Agenda of Strategy, Finance and Risk Committee meeting

Terms of reference – Strategy, Finance & Risk Committee

Membership

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

Role

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

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

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

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

Membership

The Committee will consist of:

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

· the Chairperson of Te Rangapū Mana Whenua o Tauranga Moana

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

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

Voting Rights

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

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

Committee's Scope and Responsibilities

A. STRATEGIC ISSUES

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

A1 – Strategic Issues

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

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

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

○ Consider existing and future strategic context

○ Consider opportunities and possible options

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

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

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

A2 – Policy and Bylaws

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

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

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

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

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

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

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

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

B. FINANCE AND RISK

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

· Health and safety.

· Risk management.

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

· Internal and external audit and assurance.

· Fraud, integrity and investigations.

· Monitoring of compliance with laws and regulations.

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

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

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

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

B1 - Health and Safety

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

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

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

B2 - Risk Management

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

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

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

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

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

B3 - Internal Audit

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

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

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

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

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

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

B4 - External Audit

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

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

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

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

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

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

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

B5 - Fraud and Integrity

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

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

· Review, adopt and monitor the Protected Disclosures Policy.

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

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

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

B6 - Statutory Reporting

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

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

· Compliance with applicable legal requirements relevant to statutory reporting.

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

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

· Any decisions involving significant judgement, estimation or uncertainty.

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

· The disclosure of contingent liabilities and contingent assets.

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

· Significant adjustments resulting from the audit.

Power to Act

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

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

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

o make a rate;

o make a bylaw;

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

o adopt the LTP or Annual Plan;

o adopt the Annual Report;

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

o adopt a remuneration and employment policy;

o appoint a chief executive.

Power to Recommend

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

UNCONFIRMED Strategy, Finance and Risk Committee meeting minutes

26 June 2023

MINUTES

Strategy, Finance and Risk Committee meeting

Monday, 26 June 2023

Order of Business

1 Opening karakia. 3

2 Apologies. 3

3 Public forum.. 3

4 Acceptance of late items. 4

5 Confidential business to be transferred into the open. 4

6 Change to order of business. 4

7 confirmation of minutes. 4

7.1 Confirmation of Minutes. 4

8 Declaration of conflicts of interest 4

9 Business. 4

9.1 2024-2034 Long-term Plan - Significant Forecasting Assumptions Update. 4

9.2 Alcohol Control Bylaw Amendment 6

9.3 Draft Revised Community Funding Policy. 7

9.4 Retrospective approval of submission on Discussion document: Review of the Electricity (Hazards from Trees) Regulation 2003. 9

9.5 House it going? Dashboard. 9

9.6 Infrastructure Resilience Programme update. 10

9.7 Mount to Arataki Spatial Plan Update. 11

10 Discussion of late items. 12

7 Public excluded session. 12

MINUTES OF Tauranga City Council

Strategy, Finance and Risk Committee meeting

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

ON Monday, 26 June 2023 AT 9.30am

PRESENT: Commission Chair Anne Tolley, Dr Wayne Beilby, Commissioner Shadrach Rolleston, Commissioner Stephen Selwood, Commissioner Bill Wasley, Ms Rohario Murray, Mr Bruce Robertson

IN ATTENDANCE: Marty Grenfell (Chief Executive), Nic Johansson (General Manager: Infrastructure), Christine Jones (General Manager: Strategy, Growth & Governance), Alastair McNeill (General Manager: Corporate Services), Josh Logan (Team Leader: Corporate Planning), James Woodward (Manager: Capital Programme Assurance), Jane Barnett (Policy Analyst), Nigel McGlone (Manger: Environmental Regulation), Sandy Lee (Policy Analyst), Richard Butler (Community Partnerships Funding Specialist), Paula Naude (Manager: Community Development & Emergency Management), Emma Joyce (Open Space and Community Facilities Planner), Mark Armistead (Principal Urban Forester), Rory Bayliss Chalmers (Senior Business Analyst), Kim Martelli (Resilience Specialist: Natural Hazards and Infrastructure), Natalie Rooseboom (Manager: Asset Services), Carl Lucca (Team Leader: Urban Communities), Coral Hair (Manager: Democracy & Governance Services), Sarah Drummond (Governance Advisor), Anahera Dinsdale (Governance Advisor)

1 Opening karakia

Commissioner Shadrach Rolleston opened the meeting with a karakia.

2 Apologies

An apology from Matire Duncan was received and an apology for Te Pio Kawe was noted during the meeting. Dr Wayne Beilby advised that he would be leaving the meeting early.

Committee Resolution SFR4/23/1

Moved: Commissioner Shadrach Rolleston

Seconded: Commissioner Bill Wasley

That an apology from Matire Duncan be received.

CARRIED

3 Public forum

Nil

4 Acceptance of late items

Committee Resolution SFR4/23/2

Moved: Mr Bruce Robertson

Seconded: Commissioner Stephen Selwood

That the following items be included in the agenda:

7.1 Minutes of the Strategy, Finance and Risk Committee meeting held on 6 June 2023.

11.2 Public Excluded Minutes of the Strategy, Finance and Risk Committee meeting held on 6 June 2023.

Carried

5 Confidential business to be transferred into the open

Nil

6 Change to order of business

Nil

7 confirmation of minutes

7.1 Confirmation of Minutes

Committee Resolution SFR4/23/3

Moved: Commissioner Stephen Selwood

Seconded: Mr Bruce Robertson

That the public and public excluded minutes for the Strategy, Finance and Risk Committee meeting held on 6 June 2023 be confirmed as a true and correct record.

Carried

8 Declaration of conflicts of interest

Nil

9 Business

9.1 2024-2034 Long-term Plan - Significant Forecasting Assumptions Update

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

Josh Logan, Team Leader: Corporate Planning

James Woodward, Manager: Capital Programme Assurance

External David Norman, GHD Chief Economist

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

Key points

· Mr Norman had worked with staff on the assumptions that were to be fed into the Long-Term Plan (LTP).`

· A challenge with the Waka Kotahi categories were that they were backward looking and their indices did not take into account the specific mix of capital works programmes at the different councils.

· Developed a series of indices which accounted for 81% of the capital works programme.

· Outlined the process undertaken to develop the forecasts, provided background on materials, supply chain costs and risks and the management of these.

· Cost escalation continued to be a major challenge for capital works programmes even though some indices were slowing down.

· Forecasting was being developed that quantified new risks and/or priorities of the budgeting process.

· The valuation of existing assumption/indices required moderation that enabled further development.

· Price rises and inflation were not expected to drop markedly. The New Zealand dollar remained weak and would strengthen slowly.

· Cyclones and other weather related events had increased costs, bitumen was expected to be the same price as it was at present, but petrol and steel were increasing.

· Immigration numbers had approached a record high month on month compared to the previous Long-Term Plan.

· Mr Norman stated that in his view Tauranga City Council was ahead of other councils in management mitigation and management of risk.

· The next update to the Committee would provide updated assumptions with forecasts being reviewed every six months.

In response to questions

· Overall rises of construction costs were expected to be a bit more moderate with inflation expected to be higher. Beyond the first three years the predictions were based on discussions held with a number of sectors including our own contractors and from year 4 and beyond assumes inflation reduced to just above 2%, with construction costs just above 2.5%.

· In response to a query as to whether the impact on growth was sufficiently captured regarding the use now, and the potential future use, of council community facilities, it was noted that this was captured when planning new facilities at an individual project level. As part of the LTP the timing of growth and investment was considered and staff were looking at what it would do to the growth rollout, which may result in some refinement to the current assumptions. Any flow on to the growth projections would be brought back to Council within the LTP. A section could be added to specify how infrastructure met the current demand, growth demand within the TCC area and outside the TCC area to clearly recognise future demand for council facilities.

· The rapid movement of Artificial Intelligence (AI) technology had not been specifically recognised in the assumptions, but an environmental scan was carried out at the start of the process which included information on AI as part of the digital services activity planning. Information could be added to the assumptions to cover AI.

· In answer to a query on assumption 12 as to whether the risk covered the contracting out of facilities as opposed to the best outcome of the delivery of those services, it was noted that the Council had a statutory requirement to look at options for delivering services including non-financial benefits and costs.

· It was noted that the population percentages in the report on page 23, needed to be corrected.

· The information used in the assumptions would be reviewed up until the LTP was adopted to go to audit on 11 September 2023 and these would be the assumptions used for consultation.

· The Committee requested staff to circulate the power point presentation that focused on assumptions, RMA, and water costs.

Discussion points raised

· Appreciation was given to all who had worked on the assumptions.

Committee Resolution SFR4/23/4

Moved: Commissioner Bill Wasley

Seconded: Commissioner Stephen Selwood

That the Strategy, Finance and Risk Committee:

(a) Receives the report “2023-2034 Long-Term Plan – Significant Forecasting Assumptions Update”.

(b) Approves the recommended changes to the Significant Forecasting Assumptions as proposed in Attachment 1, noting that Assumption 41 “Impact on growth beyond city boundaries” was to be updated.

(c) Approves the updated Draft 2023 – 2034 Long-Term Plan Significant Forecasting Assumptions and associated mitigation actions as set out in Attachment 2.

(d) Recommends to Council that Council:

(i) Adopts the full updated Draft Significant Forecasting Assumptions (Attachment 2) to form part of the supporting documentation for the purpose of public consultation for the proposed Long-term Plan 2024-2034 in November 2023.

(ii) Authorises the Chief Executive to make minor amendments to the documentation to ensure accuracy and correct minor drafting errors.

Carried

Attachments

1 GHD Presentation - Tauranga Cost Escalation

9.2 Alcohol Control Bylaw Amendment

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

Jane Barnett, Policy Analyst

Nigel McGlone, Manger: Environmental Regulation

Key points

· The temporary alcohol-free area over the summer period had been in place over the last five years, the amendment was now incorporating that as part of the bylaw.

· Approval was being sought to consult on the proposed amendment.

In response to questions

· It was noted that working group meetings had been held with the New Zealand Police regarding the bylaw changes they had requested.

Discussion points raised

· Reference was made to the plans that were in place for events on the green spaces along the waterfront, Masonic Park and similar areas and it was noted that the bylaw amendment was at odds with that. It was requested that staff take note of the future use of these areas and consider whether the bylaw aligns with those uses.

· It was suggested that the bylaw be revisited in its entirety and carry a separate review of the bylaw be carried out in the new year.

· The temporary bylaw provisions could be approved at this meeting to enable these provisions to stay in place over summer and allow the Police to enforce the bylaw.

· The review of the bylaw also needed to be aligned with the spatial reviews and how spaces were to be used given the changes to the city centre and the Mount Maunganui since the bylaw was introduced.

· As part of the review it was requested that evidence be provided of the differences the temporary bylaw provisions had made.

· It was requested that definitions be included in the bylaw review rather than referenced to other legislation.

Committee Resolution SFR4/23/5

Moved: Commissioner Bill Wasley

Seconded: Commissioner Shadrach Rolleston

That the Strategy, Finance and Risk Committee:

(a) Receives the report "Alcohol Control Bylaw Amendment".

