public transport services required land to be purchased and whether infrastructure costs would be included with the delivery of the service, it was noted that the public transport business case was being worked through at present with early indications being that this would be more of a through service. The working group had considered each of the bus facilities individually and the assumptions around the form and function of each hub location were used as a basis for the cost estimate. Detailed information could be provided for the workshop.

Discussion points raised

· Appreciation was noted for the work done to date on the plan as it provided a good base for conversations that needed to happen and to be reassured that the modelling was taking into account everything in relation to Tauranga.

· Commissioners requested that the item lie on the table and a governance workshop be held with the other entities to test the thinking around the plan and shape it for endorsement.

· A series of queries were raised to be considered at the combined councils’ workshop that would provide for high level questioning of the TSP process

· what was actually delivered and what would become better and by how much, when taking into account all the four outcomes e.g. how much of the city would be opened up for housing, how much of a carbon reduction would be gained

· to what extent does the modelling test the strategy e.g. to what extent does the transport investment shape the land use?

· how does variable road pricing link to the travel demand management component of the TSP and demonstrate the outcomes?

· how does the investment in transport connect with the future development strategy?

· does the sustainable urban growth modelling provide sufficient priority rating for multi-modal and alternative forms of transport?

· The upcoming workshop was to include decisions on housing and investigations into the wider growth area, as these formed part of the context and overall picture. It also needed to show clarity around the western corridor and the intensification of the Te Papa peninsula to provide clear guidance in those areas.

· Clarity was required around the scope of the future pipeline of projects including the SH29 corridor upgrade with Waka Kotahi and whether that was for all of SH29A, or the component from The Lakes to Barkes Corner, and ensuring that the business case work being undertaken was for all of that corridor.

· It was suggested that a joint submission be made to the RLTP rather than each council having a separate submission as this would provide influence sub regionally, regionally, and nationally.

· There was a need to line up the terminology of the TSP with the business cases so that everyone was clear on the subject matter.

Resolution CO11/23/4

Moved: Commissioner Stephen Selwood

Seconded: Commissioner Bill Wasley

That the Council:

· Receives the report "Transport System Plan Transport System Operating Framework (TSOF)v2 Endorsement".

· Lays the report on the table and an urgent workshop be held through the SmartGrowth Leadership Group, with an invitation to be extended to elected members of the Western Bay of Plenty District Council and Bay of Plenty Regional Council to attend.

Carried

12 Discussion of late items

Nil

13 Public excluded session

Resolution to exclude the public

Resolution CO11/23/5

Moved: Commissioner Bill Wasley

Seconded: Commissioner Stephen Selwood

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

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

General subject of each matter to be considered	Reason for passing this resolution in relation to each matter	Ground(s) under section 48 for the passing of this resolution
13.1 - Public Excluded Minutes of the Council meeting held on 19 June 2023	s7(2)(a) - The withholding of the information is necessary to protect the privacy of natural persons, including that of deceased natural persons s7(2)(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 s7(2)(c)(i) - The withholding of the information is necessary to protect information which is subject to an obligation of confidence or which any person has been or could be compelled to provide under the authority of any enactment, where the making available of the information would be likely to prejudice the supply of similar information, or information from the same source, and it is in the public interest that such information should continue to be supplied s7(2)(h) - The withholding of the information is necessary to enable Council to carry out, without prejudice or disadvantage, commercial activities s7(2)(i) - The withholding of the information is necessary to enable Council to carry on, without prejudice or disadvantage, negotiations (including commercial and industrial negotiations)	s48(1)(a) - the public conduct of the relevant part of the proceedings of the meeting would be likely to result in the disclosure of information for which good reason for withholding would exist under section 6 or section 7
13.2 - Appointment of Additional Urban Design Panel Members	s7(2)(a) - The withholding of the information is necessary to protect the privacy of natural persons, including that of deceased natural persons	s48(1)(a) - the public conduct of the relevant part of the proceedings of the meeting would be likely to result in the disclosure of information for which good reason for withholding would exist under section 6 or section 7
13.3 - Progression of the Dam 5 and Wetland 5 stormwater project	s7(2)(h) - The withholding of the information is necessary to enable Council to carry out, without prejudice or disadvantage, commercial activities	s48(1)(a) - the public conduct of the relevant part of the proceedings of the meeting would be likely to result in the disclosure of information for which good reason for withholding would exist under section 6 or section 7
13.4 - Construction of Car Parks 160-176 Devonport Road	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 s7(2)(h) - The withholding of the information is necessary to enable Council to carry out, without prejudice or disadvantage, commercial activities s7(2)(i) - The withholding of the information is necessary to enable Council to carry on, without prejudice or disadvantage, negotiations (including commercial and industrial negotiations)	s48(1)(a) - the public conduct of the relevant part of the proceedings of the meeting would be likely to result in the disclosure of information for which good reason for withholding would exist under section 6 or section 7

Carried

14 Closing karakia

Commissioner Shadrach Rolleston closed the meeting with a karakia.

The meeting closed at 11.35 am.

The minutes of this meeting were confirmed as a true and correct record at the Ordinary Council meeting held on 24 July 2023.

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

CHAIRPERSON

Ordinary Council meeting Agenda

24 July 2023

11 Business

11.1 Te Manawataki o Te Papa - Overview Report

File Number: A14855075

Author: Christine Jones, General Manager: Strategy, Growth & Governance

Gareth Wallis, General Manager: City Development & Partnerships

Authoriser: Christine Jones, General Manager: Strategy, Growth & Governance

Purpose of the Report

1. The purpose of this report is to provide an overview of the suite of reports included on this agenda. This includes providing the information that is pertinent to all of the reports, as well as an overview of how each report fits within the wider programme of works. This report provides context only and no decision is sought.

Recommendations

That the Council:

(a) Receives the report "Te Manawataki o Te Papa - Overview Report".

Background

2. In 2018, Council adopted the Civic Precinct Masterplan. The plan provided direction for the future development of the Council-owned site bounded by Willow, Hamilton, Wharf and Durham Streets (Site A); and the Council-owned site at 21-41 Durham Street (Site B), formerly known as the TV3 site. Extensive community consultation took place but for various reasons, the Civic Precinct Masterplan was not implemented at this time.

3. More recently, Council included a budget in the Long-term Plan (LTP) 2021-31 for the development of a new library and community hub on the civic precinct site. Following the adoption of the LTP 2021-31, 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;

· to respond to public submissions in favour of a museum located on the civic precinct site; and

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

4. 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. As part of the refresh, the Masterplan was expanded to include the waterfront reserve, between Hamilton and Wharf Streets, linking the moana with the civic precinct via Masonic Park.

5. 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 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.

6. On 21 February 2022, 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 to gather an understanding of the community’s views regarding the delivery and timeframes for the additional components of the Civic Precinct Masterplan, and did not revisit those components that had already been consulted on and agreed through the LTP 2021-31.

7. Community consultation on the LTPA was undertaken in conjunction with consultation on the draft Annual Plan 2022-23, and results were considered by Council on 24 May 2022. It was considered that the proposal to include the full Civic Masterplan as one programme of work (Option 1), would provide wide ranging social, economic, cultural, and environmental benefits that will have a positive impact on our communities, today and in the future.

8. This option included a capital cost of $303.4 million, subject to achieving 50% of the required funding from sources other than rates-funded debt and therefore, an estimated net cost to ratepayers of $151.5 million. At the 24 May 2022 Council meeting, Council resolved to include the full Civic Masterplan in the LTPA.

9. On 12 December 2022, the Council received the preliminary design and costs, which removed part of the project relating to the waterfront and indicated an increase in the total programme cost of $4.5 million. This resulted in the total revised cost estimate for this portion of the project moving from $270.4 million to $274.95 million.

10. At that meeting, the Council authorised the Chief Executive to enter into a Development Commitment with Willis Bond to progress the developed and detailed designs, and noted that the detailed design would be brought back to Council for approval prior to entering into a Development Agreement.

11. On 20 March 2023, the Council approved an additional $1.88 million of non-rate funded expenditure to increase the Tauranga Art Gallery project budget to $3.38 million, bringing the total programme cost of Site A to $276.83 million. (Refer Design and Cost Update Report on this agenda paragraph 16 for further details of the approved budgets and estimated costs).

Landownership Council Controlled Organisation

12. As part of the pre-work for the development of Te Manawataki o Te Papa, Council worked closely with Iwi and Hapū to resolve historical grievances relating to the ownership of the Site A land. This work resulted in the creation of a new ownership structure. Site A is now owned by a Council Controlled Organisation (CCO) Charitable Trust and governed jointly by Tauranga City Council and mana whenua. This key move forms part of Council’s overall intention for the site, which is to use it to build community cohesion and civic pride, recognise and honour our history, and to connect mana whenua and the people of Tauranga with the land and their stories.

Reports related to Te Manawataki o Te Papa on Council agenda 24 July 2023

13. There are a number of reports on this 24 July 2023 Council agenda which consider a range of matters which are directly, or indirectly related to, Te Manawataki o Te Papa.

14. Below is a summary of the reports and the matters which they address:

Report Title	Purpose
Te Manawataki o Te Papa Design and Cost Update Report	Presents the updated Design and Cost Report Seeks delegated authority for the Chief Executive to enter contracts for the delivery of packages of works.
Te Manawataki o Te Papa Business Case	Presents the Te Manawataki o Te Papa Business Case for approval.
Te Manawataki o Te Papa Financial Strategy	Provides a financial strategy, which will deliver funding for the Te Manawataki o Te Papa budgeted capital works programme.
Asset Realisation Reserve	Seeks Council approval to create an Asset Realisation Reserve approach to be used to identify property and assets for divestment, and to hold resulting disposal proceeds. Council will be able to allocate funding from the Reserve to capital projects by way of Council resolution, including Te Manawataki o Te Papa.
Willis Bond – Development Management Agreement	Seeks delegated authority for the Chief Executive to enter into a Development Management Agreement (DMA) appointing Willis Bond as Council’s Development Manager for delivery of the Te Manawataki o Te Papa (Site A) programme of works (Te Manawataki o Te Papa) pursuant to the Tauranga City Council / Willis Bond 2018 Partnering Agreement (PA).
Tauranga Moana Waterfront – Updated Masterplan	Presents the updated Masterplan for the Tauranga Moana Waterfront.

Governance Council Controlled Organisation

15. The Council has created a separate entity to govern project delivery, Te Manawataki o Te Papa Limited (CCO). In addition, oversight of the programme is also informed by a Project Control Group, steering groups, and design and technical reference group. Actual operational delivery is by way of resources either employed by or contracted to Council. Council is the principal to all project development contracts with suppliers and the employer of the project management team.

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16. The Te Manawataki o Te Papa Board have reviewed the reports which are being considered on this agenda. The Board Chairperson will speak at the 24 July Council meeting to present the views of the Board on the matters contained within the report. It is expected that the Board Chairperson will table a short written paper on behalf of the Board.

Programme delivery

17. This diagram shows an overview of the programme delivery, including those stages covered in reports on this agenda (depicted in dark blue):

Strategic / Statutory Context

18. Council adopted a new vision for Tauranga City Council in June 2022, and also endorsed it as a shared Vision for Tauranga. The vision is based on three key themes clearly expressed by our communities as being important for a future Tauranga – environment, community and inclusivity, and vibrancy. These three themes form the basis of the vision statement:

Tauranga, together we can

Prioritise nature

Tauranga is a city where… we celebrate, protect and enhance our natural environment, integrating it into the city for all to enjoy

Lift each other up

Tauranga is a city where… we foster and grow our communities, celebrate our differences, and lift up those who are vulnerable

Fuel possibility

Tauranga is a city where… we foster creativity and innovation, celebrate our arts and culture, and empower our changemakers to create a vibrant city into the future

With everyone playing their part, together we can create the change our city needs.
Kei a tātou te pae tawhiti
The future is all of ours.

Because, Tauranga, together we can.

19. The delivery of Te Manawataki o Te Papa directly responds to the city vision, with each of the three pillars being embodied by the plans for the precinct. Our community has told us loud and clear that they want a vibrant, well-planned city centre that is inclusive, accessible, and diverse, with more activities and events for all to enjoy.

20. Te Manawataki o Te Papa has clear alignment with the city and Council’s strategic direction, from the aspirational community vision to Council’s action and investment plans.

21. One of six strategic priorities for Council is to drive delivery of the City Centre Masterplan – Te Manawataki o Te Papa, the broader City Centre Action and Investment Plan, and the Te Papa Peninsula Spatial Plan, to revitalise and reactivate the heart of the city.

22. Te Manawataki o Te Papa clearly seeks to strengthen Tauranga’s city centre as the commercial, civic, and cultural heart of the Western Bay of Plenty sub region – the cultural and community focus of the city centre; a unique civic destination for the stories and decision making of Tauranga, and its people.

23. As Tauranga continues to grow, our city centre will continue to transform from a commercial business centre into a sub-regional destination, providing a wide range of activities and facilities that support our economy, strengthen our community, and celebrate who we are.

Financial Considerations

24. The budgets for Te Manawataki o Te Papa have been approved through the LTPA and subsequent Annual Plan processes. Specific financial considerations are addressed within each of the individual reports.

Legal Implications / Risks

25. Legal considerations are addressed within each of the individual reports.

Consultation / Engagement

26. The proposal to implement Te Manawataki o Te Papa required an amendment to the Council’s LTP 2021-31 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.

Significance

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

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

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

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

29. This report is an overview report, and is for information only with no decision sought. In accordance with the criteria and thresholds in the policy, it is considered that the issue addressed in this report is of low significance.

Attachments

Nil

Ordinary Council meeting Agenda

24 July 2023

11.2 Te Manawataki o Te Papa - Design and Cost Update Report

File Number: A14828132

Author: Mike Naude, Director of Civic Developments

Authoriser: Gareth Wallis, General Manager: City Development & Partnerships

Please note that this report contains confidential attachments.