(b) Approves that a temporary alcohol-free area be put in place during the summer period along the coastal strip along Marine Parade from its intersection with Grove Avenue, and Ocean Beach Road and Maranui Street in a similar manner to previous years.

(c) Requests a report back on options in respect of the Alcohol Control Bylaw review, particularly in respect of the city centre and Mt Maunganui area.

Carried

Dr Wayne Beilby left the meeting at 10.35 am

9.3 Draft Revised Community Funding Policy

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

Sandy Lee, Policy Analyst

Richard Butler, Community Partnerships Funding Specialist

Paula Naude, Manager: Community Development & Emergency Management

Key points

· The comments received in previous meetings had been incorporated in the document providing information on all the funding sources and purposes in one policy.

· An additional exception had been included in clause 5.1.5 which enabled marae that technically sit outside the Tauranga City Council boundary to be eligible for funding where they were providing services to the Tauranga community.

In response to questions

· Requiring community organisations to be a registered charity provided council with a level of accountability and assurance that these organisations were meeting the requirements of the Act and staff did not need to replicate this process.

· Reference to one source of funding per project rather than per organisation needed to be made clearer in the policy.

· It was intended that all allocations of funding allocated to organisations be captured in the programme of work to build one overall picture on assistance given. This was expected to be completed in 12 months and reported back to the Committee.

· Community leases for a sports field, verses the indoor use of a basketball court, and the benefit received from those sports fields for exclusive use, was beyond the scope of this work. As user fees did not normally cover the true cost of the facility that would become a decision about the proportion of cost that was attributed to user fees and what proportion was considered community good. There was a piece of work on this happening that would be considered as part of the LTP process.

· In response to a query as to whether the ease of the groups doing business with the Council had been tested, it was noted that this was not currently undertaken. Staff do seek comment from recipients as to how they found the process, but it could be expanded wider.

· It was noted that the partnership arrangements had been managed in the past through community grants as the funding had come from this source. However a more optimal approach would be to manage these relationships with the contractual part of the Council that was responsible for overseeing and delivering the activities, with a contract for service in place of a grant to fund this service. The feedback received would be considered and it was agreed that partnership agreements be removed from the recommendations in the report as it was more about having an outcome-based relationship with these groups rather than it just being a financial transaction.

· Members noted that they expected to consider each of the partnership agreements currently in place.

Discussion points raised

· There was a focus on the partner obligations with partnership agreements but not on the Council meeting their requirements. A better balance was required to ensure that there was more than just a funding transactional process, but rather an opportunity to undertake roles and tasks which needed to be made clearer.

· Contestable funding should be about developing more effective relationships with our partners with the possiblity of having a relationship longer than three years.

· In relation to having one partnership agreement per sector, it was suggested that given the breadth of some of the sectors, there could be more than one. It was felt that a much more effective relationship was needed in terms of the arrangements.

· It may be more beneficial from a partnership perspective to know where the Council’s policies and strategies were not working rather than having these partners as advocates. The groups were another way of Council getting good information about what was working in the community, and what was not working, as these were trusted organisations. There was a need to get the essence of the partnerships well defined and the expectations from both sides to be contributing to it.

· Recommendation (h) in the report - to provide delegated authority to the Chief Executive to approve future amendments was removed.

· The process to amend the funding schedules would need to come back to this Committee for approval.

Committee Resolution SFR4/23/6

Moved: Commissioner Bill Wasley

Seconded: Commissioner Stephen Selwood

That the Strategy, Finance and Risk Committee:

(a) Receives the report "Draft Revised Community Funding Policy".

(b) Agrees to establishing a Community Funding Programme to identify and make visible the whole collection of community funding provided by the Council, excluding partnership agreements.

(d) Agrees to continue to exclude Community Event Funding, funds provided by central government, Grants for Development Contributions for Community Housing and Papakāinga Housing, and Rates Remissions from the scope of the Community Funding Policy but include them in the Community Funding Programme.

(e) Agrees to continue to exclude Service Agreements, partnership agreements and Mayoral Grants from the scope of the Community Funding Policy and from the Community Funding Programme.

(f) Agrees to include the definitions for each of the principles specified in 4.1 of the revised policy.

(g) Agrees to remove specific details in the policy in line with making it an umbrella policy for community funding.

(h) Approves the draft revised Community Funding Policy and attached Funding Schedules (Attachment 1) for community consultation from early July to early Aug 2023, excluding partnership agreements.

(i) Authorises the Chief Executive to make any necessary minor drafting or presentation- amendments to the draft revised Community Funding Policy and Funding Schedules and related consultation material prior to the commencement of consultation.

Carried

9.4 Retrospective approval of submission on Discussion document: Review of the Electricity (Hazards from Trees) Regulation 2003

Staff Emma Joyce, Open Space and Community Facilities Planner

Mark Armistead, Principal Urban Forester

Committee Resolution SFR4/23/7

Moved: Commissioner Shadrach Rolleston

Seconded: Commissioner Bill Wasley

That the Strategy, Finance and Risk Committee:

(a) Receives the report "Retrospective approval of submission on Discussion document: Review of the Electricity (Hazards from Trees) Regulation 2003".

(b) Approve the staff submission to Ministry of Business, Innovation and Employment (MBIE) Discussion document: Review of the Electricity (Hazards from Trees) Regulation 2003 (attachment 1) noting the key points of the submission as follows:

· Differences between well-managed trees in urban environments and commercial forestry plantations

· Willingness to collaborate with works owners (lines companies) on a risk-based approach to managing trees in urban environments

· Role of trees in meeting strategic and legislative obligations to increase tree canopy and indigenous vegetation

· Role of trees in mitigating climate change effects.

Carried

9.5 House it going? Dashboard

Staff Alastair McNeil, General Manager: Corporate Services

Rory Bayliss Chalmers, Senior Business Analyst

Key points

· The dashboard aimed to tell the story of Tauranga’s housing shortfall in a succinct and dynamic way, showing the challenges being faced with housing in the city.

· The dashboard included a number of assumptions on the capacity and what and where housing could be achieved in future years.

· The city was lacking over 5,000 houses to meet the overall demand and this widened slightly over the next 15 years.

· It also included the number of building consents being approved.

In response to questions

· The data was provided by the strategy team and the assumptions included the feasible amount of housing that could be accommodated such as greenfield areas as well as the infrastructure available to determine the number of houses that could be accommodated. Factors such as stormwater, natural hazards etc had also been considered.

· In response to a request that the data be included from the wider sub-region and reported regularly, it was noted that the data had been sourced through the SmartGrowth Housing and Business Assessment (HBA) for the Western Bay of Plenty sub-region and was reported through SmartGrowth.

· More regular reporting on housing supply would come through this Committee via the regular Growth & Land Use Projects Progress re.

· It was noted that the dashboard would also include information on Māori land.

Discussion points raised

· Acknowledged the information and ease of use of the resource and it was requested that it be expanded to become a sub-regional tool.

· Sourcing reliable data on the capacity of each of the potential areas was recognised as a challenge, as were other details including the supply and demand by tenure, type, rental verses ownership.

· There was a need to think about how to address the deeper underlying issue of providing affordable housing.

Committee Resolution SFR4/23/8

Moved: Commissioner Stephen Selwood

Seconded: Commissioner Bill Wasley

That the Strategy, Finance and Risk Committee:

(a) Receives the report "House it going? Dashboard".

Carried

9.6 Infrastructure Resilience Programme update

Staff Nic Johansson, General Manager: Infrastructure Services

Kim Martelli, Resilience Specialist: Natural Hazards and Infrastructure

Natalie Rooseboom, Manager: Asset Services

Key points

· Provides a first cut indication of the resilience component of the Resilience and Sustainability Programme and an outline of how to de-risk and rank the resilience component of Council work resulting in a good picture of the hazards in the city.

· The improvements of the infrastructure were evident as it had coped and helped to reduce the damage during the recent weather events.

· Started with 320 projects of which 130 had dropped out for various reasons including some becoming operational rather than capital expenditure.

· A focus in the LTP was for bridges of $40m, including lead up and causeways, and water projects of $20m.

· Four of the five projects in the last LTP had carried on into this period.

· The data that the risks were based on was changing and these had been adapted to feed into the upcoming LTP.

· The bridges provided key connections throughout the city, and several had also been included in the Waka Kotahi resilience programme to address seismic, tsunami and storm issues.

In response to questions

· In relation to a query regarding the citywide landslide study it was noted that it was currently going through a quality assessment. The topography data was better than the previous information from 2000, the number of properties added were in areas that were formally outside the city boundary at that time with no slope hazard data available. Once this data was available, it would be reported to the Council and the affected landowners notified and form part of the information on the Land Information Memorandum (LIM) for that property.

· Discussion ensued on what an acceptable level of risk was for each asset and a consensus of whether it was a political decision from a total network rather than an individual asset perspective.

· Broader discussions would be held once the national direction came out regarding the inclusion of private sector assets, managed retreats, and whole life cycle planning, noting what an area may look like in 60 years’ time.

Discussion points raised

· Well done with adapting to the changing conditions, understanding and being better placed to manage the risk.

Committee Resolution SFR4/23/9

Moved: Commissioner Stephen Selwood

Seconded: Ms Rohario Murray

That the Strategy, Finance and Risk Committee:

(a) Receives the report "Infrastructure Resilience Programme update".

(b) Notes that the Executive will review and propose prioritisation of the projects within the Infrastructure Resilience Programme for consideration by Commissioners through the Long-term Plan process.

Carried

9.7 Mount to Arataki Spatial Plan Update

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

Carl Lucca, Team Leader: Urban Communities

Key points

· The Mount to Arataki Spatial Plan (MSP) sought to deliver a 30-year blueprint to provide a strategic direction for existing and future growth needs of the area, forming the basis for the co-ordination of decision making within and across multiple agencies in a growth context.

· The Mount Industrial Planning Study (MIPS) was being prepared at the same time and staff were working closely together to move both forward.

· Good engagement feedback had been received on the plan with 960 survey responses, of which 75% were from people living in the Mount spatial plan area. There were also several drop-in sessions and workshops, receiving around 10,000 comments.

· Staff were engaging directly with mana whenua representatives with a number of hui being held.

· Transport, parks, open spaces, healthy and safe communities, and road maintenance were the highest response items with many other consistent themes featuring strongly.

· Residents wanted to be connected to their communities, supporting growth around centres, and recognising the different communities also featuring strongly as well as being aware of and being responded to with the right actions. Protection of the environment was a strong theme.

· Consideration was needed of how to buffer the industrial area, with possible land use or softening the boundary and cross connections where people work.

· Environmental accord with business was also coming through strongly with key stakeholders who were willing and open to moving forward in that direction.

· Culture and identity was a theme at a number of levels from working with mana whenua to the holiday area where people walked down the road with a surfboard to head to the beach.

· A draft plan would be brought back to Council for consideration after the consultation period which would take place in September. It would have a stronger policy content as responses were made on the key land issues in the area.

In response to questions

· The Mount Business Association were not included in the reference group as they represented one community, however specific engagement, including workshops, was being undertaken with the Association.

· The proposed bus lanes being able to be used for freight was also a good suggestion.

· In response to a query as to whether some of the side streets in the suburbs could be used as a safer route for multi- model transport, rather than the main arterial routes, it was noted that this was a common message throughout the engagement. Staff would work with the Accessible Streets project team to determine where the routes could be located.

· It would take time and partnerships between Council, Bay of Plenty Regional Council, Priority One, other key stakeholders and the businesses to finalise the Mount Industrial Planning Study and would require an amalgam of responses including voluntary environmental accords as well as plan changes to achieve changes over time. The outcomes sought may not be acceptable to all parties and this would also need to be worked through. The next process would outline the key issues and the proposed responses to them.

· A list of the next group of prioritised plan changes would be brought to the Committee before the end of the year including centre hierarchy and industrial land as core priorities for clear direction in order for them to be progressed.

Discussion points raised

· Lack of confidence by the young people to walk around the streets was noted, and it was suggested they needed to be encouraged to use different modes of travel.

· It was noted that Whakatane District Council had a specific bylaw banning trucks from going through the Ohope residential community and it was questioned whether this could be applied to Maunganui Road. This was noted for investigation.

Committee Resolution SFR4/23/10

Moved: Commissioner Bill Wasley

Seconded: Mr Bruce Robertson

That the Strategy, Finance and Risk Committee:

(a) Receives the report "Mount to Arataki Spatial Plan Update".

Carried

10 Discussion of late items

Nil

7 Public excluded session

Nil

The meeting closed at 12.10 pm.

The minutes of this meeting were confirmed as a true and correct record at the Strategy, Finance and Risk Committee meeting held on 7 August 2023.

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

CHAIRPERSON

Strategy, Finance and Risk Committee meeting Agenda

7 August 2023

9 Business

9.1 Six Monthly Treasury Strategy Update

File Number: A14802196

Author: Sheree Covell, Treasury & Financial Compliance Manager

Kathryn Sharplin, Manager: Finance

Authoriser: Paul Davidson, Chief Financial Officer

Purpose of the Report

1. The Treasury Policy requires strategies to be approved on a six monthly basis. This report provides an update on the performance and status of Council’s treasury function and seeks approval for strategies for treasury risk management activities, debt issuances, investments, foreign exchange exposures and interest rate hedging activities.

Recommendations

That the Strategy, Finance and Risk Committee:

(a) Receives the report "Six Monthly Treasury Strategy Update".

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

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

(e) Approves to hold new retentions monies in a trust account to adhere to new legislation.

Executive Summary

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

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

Background

Debt Management - General

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

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

· Borrowing margins for short versus long term debt

· Investor demand including bank funding

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

· Compliance with LGFA covenants

· Housing Infrastructure Fund (HIF) drawdowns

· Existing maturity profile

· Available undrawn bank facilities

6. The graph below shows the current debt maturity profile as at 30 June 2023

7. As at 30 June 2023 outstanding debt was $948.3m of which $230m was issued since the beginning of this financial year.

8. This exceeds the budgeted debt per the 2022/23 Annual Plan by $46m. Two additional borrowing programme resolutions were approved by this committee in December 2022 and May 2023 for additional borrowing totalling $70m.

9. The 2023/24 Annual plan budgeted total debt is $1.1bn which will be monitored over the coming months as the impact of a $46m higher then budgeted opening debt balance rolls into the 2023/24 financial year.

10. During the 2022/23 financial year $56m of long term debt matured. A further $56m will mature in the 2023/24 financial year.

Debt Management – Waters Reform

11. The previous treasury strategy report was presented in May 2022 and at the time Waters Reform was expected to occur on 1 July 2024. A strategy for issuing short term debt to match expected waters reform debt paydowns was considered, however now that Waters reform has been delayed this strategy has been put on hold.

12. Council staff are in ongoing discussions with the Department of Internal Affairs in regards to debt negotiations and will adjust the councils debt issuance strategy once there is more certainty.

Bank Facilities

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

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

15. Bank facilities are $100m. This facility matures on 31 October 2026. Generally, the maturity date is extended by one year each year. It is planned to maintain the facility within the 2 to 4 year maturity band.

16. In general, bank facilities are available to be drawn down at short notice, provided that if they are drawn they are able to be repaid on a quarterly basis.

17. Council was required to utilise the bank facility on one occasion this financial year in order to meet higher than expected operational cashflows. $10m was drawn and paid back within one week of issuance.

18. Current facility costs are 2% ($200k for $100m facility). Generally pricing on facilities are renewed on an annual basis.

19. It is important to note that any funds drawn down from bank facilities would need to be managed within the existing debt to revenue ratio. The limit for the debt to revenue ratio for the 2022/23 financial year was 295% and the Annual Plan ratio was 180%. The anticipated actual ratio for 2022/23 is estimated to be approximately 195%.

Liquidity Risk

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

21. The key liquidity risk management indicators are:

(a) The primary debt maturity limit requires external debt committed bank facilities and cash/cash equivalents to be maintained above 100% above 12^th month peak forecasted net external debt

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

Local Government Funding Agency (LGFA)

22. The LGFA is an agency specialising in financing of the local government sector. LGFA was established to raise debt on behalf of councils on terms that are more favourable to them than if they raised the debt directly.

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

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

25. As at 30 June 2002, total LGFA bonds (long term) on issue was $17.8bn of which $815m have been on lent to Tauranga City Council.

26. Fixed rate borrowing rate from LGFA for a A+ council are:

Term	LGFA rate (A+)*
2 Year	5.98%
5 year	5.50%
10 Year	5.58%
15 Year	5.79%

*Rates are current at 19 July 2023

Security

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

Interest Rate Management

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

(a) Minimise the average net interest cost on borrowings over the long term

(b) Minimise large concentrations of interest rate risk

(d) Maintain an appropriate mix of floating and fixed rate exposures.

29. Council is exposed to the interest rate fluctuations on existing and future borrowings. Interest rate risk in minimised by managing floating and fixed exposures within the Treasury Policy limits framework. The overall outcome of interest rate risk management is reflected in the average interest rate on borrowings which is 4.53% (including margin) at 30 June 2023.

30. As at 30 June 2023 the fixed interest rate position was $616m which is 65% of debt. The graph below shows the existing fixed interest rate positions (fixed debt and interest rate hedging) for the previous, current and next financial years.

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

32. During the 2022/23 financial year $105m of interest rate swaps were executed of which $70m are forward start swaps to move the fixed rate debt position closer to the middle of policy bands. The total amount of interest rate swaps is now $353m with maturities ranging from now to July 2032.

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

Fixed Debt Profile

The chart below shows the fixed interest rate positions relative to forecast debt over time. Due to the timing of Long Term Plan data not yet being available at the time of this report the forecast debt used in this example is based on projected levels so is an estimate for the purposes of this report.

34. The above graphs show that fixed rate debt remains above the minimum policy band regardless of whether waters reform proceeds or not. If three waters remain in council operations there is minimal headroom in 2028. This being monitored and managed with interest rate swaps at each debt issuance until waters reform is confirmed.

Interest Costs

35. Interest is based on closing debt of $948m at 30 June 2023. The annual plan assumption for the average interest rate for the 2022/23 financial year was 3.55% and the actual average interest rate for the same period was 4.50% including margins.

36. The graph below shows the actual average interest rate (excluding margins and fees) against market rate benchmarks as set in the Treasury Policy. Benchmark rates are a proportional calculation of the 90 day, 2,5,7 and 10 year swap rates. The average interest rate remains below benchmarks due to hedging placed during a low rate environment and high interest debt maturing during the 2022/23 financial year.

Investments

37. From a short-term working capital management perspective it is proposed to increase the minimum liquid investment balance from $10m to $15m to reflect the increasing cash outflows of Council. Investment rates aligning to OCR have been negotiated with our transactional banker (ANZ). This level of working capital is sufficient to manage the net cashflows during an average month. Overall, the investment portfolio is managed in line with the detailed forecast.

38. As at 30 June 2023 there was $54m in cash and $60m on deposit. The funds on deposit are on short terms to align with cashflow forecasts over the coming months.

Foreign Exchange

39. Under the treasury policy upon approval of expenditure, all significant commitments for foreign exchange are hedged. Generally foreign exchange exposure above $100,000 is regarded as significant.

40. Currently there are no outstanding foreign exchange contracts.

Retentions

41. New legislation will require council to change the way Council deals with retentions on construction contracts. The changes come into force on 5 October 2023 and applies to commercial construction contracts entered into or renewed after this date. The key changes for Council relate to securing retention monies and reporting to contractors.

42. Council will now transfer retentions money into a separate trust account to hold until such time that the retentions are agreed to be released. The Trust account will earn interest at the official cash rate and Council can retain the interest earned.

43. This change will be included in the triennial Treasury Policy review which is currently underway as part of the Long Term Plan process and will be reported to council in October 2023.

Strategic / Statutory Context

44. The treasury strategy is an important element of sound financial management and allows Council to efficiently manage its funding and associated risks. These strategies ensure compliance with Treasury Policy limits.

Options Analysis

45. Option 1: Approve Recommendations

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

46. Option 2: Do Not Approve Recommendations

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

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 matter.

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

ENGAGEMENT

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

Next Steps

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

Attachments

Nil

Strategy, Finance and Risk Committee meeting Agenda

7 August 2023

9.2 Review of Rating Categories to Differentiate Industrial Ratepayers

File Number: A14848445

Author: Jim Taylor, Manager: Rating Policy and Revenue

Kathryn Sharplin, Manager: Finance

Malcolm Gibb, Contractor - Rating Review

Authoriser: Paul Davidson, Chief Financial Officer

Purpose of the Report

1. The report considers matters relevant to the consideration of further differentiation of the commercial rating category to set a separate industrial rating category and whether this could reflect a fairer and more equitable balance of funding.

Recommendations

That the Strategy, Finance and Risk Committee:

(a) Receives the council report "Review of Rating Categories to Differentiate Industrial Ratepayers".

(b) Receives the attachment “Report on Rating Categories – Differential by P J and Associates”.

Executive Summary

2. The Port of Tauranga (POT) and industrial companies are particularly significant to the city’s economy. They bring significant employment and wealth to the city and its community.

3. The planning and provision of infrastructure services is crucial to this sector as well as the need for housing and social, environmental and cultural amenity.

4. There are costs and pressures on the city which come with this business activity including increased congestion both on the state highway network and city roading infrastructure, higher maintenance and renewals requirements from heavy vehicle use along with other wellbeing impacts both positive and negative on the community that come with a large industrial sector particularly related to a busy Port.

5. The Rating Policy was amended in the 2022/2023 Annual Plan to phase in a commercial rating differential for the general rate and a transportation targeted rate to reflect a 50/50 funding split between commercial and residential rating units.

6. In submissions, members of the commercial sector requested council to further differentiate the contributions of the commercial sector by separately recognising the benefits received and impacts of the industrial sector in the city.

7. The issue particularly relates to industrial warehousing, manufacturing, transportation of goods and other industrial activity related to industrial properties both within proximity of the Port of Tauranga and within other industrial areas in the city.