Public Excluded Attachment	Reason why Public Excluded
Item 11.2 - Te Manawataki o Te Papa - Design and Cost Update Report - Attachment 2 - Confidential attachment - Delegation to Chief Executive	s7(2)(i) - The withholding of the information is necessary to enable Council to carry on, without prejudice or disadvantage, negotiations (including commercial and industrial negotiations).

Purpose of the Report

1. The purpose of this report is to:

· present the Design and Cost Update Report July 2023 for Te Manawataki o Te Papa for approval.

· seek delegated authority for the Chief Executive to enter contracts on behalf of Council for the delivery of the Te Manawataki o Te Papa (Site A) programme in accordance with the Tauranga City Council / Willis Bond Partnering Agreement 2018 and Development Management Agreement 2023.

Recommendations

That the Council:

(a) Receives the report "Te Manawataki o Te Papa - Design and Cost Update Report".

(b) Receives the Library Community Hub Developed Design and approves the associated cost estimates.

(d) Receives the Masonic Park Detailed Design and approves the associated cost estimates.

(e) Receives the Civic Precinct Landscaping 50% Developed Design and approves the associated cost estimates.

(f) Reallocates $1.0 million unspent Civic Heart Demolition budget to Te Manawataki o Te Papa.

(g) Requires that the overall cost estimate will be further refined, including exploring value engineering opportunities during the detailed design phase of the programme, to within a revised budget of $306.3 million ($303.4 million approved in May 2022, $1.88 million approved in March 2023 and $1.0 million Civic Heart demolition underspend).

(h) Delegates to the Chief Executive authority to enter contracts on behalf of Council for the delivery of the Te Manawataki o Te Papa (Site A) programme of works as further outlined within the Te Manawataki o Te Papa Design and Cost Update Report – July 2023 (attachment 1), subject to:

(i) Endorsement by the Te Manawataki o Te Papa Board (Ltd.); and

(ii) Sufficient funds being available in accordance with the Te Manawataki o Te Papa Financial Strategy Report resolutions approved by Council at this 24 July 2023 meeting; and

(iii) Condition of commercial sensitivity (as per attachment 2 confidential resolution).

(i) Transfers Attachment 2 into the open when contract negotiations are complete.

Executive Summary

2. The Council adopted the Civic Precinct Masterplan on 6 December 2021. The new civic precinct, to be called Te Manawataki o Te Papa – the heartbeat of Te Papa, is envisaged as a vibrant space which includes a library and community hub, civic whare (public meeting house), exhibition gallery, museum, upgrade of Baycourt Theatre, upgrade of Masonic Park, the landscaping of the wider precinct, and a section of the Tauranga Moana Waterfront.

3. Following community consultation, at the 24 May 2022 Council meeting, Council resolved to include the full Civic Masterplan in the Long-term Plan. Council approved a capital cost of $303.4 million, subject to achieving 50% of the required funding from sources other than rates-funded debt and therefore, an estimated net cost on rates of $151.5 million.

4. On 12 December 2022, the Council received the preliminary design and costs, which removed part of the project relating to the waterfront and indicated an increase in the total programme cost of $4.5 million. This resulted in the total revised cost estimate for this portion of the project moving from $270.4 million to $274.95 million. At that meeting, the Council authorised the Chief Executive to enter into a Development Commitment with Willis Bond to progress the developed and detailed designs, and noted that the detailed design would be brought back to Council for approval, prior to entering into a Development Agreement.

5. On 20 March 2023, the Council approved an additional $1.88 million of non-rate funded expenditure to increase the Tauranga Art Gallery budget to $3.38 million, bringing the total programme cost to $276.83 million.

6. This report is the next key gateway stage built into the programme structure to ensure prudent Council governance and oversight.

7. It provides the Council the design and cost estimates for various developments within Te Manawataki o Te Papa Site A and seeks approval from Council to authorise the Chief Executive to enter contracts on behalf of Council for the delivery of the Te Manawataki o Te Papa (Site A) programme of works as further outlined within the Te Manawataki o Te Papa Design and Cost Update Report – July 2023 (Appendix 1).

8. Further enhanced costings have been undertaken to reflect the progression from preliminary design to detailed design. These costings have resulted in a number of changes to various components of the programme, with increases in some components being largely offset by decreases in other areas.

9. The overall change is a $5.78 million increase in Te Manawataki o Te Papa (Site A) costs, resulting in the total revised cost estimate for this portion of the project moving from $276.83 million to $282.61 million, which represents a 2.08% increase from the December report. The driving factor for this cost change is attributed to the increased cost relating to the Exhibition Gallery and Museum.

10. It is important to note that included in the above cost estimates is a 10% contingency, and 7.5% average escalation costs across the programme.

11. The Willis Bond Report identifies a potential value engineering target of $2.6 million resulting a predicted shortfall of $3.17 million which represents a 1.15% increase from the December report.

12. The approved budget of $306.3 million takes the base approved budget of $303.4 million from the LTPA, adds the Art Gallery additional budget approved in March 2023 of $1.88 million and $1.0 million reallocated from an underspend in the demolition budget. It is expected that value engineering to the tune of $1.9 million will be achieved to bring the approved budget to $306.3 million.

13. The designs and cost estimates will be further refined through the developed design, and tendering and procurement processes with the view to deliver the programme within the overall project budget of $306.3 million.

STAGE IN THE PROJECT

14. This diagram summarises the key Te Manawataki o Te Papa project delivery approval processes, as well as the suite of reports being considered on this agenda. The red shapes identify where this report fits into the wider process:

15. This report is one of the gateways identified in the above diagram and seeks approval to proceed to various delivery contracts. In progressing, Council is committing to delivering the project, with a cost estimate of $276.83 million.

16. The updated Tauranga Moana Waterfront Masterplan is the subject of an additional paper on this agenda.

Project costs

17. Table 1 (below) outlines project costs for key elements of the Te Manawataki o Te Papa programme. Costs included in the LTPA are included, as well as updated project costs resulting from the preliminary design process and latest costs resulting from detailed designs. Project costs (including cost escalation) have increased from $303.4 million in the LTPA to a total of $308.2 million, and are delivered over the 2022-28 timeframe.

Project	Proposed Completion Date	Approved in LTPA Document – May 2022 ($mil)	Revised costs from Enhanced Concept Plan – November 2022 ($mil)	Revised costs from Enhanced Concept Plan – July 2023 ($mil)
Site A establishment	Jan-24	$7.0	$7.0	$7.2
Art Gallery*	Jul-24	-	$1.5	$3.4
Masonic Park upgrade	Aug-24	$10.9	$9.0	$9.1
The Strand Road Reserve and adjacent reserve upgrade**	Jun-25	$7.5	$7.5	$1.4
Baycourt upgrade	Dec-25	$11.0	$11.0	$11.0
Library and Community Hub	Jan-26	$88.2	$91.5	$93.3
Durham/Hamilton/Wharf Street footpath upgrade	Jun-28	$9.2	$3.4	$3.5
Museum and Exhibition Gallery	May-28	$104.2	$110.5	$114.0
Civic Whare	May-28	$15.4	$15.5	$15.5
Wharf and Central Strand Plaza**	Jun-28	$25.4	$25.4	$24.2
Willow Street shared space	Jul-26 & Aug-28	$8.9	$8.3	$8.0
Public amenity space – staged	Jul-26 & Sept-28	$15.7	$17.3	$17.6
TOTAL ESTIMATED COSTS		$303.4	$307.9	$308.2

*Art Gallery costs are included within the individual project cost items in the LTPA Document. These have been separated into their own project line for the Enhanced Costs presented. An increase in budget of ~$1.9m was further approved by the Council on 20 March 2023 to cover an approved change in scope.

** Following approval of the $303.4m a number of scope changes made to the programme. For example, the Strand Road Reserve and Central Plaza and Wharf are being delivered separately as part of the Waterfront Masterplan programme.

Table 1: Project costs for Te Manawataki o Te Papa^{^[1]}P

18. Once developed, the precinct will be operated as a campus operating model, resulting in efficiencies in service delivery and cost. It is currently expected that the average annual operating costs will be ~$26 million, once construction is complete. Further information regarding operating costs can be found in the Business Case, included as a separate report on this agenda. These operating costs are continually being refined and updated as the programme progresses. The LTP 2024-34 will include updated and more detailed ongoing operating costs.

19. Of the $303.4 million LTP budget adopted for Te Manawataki o Te Papa, $32.9 million was allocated for Site C, waterfront and The Strand, leaving a budget of $270.5 million for Site A. The preliminary designs in December 2022 suggested a $4.5 million budget increase for Site A to a total of $274.95 million. In March, the Council approved an increase in the budget for the Art Gallery of $1.88 million, reflecting an increase in scope. The updated design and costings provided through this report include an additional $1.88 million in respect of the Art Gallery.

Figure 1 – Funding changes from May 2022 to July 2023

20. Further enhanced costings have been undertaken to reflect the progression of the detailed design from preliminary design (attached as Appendix 1). These costings have resulted in a number of changes to various components of the programme, with increases in some components being largely offset by decreases in other areas (see Table 1 in section 16).

21. Figures are based on the costings provided in the Preliminary Design and Costings Report, and have been developed by Rider Levett Bucknall (quantity surveyors) and reviewed by LT McGuinness (construction partner). These costs are based on the following conservative assumptions:

· Cost escalation of 7.5% of construction costs across the five years, totalling $21.33 million (down from $21.52 million in December 2022 budgets).

· Contingency of 10% of total cost across five years, resulting in $29.63 million total contingency (up from $29.35 million in December 2022 budgets).

· Programme of works commencing with construction staged over the following five years.

· Programme completion by September 2028.

22. Included within the capital project costs are costs associated with the museum and exhibition gallery fitout. These costs are currently under review and any changes in costs will be managed within the constraints of the current budget, or considered through the established approval processes and gateways for this project.

Options Analysis

23. The decision to progress with Te Manawataki o Te Papa to its current state was previously made through the LTPA. This report seeks approval to enter into a Development Agreement for the delivery of the packages of works within the Te Manawataki o Te papa (Site A) programme. The Council has two options for consideration:

(a) Option 1: Delegates authority to the Chief Executive to enter into contracts to progress with delivery of the packages of works within the Te Manawataki o Te papa (Site A) programme; or

(b) Option 2: Decide not to progress with the Te Manawataki o Te Papa programme of works.

24. Key benefits and disadvantages for each option are outlined below.

Option 1: Authorises the Chief Executive to enter into contracts to progress with delivery of the packages of works within the Te Manawataki o Te papa (Site A) programme – RECOMMENDED

Advantages

25. In delegating authority to the Chief Executive to enter into contracts to progress the delivery of the packages of works within the Te Manawataki o Te papa (Site A) programme, the programme can proceed at the pace and quality planned.

26. In progressing to the delivery stage, Council will be making progress towards delivering on the broad community benefits of the Te Manawataki o Te Papa programme, as detailed further in the Te Manawataki o Te Papa Business Case.

27. Approving Option 1 is consistent with the Council’s LTPA and delivers on the commitment set through that process.

28. Council has set an expectation with the community that the city centre will be revitalised, and enhanced community facilities such as a museum, library, exhibition gallery and civic whare will be developed over the next five years and be available for the community to use and enjoy. By progressing to the next stage of the programme, Council is delivering on that community expectation.

29. As a flagship community development, the project is proposed to attract significant external funding that is expected to significantly enhance community outcomes.

30. As the project progresses through the developed and detailed design phases to the tendering stage, costs will continue to be refined. There are potential opportunities to bring the costs back within the total programme budget. This may include amending the design, without negatively impacting the project deliverables. Therefore, this report does not look to increase the budget, at this stage, as future savings may mean that additional budget doesn’t eventuate as being necessary.

Disadvantages

31. In authorising delivery of the next phase of the project, Council is committing to the next portion of project investment. This includes an estimated $276.83 million to complete the delivery of the packages of works within the Te Manawataki o Te papa (Site A) programme.

32. The current costings show an increase of $5.78 million from already approved budgets. The Willis Bond Report identifies a potential value engineering target of $2.6 million resulting a predicted shortfall of $3.17 million. There is a reputational risk that the community will see the current projected increase as a sign that the overall programme cost will increase over time. This is why the Financial Strategy report recommends a separate resolution to reconfirm that the ratepayer funded loan shall be a maximum of $151.5 million.

Option Two: Decide not to progress with Te Manawataki o Te Papa – NOT RECOMMENDED.

Advantages

33. By not continuing to the delivery phases of the programme, Council would limit further expenditure on design and construction.

34. Not delivering Te Manawataki o Te Papa will see financial savings for ratepayers and reduced loan funding, which may present an opportunity cost for alternative project delivery.

Disadvantages

35. The Council has already committed costs to get to this stage of the programme. By deciding not to continue the programme at this stage, those costs will be sunk with no discernible community outcome to show for it.

36. Extensive community consultation and partner collaboration has set an expectation that Te Manawataki o Te Papa will deliver great outcomes for the Tauranga community. Not continuing with the project means that those outcomes will not be realised, including revitalising the city centre, and enhancing mana whenua’s relationship with the land. This poses a reputational risk for the Council with mana whenua, with Council’s key partners, and with the broader community.

37. Extensive external funding is proposed for this programme. If the programme does not continue, the investment into Tauranga from other sources will not be realised.

38. Discontinuing the programme at this stage will see Council break its Partnering Agreement with Willis Bond.

39. If Te Manawataki o Te Papa is not built, further work would be required to determine an alternative use for the land where the civic precinct is currently planned.

financial considerations

40. This report outlines the updated cost estimates for the Te Manawataki o Te Papa (Site A) Programme of works. The Financial Strategy Report on this agenda outlines the funding implications of this programme. Operational costs are covered in more detail in the Te Manawataki o Te Papa Business Case.

Legal Implications

41. The legal implications of entering into contracts for the delivery of Te Manawataki o Te Papa are covered off in more detail in the Development Management Agreement report included on this agenda.

Risks

Key project risks

42. The different projects are at various stages of design development and therefore may risk being stalled due to various factors e.g. lack of external funds and/or project cost escalation. This risk is further amplified by the interconnected nature of this programme of works, with many projects co-dependent on another through the sharing of spaces and/or facilities. The governance structure that has been developed to oversee the programme and several key gateway decisions points, will ensure appropriate Council oversight is provided throughout the programme.

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

44. For a detailed description of key project risks, please refer to Section 12 of the Te Manawataki o Te Papa Design and Cost Update Report – July 2023.

Key financial risks

45. The projects that make up this programme of works, includes assumptions regarding the level of project contingencies and cost escalation. However, there is always a risk that significant unplanned events may have an impact on overall and eventual project costs.

46. Several of the key projects include a level of external funding. An update on the likelihood of achieving this level of external funding is included in the Funding Strategy Report on this agenda.

Key reputational risk

47. Council has consulted on a total project budget of $303.4 million. If that budget changes at this stage of the programme, or if there is cost creep and overspend later in the project, that could have a detrimental impact on the community perception of the Council.

Significance

48. 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.

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

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

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

50. This report is part of a wider process for the development of Te Manawataki o Te Papa. In accordance with the considerations above, and criteria and thresholds in the policy, it is considered that the decision to deliver Te Manawataki o Te Papa is of high significance. As a result, the Council undertook a thorough decision-making process to approve the programme of work, including developing an LTPA and corresponding community consultation using the Special Consultative Procedure.

51. The decision made through this report is materially consistent with the decisions made by Council on 24 May 2022 and 12 December 2022. The extensive community feedback received through the LTPA process has been incorporated throughout the design phase of this project, and Council has a thorough understanding of the views of the community and has approved a clear plan for the delivery of the project.

52. Option 1 of this report is considered to be of low significance, in accordance with the considerations above, and criteria and thresholds in the policy, as the decision has a strong and logical flow from a prior decision of Council, and approves expenditure that is within existing budget.

ENGAGEMENT

53. The proposal to implement Te Manawataki o Te Papa required an amendment to the Council’s LTP 2021-31 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.

54. Taking into consideration the above information, if Council approves Option 1, further community consultation is assessed as not being required at this stage of the project.

Next Steps

55. This report seeks approval to progress the Te Manawataki o Te Papa project to delivery stage. In addition to this report, separate reports on this agenda also seek approval to enter into a Development Management Agreement and approval of the funding strategy for Te Manawataki o Te Papa. Subject to approval by Council of all of these reports, the delivery of Te Manawataki o Te Papa will commence as approved.

Attachments

1. TMOTP design and cost update report - 13 July 2023 - final - A14862960 ⇩

2. Confidential attachment - Delegation to Chief Executive - A14862967 - Public Excluded

Ordinary Council meeting Agenda

24 July 2023

11.3 Te Manawataki o Te Papa Business Case

File Number: A14655033

Author: Sarah Stewart, Principal Strategic Advisor

Authoriser: Christine Jones, General Manager: Strategy, Growth & Governance

Purpose of the Report

1. This report presents the Te Manawataki o Te Papa Business Case (the Business Case) for adoption (Attachment 1). The Business Case supports the case for investing $309.8 million in capital that will transform the city centre site into a vibrant community, civic and cultural focal point that meets our people’s needs and aspirations now and in the future.

2. This report is one in a suite of reports presented to Council today to progress Te Manawataki o Te Papa – refer to ‘Te Manawataki o Te Papa – Overview Report’ for detail of the overall report package and interactions between reports.

3. Completion of the Business Case is one of the key gateways and approval processes outlined in the Tauranga City Council / Willis Bond Partnering Agreement.

Recommendations

That the Council:

(a) Receives the report "Te Manawataki o Te Papa Business Case"; and

(b) Adopts Te Manawataki o Te Papa Business Case that recommends proceeding with the delivery of the programme of works.

Overview of business case

4. The Business Case recommends proceeding with the delivery of the programme of works over the next six years. The suite of Te Manawataki o Te Papa projects will transform the co-owned site in the heart of the city centre, delivering social, cultural and economic benefits for the city.

5. With plans for Te Manawataki o Te Papa well-advanced, the Business Case re-confirms the validity of the programme of works to ensure the best value for our communities is delivered. Promoting social cohesion and economic stimulus for the city centre will result in local, subregional, and national benefits being realised. An adaptive funding pathway is recommended as the best way of managing funding challenges, thereby providing confidence that Council can deliver.

6. The Business Case is guided by The Treasury’s five case model – strategic, economic, commercial, financial and management cases.

Investment objectives

7. Three investment objectives underpin the Business Case and specify the desired outcomes for the proposed investment. Each investment objective is based on demand forecasting modelling by Rationale (2023) and/or GHD’s (2023) assessment of wider benefits that Te Manawataki o Te Papa could contribute to the city:

· To improve central city vibrancy and liveability by attracting 2,000,000 visits per annum to Te Manawataki o Te Papa by 2035.

· To increase the present value of local and regional economic output by $500 million and wider economic benefits by $500 million over the life of the buildings.

· To enhance inclusiveness, sense of belonging and cultural identity by attracting greater than 300,000 annual museum visits and greater than 800,000 annual community hub visits, with 60 percent of residents being prepared to recommend Tauranga as a visitor destination by 2035.

Single-stage Te Manawataki o Te Papa is the preferred approach

8. The Business Case provides structured and comprehensive analysis to evaluate a range of approaches, alongside the Single-stage Te Manawataki o Te Papa option that Council is progressing.

9. This option is assessed in the Business Case using multi-criteria analysis (MCA) against a mix of five other options. These included the option considered previously by Council (stand-alone library and community hub) and new options that represent ‘book-ends’ or ‘do minimum’ (high amenity green space) and ‘do maximum’ (selling the land for commercial purposes) approaches to assess value for money to the community.

10. Through the MCA process, the Single-stage Te Manawataki o Te Papa is reconfirmed as the preferred option, ranking first against the other five options. As well as contributing fully to all three investment objectives, it is assessed as making a high contribution of benefits with a medium risk profile. Although relatively costly, with total costs amounting to $703 million over 60 years (including $309.8 million of capital cost over the next six years), this option does have a positive cost benefit assessment of 1.17 when considering all monetary and non-monetary benefits that are able to be quantified). It also:

· recognises the need for an integrated programme of investment that will help transform the civic heart of the city centre

· has a focus on connection between projects in relation to shared spaces, shared facilities and sharing of costs

· is developed in partnership with mana whenua and is steeped in cultural design, providing connection with our past and with our environment, particularly Te Awanui (Tauranga harbour)

· clearly aligns with current strategy and policy and will provide wide-ranging social, economic, cultural, and environmental benefits ensuring the project will have a positive impact on our communities today and in the future

· has community support, as shown through the Long-Term Plan Amendment consultation process.

Wide-ranging benefits for our communities

11. The benefits Te Manawataki o Te Papa will bring are widespread, reaching out to the region and providing a site that captures and reflects Tauranga’s unique cultural heritage. Te Manawataki o Te Papa will significantly contribute to city centre GDP and deliver wider economic benefits, generating an additional $788.4 million to $1,370.5 million in estimated quantified benefits in net present terms over the next 60 years (assuming a 4% discount rate)^{^[2]}.

12. With a focus on creating connected, cohesive, and inclusive communities and a vibrant and thriving city centre, the benefits that will flow from the investment are anticipated to fast-track social, economic, and cultural outcomes. Key benefits and key performance indicators (KPIs) outlined in the Business Case are reproduced in the following table.

Table 2: Key benefits and key performance indicators for the investment proposal

Benefits	KPIs
Improved central city vibrancy & liveability	Utilisation
	Increased tourism
	Increased inner city housing
Increased local & regional sustainable economic development	Increased business & employment (GDP)
	Increased events
	Increased bed nights
Enhanced inclusiveness, sense of belonging & cultural identity	Participation
	Reputation /Brand
	Educational opportunities

Ensuring successful delivery

13. The Management Case demonstrates that robust arrangements are in place for the delivery, monitoring and evaluation of Te Manawataki o Te Papa. It sets out that the external Te Manawataki o Te Papa Board govern the design and construction phase, with the preferred approach for the on-going management and operation of Te Manawataki o Te Papa once built being brought back in-house and governed by Council.

14. Programming of works is also outlined in the Management Case. The draft programme indicates the completion of the project in January 2028.

15. Effective benefit management is about giving investments the greatest possibility of delivering in a way that optimises benefits. A benefits map in the Business Case illustrates alignment with Council’s strategic direction and how benefits will be measured (key performance indicators, measures, and targets). The approach to benefits management largely aligns with Council’s Long-Term Plan and annual reporting processes, in that they share KPIs and measures. This ensures those responsible for relevant Council activities (and associated benefits) can actively monitor, respond, and report on benefits with ease.

Strategic / Statutory Context

16. The proposed delivery of Te Manawataki o Te Papa has clear alignment with the city and Council’s strategic direction, from the aspirational community vision and primary strategies, through to Council’s action and investment plans, including:

· Our Direction – Tauranga 2050 (including the City Vision)

· Tauranga City Council Community Outcomes

· Te Papa Spatial Plan 2020

· City Centre Action and Investment Plan 2022-2032

· Tauranga Events Action and Investment Plan 2022-2032

17. It also aligns with sub-regional, regional and national strategies, most notably the Urban Form and Transport Initiative, and SmartGrowth. At a national level, Te Manawataki o Te Papa will contribute to a range of central government policy initiatives, including The Treasury’s ‘Living Standards framework’, Ministry of Social Development’s ‘Social Cohesion Strategic Framework’, the Ministry of Education’s ‘Aotearoa New Zealand’s Histories and Te Takanga o Te Wā’ and Creative New Zealand’s ‘Te Whakaputa Hua Ki Te Hunga o Aotearoa’.

option Analysis

18. The Council has two options for consideration:

(a) Option 1: Adopt Te Manawataki o Te Papa business case. (Recommended)

(b) Option 2: Do not adopt Te Manawataki o Te Papa business case. (Not Recommended)

19. Key benefits and disadvantages for each option are outlined in the table below.

OPTION ONE: Adopt Te Manawataki o Te Papa business case

Benefits

Disadvantages

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

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

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

· Achieves wide-ranging social, cultural, economic, and environmental benefits.

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

· Campus approach provides ‘economies of scale’ in design, procurement and construction, and greater utilisation opportunities.

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

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

· Delivers a suite of community projects (e.g. museum, new library) that align with community perceptions about what is needed in the city centre.

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

· Prevents the funds from land disposal being used for an alternative purpose.

Key risks

· Funding still needs to be secured from external sources. Depending on the success or otherwise of potential external funding streams, this may require a level of flexibility in the method for funding and financing Te Manawataki o Te Papa (refer to the accompanying ‘Financial Strategy - Te Manawataki o Te Papa’ report for further information).

· Reputational risk is high with a high level of public expectation that this project will provide the catalyst to revitalise the heart of the city centre.

OPTION 2: Do not adopt Te Manawataki o Te Papa business case.
Benefits	Disadvantages
· Adoption of the Business Case is a key gateway for the successful delivery of Te Manawataki o Te Papa. Not adopting the Business Case may delay works and/or halt delivery. If further works on Te Manawataki o Te Papa do not progress this will see financial savings for ratepayers and reduced loan funding, which may present an opportunity cost for alternative project delivery.	· Council has already committed substantial costs to progress Te Manawataki o Te Papa. At this stage, deciding not to continue with the programme of works will result in sunk costs with no discernible community outcomes. · Extensive community consultation and partner collaboration has set an expectation that Te Manawataki o Te Papa will deliver substantial social, economic, and cultural outcomes for the Tauranga community and the sub-region. Not continuing with the project means that outcomes will not be realised, therefore posing a reputational risk for Council with mana whenua, other key partners, and with the broader community.
Key risks
Council recently consulted on Te Manawataki o Te Papa with the community through the Long-Term Plan Amendment process during 25 March to 26 April 2022. Community feedback illustrated a high level of support for the project. Choosing not to progress delivery of Te Manawataki o Te Papa is likely to have a detrimental impact on the community perception of Council.

Financial Considerations

20. Due to the Business Case being prepared in parallel with planning of the project, the Business Case does not fully align with the updated programme of works or the updated costs presented today in the ‘Te Manawataki o Te Papa – design and cost update’ report. Total capital costs differ by $1.6 million ($308.2 million compared with $309.8 million in the Business Case). From a Business Case perspective, this financial difference is considered minor and does not impact on the validity of the Business Case and its recommendations.

21. The business case addresses the project costs, funding pathways, likely funding sources and financial impact on both Council and ratepayers. As noted in paragraph 20 above, costs have been updated in parallel with the development of the business case and this in turn impacts on the funding quantums. Refer to the ‘Design and Cost Update Report’ and ‘Financial Strategy - Te Manawataki o Te Papa’ report on this agenda for further information.

22. In terms of operating costs, the total net cost to fund Te Manawataki o Te Papa is forecast to be $26 million per annum when it is fully-functioning, with all the facilities and levels of service in operation for the community and visitors. The current proposal is for Council to fund this net cost from general rates or potentially through a targeted rate across the city.

23. There are number of funding pathways which could be considered for Te Manawataki o Te Papa and these each have their own funding risks and uncertainties. The Business Case outlines that the pathways can be adaptive as Te Manawataki o Te Papa progresses to completion, and a certain amount of flexibility can be employed to ensure the project’s cashflow demands are able to be met and risks can be managed.

24. Although the Business Case acknowledges that funding and financing is challenging, it also recommends that there is enough evidence to proceed with investing in Te Manawataki o Te Papa.

Legal Implications / Risks

25. Funding and reputational risks are outlined in the options table above. Also refer to the ‘Financial Strategy - Te Manawataki o Te Papa’ report.