8. Commissioners have requested staff to investigate whether there is justification to introduce a new Industrial rating category which could provide for a fairer and more equitable funding outcome.

9. The recent Judgement by the Supreme Court of NZ in the successful appeal by Auckland Council, for a targeted rate on commercial accommodation providers has presented some important principles in the setting of rates by a local authority.

Background

CURRENT APPROACH

10. Currently council has two rating categories

· “Residential” which includes land whose primary use is residential, rural, educational, recreation, leisure, or conservation

· “Commercial” which includes land whose primary use is commercial, industrial, port, transportation or utilities networks, and any land not in the residential category.

11. During the 2022/23 Annual Plan process, council approved an increase in the commercial general rate differential from 1.6 in financial year 2021/22 to 1.9 in 2022/23 with a further increase to 2.1 in 2023/24. The commercial transport targeted rate was also approved to move from 1.6 in financial year 2021/22 to 3.33 in 2022/23 and with a further increase to 5.2 in 2023/24.

12. The decision was to ensure a fairer balance between the residential and commercial ratepayers in the city whereby the funding split to fund the transportation activity was shared 50:50.

13. The issue about whether the commercial rating category fairly reflected all the constituent activity, particularly by the “Industrial and Port related sector”, was raised by commissioners and other commercial ratepayers during the Long-term Plan deliberations. The independent reports from Insight Economics and subsequently supported by Gray Matter Ltd, looked at the volume of use of different categories of users of the transportation network. On the basis of usage statistics available at that time it was concluded that there was insufficient data to support further separating the commercial and industrial rating category. This in part reflected Tauranga City Councils (TCC) data limitations. The earlier studies did not look at the impact of heavy vehicles on the council’s costs or community wellbeing.

Other Reviews on Options for Fair Contribution

14. As part of the funding mix for the future, Council is also considering the use of variable road pricing for the city. The viability and impacts of variable road pricing in Tauranga could provide a range of benefits, including reduced congestion and faster, more reliable journey times. It could also deliver significant economic and social benefits, encourage different transport choices, reduce transport-related greenhouse gas emissions and support the Government’s objective of reducing vehicle trips in main urban centres.

15. Variable road pricing could charge all vehicle users for access to Tauranga’s main transport corridors. The charge could vary, depending on the time of day, day of the week and traffic demand. It is similar in concept to the charges applied to toll roads and would include using prepayment systems and vehicle recognition technology. The introduction of variable road pricing would require new legislation, comprehensive work on its benefits and implications and a significant community consultation process to ensure the concept was supported.

16. For identified new capital expenditure in the transportation activity TCC has reached agreement with Crown infrastructure partners on an Infrastructure Funding and Financing arrangement under which ratepayers will be levied over a period of 30 years to fund these projects. This financing arrangements enables future ratepayers who will benefit from this investment to contribute a fair share rather than focussing the costs on ratepayers over a shorter term which would have been the case under normal TCC financing arrangements.

17. Large industrial businesses are both a contributor to costs and a beneficiary of the roading network. As some of our largest businesses as evidenced by capital value and supported by published accounts they can have a greater ability to pay a larger share which council can consider, under section 101(3)(iv).

Comparison with other Councils

18. The table below shows that TCC’s commercial differential, at 2.1, is the lowest compared with other metro councils that we benchmark against. It also confirms that the capital value of the industrial sector as a percentage of the city’s total capital value, at 9%, is higher than these councils. This is consistent with the location and function of the Port of Tauranga and the proximity of New Zealand’s busiest port to the centre of Tauranga.

19. It is noted that further review is needed to incorporate the impact of TCC’s economic development rate and other metro councils’ similar rates into this comparison. At present it is based on the commercial differential on the general rate only

20. The Waikato region will also face cost and impact issues from the development of an inland port in the Waikato region. The Port of Tauranga Limited (POTL), through their subsidiary Quality Marshalling, manage the Ruakura Inland Port, which is a joint venture between POTL and Tainui Group Holdings. The 34-hectare site is located within the Ruakura Superhub which is a 490-hectare industrial, commercial and residential development.

21. The inland port is adjacent to the East Coast Main Truck line and the Waikato Expressway for efficient connectivity to the Port of Tauranga. The rates on the Ruakura Superhub site will be assessed by Hamilton City Council.

22. It is noted that under the current rating regime road and rail traffic destined for the Port of Tauranga or returning to the Ruakura Inland Port will utilise this city’s infrastructure but contribute no rate revenue. It is expected to significantly increase traffic flows and therefore increase the costs to council and the community of industrial and port-related activity.

FURTHER INDEPENDENT REVIEW

23. PJ and Associates were engaged earlier this year to investigate and report on whether the introduction of a new rating category could be supported. Philip Jones is a recognised expert in finance and asset management in the local government sector and is a member of several local authority audit and risk committees in NZ.

24. The report (attached) focuses on an assessment of the council’s proposed expenditure as part of the development of the asset management plan in conjunction with the 2023/24 Annual Plan and 2024/34 Long Term Plan.

25. The report concludes that while the information on current renewal proposals supports the existing differential, there is insufficient existing TCC data collected to directly support a higher ratio. The ratios for each category for renewal costs and capital values are relatively close.

26. The report noted that other transportation expenditure, relating to both operational and capital expenditure, including the financial and non-financial impact of safety and congestion in the city, was not available for analysis. This information is not currently recorded in council’s asset management system (RAMM) for each road in the city.

27. The report does not specifically consider traffic associated with the Port and related industries but notes that this traffic is likely to increase both from inside and outside the city boundaries in the coming years.

28. The report does, however, mention the opportunity for council to consider section 101(3)(b) and the overall impacts on the community and particularly the four well beings. The social, economic, environmental and cultural impacts which could be considered include safety, congestion, noise and pollution.

29. The industrial sector uses particular vehicle types (axle weights), travel different trip lengths and need certain road facility types which are factors in their differential impacts on the city network.

30. The PJ & Associates report recommends that Council continue to develop the systems and processes capable of providing the financial and asset management information to support the industrial rating category and the benefits provided to industry with the city.

OTHER SUPPORTING INFORMATION FOR AN INDUSTRIAL CATEGORY

31. A report produced by Road Controlling Authorities attached as Appendix 2, provides an independent analysis of the impact of heavy vehicles on a road network.

32. The report references that the typical impacts from an increase in the number and/or weight of heavy vehicles using a road include

· A need for extra pavement width

· Change in surfacing type and pavement thickness

· Increase in maintenance and

· Reduction in pavement life requiring road pavement upgrading (either strengthening or reconstruction)

33. Further research concluded that heavier vehicles do a lot more damage on a road due to the "fourth power law". Basically, the more weight each axle of a vehicle is required to bear, the damage done to the road increases exponentially, to the power of four - so an axle bearing 10 tonnes, for example, would put 10,000 times as much stress on the road as one carrying a single tonne.

RECENT LEGAL DECISIONS

34. The recent Judgement made by the Supreme Court of NZ (May 2023) in the successful appeal by Auckland Council, for a targeted rate on commercial accommodation providers, has provided some important principles in the setting of rates by a local authority.

35. Key principles are the extent to which a local authority needs to ensure a rational connection between the imposition of the rate and the benefits from the activity. This does not need to be an exact equivalence, or a close correlation and it is reasonable for the local authority to consider the intended or expected future benefits from an activity that is to be funded.

36. This Judgement is significant with regard to the matter being discussed in this report and given the opportunity provided by section 101(3)(b), council staff have developed options which can now be considered.

Strategic / Statutory Context

37. This report considers the options to fund the transportation activity which could be included in the 2024/34 Long-term plan consultation to ensure adequate consultation and feedback opportunities for the community and particularly the groups and individuals who may be affected by any proposal.

Options Analysis

38. Having considered the factors in section 101(3)(a) of the Rating Act, council can then consider section 101(3)(b) and the overall impact of any allocation of liability for revenue needs on the current and future social, economic, environmental, and cultural wellbeing of the community. The options for strategy Finance and Risk to consider and recommend on to Council are summarised below:

39. Option 1: Include a proposal to introduce a new rating category for “Industrial” properties as part of the draft 2024/2034 Long Term Plan.

The current commercial differential would remain at 2.1:1 and the industrial properties would be created as a separate category. The level of general rates differential for the industrial category when split could initially remain at 2.1:1. This category’s differential would be expected to develop over time as the costs, impacts of and benefits to the industrial sector increase.

Advantages		Disadvantages
- Responds to the commercial sector’s concerns that they are paying a disproportionate rate. - Recognises the increasing volumes of heavy vehicle to Industrial and Port related businesses in the city from journeys originating or finishing outside the city’s boundary. - Recognises the social and environmental impacts such as congestion, safety and pollution on the city. - Confirms there is a rational connection between the benefit and a rate which could be imposed. - This differential for the industrial sector would remain within a range of comparable council’s general rates differential.		- Data to support an ongoing and likely increasing impact of industrial activities will continue to be required to be developed.

Key risks	The limited empirical financial and asset management evidence based on data to date. This can be mitigated by (a) developing better information and communication around the impacts and relevant investments to support the industrial category and the benefits and support provided to industry along with support for the wellbeing of the wider community. (b) Clearer communication of the principles underlying the recent Supreme Court judgement and council’s consideration of the four wellbeing’s as part of the rating process.
Recommended?	Yes

40. Option 2: Do not include a proposal to introduce a new rating category for “Industrial” property as part of the draft 2024/2034 Long Term Plan.

41. Continue to monitor the fairness and equitable funding of the transportation and wider activity of council and request staff to continue to develop systems and processes capable of providing the financial and asset management information which is recommended in the PJ & Associates’ report to enable clear measurements on the operational and capital expenditure.

Advantages		Disadvantages
- Delay a decision until improved financial information is available to ensure there is a stronger proof of correlation between the benefit and the rate imposed.		- The rating policy is not necessarily providing a fair and equitable outcome. - Council has legal authority to commence a process to establish a rating category without further delay and cost.

Key risks	Some of this information is difficult to capture and measure and may take time and considerable resources to get to a position of more exact equivalence. In the meantime, the allocation of costs would not recognise the impacts of the industrial category.
Recommended?	No

42. In conjunction with both Options, council staff will continue to investigate other options to fund the transport activity as part of the draft 2024/34 Long Term Plan.

43. This includes congestion pricing or variable road pricing as a long-term solution to help manage the demand on the network and provide funding to maintain and repair the road corridors.

Financial Considerations

44. If the recommendations are approved there is no significant financial impacts on the current rating base, however there may be some budget requirements to develop systems and processes to better measure who benefits from the activity expenditure in the city.

45. If Council decides to consider the introduction of a new rating category there will be implications on rating units that can be presented as part of the draft 2024/34 Long-term Plan

Legal Implications / Risks

46. The Local Government Act requires Council to consult on any proposal to change the Rating Policy and this report forms part of this process.

Consultation / Engagement

47. This report is a continuation of the commissioners’ response to the community concerns received as part of the changes to the Rating Policy to ensure fair and equitable funding for the transportation activity.

Significance

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 proposal.