Significance

26. 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.

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

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

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

28. This report is part of a wider process for the development of Te Manawataki o Te Papa. In accordance with the considerations above, and criteria and thresholds in the policy, it is considered that the decision to deliver Te Manawataki o Te Papa is of high significance. As a result, the Council undertook a thorough decision-making process to approve the programme of work, including developing an LTPA and corresponding community consultation using the Special Consultative Procedure.

29. The decision made through this report is materially consistent with previous decisions made by Council, including those made on 24 May 2022 and 12 December 2022. The extensive community feedback received through the LTPA process has been incorporated throughout the design phase of this project, and Council has a thorough understanding of the views of the community and has approved a clear plan for the delivery of the project.

ENGAGEMENT

30. The proposal to implement Te Manawataki o Te Papa required an amendment to the Council’s LTP 2021-31 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.

31. Taking into consideration the above information, if Council adopts the Business Case (option one) further community consultation is assessed as not required.

Attachments

1. Attachment 1: Te Manawataki o Te Papa Business Case - A14869361 (Separate Attachments 1)

Ordinary Council meeting Agenda

24 July 2023

11.4 Financial Strategy - Te Manawataki o Te Papa

File Number: A14836658

Author: Frazer Smith, Manager: Strategic Finance & Growth

Anne Blakeway, Manager: City Partnerships

Authoriser: Christine Jones, General Manager: Strategy, Growth & Governance

Please note that this report contains confidential attachments.

Public Excluded Attachment	Reason why Public Excluded
Item 11.4 - Financial Strategy - Te Manawataki o Te Papa - Attachment 1 - Confidential Attachment to TMoTP Financial Strategy Report - Airport Funds Legal Advice and Associated Analysis	s7(2)(g) - The withholding of the information is necessary to maintain legal professional privilege. s7(2)(h) - The withholding of the information is necessary to enable Council to carry out, without prejudice or disadvantage, commercial activities.
Item 11.4 - Financial Strategy - Te Manawataki o Te Papa - Attachment 2 - Legal Advice re Airport Authority	s7(2)(g) - The withholding of the information is necessary to maintain legal professional privilege.
Item 11.4 - Financial Strategy - Te Manawataki o Te Papa - Attachment 3 - Assessment of Airport Surplus Allocation to Te Manawataki o Te Papa	s7(2)(h) - The withholding of the information is necessary to enable Council to carry out, without prejudice or disadvantage, commercial activities. s7(2)(i) - The withholding of the information is necessary to enable Council to carry on, without prejudice or disadvantage, negotiations (including commercial and industrial negotiations).

Purpose of the Report

1. This report provides a financial strategy, which will deliver the sufficient funding for the Te Manawataki o Te Papa budgeted capital works programme.

Recommendations

That the Council:

a) Receives the report "Financial Strategy - Te Manawataki o Te Papa".

b) Approves the Financial Strategy – Te Manawataki o Te Papa with the following key elements:

i) Reconfirmation that the ratepayer funded loan shall be a maximum of $151.5 million; and

ii) Council will seek to maximise external funding sources, including grants and development contributions; and

iii) To the extent that the funding sources (b)(i) and (b)(ii) are insufficient to fund the full capital costs, the balance will be funded by:

· Airport Activity funding up to $13 million; and/or

· Asset Realisation Reserve.

c) Notes that the decision on the quantum of airport activity and/or Asset Realisation Reserve funding to be applied to Te Manawataki o Te Papa will be made by way of subsequent resolutions of Council after consideration of what is appropriate, further legal advice on the application of the airport activity funding, the outcome of any required consultation processes, and assessment of compliance with any relevant legal requirements.

d) Confirms that Council considers that sufficient funding will be available to proceed with the Te Manawataki o Te Papa investment within the approved budget.

e) Retains Attachments 1 and 2 in confidential to maintain legal professional privilege and to enable Council to carry out, without prejudice or disadvantage, commercial activities.

f) Transfers Attachment 3 into open when consultation and any associated negotiation with direct stakeholders is complete.

Executive Summary

2. This report proposes a financial strategy for Te Manawataki o Te Papa, which provides sufficient funding for the approved project budget and delivers on the publicly consulted commitment to have a ratepayer funded loan no greater than $151.5 million.

3. The financial strategy confirms the non-ratepayer funding will be utilised in the following priority order:

· First Priority - External non-rates funding

· Second Priority – Funding from airport activity and/or Asset Realisation Reserve.

Background

4. The Te Manawataki o Te Papa -Overview Report on this 24 July Council agenda outlines the background, strategic context and previous consultation associated with the Te Manawataki o Te Papa project. That information is not repeated in this report. The Overview Report also outlines a number of inter-related reports on this agenda.

5. The LTPA consultation document asked whether Council should implement the full Te Manawataki O Te Papa (Civic Precinct) Masterplan (Refreshed 2021). The consultation document included the following statements:

· Half of the estimated capital investment of $303 million would be debt-funded and financed through rates, with the balance coming from other sources, such as government grants and the sale of non-core council assets

· Potential funding sources include Government grants; sponsorships; philanthropic grants; Government’s three waters reform ‘better off’ grant; and proceeds from the sale of noncore council assets. The amount of grant funding is uncertain, as we will not be in a position to seek funding support until we have approved plans in place

· Further investigation of assets sales is required, but potentially, this could include Council’s two central city parking buildings and the Marine Precinct. If these investigations prove favourable, it’s likely that further consultation would be undertaken with key stakeholders.

· If the full transformation goes ahead, we’ll firm up our funding options and check in at key project milestones to confirm we have the investment we need before we proceed.

6. The adopted LTPA included 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. The estimated net cost to ratepayers in the adopted LTPA is $151.5 million.

7. Council remains committed to limiting rates-funded debt for the Te Manawataki o Te Papa capital works project to $151.5 million. However, the project costs have been updated since June 2022 and the approved budget (subject to resolutions as per the Design and Cost Update Report on this agenda) will be $306.3 million, leaving $154.8 million to be funded via alternative sources (non-rates funding). In addition, some anticipated sources of external funding have been reduced, most notably the Waters Reform Funding (“Better Off” funding).

8. The LTPA consultation document stated that Te Manawataki o Te Papa funding packages and business case would be considered to enable Council to confirm whether the investment should proceed.

9. This report details a financial strategy for the Te Manawataki o Te Papa capital works which, in conjunction with Council’s asset realisation programme and the completed business case for Te Manawataki o Te Papa, provides the surety needed for the project to progress.

funding sources

10. The current project cost estimates and previous funding decisions has resulted in Council exploring alternative funding streams for the $154.8 million of capital funding needed for the project, with two main avenues being considered.

i. External funding – this refers to funding provided to Council by other organisations. It includes the Waters Reform Funding (“Better Off” funding) and other government and community grants, as well as growth funding (developer contributions).

ii. Airport activity and / or Asset Realisation Reserve funding – this refers to non-ratepayer debt funding which is only applied where there is insufficient external funding to meet the full $154.8 million. It includes funding from the Airport activity, i.e., non-ratepayer funded debt, and funds raised by selling of Council assets as outlined in the LTPA consultation document.

11. Increases to the amount of external funding will reduce the amount of debt sourced from the Airport activity and/or will allow Council to apply any proceeds from its Asset Realisation Reserve to other initiatives.

Proposed funding sources for Te Manawataki o Te Papa

12. Table 1 summarises the changes in the projected external funding from that consulted upon in the LTPA through to the current budgets and finally to an updated risk weighted estimate.

13. This highlights that there is currently an estimated $91.6 million funding gap to be met by other funding. The need for other funding was anticipated in the LTPA which referred to the sale of non-core council assets.

Table 1: Comparison of the funding sources as per the LTPA with current estimates

Funding Source	LTPA Estimate ($M)	Current Estimate ($M)	Current Risk Weighted^{^[3]} Estimated ($M)
External Non-Rates Funding
Waters Reform Funding (“Better Off” funding)	$33.2M	$12.1M*	$12.1M*
Other Government Grants	$49.1M	$23.6M	$14.2M
TECT Partnership	$27.0M	$27.0M	$21.0M
Local and Community Grants	$31.7M	$15.5M	$4.5M
Growth Funding (Developer Contributions)	$10.9M	$10.8M	$11.4M^{^[4]}
Total External Funding	$151.9M	$89.0M	$63.2M
Total Remaining Funding Required	$0	$65.8M	$91.6M
Total Non-Rates Funding	$151.9M	$154.8M	$154.8M
Rates Funded Debt (including Renewals)	$151.5M	$151.5M	$151.5M
Total Approved Budget for Programme of Works	$303.4M	$306.3M^{^[5]}	$306.3M

*Already received.

External Funding Sources

14. External funding sources are anticipated to include charitable community trusts, corporate partnerships, central government, and philanthropic grants.

15. The $12.1M “Better Off” funding payment received from government as part of the water reforms will also be allocated to Te Manawataki o Te Papa.

Tauranga Energy Community Trust (TECT)

16. TECT have now formally confirmed their ‘Founding Funder’ contribution of $21 million towards Te Manawataki o Te Papa, the largest amount of funding that TECT has ever contributed to any project of regional significance. TECT has indicated that this is the beginning of a long-term strategic relationship with Council to fund community facilities and amenities.

Other government grants

17. An expression of interest has been submitted to the Associate Minister for Arts, Culture and Heritage for significant funding from the Regional Culture and Heritage Fund, with a view to submitting a formal funding application closer to the construction date. This will be the first time that Tauranga has ever applied to this fund, which has provided significant funding towards similar projects in neighbouring councils, e.g., Rotorua.

18. We are also working closely with staff at the Department of Internal Affairs to determine which aspects of Te Manawataki o Te Papa would be of interest for grant funding from the Community Facilities fund.

Local and community grants

19. Staff have been working closely with various trusts, including the Gaming Trusts, to determine which particular projects, or aspects of projects, might fit their respective criteria and eligibility thresholds. Funding applications will be submitted closer to the date of construction, as per their requirements.

Corporate sponsorship and individual donor programmes

20. A detailed corporate sponsorship and individual philanthropic donor programme has been developed and staff are in early conversations with potential corporates and high net worth individuals that are keen to support the Te Manawataki o Te Papa civic development programme. Subject to receiving the ‘licence to proceed’, more specific conversations will commence and continue over the next three years.

Potential impacts on the funding environment

21. It should be noted that external funding is provided by organisations who have a range of competing priorities and is vulnerable to changes in political focus, and other community and environmental factors. Two pertinent examples of this include the recent flooding events across New Zealand, which required a cash injection from government, reducing funding available for other initiatives, and the Water Reform alterations (which resulted in the “Better Off” funding package for Tauranga being cut by $36.3 million).

22. As detailed above, Council is proactively applying for several grants to contribute to the external funding available for the Te Manawataki o Te Papa capital works project, as well as considering other future grant funding opportunities. Given the uncertainty that exists in the grant funding sector, a risk assessment has been undertaken for current and potential grant applications.

23. After adjusting for ‘known’ impacts a risk weighting was applied to the remaining grants. These were reviewed based on the following scale (Table 2) to determine a ‘likely’ outcome based on the current environment. It is acknowledged that this may change over the construction of projects and more external funding will be sought where possible.

Table 2: Criteria for reviewing potential grants

24. While this set of criteria has been used for determining the potential outcome of the external funding, this does not reduce the focus on collecting all the potential external funding. Council staff will continue to work on maximising these and other external funding opportunities.

Other Funding Sources

25. Although external funding is the priority funding source for the Te Manawataki o Te Papa capital works project, it is likely that Council will still require a level of other non-rates funding (other funding), to proceed with the project. It is anticipated that this will consist of:

· Divestment of business interests and Council properties (refer Asset Realisation Reserve report on this 24 July Council agenda).

· Funding from the Airport activity.

26. The Asset Realisation Reserve and Airport Activity Funding for Te Manawataki o Te Papa is not required immediately and may form part of funding over the life of the project. It will only be utilised once the rate-payer funding and external funding have been fully spent. Based on the current estimated external funding (risk weighted), this is currently projected to be, at the earliest, in year 3 of the delivery programme.

27. Table 3: Potential other funding sources

Funding Source	Estimated Realisable Value Gross $’s million’s	Estimated Realisable Value Net of Debt Repayment $’s million’s
Asset Realisation Reserve	$146.3	$97.7
Airport Activity Funding	$13.0	$13.0
Other Funding Options	Nil *	Nil *
Total Other Funding Identified	$159.3	$110.7

Total Other Non-Rates Funding Required (Table 1)	$91.6	$91.6

* This is nil for the purpose of inclusion in this report but note that further opportunities will be available in the future. These opportunities need considerable work to realise and understand true value.

28. Table 3 above details the estimated realisable value both gross and net of debt repayment for the associated assets. This matter is addressed in the Asset Realisation Reserve Report.

29. Council staff have deliberately identified a greater amount of other funding for Te Manawataki o Te Papa than is currently required. This creates a funding buffer in the event of one or more of the following:

· Asset Realisation Reserve: Some of the assets identified for realisation require further analysis and market testing. It is possible that Council may subsequently decide not to dispose of the asset or may attach conditions to the disposal that reduces the realisable value.

· External funding shortfalls: This funding buffer could be used if Council is unable to secure further External funding within the required timeframe.

· Overruns: Council may decide to utilise the buffer if unforeseen/unbudgeted project costs (due to inflationary pressures, supply-chain uncertainties etc) occur.

Other Funding - Utilisation of non-ratepayer funded surpluses

30. While most of Council’s activities are funded by the ratepayers, there are several activities that are funded directly by user fees. For these activities we have undertaken a three-step process to determine what funding might be available for the Te Manawataki o Te Papa project.

Step1: Link to City Centre activity

31. Step 1 is to assess the linkage to the city centre both in terms of impact that the activity has on the city centre and the geographic proximity. Results are summarised in Table 4 below.

Table 4: Link to City Centre for user fee funded activities.