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

ENGAGEMENT

51. Taking into consideration the above assessment, that the proposal is of medium significance, staff are of the opinion that engagement is required following the Council making a decision and the draft 2024/34 LTP process will form an integral part of the engagement process.

52. Council may decide that given the nature of the topic that specific engagement with the industrial sector is warranted.

Next Steps

53. The consideration of these issues by the Strategy, Finance and Risk Committee will be referred to Council for 21 August consideration of the option of an industrial rating category to be consulted on as part of the 2024-2034 Long-term Plan.

Attachments

1. Attachment to Rating Review - PJ & Associates Report on Rating Categories - Differential - A14891103 ⇩

2. Attachment 2 to Rating Review - Road Control Authority - The Impact of Heavy Vehicle Traffic on Road Pavement - A14891310 ⇩

Strategy, Finance and Risk Committee meeting Agenda

7 August 2023

9.4 Q4 Financial and Non-Financial Monitoring report to 30 June 2023 - Draft results

File Number: A14865036

Author: Kathryn Sharplin, Manager: Finance

Tracey Hughes, Financial Insights & Reporting Manager

Josh Logan, Team Leader: Corporate Planning

Authoriser: Paul Davidson, Chief Financial Officer

Purpose of the Report

1. The purpose of this report is to provide information on Council’s performance for the 2022/23 financial year. These are early results, substantively correct but prior to some revaluation impacts and subject to ongoing review including from Audit New Zealand.

Recommendations

That the Strategy, Finance and Risk Committee:

(a) Receives the report "Q4 Financial and Non-Financial Monitoring report to 30 June 2023 - Draft results".

Executive Summary

2. This report along with the material in attachment one outlines council’s draft financial performance against budget for 2022-2023 financial year. Results are presented and variances explained in Attachment 1.

3. The overall surplus for the year including asset revenues was $116m against a budget of $121m ($5m unfavourable variance). This unfavourable variance largely arises from reclassification of expenditure budgeted as capital but recorded as operational in nature. It is offset by favourable variances in the capital programme for Tauriko West and Digital projects.

4. Overall rates collected were sufficient to cover actual expenditure budgeted to be funded by rates.

5. Capital Expenditure of $287m was delivered which compares to the annual plan budget of $298m, excluding vested assets and projects delivered by third parties. This is Council’s highest spend ever on capital projects. While at a total spend level it represents 96% of the budget the result represents a combination of annual plan budgeted spend (75% of budget), bring forward and carry forward of budgets for projects budgeted through the LTP and some new expenditure approved by Council. Attachment 2 provides more information on the capital programme delivery for the 12 months.

6. The 75% delivery of annual plan budget means there is a significant carry forward of budgeted project spend to 2023-24 or later years (in total $150m). Most of this has already been integrated with the Long-term Plan capital programme and final budget adjustments for the LTP and as revision to the 2023-24 annual plan will be presented to Council for approval in August.

7. Attachment 3 presents how Council, and the community are tracking towards achieving Council’s non-financial performance measures and levels of service in 2022/23.

8. Of the 100 non-financial performance measures, 64 measures (64%) have achieved the annual target, up from 60% in 2021/22. 32 measures (32%) were not achieved, down from 37% in 2021/22. Data was not available for four (4%) of the measures and these have not been measured for 2022/23.

Background

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

10. The operational budgets were set during the annual plan process with some changes to year two of the Long-term Plan (LTP) to deliver on agreed service levels and capital investment. In an LTP, the level of service that the council will deliver along with operational budgets and the capital investment programme are agreed upon by the council in consultation with the public. Rates and user charges are set based on these budgets.

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

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

Strategic / Statutory Context

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

14. This 12-month financial performance report will be followed by presentation in September of the draft Annual Report for audit and later in the year the audited Annual Report in accordance with the Local Government Act 2002.

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

Discussion

Part 1: Financial Performance

16. The financial results for the full 12 months of the 2022-23 financial year are presented in Attachment 1.

17. The overall surplus for the year including asset revenues was $116m against a budget of $121m ($5m unfavourable variance). This unfavourable variance largely arises from reclassification of expenditure initially budgeted as capital now recorded as operational. It is offset by favourable variances in the capital programme for Tauriko West and digital projects.

18. This unfavourable variance was heavily influenced by the change in accounting treatment of capital works at Tauriko West which in total was an unfavourable impact on the Statement of Comprehensive Revenue and Expense of $18m. The Tauriko West costs and revenues are shown separately in the Statement of Revenue and Expense in attachment 1.

19. There was a further $10m of digital costs budgeted as capital which have been reclassified as operational under software as a service (saas) accounting requirements. These costs are offset by underspends in the capital programme. They are proposed to be loan funded as they relate to work of a long-term nature to enable software to be used within TCC. The request to Council to fund these costs through loan rather than rates will be made as part of the presentation of the annual report later in the year.

Revenue Variance

20. Operating revenue is ahead of budget not only due to the accounting treatment of Tauriko West but also from interest revenue due to higher interest rates and subsidies from Waka Kotahi on maintenance above budgeted levels and for three waters transition.

21. Development contributions were also $10.8m higher than budgeted offsetting a lower value of vested assets and capital grants.

22. User fee revenue is significantly below budget. Key areas of lower revenue include building services and environmental planning where volumes have been reducing and in the case of planning, delays in consents processing have led to higher than budgeted discounts. Parking revenue has been down due to the extension of the free parking trial and airport revenue is still recovering post covid. Water revenue from forestry harvesting in the water catchment has also been delayed

23. Rates revenue is $500k under budget because of lower rates to be charged to properties as a result of challenges to values resulting from the last property valuation.

Expenditure Variance

24. Total operational expenditure, (excluding capital project reclassification for Tauriko West and digital) was $8m favourable to budget. This overall favourable variance was made up of a combination of significant under and over expenditure in various expenditure categories as outlined in Attachment 1.

25. The main operational overspends were in depreciation and interest which accounted for $7m of overspend caused by higher interest costs and increased depreciation arising from asset revaluation primarily in transportation.

26. Transportation is the main activity where an unfavourable operating result is recorded. The cost pressure on the transportation activity has been reported to council, which has approved over-spend to budget on transport operations and maintenance costs through to the end of the year ($5.5m). Benchmarking analysis provided in December had indicated that prior to recognising these additional costs TCC expenditure was tracking significantly below comparator councils.

27. Across council personnel expenses along with contractors and consultants were $5m below budget reflecting ongoing unfilled positions and lower consultant spend on city planning projects due to delays in government guidance and changes to legislation affecting planned areas of work. Lower capitalisation rates reflect less time than budgeted being recorded against capital projects. In part this reflects greater use of consultants on projects and also some over-estimate of likely capitalisation of positions not directly involved in project delivery.

28. Other operational expenditure is underspent particularly in community contributions and grants (timing of grants particularly for Community Partnerships, BVL and Bay Oval) and operational costs (slower expenditure for biosolids disposal, software licenses).

Rates Requirement

29. Higher expenditure in rate funded transportation has been largely offset by higher Waka Kotahi subsidies and lower operational expenditure elsewhere. Some rates funded budget is proposed to be carried forward to 2023-24 or later years. This will be outlined in reports to Council in August/September.

Capital

30. Capital Expenditure of $287m was delivered which compares to the annual plan budget of $298m, excluding vested assets and projects delivered by third parties. This is Council’s highest spend ever on capital projects. While at a total expenditure level it represents 96% of the budget, it represents a combination of:

(a) budgeted projects spend from the annual plan (75% of budget),

(b) projects carried forward from previous years ($29m),

(c) budget brought forward for projects that are being delivered ahead of budget timing under CE delegation or council approval ($34m), and

(d) additional budget approved by Council or CE delegation ($20m).

31. The graph below shows delivery against annual plan budget and revised budget after the above additions. Further Information is provided in Attachment 2

32. The 75% delivery of annual plan budget means there is a significant carryforward of budgeted project spend to 2023-24 or later years (in total $150m). Most of this has been integrated with the Long-term Plan (LTP) capital programme. Final budget adjustments for the LTP and required revision to the 2023-24 annual plan will be presented to Council for approval in August.

Borrowing and Debt

33. Net debt at year end was $835m, which was slightly below the Annual Plan budget of $853m, while gross debt is above reflecting timing of forecast capital expenditure and forward funding of debt maturities. The cost of borrowing has increased with our average cost of borrowing at 4.53%.

Part 2: Non-Financial Performance to March 2023

34. Attachment 2 presents how Council, and the community are tracking towards achieving Council’s non-financial performance measures and levels of service.

35. Of the 100 non-financial performance measures, 64 measures (64%) have achieved the annual target, up from 60% in 2021/22. 32 measures (32%) were not achieved, down from 37% in 2021/22. Data was not available for four (4%) of the measures and these have not been measured for 2022/23.

36. 32 measures, across 12 groups of activities, are off-track. In detail, these are:

· Transportation – five off-track from nine measures

· Water Supply – one off-track from 11 measures

· Stormwater – two off-track from six measures

· Sustainability and Waste – one off-track from four measures

· City and Infrastructure Planning – one off-track from three measures

· Community Services – six off-track from 20 measures

· Community, People and Relationships – two off-track from six measures

· Economic Development – one off-track from eight measures

· Emergency Management – one off-track from three measures

· Marine Precinct – two off-track from three measures

· Regulatory and Compliance – nine off-track from 17 measures

· Spaces and Places – one off-track from five measures.

37. It should be noted that of the 32 measures that were not achieved above, we were within
1-10% of our target for 15 of the measures.

38. The four measures that were not measured were:

· Water Supply – The water loss data for 2022/23 will not be ready until after the adoption of the annual report and so is reported as not measured. To meet DIA requirements the 2021/22 result is entered into the commentary in the annual report.

· Community Services – Following a review of the Project Tauranga city partners' programme, the decision was made to wind up Project Tauranga in November 2021 and so the Project Tauranga measure will remain not measured for this annual report and the next.

· Economic Development – The airport customer satisfaction survey for facilities was not carried out. A few minor complaints were received about airport facilities which were addressed.

· Marine Precinct - Percentage of customers satisfied with fish unloading facilities and access to existing ice loading facilities was not measured due to the wharf being replaced.

39. A recent request has come from Commissioners to include more trend graph reporting to the quarterly non-financial reporting. We have added two pages called “Measures of interest” on pages 3-4 of the attachment report which highlight trends in Building Services (processing measures) and Transportation (congestion measures).

40. We are seeking feedback on whether this is what Commissioners envisaged for these trend graphs and note that we are happy to take any feedback on how this can be improved further and if there were other measures they would like to see in this section.

41. Also, the Annual Residents Survey results are usually reported along with this report but due to it being the full year this is reported in a separate report which is also on this agenda.

Options Analysis

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

Financial Considerations

43. This report monitors performance to budget to ensure council delivers on proposed expenditure within allocated budgets to ensure financial sustainability and accountability.

Legal Implications / Risks

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

Consultation / Engagement

45. This report is made public.

Significance

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

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

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

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

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

ENGAGEMENT

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

Next Steps

50. This report ensures monitoring of Council performance to ensure compliance with Council’s budgets, policies and delegations. The non-financial monitoring report summary will be presented on the Council website.

Attachments

1. Attachment 1 Financial Performance to 30 June 2023 - A14891418 ⇩

2. Attachment 2 Capital Financial to 30 June 2023 - A14891445 ⇩

3. Attachment 2b Budget Adjustment June 2023 - A14891448 ⇩

4. Q4 (01 April - 30 Jun 2023) - Non-Financial Performance Off Track Measures_PDF - A14903968 ⇩

Strategy, Finance and Risk Committee meeting Agenda

7 August 2023

9.5 Annual Residents' Survey 2022/23

File Number: A14861614

Author: Kathryn Hooker, Corporate Planner

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

Purpose of the Report

1. The purpose of this report is to present the Annual Residents’ Survey 2022/23.

Recommendations

That the Strategy, Finance and Risk Committee:

(a) Receives the report "Annual Residents' Survey 2022/23".

Executive Summary

2. Each year, Council seeks feedback from its residents regarding their perception on various aspects of Council provided services and initiatives. This survey is carried out over four waves during the year and is collated into an annual report. The results of the most recent survey are reported to this Committee.

Background

3. The Annual Residents’ Survey 2022/23 forms part of a wider set of information we have around engagement with the Tauranga community and their wants, needs and perceptions of Council and of Tauranga as a place to live.

4. Survey results help Council staff assess the performance of the Council against a set of pre-determined actions and performance levels, including those outlined in the Long-term Plan.

5. Key Research has undertaken an annual residents’ survey from 2006 to 2023, on behalf of the Council, by collecting responses via a mail-out with an option to complete the questionnaire online.

6. Data collection for the 2022/23 year took place by Key Research between 18th September 2022 and 30th May 2023 in four waves. A statistically robust sample of n=612 residents across the Tauranga City Council area was collected and the resulting data analysed.

7. The sample selection was based on a random selection from the Electoral Roll. This method ensures each member within the population has an equal probability of selection, thereby minimising the opportunity for bias.

8. Post data collection the sample was weighted so it aligned with known population distributions for the Tauranga City Council area, as per the Census 2018 results, based on age, gender, ward and ethnicity.

9. The report, included as Attachment 1, by Key Research explores the findings in detail, looking at trends and how the results to individual questions contribute to residents’ overall perception of Council.

Key Findings

10. The results of the key performance indicators trending up include:

· For 2022/23 overall performance, 40% of respondents are satisfied or very satisfied with Tauranga City Council in general, up from 32% in 2021/22.

· Reputation measures the community’s perception of four key areas – leadership, faith and trust, financial management and quality of services/facilities. For 2022/23 reputation, 29% of respondents are satisfied or very satisfied with Tauranga City Council in general, up from 23% in 2021/22.

· Within reputation, there is the measure in terms of respondent’s trust in Council, the 2022/23 result is that 30% of respondents are satisfied or very satisfied, up from the full year result for 2021/22 which was 24%.

· For 2022/23 overall value for money, 38% of respondents are satisfied or very satisfied with Tauranga City Council in general, up from 36% full year result of 2021/22.

11. A summary of the rest of the high-level survey results of the 2022/23 full year compared to 2021/22, and their trend is summarised in the table below:

12. Measure	2021/22 result	2022/23 result	Trend
Overall performance	32%	40%	5
Overall image and reputation	23%	29%	5
Overall value for money	36%	38%	5
Overall core services deliverables	56%	60%	5
Overall water management	55%	56%	5
Overall road and footpaths	44%	32%	6
Overall waste management	63%	71%	5
Overall outdoor spaces	73%	68%	6
Overall public facilities	70%	71%	5

13. However, declining satisfaction trends worth noting are in:

· Roading and footpaths (-12%), based on the comments, is mainly due to the extensive roadworks, safety concerns, and protection from flooding.

· Outdoor spaces (-5%) which, from the comments, is mostly due to the decline in satisfaction with the parks’ maintenance and investment.

Annual Residents’ Survey 2023/24

14. Following the 2021/22 Annual Residents’ Survey presentation, a resolution was passed endorsing staff exploring other options to gain more meaningful insights into community sentiment and satisfaction of council services, including consideration of an online citizen panel and bespoke activity surveys.

15. Further work and consideration have been undertaken by the Corporate Planning and Community Relations teams to assess the usefulness of the survey to inform decision making and operational improvement.

16. It was decided that the Annual Residents’ Survey should continue in 2023/24 due to the need to provide data for existing measures that need to be reported on for year three of the current Long-term Plan (LTP) and in the 2023/24 Annual Report.

17. Also, in the review of the performance framework as part of the 2024-34 LTP it has been identified that a number of the proposed new measures will draw their results from the survey. So, in 2023/24 new questions will be added to the survey to collect baseline data to inform the targets for these new measures in the LTP.

18. In addition to this Community Relations have launched a number of complimentary new initiatives in May 2023 to help enable better engagement with the community. These include:

· the Kōrero mai - Let’s talk Tauranga website; and

· a fortnightly Kōrero mai - Let’s talk Tauranga email newsletter.

19. The two teams will continue to look at and explore other options to gain more meaningful insights into community sentiment and satisfaction of council services.

Strategic / Statutory Context

20. The Annual Residents’ Survey allows effective monitoring of performance and insights to be gained to inform future planning.

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 matter.

23. In accordance with the considerations above, criteria and thresholds in the policy, it is considered that the while the services that are covered by the satisfaction survey are of high significance to the community, the matter of receiving the report is of low significance.

ENGAGEMENT

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

Next Steps

25. The results of the report will inform reporting in the Annual Report 2022/23 and will be published on our website.

26. The 2023/24 survey waves will take place in August 2023, November 2023, February 2024, and May 2024.

Attachments

1. TCC Residents Survey Report - A14887811 (Separate Attachments 1)

Strategy, Finance and Risk Committee meeting Agenda

7 August 2023

9.6 2024 - 20234 Long-term Plan - Revenue and Finance Policy Framework - Funding Needs Analysis

File Number: A14887475

Author: Sarah Holmes, Corporate Planner

Kathryn Sharplin, Manager: Finance

Josh Logan, Team Leader: Corporate Planning

Authoriser: Paul Davidson, Chief Financial Officer

Purpose of the Report

1. To provide information on Council’s obligation relating to its Revenue and Financing policy.

2. For Strategy, Finance and Risk Committee to provide direction on the Funding Needs Analysis (FNA), so that it can be used to inform the Draft Revenue and Financing Policy, to be presented to Council meeting on 21 August 2023.

Recommendations

That the Strategy, Finance and Risk Committee:

(a) Receives the report "2024 - 20234 Long-term Plan - Revenue and Finance Policy Framework - Funding Needs Analysis".

(b) Adopt the draft Funding Needs Analysis (Attachment 1) to confirm step one of the process and to inform the drafting of the Revenue and Finance Policy for consideration at Council on 21 August 2023.

Executive Summary

3. Council is required to review and adopt a Revenue and Financing policy every three years. The purpose of the policy is to show how Council’s activities are funded – who pays for what and why. The policy would come into effect from 1 July 2024.

4. This report presents the first step in the policy review process by putting forward the draft Funding Needs Analysis (FNA) (Attachment 1) for approval.

5. The funding decisions in the draft FNA largely reflect the funding positions in the 2021 Revenue and Financing Policy, with new activities City Centre Development, and Flood Protection being included.

6. Changes are proposed to the operating funding bands for some activities to reflect an increase or potential increase in funding from fees and charges and targeted rates.

7. The draft FNA also sets out the Council’s preference for funding capital expenditure and allows for the possibility of each funding source to be used.

Discussion

Legal Requirements

8. The Local Government Act 2002 (LGA) requires Council to adopt a Revenue and Financing Policy that must then be included in the Long-term Plan (LTP).

9. The Revenue and Financing Policy sets out how Council plans to fund each of its activities and outlines how it has made these decisions.

10. The policy is an important step in the rate setting process, in determining levels of development contributions, and in setting fees and charges. A policy that has not been created following correct process or is unreasonable may result in decisions that flow out of the policy being invalid.

11. Two separate steps are required under the LGA to develop the draft Revenue and Financing policy. The first step is the process set out in section 101(3)(a) of the LGA (see chart below).

12. Having completed this analysis for each activity the second step is to aggregate all of the results and consider the impact that these results might have on the community. This includes consideration of differentials, the level of rates set on a uniform basis, and the factors used to set targeted rates.

13. Following the transition of Water Supply, Stormwater, and Wastewater activities to the Water Services Entity, Council will need to carry out Step Two again to consider the overall impact of allocation of liability for revenue. At that stage, any proposed amendments to the Revenue and Financing Policy will need to be consulted in a manner that gives effect to the requirements of section 82 of the Local Government Act 2002.

The two-step funding process

14. The draft FNA (Attachment 1) is the documentation of the step one analysis and informs the draft Revenue and Financing Policy.

15. Approval of the proposed analysis is sought to allow step two to be progressed.

Provisional Changes

16. The funding decisions set out in the FNA largely reflect the funding positions in the current Revenue and Financing Policy, with the exception of the following changes.

Capital funding changes

17. The FNA includes Infrastructure Funding and Financing (IFF) as a second funding preference for new and growth-related capital expenditure. With the initiation of the IFF, the Transportation Targeted Rate has been removed as a funding source, this is reflected in the FNA Operating Expenditure table in Attachment 1.

18. Inclusion of depreciation reserves as a third funding preference where there is a renewal portion of capital projects.

19. Clarification that the third preference for new capital is funding by loans. The loans could be funded through general or targeted rates, user fees, or activity surpluses. This allows for capital projects to be funded through income received from activities such as parking.

20. Addition to the third preference for growth related projects to allow for targeted rates or general rates, user fees, or activity surpluses for the portion of capital that offers wider benefit or where there has been an under collection in development contributions.

Operating funding changes

21. Introduce a Flood Protection activity, to ensure the continued flood protection service after the Stormwater activity has been transferred to the new Water Service Entity. This activity has been included in the FNA with an initial assessment completed. The new Flood Protection activity is proposed to be funded by a mix of general and targeted rates. It is important to note however that there are uncertainties around the new activity, with the Water Services Entities Amendment Bill currently at Select Committee stage.

22. The FNA includes the potential for a Community Facilities Targeted Rate to be used in the future for Spaces & Places, City Centre Development, Libraries, Venues & Events, and Arts & Culture.

23. Introduction of a targeted rate for required private pool inspections under the Building Act 2004. Inspections are required every three years, and a targeted rate spreads the cost burden over that period, ensuring future owners pay their fair share. Replacing the current three yearly fee with a targeted annual rate will reduce administration, allowing resources to be used in other areas of the Building Services activity.

24. Funding bands have been revised to reflect the additional revenue opportunities from fees and charges and other revenue sources within the ten-year LTP period. These revenue opportunities will be covered in a separate presentation and include:

(a) Redesign of how the fees and charges are structured and align to the Use of Council Land Policy adopted in Dec 2022.

(b) Introduction of fees for using the main boat ramps through parking charges for vehicles and trailers.