This was based on the following criteria

Step 2: Identify the maximum funds available

32. A review was completed of the ongoing cash surpluses for key activities, as identified above. This includes all the activities related to the sale of business interests. Cash surpluses were reduced by 20% to ensure the activity could survive future funding shocks (reduced revenues) (e.g., short term shutdowns from covid).

33. On this basis it was determined that the airport activity could potentially fund up to $45 million of the Te Manawataki o Te Papa project. This could be done by way of an annual transfer.

Step 3: Specifically identify the level of funding which would be appropriate to apply to Te Manawataki o Te Papa

34. The airport is the only activity identified that has both strong links with the city centre combined with available surpluses.

35. An assessment has been undertaken (refer confidential attachment) to determine whether it is appropriate, and if so at what level, funding from the airport activity could be applied to the Te Manawataki o Te Papa project. Key factors in that assessment include:

· Requirements of the Airport Authorities Act 1966

· Level of airport patronage from international and domestic tourism visitors

· Level of international and domestic (excluding local and regional domestic) visitors to the individual Te Manawataki o Te Papa facilities.

· Expected benefit to the airport measured in terms of increased visitor numbers.

36. In performing the assessment, it was also noted that Visitor I-Site will be housed within the community hub and that capital cost of that I-Site facility is currently estimated at $972,000.

37. Based on the assessment undertaken it has been concluded that $13m could be appropriately funded from the Airport Activity. It is proposed that this would be achieved by way of an airport activity loan repaid from the Airport Activity over an appropriate period. It is important to note that this is subject to consultation with direct airport stakeholders and further legal advice.

38. While operating costs are not within the scope of this report, and subject to further legal advice, it is noted that Council could also consider covering some of the ongoing operational costs of Te Manawataki o Te Papa from airport funding.

39. Utilising funding from the airport has a disproportional impact on Council’s debt to revenue ratio (which limits Council’s total borrowing). This is because the debt is new, but there is no corresponding increase in revenue (as the revenue is already accounted for in budget forecasts).

Possibility of Using the Infrastructure Funding and Financing Legislation to Raise Ratepayer Funds

40. Approximately half of the funding needed for the Te Manawataki o Te Papa capital works project, $151.5 million, will be met via ratepayer funded debt. The recently introduced Infrastructure Funding and Financing (IFF) legislation has already been used by Council to fund several transport related programmes and provides a potential avenue for Council to use to raise funds for Te Manawataki o Te Papa.

41. IFF legislation allows local governments to raise funds via a ratepayer levy and has the advantage of removing associated debt from local governments’ balance sheets.

42. Council has commenced discussions with Crown Infrastructure Partners (CIP) to determine whether the ratepayer funded portion of Te Manawataki o Te Papa could be sourced via an IFF levy. Initial conversations with CIP and other partners have been positive.

43. Two pieces of work are currently underway:

· A beneficiary analysis is being completed by Council staff and external consultants, Insight Economics. This work identifies and assesses the expected beneficiaries/users of Te Manawataki o Te Papa. It is anticipated that some of the beneficiaries will come from beyond the Tauranga city (Council) boundaries.

· The second piece of work is a more detailed analysis of the projects within the Te Manawataki o Te Papa programme to determine if they are eligible for funding under this legislation.

44. The initial findings from both pieces of work are positive, with a wide range of beneficiaries being identified and most of the expenditure falling within the definitions of the IFF Act. Once complete, this work will be taken to the Crown Infrastructure Partners board to seek endorsement of this project.

45. Amongst other things the major benefits of an IFF levy for this project are:

· A transparent separate charge for Te Manawataki o Te Papa;

· A long-term charge established over a 30-year period which may attract further external funding certainty; and

· A further $150+ million of funding removed from Council’s constrained balance sheet, which will assist Council to manage its financial programme as it develops its upcoming Long-Term Plan.

46. A detailed programme is currently being developed to align with the Long-Term Plan process.

Options Analysis

Option One (recommended)

47. Council approves the financial strategy for the Te Manawataki o Te Papa capital works project as set out in this report, the key elements of which are:

· A maximum of $151.5 million of project costs to be met by rate-payer funding.

· The remaining capital costs to be met by a combination of external funding and other funding, with the priority funding source to be external funding and other funding to only be utilised once ratepayer funding and external funding has been fully spent.

48. Key risk: that Council is not able to achieve the projected levels of external funding, resulting in the need to increase other funding beyond the amount that this report anticipates.

Advantages

Disadvantages

· Aligns with Council’s commitment to limit rate-payer funding for the project to $151.5 million.

· Provides a financial strategy that allows the project to proceed.

· Commits to maximising external funds as a priority, ideally lessening the requirement to utilise other funding sources.

· Remaining work is required to secure the full amount of external funding anticipated by this report.

· Remaining work is also required to secure some of the funds envisaged to contribute other funding (refer to the Asset Realisation Programme report).

Option Two (not recommended)

49. Alternative option – Council reduces the requirements for external funding and other funding by increasing the amount of ratepayer funding for the Te Manawataki o Te Papa capital works project above $151.5 million, noting that if Council wished to proceed with this option, it would require further community consultation via the 2024-2034 Long Term Plan process before a decision could be made.

50. Key risks: that project delays caused by the need to reconsult place the viability of the project at risk and decrease investor confidence, and that the community is unsupportive of any proposal to increase the ratepayer funding for the project.

Advantages

Disadvantages

· Decreases the amount of external funding and other funding required (both of which require further work before funds can be realised).

· Project delays place the viability of the project at risk and decrease investor confidence.

· Ratepayer costs are increased.

· Council’s overall balance sheet is negatively impacted by increasing ratepayer debt levels.

· Requires further community consultation, in addition to that which already occurred as part of the recent Long Term Plan Amendment. This would need to occur via upcoming 2024-2034 Long Term Plan process.

legal and policy Implications / Risks

51. Legal and policy considerations have been addressed as follows:

· Use of airport activity funds (refer confidential attachment).

· Asset realisation reserve (refer Asset Realisation Report on this 24 July Council agenda.

Consultation / Engagement

52. The civic precinct, Te Manawataki o Te Papa, was consulted on as part of the 2021-2031 Long Term Plan Amendment in 2022, at which point Council decided to move forward with the project conditional upon:

· Rates-funded debt for Te Manawataki o Te Papa being limited to $151.5 million.

· Funding packages and business cases being confirmed before making the final decision to proceed with Te Manawataki o Te Papa.

53. Further consultation is anticipated for elements of the other funding, for example the proposed sale of properties and assets (such as the carparking buildings) will likely need to be consulted on individually in accordance with the Significance and Engagement Policy, Property Acquisitions and Disposals Policy and the requirements of the Local Government Act 2002.

54. Further consultation will also be likely required with direct airport stakeholders over the use of airport funds to contribute to the Te Manawataki o Te Papa costs.

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 (the 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 decisions.

57. In accordance with the considerations above, and criteria and thresholds in the Policy, it is considered that the decisions proposed by this report are of medium significance, as they follow the direction set by previous decisions made which were of high significance and consulted on as per the requirements of the Policy and the Local Government Act 2002.

ENGAGEMENT

58. Taking into consideration the above assessment, that the decisions are of medium significance, that the significant matters have either already been consulted on, or will be consulted on in future (for some asset disposals and airport funding issues), officers are of the opinion that no further engagement is required prior to Council making the decisions recommended by this report.

Next Steps

59. If the recommendations of this report are adopted, the next steps will be to progress further work required to implement the financial strategy for the Te Manawataki o Te Papa project as outlined by this report.

Attachments

1. Confidential Attachment to TMoTP Financial Strategy Report - Airport Funds Legal Advice and Associated Analysis - A14860084 - Public Excluded

2. Legal Advice re Airport Authority - A14860929 - Public Excluded

3. Assessment of Airport Surplus Allocation to Te Manawataki o Te Papa - A14866032 - Public Excluded

Ordinary Council meeting Agenda

24 July 2023

11.5 Asset Realisation Reserve

File Number: A14836606

Author: Simon Collett, Manager Commercial Property

Authoriser: Marty Grenfell, Chief Executive

Please note that this report contains confidential attachments.

Public Excluded Attachment	Reason why Public Excluded
Item 11.5 - Asset Realisation Reserve - Attachment 2 - Potential Sale Properties and Estimated Values - Confidential - 24 July 2023	s7(2)(i) - The withholding of the information is necessary to enable Council to carry on, without prejudice or disadvantage, negotiations (including commercial and industrial negotiations).
Item 11.5 - Asset Realisation Reserve - Attachment 3 - KPMG Report - Asset Realisation Reserve (12 July)	s7(2)(i) - The withholding of the information is necessary to enable Council to carry on, without prejudice or disadvantage, negotiations (including commercial and industrial negotiations).

Purpose of the Report

1. This report seeks Council approval to create an Asset Realisation Reserve (the Reserve) approach. The Reserve approach will be used to identify, manage property and assets pending divestment, and to hold resulting disposal proceeds. Council will be able to by resolution allocate funds held in the reserve to capital projects, with Te Manawataki o Te Papa identified as the first capital project to receive funds from the Reserve.

Recommendations

That the Council:

(a) Receives the report "Asset Realisation Reserve".

(b) Approves the creation of an Asset Realisation Reserve approach which will be used to:

i) Manage Council properties and assets, initially acquired from sources other than the Strategic Acquisitions Fund, which have been assessed as:

· No longer needed for operational or strategic purposes, or

· Identified as available for disposal (externally or to a Tauranga City Council activity) to achieve a strategic purpose and a defined trigger or timeframe for that disposal has been determined; and

· Includes, for avoidance of doubt, assets associated with commercial activities that Council no longer wishes to own or operate.

ii) Hold the resulting sale proceeds from Council properties and assets.

iii) Fund Council capital projects, with the decision to fund capital projects from the Asset Realisation Reserve to be made via Council resolution.

(c) Approves that on sale of assets managed through the Asset Realisation Reserve approach, any debt associated with that asset will be not repaid unless Council, by further resolution, determines full or partial debt repayment shall occur.

(d) Notes that property or an asset identified to be managed through the Asset Realisation Reserve approach is not necessarily a decision to sell that property or asset, but a recognition that the property/asset is no longer required by Council for operational purposes or is available for strategic disposal.

(e) Notes that an annual review of Council’s property holdings will be undertaken, with those properties which are identified as no longer required by Council for operational purposes or are available for strategic disposal managed through the Asset Realisation Reserve approach.

(f) Notes that the potential sale of any Council properties or assets held by the Asset Realisation Reserve will be assessed and managed on a case-by-case basis and in accordance with Council’s legislative requirements and policies, including the Property Acquisitions and Disposals Policy and Significance and Engagement Policy.

(g) Approves all the properties listed in Attachment 1, subject to not being required for any alternate operational purpose, being managed through the Asset Realisation Reserve approach and approve staff to progress the sale or potential sale of those properties.

(h) Approves the Asset Realisation Reserve to be used as a source of funding for the Te Manawataki o Te Papa project in the first instance.

(i) In accordance with section 80 of the Local Government Act notes that, with respect to the decision to hold sale proceeds in the newly established Asset Realisation Reserve:

i) The decision is inconsistent with the Property Acquisitions and Disposals Policy (section 5.8.5) which states that proceeds from the disposal of surplus property will be returned to the council activity that funded the purchase; and

ii) The reasons for the decision are addressed in this Asset Realisation Reserve Report; and

iii) Council intends to amend the Property Acquisitions and Disposals Policy to accommodate the decision.

(j) Retains the information contained within Attachments 2 and 3 in public excluded until the respective property sale has been completed. Details associated with unsold properties will remain confidential and are to be redacted from any public release.

Executive Summary

2. This report proposes the establishment of an Asset Realisation Reserve approach by Council to facilitate the funding and sale of non-core Council assets as outlined in the 2021-2031 Long Term Plan Amendment (LTPA). The reserve will transparently manage the sale of Council properties and assets and hold the resulting proceeds, which will be allocated to capital projects based on highest need.

3. The proposal aligns with Council's commitment to strategic and coordinated property management and will be supported by an annual property review process. The management of properties through the Asset Realisation Reserve approach does not imply an immediate decision to dispose of them, as disposal decisions will be made on a case-by-case basis following the transfer.

4. This report presents three issues for consideration and decision.

i. The proposal to establish an Asset Realisation Reserve approach and the criteria for identifying properties to be managed through that approach.

ii. The treatment of debt associated with properties in the reserve.

iii. The list of properties proposed for management through the Asset Realisation Reserve approach, which includes the Marine Precinct, central city carparking buildings, “Smiths Farm”, “Pōteriwhi” (Parau Farms), and various other Council properties. The total estimated gross value of these properties is $146.3 million (and $97.7 million net of debt).

5. This report emphasizes that property values are influenced by wider economic performance and interest rates. It recommends considering future revenue assumptions and developing a parking strategy to maximise the value of the carpark buildings and inform any subsequent divestment. Further work will also be completed to develop a divestment strategy for the Marine Precinct.

6. The report highlights the financial considerations, legal implications, risks, and the need for consultation and engagement on individual property sales as required.

7. Any future sale processes will be managed on a case-by-case basis and in accordance with Council’s legislative requirements and policies, including the Property Acquisitions and Disposals Policy and Significance and Engagement Policy.

Background

8. Through the 2021-2031 Long Term Plan Amendment (LTPA) Council noted the following:

· Council needs to explore new ways of funding; and

· With respect to Te Manawataki o Te Papa the sale of non-core Council assets was identified as a potential funding source. The consultation document stated “Further investigation of assets sales is required, but potentially, this could include Council’s two central city parking buildings and the Marine Precinct. If these investigations prove favourable, it’s likely that further consultation would be undertaken with key stakeholders.”

9. This report proposes the establishment of an Asset Realisation Reserve (the Reserve) approach by Council to create a vehicle to achieve the funding and asset disposals outlined in the LTPA.