(c) Additional revenue has been included for the crematorium business which has increased significantly following the closure of the other facility operated by the private sector.

(d) Introduction of fees for sports fields so all recreational activities contribute something to the operational costs of the facilities they use.

(e) Opportunity to charge education providers for the cost of programmes at the Art Gallery and Museum.

(f) Additional revenue for Beachside Holiday Park for higher shoulder and peak season rates and the addition of more cabins.

(g) Addition of paid parking at Mount Maunganui and Beachside.

Strategic / Statutory Context

25. The policy sets out how Council will fund its activities. These activities help deliver our community outcomes.

Financial Considerations

26. The financial implications of the proposed funding sources for each activity will be considered in the step two analysis and will be included in the initial drafting of the 2024-34 LTP.

Legal Implications / Risks

27. There is no risk to providing direction on the proposed draft FNA because it simply sets the framework. Formal approval of the FNA is expected on 21 August. Further consideration is required in step two, and this allows for adjustments to funding sources once the full impacts are known.

28. If direction is not provided on the FNA at the workshop there is a risk that the LTP could be delayed.

29. As noted above, if the correct process is not followed or the resulting policy is considered to be unreasonable, it can be challenged and the decisions that flow out of the policy could become invalid.

Consultation / Engagement

30. Consultation on the draft Revenue and Financing policy will occur as part of the 2024-34 LTP plan consultation.

Significance

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

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

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

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

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

ENGAGEMENT

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

35. This is due to the draft Revenue and Finance Policy and Funding Needs Analysis being scheduled to be adopted as supporting material alongside the LTP consultation document in November 2023. After that adoption all will be consulted on with the community in accordance with section 93A of the LGA.

Next Steps

36. Once Strategy Finance and Risk Committee provides direction on the draft FNA, the funding decisions can be applied to calculate the aggregate impact on the community.

37. Council will consider this impact on 21 August 2023. In considering the impact on the community, Council can make changes to the draft Revenue and Financing Policy.

38. After any changes have been made, a revised policy will be approved for legal review. This may result in changes to wording in the policy and will be noted in future reports.

39. The draft Revenue and Financing Policy will be subject to an audit as part of the LTP process.

40. The revised draft Revenue and Financing policy will form the supporting information to the LTP consultation document, with public consultation planned for November 2023. During consultation Council can receive feedback from the community on its funding decisions.

Attachments

1. DRAFT Funding Needs Analysis 2024 - Revenue and Financing Policy - A14426953 (Separate Attachments 1)

Strategy, Finance and Risk Committee meeting Agenda

7 August 2023

9.7 2024 - 2034 Long-term Plan - Update - Funding and Reserves

File Number: A14886828

Author: Kathryn Sharplin, Manager: Finance

Frazer Smith, Manager: Strategic Finance & Growth

Authoriser: Paul Davidson, Chief Financial Officer

Purpose of the Report

1. The purpose of this report is to provide an opportunity for the Strategy Finance and Risk Committee to consider the current situation in relation to reserves, including depreciation and weathertight, risk and unfunded liabilities reserves and provide recommendation to council for consideration in preparing the Long-term Plan (LTP)

Recommendations

That the Strategy, Finance and Risk Committee:

(a) Receives the report "2024 - 2034 Long-term Plan - Update - Funding and Reserves".

(b) Recommends to Council that the following matters are considered in the LTP to address both the significant impacts of large asset revaluations on depreciation and the current risks and impacts on the depreciation reserves.

(i) Phasing in of increased funding of depreciation expense in the early years of the LTP to mitigate the otherwise significant up-front increases in rates arising from significant asset revaluation.

(ii) Restoring depreciation funding and the level of reserve balances within the ten years of the LTP.

(iii) Short term loan funding of capital renewals for activities where there are insufficient depreciation reserves

(iv) additional rates funding to retire debt for those activities where there are insufficient depreciable assets to repay debt over time

(c) Recommends to Council that the phased retirement of debt in the weathertight and unfunded liabilities reserve subject to rates affordability should aim to significantly reduce these reserve deficits through the period of the LTP

(d) Recommends that Council consider the value of risk reserve funded through the LTP taking into account both debt headroom maintained in the debt to revenue ratio below LGFA funding limits and the value of the reserve.

Executive Summary

2. There have been significant increases to depreciation expense in recent years based on significant recent asset revaluations that in the absence of phasing in of the funding of this depreciation would give rise to a substantial one-year increase in rates.

3. Tauranga City Council maintains separate activity depreciation reserves to help demonstrate that we are using rates charged to maintain our assets appropriately. Predominantly because we are also using these reserves for debt retirement, along with non-funding a portion of depreciation some of these reserves are going into overdraft. There are steps that can be taken by Council within the LTP to rectify these problems which are discussed in this report.

4. There are deficit balances sitting in two reserves, the weathertight reserve and the unfunded liabilities reserve, for which specific rates funded debt is required to continue through the LTP.

5. Council currently provides for unforeseen events through the risk reserve and the debt headroom maintained by borrowing below Local Government Funding Agency limits. The adequacy of these reserves and borrowing capacity needs to be reviewed as part of the funding strategy for the LTP.

Background

Basis for Depreciation Reserves

6. Councils are required to fund (collect revenue for) depreciation under the Local Government Act. The intention is that these funds will be used to renew assets as they wear out.

7. Tauranga City Council keeps track of the money collected via depreciation and spent on renewals, with the net amount being the balance of activity depreciation reserves. This transparent approach demonstrates prudence in the management of council assets and helps to ensure depreciation funding is spent appropriately.

8. Council has also resolved to repay debt through depreciation reserves rather than specifically charging rates (or user fees) for this. In the long term this decision implies that depreciation reserves will not have enough funds to fully pay for asset renewals but that debt will be lower to enable further borrowing.

9. There are also instances where Council does not fully fund (charge rates or user fees) depreciation. Historically this is when we are expecting other future renewals funding, the most common example being Waka Kotahi subsidies on transport

renewals Approach

Depreciation Reserves and Funding of Depreciation

10. Table 1 below shows the increase in depreciation facing council in the early years of the LTP arising from both new assets and asset revaluation. Because of the significant increases in asset valuations (driven by inflation) and the flow on increase to depreciation this expense has increased significantly in 2025 from earlier levels ($20m from 2022-23 actuals). To manage this large impact without a significant one-year impact on rates Council has the option to not fully fund the new higher levels of depreciation in the initial years of the LTP.

11. Because of the significant increases in asset valuations (driven by inflation) and the flow on increase to depreciation (and rates) we have increased the level of non funded depreciation in the initial years of the LTP. The increased non funded depreciation adjustments are shown in Figure 1.

12. Council on 19 June 2023 agreed to increase funding to the BVL depreciation reserve to ensure sufficient funding to renew assets. To fully fund this decision in year one of the LTP would be an increase in rates for the year of $3.6m. Council has the option to phase the rates funding of this increase in depreciation over several years which is also included in the table below.

13.

Figure 1: Additional Non Funded Depreciation included in the LTP

	2023 $M	2024 $M	2025 $M	2026 $M	2027 $M	2028 $M	2029 $M	2030 $M	2031 $M
Total Depreciation	78.1	82.5	98.7	111.8	85.6*	95.4	108.8	119.1	129.5
This is made up of:
Funded Depreciation	66.1	68.6	68.7	89.2	70.0	79.1	87.3	97	106.9
Base non funded depreciation (transport)	12.0	10.9	12.0	13.6	15.6	16.3	21.5	22.1	22.6
Increased Non Funded Depreciation	0	3.0	18.0	9.0	0	0	0	0	0
CCO Non Funded Depreciation
BVL			1.3	1.8	1.8	1.6	1.0	0.3	0.3

* total depreciation reduces once three waters are removed from LTP.

Balances of Depreciation Reserves

14. Most depreciation reserves across Council remain in funds (ie more money collected than spent). However, for a few activities this has not been the case, eg transport.

Figure 2: Model of Depreciation Reserves for Council over LTP

15. We note that there are significant depreciation reserves relating to the 3 waters activities. This is because there are a large portion of these assets which have very long asset lives (up to 100 years) but are still relatively new. These will transfer out when 3 waters activities are split off from Council.

Approach to remedy depreciation reserves in overdraft

16. Table 2 shows activities where there is a concern over the level of depreciation reserves available and a proposed approach to remedy reserve balances over the LTP.

Figure 3: Summary of activities that have depreciation overdrafts

Activity Area	Peak Overdraft ($M)	Year of Peak Overdraft	Suggested solution.
City Waters Support	$1.4M	2034	Adjust against other water activities (Figure 5)
Transportation	$43.7M	2026	Loan fund some renewals projects Reverse non funded depreciation in later LTP years (Figure 4)
Emergency Management	$2.9M	2034	Rates Fund Debt retirement (Figure 5)
Environmental Health	$0.02 M	2024	Rates Fund Debt retirement (Figure 5)
Community Partnerships	$0.09M	2034	Rates Fund Debt retirement (Figure 5)
Spaces and Places	$16.0	2029	Loan fund some renewals projects
Marine Facilities	$11.3M	2030	Loan fund some renewals projects
Property Management	$0.3M	2030	Rates Fund Debt retirement (Figure 5)
Historic Village	$4.3M	2028	Loan fund some renewals projects
Libraries	$3.6M	2027	Loan fund renewals portion of new city library

Loan funding of renewals

17. This should have little or no impact on rates. This action would not change the classification of the project for financial reporting purposes, but would cease to draw funds from reserves for a period of time.

Reverse non funded depreciation in later LTP years

18. Reverse the adjustments made in the first years of the LTP. This will directly increase rates in later years of the LTP but will bring the reserve balances back into funds.

Figure 4: Reversed Non Funded Depreciation included in the LTP

	2028 $M	2029 $M	2030 $M	2031 $M	2032 $M	2033 $M	2034 $M
Reduced Non Funded Depreciation	(3.0)	(3.0)	(3.0)	(3.0)	(3.0)	(4.0)	(4.0)
CCO Reduced Non-funded Depreciation
BVL					(0.3)	(1.1)	(1.9)

Rates Fund Debt retirement

19. These are activities that have loan funded activities in the past but have little or no depreciable assets. This means that the reserves will never rectify themselves without direct rates funding. The amounts required are lower than the peak overdraft in the table because early intervention removes the effect of compounding interest exacerbating the problem.

20. The additional rates required are shown in Figure 5 below. This could be spread over later years.

Figure 5: Rates funding of Debt retirement

Activity	2026 $M	2027 $M	2028 $M	2029 $M	2030 $M	Total $M
Emergency Management		0.72	0.72	0.72		2.16
Environmental Health		0.01				0.01
Community Partnerships		0.06				0.06
Property Management		0.27				0.27
Total additional rates funding	0	1.06	0.72	0.72		2.50
Additional Funding from Allocation
City Waters Support	0.40					0.40

renewals Approach

Other Financial Reserves

21. In the 2021-31 LTP Council separated out an ongoing risk reserve into which it annually rate funded an amount ($1m) to increase available reserves to fund unexpected events. There is potential to increase funding of the risk reserve through the LTP with a view to ensuring there is sufficient capacity for council to respond to unforeseen events. Further work is required over the development of the Long-term Plan to determine an agreed level of risk reserve balance also taking into account the level of internal debt to revenue limit that has in the past been proposed to be prudent in our approach to financial sustainability. The debt capacity by holding borrowings at a lower debt to revenue ratio that has been targeted in past LTPs allowed for $100 to $150m of expenditure. However, the use of a rates funded reserve better recognises intergenerational equity.