Proposal to Establish an Asset Realisation Reserve

10. Council acquires property to support the demands of growth and enable the timely provision of infrastructure and services, with the overall objective of enhancing the lifestyle, amenity and liveability of the City and delivering improved wellbeing for the City’s residents.

11. Over time, as the needs of the City change and infrastructure projects are completed, some of Council’s property portfolio is no longer required. When this occurs, there is an opportunity for Council to sell its surplus property.

12. Council may also choose to dispose of property to achieve a strategic outcome for the City. An example of this is the sale of Council’s elder housing portfolio to Kāinga Ora: Homes and Communities, which ensured these sites will be used to increase the quantity and quality of public housing for the city.

13. This report proposes establishing the Reserve, which will be used as a vehicle to transparently manage the sale of Council properties and assets, and to hold any resulting proceeds. Council would then allocate funds from the Reserve to capital projects.

14. Establishing the Reserve will form part of Council’s ongoing commitment to acquire, hold and dispose of property and assets in a strategic and coordinated manner, and would be established alongside an annual property review process. Holding net sale proceeds in the Reserve allows Council to transparently allocate funding and the benefits of capital gains from the Reserve to projects based on highest and best need.

15. The identification of a property or asset to be managed through the Reserve approach may not necessarily be a decision to dispose of that property or asset. Disposal decisions will be made on a case-by-case basis and managed in accordance with then current Council policy.

Current Council Policy

16. There is some guidance within Council policy as to how sale proceeds and associated debt is to be treated.

17. The Property Acquisitions & Disposals Policy provides:

· 2.1 “This policy relates to the acquisition and disposal of council property; except for …. acquisition of stormwater- affected property.”

· 5.5.4; “When the Strategic Acquisitions Fund is used to purchase property, which is later used for operational purposes, the relevant council activity will then account internally for the purchase of the property. The notional purchase amount will be based on the amount the property was originally purchased for, including any legal and valuation costs incurred at the time of purchase, plus holding costs. The monies will be reimbursed to the Strategic Acquisitions Fund. Consideration may be given to the current market value and the original reason for purchase.”

· 5.8.5 The proceeds from the disposal of surplus property will be returned to:

o the council activity that funded the purchase, or;

o the Strategic Acquisitions Fund if the purchase was funded by the Strategic Acquisitions Fund.

· 5.5.5 to 5.5.7:

o Budget is allocated to the Strategic Acquisitions Fund per annum.

o Unspent funds and proceeds reimbursed to the Strategic Acquisitions Fund will be carried over into the following financial year.

o The Strategic Acquisitions Fund will be capped once the amount contained in the fund equals or exceeds the total amount of budget allocated over the previous three years. Future annual budget allocations will resume once the amount in the Strategic Acquisitions Fund is less than the total amount of budget allocated over the previous three years.

18. The Treasury Policy provides in 5.1.4:

“Council will repay borrowings from general funds, proceeds from the sale of investments and assets unless the Council specifically directs that the funds will be put to another use.”

19. Policies are created by Council resolution and the Local Government Act 2002 (section 80) address the matter of situations where Council subsequently makes a decision which is inconsistent with adopted policy:

“If a decision of a local authority is significantly inconsistent with, or is anticipated to have consequences that will be significantly inconsistent with, any policy adopted by the local authority or any plan required by this Act or any other enactment, the local authority must, when making the decision, clearly identify:

o The inconsistency; and

o The reasons for the inconsistency; and

o Any intention of the local authority to amend the policy or plan to accommodate the decision.”

20. Legal advice has confirmed that if Council sells an asset, and it otherwise still meets its debt covenants, Council can choose whether to use the proceeds to repay debt, or to use the proceeds for another purpose.

21. In summary the above guidance and legal framework generally provides that:

· With respect to property funded from the Strategic Acquisitions Fund:

o Proceeds of disposal will return to the Strategic Acquisition Fund; and

o Proceeds will reduce the required annual budget allocation to the Fund.

· With respect to property funded from an activity:

o Proceeds from the property sales will return to that activity (except that there is no similar requirement for stormwater affected properties); and

o Proceeds will be used to repay debt.

· Council, can by resolution:

o Direct proceeds from sale of assets to a use other than debt repayment; and

o Decide not to act in accordance with an adopted policy provided that decision is transparently made, and specific Local Government Act 2002 requirements are complied with.

Issue 1 – Decision on establishing an asset realisation reserve

22. Property owned by Council is currently funded and held in either:

· The Strategic Acquisitions Fund; or

· An activity of Council.

23. It is proposed that the Reserve is established, with property managed through the Reserve where it is identified that:

· Either the property is no longer required for operational purposes, or it is available for disposal to achieve a strategic objective; and

· There is a defined trigger or timeline for the disposal to occur.

24. It is also proposed that there be an annual (or more frequently as appropriate from time to time) review of properties both within the Reserve and within activities to ensure that they are proactively managed, and that any property no longer required or available for strategic disposal is actively identified. Identification of property to be managed through the Reserve approach would be via Council resolution.

25. Proceeds from the divestment of property would be held in the Reserve and distributed in accordance with Council resolutions.

26. Issue 1 – Option 1

Establish an Asset Realisation Reserve including property funded from the Strategic Acquisition Fund and Council Activities

Advantages

Disadvantages

· Requires an annual (at minimum) review of all property and identify property available for disposal through the reserve for active management.

· Captures property value and enables Council to make a transparent decision on how that value should be applied.

· Enables property not required for operational purposes to be removed from the activity and managed by a dedicated team with property expertise.

· Increases transparency regarding Council’s programme of potential property sales.

· The Strategic Acquisitions Fund would require additional debt to be raised as proceeds would not be reinvested in the fund and therefore less funds would be available for strategic acquisitions.

· Activities do not benefit from any capital gains resulting from property held by their activity being sold.

27. Issue 1 – Option 2

Establish an Asset Realisation Reserve for property funded from Council Activities

Advantages

Disadvantages

· Advantages same as option 1

· Strategic Acquisitions Fund can continue to operate as it currently does.

· Activities do not benefit from any capital gains resulting from property held by their activity being sold.

28. Issue 1 – Option 3

Do not establish an Asset Realisation Reserve

Advantages

Disadvantages

· None identified

· Does not enable Council to make a transparent decision on how capital gains realised by sale of property are applied (as capital gains from sale proceeds are automatically allocated to the activity which held that property).

· Does not enable property not required for operational purposes is be removed from the activity and managed by a dedicated team with property expertise.

· Provides less transparency regarding Council property which may at a future point be available for sale.

29. Recommendation

It is recommended that Option 2 be approved.

Issue 2 – Treatment of Debt Associated with properties in the asset realisation reserve

30. Council records debt associated properties against the activity for which the property is acquired.

31. The Treasury Policy provides, as noted in paragraph 18 above, that proceeds from sale of assets will be used to repay debt unless the Council specifically directs that the funds be put to another use.

32. The following options can be considered:

· Option 1: Upon selling a property, repay any associated debt.

· Option 2: Upon selling a property retain debt in an activity of Council to the extent that there is an available non-rate funding source to repay that debt and repay the balance of the debt.

· Option 3: Upon selling a property all debt retained within the activity associated with that property.

33. The rationale underpinning Option 3 is that there is no additional debt and Council is recycling or exchanging one asset for another by applying the gross proceeds to an alternative asset.

34. Option 3 results in the most funds being available for investment by way of Council resolution.

35. Options 2 & 3 result in higher debt levels than option 1.

36. Option 3, for assets from rate funded activities, Council may require rate funded debt in future years.

37. Recommendation

It is recommended that Option 3 be approved.

Properties and Assets Identified for Transfer to the Asset Realisation Reserve

38. Should Council decide to establish the Reserve, a list of Council properties to be managed through the Reserve approach are identified in Attachment 1. Confidential attachment 2 provides a breakdown of the estimated values at an individual property level.

39. As noted above, management through the Reserve approach is not necessarily a decision to divest/sell these properties. It is that Council has completed an initial assessment that the properties are:

· Not required to deliver core business; or

· Should be disposed of (either externally or internally) to achieve a strategic objective;

and

· Are in the first stage of any resulting disposal process.

40. Properties recommended to be managed through the Reserve approach include the Marine Precinct, central city carparking buildings, “Smiths Farm”, “Poteriwhi” (also known as Parau Farms) and a range of other Council properties. The total estimated gross value of these properties is $146.3 million (and $97.7 million net of debt).

41. It is intended that over time the Reserve will be used to providing funding for a range of Council’s capital projects, with Te Manawataki o Te Papa being the first of these, as is recommended by the Financial Strategy for Te Manawataki o Te Papa report.

42. If Council decides to proceed with the properties listed in Attachment 1, any resulting sale processes will be managed at the individual property level with reports to Council as needed.

43. Sale processes will be managed in accordance with the disposal requirements outlined in Council’s Property Acquisitions and Disposals policy and with consultation as required by Council’s Significance and Engagement Policy.

The Marine Precinct

44. The Marine Precinct (also known as Vessel Works) is a marine servicing hub located at the Sulphur Point Marine Precinct. It offers a wide range of marine services and facilities for commercial and recreational vessels, including haul-out, launch, berthage, fuelling, and unloading. The initial development included a 6,300m2 hardstand, deep water marina berths, and a large travel lift capable of hauling 350T vessels. Further development stages, such as expanding the hardstand space and adding additional buildings, are still being considered.

45. The Marine Precinct was initially funded by the Council and the Bay of Plenty Regional Council (BOPRC) through land sales and the Regional Infrastructure Fund (RIF), respectively.

46. The Precinct is currently owned and operated by the Council and holds approved Ministry for Primary Industries transitional facility status. It caters to a range of recreational users, from fishermen to boat owners, while also providing a base for boat building and refit businesses in Tauranga. The Marine Precinct's strategic location and direct connection to the transport network make it an ideal spot for marine businesses.

Figure 1: Scheme Plan for Marine Precinct

Diagram, map

Description automatically generated

47. The vision for the Marine Precinct, shared by Council and BOPRC, is to support the growth of the region's commercial marine sectors, thereby benefiting the local community. It is proposed to achieve this by developing the site as a marine refit hub for commercial working fleets and super yachts, and to provide related support facilities for commercial vessels.

Requirement to Operate as a Marine Precinct

48. The obligation to develop and operate the site as a Marine Precinct is established through covenants registered against the property and a 2014 Heads of Agreement (HoA) between the Council and BOPRC.

49. The covenants, in favour of the Council and Port of Tauranga, state that activities on the site must be "Marine Related Activities," defined as operations or activities that provide goods and/or services to the marine industry. The Council is responsible for enforcing the covenants, with the option to seek Port approval if needed.

50. The HoA outlines various conditions, including restrictions on transferring the Marine Precinct land without BOPRC's approval and a repayment clause for the grant provided by BOPRC.

TwentyTwo Report

51. The Council engaged TwentyTwo consultants to assess future development and leveraging options for the Marine Precinct. The resulting report compares different development and operating models for the precinct.

52. This TwentyTwo report recommends that the Council considers selling the land to a third party, relying on the land covenants and the purchaser's reputation in the relevant market. Regional Council consent would be necessary for any divestment, with the wharves likely excluded from the divestment process.

Next steps

53. This Council report recommends managing the Marine Precinct through the Reserve approach. This would only be the first step moving towards divestment of the Marine Precinct and further work would occur to develop a divestment strategy for the Precinct, with any future disposal occurring in accordance with Council policy.

Carparking Buildings – Spring Street and Elizabeth Street

54. Council owns two carparking buildings located in central Tauranga, the Spring Street carparking building (453 carparks) and the Elizabeth Street carparking building (620 carparks). Council has recently reintroduced parking charges for on-street (berm) parking in the city centre, and as a result the fee-based carparking buildings are now a more attractive option than previously (when people could park for free on the street).

55. Council’s long-term strategy for carparking management in the city is to reduce on-street carparking and implement carparking restrictions. Additionally, the Draft Tauranga City Centre Parking Assessment (TCCPA) – Stantec Report Dated 17 November 2022 highlights significant growth projections for the CBD in terms of housing units, jobs, and students and makes the following conclusions:

· Carparking supply in the city centre is expected to decrease by 2025, in part due pending developments.

· There is a strong desire to drive and park close to destinations.

· The assessed access gap indicates a potential shortage of parking spaces.

56. In December 2022 KMPG completed a market sounding on Council’s behalf, assessing the sale potential of the two carparking buildings. This report concluded that:

· Interested parties suggested the buildings should continue as car parks.

· Redevelopment of the sites is unlikely.

· The seismic ratings of the buildings may impact their value.

· Cashflows, rather than land or building values, would determine the sale price.

57. This report seeks approval to manage the carpark buildings through the Reserve approach. The next step would be to begin the potential sale process, as per Council’s Property Acquisitions and Disposals Policy. Any sale process would address consultation requirements, as required under Council’s Significance and Engagement policy.

58. If Council decides to divest of the carpark buildings, it can consider a number of matters including (but not limited to):

(a) whether to sell to a carpark operation or to an investor with a lease-back arrangement; and

(b) whether any conditions such as ongoing availability of public carparks would be appropriate.

59. The values of the carparks are largely dependent on their future revenue assumptions which will be further developed in coming months along with the parking strategy to support Te Manawataki o Te Papa and the city centre.

60. The carpark building issues and sale approaches will be explored in detail in a subsequent report to Council focused solely on the potential sale of the carpark buildings. Any future disposal/s will occur in accordance with Council policy.

Smith’s Farm

61. The land known as “Smiths Farm” at 10 Richards Way, Bethlehem provides approximately 13-14ha of developable land and is zoned as medium density residential under Plan Change 33. Council is progressing development of this greenfield site via an open market disposal process.

62. In addition to the mandated minimum of 255 new dwellings and the option for 20% of the social / affordable housing land within the development to be made available for the Housing Trust arrangement which Council is currently exploring, Council is also seeking to achieve a blend of the following outcomes alongside optimised commercial return:

· Enabling housing supply.

· Encouraging improved housing affordability including affordable rentals, mixed tenure, shared equity, or other such innovative schemes.

· Encouraging quality density by the integrated and comprehensive design of a master planned medium density development.

· Community and cultural collaboration, employment and social initiatives.

63. Council has completed an Expressions of Interest process for Smiths Farm and shortlisted four responses. The next step in the process is a Request for Proposal with the aim of securing an unconditional sale and purchase agreement in 2024. However, the settlement date for this property will be 18 months+ from the date of sale due to siteworks. This disposal has been assessed under Council’s Property Acquisitions and Disposals policy, and was classified as a strategic disposal

Poteriwhi (Parau Farms)

64. This is a Council owned site of approximately 22 hectares in Bethlehem and was purchased by Council in 2000 for sports fields. The land is well placed for housing, close to shops, schools and other amenities, including public transport.

65. Council has engaged with Ngati Kahu and has undertaken public consultation on the utilisation of this site.

66. At the 19 June 2023 Council meeting, Council:

· Approved the Pōteriwhi land use change to include retention of land for sports fields, passive reserves, stormwater and river access, with the remainder of land being disposed for housing purposes

· Endorsed in principle the updated concept plan for Pōteriwhi which included 11 hectares of housing land.

67. Sale of this site is expected to occur in the medium term (i.e., 3-6 years). It is proposed that the housing land area be managed through the Reserve approach. Council policy will be considered prior to any disposal approach being approved.

Other Council properties

68. Council owns a range of other properties across the City and Western Bay which have been identified as potentially suitable for sale in the short or medium term (refer Attachment 1.)

69. Some of these properties can be sold within the short term (1-3 years), whilst others would take longer to sell (3-6 years). This report recommends managing these properties through the Reserve approach. Some of these properties may be subject to consultation before a sale can be affected. Relevant Council policy will apply.

Economic considerations

70. Property values are closely correlated to wider economic performance. The current high interest rates are negatively impacting property values and it is not expected for property values to increase until interest rates fall, and the economy moves out of its downward cycle. A sensitivity test has been applied to estimated values to account for this (refer confidential Attachment 2).

Issue 3 – Management of Properties and Assets through the Asset Realisation Reserve approach

71. Issue 3 – Option 1

Manage all the properties listed in Attachment 1 through the Asset Realisation Reserve approach.

Advantages

Disadvantages

· Property which is not required for operational purposes will be managed by a dedicated team with property expertise.

· There is a high level of transparency regarding Council’s potential property disposal programme.

· There is increased certainty regarding Council’s commitment to the proposed funding strategy for Te Manawataki o Te Papa.

· May result in properties being managed through the Reserve approach which Council then decides not to sell (although this is potentially a risk with all options).

72. Issue 3 - Option 2

Manage through the Reserve approach only those properties categorised in Attachment 1 as a short-term priority for potential sale.

Advantages

Disadvantages

· Allows for further work to occur regarding those properties identified as medium-term sale prospects, meaning that when Council comes to decide whether to manage those properties through the Reserve approach, there is greater certainty regarding future sale timeframes, proceeds and processes.

· Does not provide as much certainty regarding Council’s potential disposal plans as managing properties through the Reserve approach would.

· May make the funding strategy for Te Manawataki o Te Papa appear less certain.

73. Issue 3 - Option 3

Do not identify any properties for management through the Reserve approach at this time. Proceed on a case-by-case basis as recommended by subsequent reports to Council.

Advantages

Disadvantages

· Allows for greater in-depth consideration of each property/asset prior to managing it through the Reserve approach.

· Does not provide as much certainty regarding Council’s potential disposal plans as identifying properties now would.

· Does not allow for ‘bundling’ of potential sale properties in Council reports, creating extra work for both Council staff and Commissioners.

· May lengthen sale times, impacting on potential cashflow for Te Manawataki o Te Papa.

· May make the funding strategy for Te Manawataki o Te Papa appear less certain.

74. Recommendation – Issue 3

It is recommended that Option 1 be approved.

Strategic / Statutory Context

75. The Local Government Act 2002 requires councils to promote the social, economic, environmental, and cultural well-being of their communities in a balanced and sustainable manner.

76. The creation of the Reserve will assist Council to meet its responsibilities to promote overall community wellbeing, as it assists Council to manage its divestment programme strategically and transparently and facilitates a considered approach to the reinvestment of sale proceeds into capital projects rather than sale proceeds automatically returning to Council activities or to the general fund.

Financial Considerations

77. Many of the assets generate income for Council. This income will be forfeit as a result of any divestment. The loss of income will need to be considered with respect to any sale, although this report notes the financial return on capital is generally low (setting aside any community or other non-financial benefits the assets provide).

78. The sale of non-core Council assets and strategic disposal of assets such as the central city carparking buildings was anticipated as a revenue stream for the Te Manawataki o Te Papa capital project by the LTPA consultation document. This report provides more detail regarding potential achievable proceeds and together with the Financial Strategy – Te Manawataki o Te Papa report, delivers certainty regarding Council’s ability to fund the civic precinct development.

Legal Implications / Risks

79. Each property/asset will have its own set of legal risks attached to it. These will be considered on a case-by-case basis. General legal considerations, which may apply to a number of properties, are discussed below. These will also be considered specific to each property as it is assessed for potential disposal.

Section 40 Public Works Act 1981 (PWA)

80. Section 40 of the PWA requires Council, when selling land that is no longer required for a public work, to offer that land back at current market value to its previous owner (or their successor).

81. There are exceptions to this. That is, where:

· Council considers that it would be impracticable, unreasonable, or unfair to do so; or

· There has been a significant change in the character of the land in connection with the public work.

82. Whilst Section 40 of the PWA does not prevent sale of land by Council, it can lengthen the sale process.

State-Owned Enterprises Act 1986 (SOE Act)

83. Some of Council’s central city properties (the Spring Street carpark for instance) have a Section 27A SOE Act memorial on them.

84. Where any land is transferred to or vested in a State Enterprise, the record of title will include the words “Subject to section 27B of the State-Owned Enterprises Act 1986 (which provides for the resumption of land on the recommendation of the Waitangi Tribunal and which does not provide for third parties, such as the owner of the land, to be heard in relation to the making of any such recommendation)”.

85. This means the Waitangi Tribunal may require that the land be returned to Manu Whenua.

86. In practice this is not possible/achievable, as the relevant properties are part of a larger block containing several titles with a substantial structure over them. An example of this is the Spring Street carpark building. It is much more likely that the Tribunal would order a monetary compensation from the Crown with respect to such properties.

KPMG Summary of Findings

87. KPMG conducted a review of this report and its appendices, focusing on several key areas (see Summary of Findings - Attachment 3). In the Summary of Findings, KPMG:

(a) Comments on the overall robustness of the conclusions and supporting analysis presented in this report.

(b) Conducts a specific review and provides comments on the saleability assessment for the priority properties. They also provide high-level comments on the sensitivities applied to sale prices.

(c) Offers more detailed comments on the saleability of the car parking buildings and outlines the necessary steps that need to be taken before divesting these assets.

88. The Summary of Findings does not include an examination of the internal structuring and process related to setting up the Reserve. They also do not comment on the debt position of individual properties or the overall debt situation of Council.

89. Furthermore, the Summary of Findings does not cover certain factors such as zoning, iwi engagement, or Public Works Act status.

90. Whilst generally supportive of the methodology and sensitivities applied, KPMG's Summary of Findings (Attachment 3) makes several recommendations and highlights material issues regarding the saleability and pricing of certain properties.

91. KPMG suggests that the Council, in the next phase of its work, assesses if there will be any significant impacts on borrowing capacity resulting from the foregone revenue caused by prioritised divestments. Alternatively, Council can create a plan to reduce existing debt using the proceeds from the divestments.

92. KPMG also recommends identifying any asset-specific issues that may affect the speed of bringing the assets to sale in the upcoming divestment work.

Consultation / Engagement

93. No consultation has occurred in relation to the proposal to create the Reserve and none is required. Consultation will occur for individual property/asset sales as appropriate.

Significance

94. 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.

95. 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 decisions proposed by this report; and

96. In accordance with the considerations above, criteria and thresholds in the policy, it is considered that the decisions proposed by this report are of low significance.

97. The assessment of low significance reflects that adopting the recommendations made by this report does not necessarily equate to a decision to divest of any Council property. Any property divestment will be dealt with its individual merits in accordance with the relevant policies (including Council’s Significance and Engagement Policy), requirements and legislation.

ENGAGEMENT

98. Taking into consideration the above assessment, that the decisions proposed by this report are of low significance, officers are of the opinion that no further engagement is required prior to Council adopting the recommendations.

Next Steps

99. If Council approves the creation of the Reserve, and the list of properties/assets to be managed through the Reserve approach as recommended by this report, the next steps would be to develop an individualised divestment plan for each property/asset, with subsequent reports to Council and community engagement/consultation as required.

Attachments

1. Property List - Public - 24 July 2023 - A14858964 ⇩

2. Potential Sale Properties and Estimated Values - Confidential - 24 July 2023 - A14858965 - Public Excluded

3. KPMG Report - Asset Realisation Reserve (12 July) - A14860024 - Public Excluded

Ordinary Council meeting Agenda

24 July 2023

11.6 Te Manawataki o Te Papa - Willis Bond - Development Management Agreement

File Number: A14845846

Author: Graeme Frith, Team Leader: Legal & Business Support

Mike Naude, Director of Civic Developments

Authoriser: Gareth Wallis, General Manager: City Development & Partnerships

Purpose of the Report

1. The purpose of this report is to seek delegated authority for the Chief Executive to enter into a Development Management Agreement (DMA) appointing Willis Bond as Council’s Development Manager for delivery of the Te Manawataki o Te Papa (Site A) programme of works (TMOTP) pursuant to the Tauranga City Council / Willis Bond 2018 Partnering Agreement (PA).

Recommendations

That the Council:

(a) Receives the report "Te Manawataki o Te Papa - Willis Bond - Development Management Agreement ".

(b) Delegates to the Chief Executive authority to enter into a Development Management Agreement on behalf of Council with Willis Bond for delivery of the Te Manawataki o Te Papa (Site A) programme of works as further outlined within the Te Manawataki o Te Papa Design and Cost Update Report July 2023.

Executive Summary

2. Subsequent to approval of the Preliminary Design Cost Report in December 2022, Council was authorised to enter contracts for the developed and detailed design phase of TMOTP with Willis Bond and other consultants. In parallel and consistent with the intent of the PA, Council have been negotiating an agreement for Willis Bond to provide development management services in relation to completion of the design, construction, and delivery of TMOTP.

3. The TMOTP Design and Cost Update Report has been presented to Council earlier on today’s agenda, seeking approval to complete the design process and enter contracts for the delivery of the packages of works within TMOTP.

4. Subject to Council approving the recommendations contained within the TMOTP Design and Cost Update Report, this report recommends that Council enters a DMA with Willis Bond to provide development management services to progress delivery of TMOTP, as detailed within the TMOTP Design and Cost Update Report.

5. The Te Manawataki o Te Papa Limited Board (Board) have had input into negotiations of the DMA and, should Council approve the recommendations contained in this report, endorsement will be obtained from the Board prior to signature of the DMA. The Board will oversee and monitor Willis Bond’s performance under the DMA.

Background

6. In 2017-18, Council carried out a comprehensive and competitive procurement process to engage a development partner to undertake and deliver various developments within the Tauranga city centre. Willis Bond was selected by Council as its preferred development partner and entered into the PA. The PA covers the period 2018-2030 and sets out the parties’ contractual framework for the programming, identification, selection, and activation of individual developments within the Tauranga city centre. Willis Bond submitted a very strong Request for Proposal (RFP) response that clearly demonstrated the following key attributes:

(a) evidence of their experience and ability to deliver long-term development projects for significant sites (working with public and private sector);

(b) willingness and ability to act flexibly in terms of the commercial framework;

(d) elements of innovation across their proposal.

7. Consistent with the principles of the PA, the DMA will formalise Willis Bond’s role as Council’s Development Manager for TMOTP. The DMA will utilise Willis Bond’s experience and knowledge in the development and construction industries, to advise and recommend to Council the acquisition of specialist consultants and contractors to support the delivery of TMOTP.

8. The DMA will cover Willis Bond’s advice, oversight, and management of:

(a) consultants carrying out the design and revised costings;

(b) negotiation and pricing of each construction package; and

9. The DMA is consistent with the key principles set out in the PA, including:

(a) open book transparency;

(b) Willis Bond secures sufficient commercial return;

(d) quality matches original RFP standards.

10. The diagram below provides an overview of the contractual framework for TMOTP.

11. The table below summaries key provisions within the DMA:

Provision	Summary
Connection to the PA	The DMA ensures that the visions and principles outlined in the PA continue to apply to, and be a core focus for TMOTP.
Nature of the DMA	The DMA is a master agreement, which will apply to services supplied by Willis Bond in relation to TMOTP as a whole, and services provided by Willis Bond in respect to specific packages of work within TMOTP, once construction contracts have been finalised.
Obligations	The DMA outlines Willis Bond’s performance obligations, including but not limited to: · Ensuring performance is in accordance with good industry practice, with due expedition and without unnecessary or unreasonable delay, in accordance with all applicable laws (including the H&S Laws), consents, standards, codes, and specifications. · An obligation to always act in the best interests of Council. · A requirement for Willis Bond to seek and obtain Council’s prior consent to all significant decisions, which need to be made in relation to TMOTP.
Master Pre-Construction Services Agreement, Construction Contracts, and Consultants	The DMA ensures that, when assisting Council in negotiating each construction contract, Willis Bond will endeavour to negotiate an outcome for Council as principal that: i. will reflect value-for-money; ii. ensure overall project efficiencies and cost-savings, including in relation to P&G pricing, and overall site staging and efficiencies; iii. adopt a “buy local” approach in relation to relevant subcontractors and suppliers; and iv. otherwise, be consistent with other requirements of the PA. The DMA provides that all contracts, including consultant contracts, must be in a form finally approved by Council in all respects.
Budgeting and Variation Control	The DMA requires Willis Bond to perform its services so as to enable Council to complete TMOTP in accordance with the Master Budget. Variations under a construction contract will be managed by Willis Bond in accordance with the relevant contract and an agreed Construction Variation Protocol.
Suspension and Termination	Council may elect to terminate the DMA as to a works package prior to the applicable construction contract being entered into for that package of work.

Options Analysis

12. The Council has two options for consideration:

(a) Option 1: Council could authorise the Chief Executive to enter into a DMA with Willis Bond consistent with the PA and party’s intentions thereunder.

(b) Option 2: Decide not to enter into a DMA with Willis Bond, which would result in TMOTP being unable to progress as outlined in the TMOTP Design and Cost Update Report.

13. The key benefits and disadvantages for each option are outlined the TMOTP Design and Cost Update Report.

Financial Considerations

14. The costs associated with the DMA and Willis Bond’s services for TMOTP are included in the total overall costs of TMOTP, as reported in the TMOTP Design and Cost Update Report.

15. Council has benchmarked the fee against prevailing industry standard rates for similar project management and delivery services. Based on this assessment, Council is satisfied that the fees charged are reasonable for the nature of the services provided. The fee structure has also been endorsed by the Board.

Legal Implications / Risks

16. Council and Willis Bond have had legal representation and advice during the negotiation and drafting of the DMA.

17. Willis Bond’s appointment to the role of development manager for TMOTP is consistent with the parties’ intentions and obligations under the PA. It is one of several commercial and legal structures that are within the contemplation of the framework provided by the PA.

18. Council continues to have a discretionary right to enter the relevant consultant and construction contracts for TMOTP so whilst the DMA, and Willis Bond’s appointment thereunder is a key part of the procured solution, Council is not required to enter contract at any cost. This helps ensure that Council achieves public value in the engagement of consultants and contractors. Similarly, to further ensure public value, Council can require that any subcontractors or subconsultants are subject to a competitive procurement process before being engaged.

Consultation / Engagement

19. The proposal to implement TMOTP required an amendment to the Council’s Long-term Plan 2021-31 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.

20. Taking into consideration the above information, if Council approves the recommendations contained in this report, further community consultation is assessed as not being required.

Significance

21. 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.

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

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

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

23. This report is part of a wider process for the development of TMOTP. In accordance with the considerations above, and criteria and thresholds in the policy, it is considered that the decision to deliver TMOTP is of high significance. As a result, the Council undertook a thorough decision-making process to approve the programme of work, including developing a Long-term Plan Amendment and corresponding community consultation using the Special Consultative Procedure.

24. The decision made through this report is materially consistent with the decisions made by Council on 24 May 2022 and 12 December 2022. The extensive community feedback received through the Long-term Plan Amendment process has been incorporated throughout the design phase of this project, and Council has a thorough understanding of the views of the community and has approved a clear plan for the delivery of the project.

25. The recommendation contained in this report is considered to be of low significance, in accordance with the considerations above, and criteria and thresholds in the policy, as the decision has a strong and logical flow from a prior decision of Council and approves expenditure that is within existing budget.

Next Steps

26. If Council approves the recommendation outlined in this report, and those contained in the TMOTP Design and Costings Update Report, the DMA will be finalised, provided to the Board for endorsement, and then under Chief Executive delegation, entered into with Willis Bond.

Attachments

Nil

Ordinary Council meeting Agenda

24 July 2023

The Strand North Reserve

8. The Strand North Reserve is the area along the waterfront from Fisherman’s Wharf to the existing tidal stairs, between the harbour and railway line. This area is being redeveloped to provide a large, flat, and accessible area for future events. The Tauranga City Council Events team have provided input on their requirements for inclusion in the design.

9. The redevelopment includes the following landscape criteria:

· Seawall – due for renewal in 2024 and designed as a “Living Seawall”

The construction of the new seawall is being achieved with an overlay of quarried rock and includes a number of seawall “eco-pods” embedded in the rock armour to promote habitation by a variety of sea organisms endemic to the harbour. These units are being placed to enable viewing access by the public.

· Promenade

The promenade along this section is being replaced with new, horizontally aligned, feature promenade adjacent to and integrated into the new seawall.

· Landscape Features

Other features include increased seating areas, improved lighting to activate the area at night, planting of trees and shrubs to contribute to the greening of our city, and to provide shade and screening along the rail corridor; an extensive, flat area of lawn will be created for hosting events and other recreational activities.

· Rail crossing

A new pedestrian rail crossing is planned to align with Harrington Street to provide an access point to the reserve, and service exit and entry for larger numbers of people during events.

· Accessible Parking

Accessible parking and drop-off bays along Dive Crescent in close proximity to the reserve are included in the design.

The Strand South Reserve

10. The Strand South Reserve is the area along the waterfront from in-line with Wharf Street and the boat-ramp at the mooring holder’s car park, between the harbour and railway line. This area is being developed as a passive reserve area and will include a greater number of trees in a contoured landscape. It also includes the site of the new Whare Waka (originally planned for the Central Plaza) located adjacent to the boardwalk and underpass. The seawall, promenade, pavilion, lighting, and furniture will complement the design.

· Whare Waka

In consultation with the Otamataha Trust, the new Whare Waka has been relocated from the central waterfront area to the southern end of the waterfront at the site of the mooring holder’s car park. Concept plans have been completed for the new facility and will be progressed, subject to external funding. This report seeks approval for the new location for the Whare Waka.

· Rail crossing

A new vehicular rail crossing is planned to align with Spring Street to provide an access to the Whare Waka and for maintenance purposes.

The Central Plaza

11. The Central Plaza is the area along the waterfront adjacent to Masonic Park and in line with Wharf Street between the tidal stairs and the railway line. This area is being developed to link the harbour with Masonic Park.

12. The redevelopment of this area includes:

· Pouwhenua

Installation of a Pouwhenua connecting and complementing the waharoa in Masonic Park and the Te Manawataki o Te Papa site.

· Pavilion

A pavilion with public conveniences and amenities, including accessible facilities, adjacent to the playground, water feature, and a proposed Wharf and associated facilities (in the location of Coronation Wharf). The design of the wharf and associated amenities will be further developed on completion of a bathymetric survey and geotech investigations.

· Rail crossings

The existing vehicular rail crossing in line with Wharf Street is planned to be reconstructed as a wide pedestrian crossing as part of the overall link from the waterfront to Te Manawataki o Te Papa, through Masonic Park. A new, pedestrian rail crossing is planned between Masonic Park and the waterfront providing a continuous access corridor from the waterfront, through Masonic Park to the Civic Precinct

Destination playground

13. A new accessible playground is currently in concept design, to be located between The Strand North Reserve and the Central Plaza. Water play is a significant design element of this playground, reflecting the original springs that used to flow from the ridge through Te Manawataki o Te Papa site and Masonic Park, to the moana.

The Strand

This area of redevelopment is the section of the carriageway, footpaths, and reserve between Masonic Park and Wharf Street, connecting Masonic Park to the waterfront.Memorial Park Link – Stage 1

14. The Memorial Link – Stage 1 includes the access link between the Strand South Reserve and Tunks Reserve. The two parts to this development include:

· The Rail Underpass

The rail underpass was successfully installed in early April 2023 during three days of railway line closure. Construction work was completed in June 2023 and the remaining finishes include the installation of a Corten steel ceiling screen that flares out either side of the underpass. The celling screen includes a contemporary pattern, which will be backlit providing an engaging experience.

· Boardwalk

The boardwalk design is 80% complete and a contractor has been engaged to input into the final design of the new structure.

Beacon Wharf

15. Beacon wharf is an historic wharf situated between the Cargo Shed and Trinity Wharf. The upgrade includes a viewing area on Dive Crescent providing access to the moana by way of a gantry connected to pontoons.

16. This option provides temporary berthage for some of the smaller fishing fleet during the renewal of Fisherman’s Wharf.

Fisherman’s Wharf

17. The existing wharf is no longer fit-for-purpose for berthage for the smaller fishing fleet and is subject to increasing maintenance costs to address ongoing safety issues. This project has not yet commenced and further geotechnical investigations are scheduled to inform the design and costs, which may be subject to consideration through a future annual plan or long-term plan process.

Cargo Shed Wharf

18. A wharf on the harbourside of the Cargo Shed is included in the Tauranga Moana Waterfront Masterplan. The proposed wharf is proposed to function as a recreational facility.

19. The addition of this wharf will complete a waterfront connection from Trinity Wharf, all the way through to Tunks Reserve.

20. This project is not yet scoped, designed or included in current budgets.

OPTIONS ANALYSIS

22. This report provides an updated Tauranga Moana Waterfront Masterplan to the Council, with no material decision sought, therefore no options have been identified. It is noted that some components of delivering the Masterplan are already underway.

Legal Implications / Risks

23. The implementation of the Tauranga Moana Waterfront Masterplan relies on stakeholders, key city partners, and the community supporting the transformation of the waterfront through project execution. Ensuring we all work together will be key to the ongoing success and revitalisation of our city’s waterfront.

24. Certain areas of our waterfront are zoned according to the Bay of Plenty Regional Council’s Regional Coastal and Environment Plan, which promotes sustainable management of the natural and physical resources of the Bay of Plenty’s coastal environment. The city centre waterfront falls within the Harbour Development Zone. It will be important to continue to work closely on waterfront projects with our Regional Council partners.

25. Legal implications and risks for individual projects will be identified through the detailed project planning phases, and as projects are implemented. These will be regularly reported to the Waterfront and Public Realm Steering Group.

Consultation / Engagement

26. As discussed above, the Tauranga Moana Waterfront Masterplan is not a new document and has been refreshed to ensure alignment with current thinking and plans. Significant consultation and engagement with key stakeholders was undertaken throughout the refresh process to ensure alignment and integrated planning across organisations. Key stakeholders included mana whenua representatives, Bay of Plenty Regional Council, Vessel Works, and Kiwi Rail. The Waterfront and Public Realm Steering Group has provided oversight to the programme and a Design Reference Group has met regularly to consider and review design details, and provide feedback from the groups that they represent.

27. Consultation with the community has occurred for several of the waterfront projects throughout Council’s Long-term Plan Amendment 2021-31, and annual planning processes.

28. A Cultural Advisory Group for Te Manawataki o Te Papa has been actively involved in the Tauranga Moana Waterfront Masterplan development. In addition, the Cultural Advisory Group and Otamataha Trust have been fully engaged in specific culturally significant waterfront projects, including the Whare Waka, Dive Crescent carpark, the Cargo Shed upgrade, and Tunks Reserve.

29. Community engagement for the new destination playground is scheduled to commence in August/September 2023.

Significance

30. 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.

31. 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 wellbeing of the district or region;

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

32. In accordance with the considerations above, criteria and thresholds in the policy, it is considered that the matter is of low significance. The project team acknowledge the issue of the future of the city centre’s waterfront is of high significance. However, as the purpose of this report is to provide a project update, this report is of low significance. In addition, the project is a refresh of previous strategic work; some projects have already been consulted on and funded through the LTP Amendment and annual planning processes; and significant engagement and input that has occurred through past workstreams and community engagement.

ENGAGEMENT

33. Taking into consideration the above assessment, that the matter is of low significance, that considerable engagement has occurred with key stakeholders and been incorporated through the development of the Tauranga Moana Waterfront Masterplan, officers are of the opinion that no further engagement is required prior to Council receiving the Tauranga Moana Waterfront Masterplan.

34. In the future, it may be considered appropriate to consult on the inclusion of currently unbudgeted items that are contained within the Tauranga Moana Waterfront Masterplan, likely as part of upcoming annual planning and/or long-term planning processes.

Next Steps

35. Ongoing implementation of the Tauranga Moana Waterfront Masterplan will be coordinated and monitored by the Civic Development and Partnerships Team, in delivery partnership with other council teams, key partners, the Bay of Plenty Regional Council, and other key stakeholders.

36. Implementation of some projects has already commenced (for example, the Cargo Shed refurbishment, Dive Crescent Car Park etc.), or will commence shortly, and will be supported by the updated Tauranga Moana Waterfront Masterplan.

37. Partnerships with mana whenua, the community, and key stakeholders, particularly the Bay of Plenty Regional Council, will be essential to achieving the objectives of the Tauranga Moana Waterfront Masterplan. We will continue to engage with our partners and the community on the actions as they are planned, initiated, and successfully delivered.

Attachments

Nil

[1] Note: The ‘Performance Arts and Conference Centre, and Hotel’ is not included in the project cost table. A feasibility exercise is currently underway to better understand the opportunity for this site to house a conference centre, hotel and new performance venue. Council will need to consider the feasibility report and alternate development models. If appropriate, development options for Site B could be consulted on through the upcoming Long-term Plan consultation process.

[2] GHD (2023): Wider Benefits for the Civic Precinct.

[3] Refer Table 2 for detail on Current Risk Weighted Estimate

[4] Further work is required to determine the quantum of development contributions. This quantum is considered to be a conservative estimate.

[5] Refer Design and Cost Update Report recommended resolution (g) (per Council agenda 24 July 2023)


AGENDA Ordinary Council meeting Monday, 24 July 2023
I hereby give notice that an Ordinary meeting of Council will be held on:
Date:	Monday, 24 July 2023
Time:	10.30am
Location:	Bay of Plenty Regional Council Chambers Regional House 1 Elizabeth Street Tauranga
Please note that this meeting will be livestreamed and the recording will be publicly available on Tauranga City Council's website: www.tauranga.govt.nz.
Marty Grenfell Chief Executive

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

1. To ensure the effective and efficient governance of the City

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

3. Oversee the work of all committees and subcommittees.

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