22. There was a large deficit reserve balance held in the risk reserve in 2021 when it was split at that time as a result of past risk realisation from weathertight claims, and unforeseen costs including Bella Vista costs and Harrington Street carpark write off of capital expenditure. These unfunded deficits have been placed into separate deficit reserves with a view to remaining stranded debt being retired over time through rates funding of debt retirement.

23. There is potential to increase contribution to these reserves to substantial address deficit balances which would also free up Council’s capacity for future capital investment.

Strategic / Statutory Context

24. Under the Local Government Act 2002 section 101 (1) a Council “must manage its revenues expenses liabilities investments and general financial dealings prudently and in a manner and in a manner that promotes the current and future interests of the community”.

Options Analysis

Depreciation Reserves and Funding of Depreciation

25. As noted above Council may choose to phase in the funding of the significant increase in depreciation costs arising from revaluation of the value of assets.

26. The reason for this mitigation is to delay the full impact of this revaluation on the ratepayer. If this rates mitigation is not put in place rates (in 2025) would be $18M representing a rate increase of 7 % for depreciation alone.

27. By phasing in the funding through later years of the LTP rates will be increased in those years. The reduced non funded depreciation (Figure 4) in the later year further increases rates increases in the outer years of the LTP.

Figure 6: Options analysis in relation to the immediate funding of the increase in depreciation

	Advantages	Disadvantages
Option 1 Use non funded depreciation to reduce the short term impact on the ratepayer	· Delays the full rates impact of the valuation impact · Recognises that many ratepayers are under financial hardship	· Risk that future valuation increases have a similar impact creating a need for an ongoing adjustment · Reduced revenue (and effectively higher debt) limit TCC’s future debt headroom · Lower depreciation reserves may require future renewals to be loan funded (no rates impact)
Option 2 Immediately fund the full impact of the valuation increase	· Reflects the full cost to the ratepayer of asset ownership · Gives Council more borrowing capacity for the future	· Very significant impact on rates in 2025 (over 7% increase)

Advantages

Disadvantages

Option 1

Use non funded depreciation to reduce the short term impact on the ratepayer

· Delays the full rates impact of the valuation impact

· Recognises that many ratepayers are under financial hardship

· Risk that future valuation increases have a similar impact creating a need for an ongoing adjustment

· Reduced revenue (and effectively higher debt) limit TCC’s future debt headroom

· Lower depreciation reserves may require future renewals to be loan funded (no rates impact)

Option 2

Immediately fund the full impact of the valuation increase

· Reflects the full cost to the ratepayer of asset ownership

· Gives Council more borrowing capacity for the future

· Very significant impact on rates in 2025 (over 7% increase)

Recommendation

28. Because of the significant increases in the cost of living for most ratepayers and the anticipation that, as inflation returns to previous levels, future valuation increases are likely to be much lower Strategy Finance and Risk committee may consider recommending to Council that the options are considered for the Long-term Plan.

Financial Considerations

Depreciation Reserves and Funding of Depreciation

29. The options and risks have been fully outlined in the sections above. Any underfunding of depreciation represents an increase in debt and higher rates later in the LTP.

Legal Implications / Risks

30. There are no direct legal implications from this report.

Consultation / Engagement

31. Decisions on depreciation and reserves will form part of the long term plan financials and ultimately be reflected in rates and debt over time.

Significance

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

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

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

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

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

ENGAGEMENT

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

Next Steps

36. Council will consider these issues as part of its consideration of the draft Long-term Plan.

Attachments

Nil

Strategy, Finance and Risk Committee meeting Agenda

7 August 2023

9.8 2024-2034 Long-Term Plan - Non-Financial Performance Measures

File Number: A14888046

Author: Josh Logan, Team Leader: Corporate Planning

Rob Lahey, Principal Strategic Advisor

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 non-financial performance measures proposed for inclusion in the 2024-2034 Long-term Plan (“LTP”).

Recommendations

That the Strategy, Finance and Risk Committee:

(a) Receives the report "2024-2034 Long-Term Plan - Non-Financial Performance Measures".

(b) Approves the draft non-financial performance measures for inclusion the Groups of Activities section of the Long-term Plan 2024-2034 as proposed in Attachment 1 – Appendices 1-12.

(i) Adopts the draft non-financial performance measures for inclusion in the Long-term Plan 2024-2034 (Attachment 1 – Appendices 1-12) to form part of the supporting documentation for the purpose of public consultation for the proposed Long-term Plan 2024-2034.

(ii) Authorises the Chief Executive to make any minor amendments to the documentation necessary to ensure accuracy and to correct minor drafting errors.

Executive Summary

2. This report outlines proposed revisions to the non-financial performance measures for Tauranga City Council's (TCC) Long-Term Plan (LTP). The primary aim is to streamline the number of measures for better focus and comprehension while ensuring a balance between output and outcome measures. Measures are set to align with the Council's responsibilities under the Local Government Act 2002 and with Council’s strategic framework. A reduction in measures from 100 to 80 is proposed, and a proposed broader performance management framework has been attached for review.

Background

Monitoring and reporting overview

3. Council is in the process of considering its wider monitoring and reporting framework, of which the LTP non-financial performance measures are just one part. An emerging theme of that review is to create a two-pronged approach to external accountability, separately meeting the needs of:

(a) the measures required to meet statutory obligations for planning and reporting, particularly regarding the LTP legislation, and

(b) a more comprehensive reporting framework that is aligned with the vision, community outcomes, and council’s strategic framework as encapsulated in the Our Direction suite of documents.

4. It is highly likely that there will be some cross-over between these two needs, but it is also highly likely that some measures will be exclusive to one or other of the needs. As part of the assessment of the practicality of such an approach, staff will shortly engage with Audit New Zealand.

5. We have recently received some useful feedback from Commissioner Selwood on this emerging approach. Unfortunately, there has not yet been sufficient time to incorporate that feedback into the approach that is described in the remainder of this report. This feedback, and any further feedback during, or after, the Strategy Finance and Risk Committee meeting will be incorporated before the LTP measures are brought back to Council formally in September 2023, when the LTP Consultation Document and supporting material are adopted for audit.

6. This report deals only with the LTP element of the performance framework (other than proposing, in Attachment 1 – Appendix 14, a potential model for a broader framework that is consistent with the thinking noted above).

Statutory basis for LTP measures

7. The Local Government Act 2002 (“the Act”) requires councils to include within the LTP performance measures and targets that "the local authority considers will enable the public to assess the level of service for major aspects of groups of activities". Performance measures need not be in place for every activity in the Council; instead, our focus should be on the major aspects that significantly contribute to the overall performance narrative for the community.

8. To ensure a baseline level of common reporting among councils, the Act also requires that LTPs include measures required by the Secretary for Local Government, taking advice from the Department of Internal Affairs (“DIA”), covering:

· Water supply.

· Sewerage and the treatment and disposal of sewage.

· Stormwater drainage.

· Flood protection and control works.

· The provision of roads and footpaths.

9. There are 24 of these "DIA measures". During this review, we have updated targets using a combination of past performance data and the relevant Activity Manager’s understanding of the planned investment program that would impact delivery against the measure. The description of some of the DIA measures in the LTP has been amended for brevity and clarity.

10. In terms of reporting, Subpart 2 of Part 6 of the Act requires that Annual Reports compare the actual activities and the actual performance of the local authority in the year with the intended activities and the intended level of performance as set out in the LTP. The Act does not require quarterly reporting against LTP measures, as is the practice at TCC. However, note that Council Control Organisations (CCOs) are required to report twice yearly.^{^[1]}

Current LTP performance measures

11. Although the primary purpose of LTP performance measures is to establish a foundation for Council accountability to the public, these measures have inadvertently become the default performance management framework within TCC. The identification of measures, targets, and data sources occurs during the LTP development process, with performance evaluation and reporting conducted quarterly for the Executive and Council, as well as being published on a quarterly and annual basis.

12. In some respects, this approach mirrors a customer-centric organisation, embodying the notion that "the interests of my customers captivate my attention." However, with every activity in Council represented with several measures, and no alternative formal performance measurement or management methods in place, the LTP measures (and the associated reporting and performance management) have grown cumbersome and unwieldy.

13. The LTP for 2021-2031 included 100 measures, which is widely considered to be excessive. See Table 1 for a comparison of measures and the number of groups of activities/activities across a selection of councils:

Table 1: LTP performance measures across councils

Council (LTP)	# of measures	# of groups of activities	# of activities
Tauranga City Council (2021-2031)	100	14	39
Auckland City Council (2021-2031)	81	8	22
Hamilton City Council (2021-2031)	61	12	Not clear, organised around 5 community outcomes.
Masterton District Council (2021-2031)	42	8	24
Queenstown Lakes District Council (2021-2031)	50	9	20
Western Bay of Plenty District Council (2021-2031)	127	5	15
Proposed: Tauranga City Council (2024-2034)	80	14	36

14. TCC’s high number of performance measures is likely a combination of the number of groups of activities and activities represented in the LTP and the lack of alternative mechanisms for performance measurement and reporting.

15. To realign the LTP non-financial performance measures with their intended purpose, it is proposed that TCC implement a performance management framework where LTP performance measures constitute only one element. A suggested performance management framework tailored for TCC is provided in Attachment 1 – Appendix 14 for discussion.

What do good measures look like?

16. Just like our goals, measures and targets should be specific, measurable, achievable, and time bound. However, they should also be aligned to the level of service statement, Council's strategic framework, and controllable or at least strongly influenceable by Council. Finally, as required by the LGA, the measures need to be outward facing and useful for the public in assessing how the council have performed in delivering our level of service.

17. In performance management generally, it's recommended to have a small number of measures that are highly relevant and meaningful to the public, team, or organisation's objectives. Having too many measures can create information overload and make it difficult to focus on what's most important. On the other hand, having too few measures can lead to a lack of understanding of overall performance and progress towards goals.

18. A mix of both output and outcome measures is required to provide a holistic insight into the council’s performance.

(a) Output measures focus on the quantity and quality of the services delivered by the council, such as the number of parks maintained, or the kilometres of roads repaired. These measures are typically more straightforward to track and are directly linked to the council's efforts. An example of an output measure proposed for inclusion in LTP 2024-2034 is the “Percentage of Land Information Memoranda provided within the 10-day statutory timeframe.”

(b) Outcome measures evaluate the broader impact and effectiveness of these outputs in achieving the council's objectives and meeting community preferences, such as improved community well-being, reduced traffic congestion, or resident satisfaction with recreational facilities, An example of an outcome measure proposed for inclusion in LTP 2024-2034 is the “Percentage of residents satisfied or neutral with the quality and experiences offered by Tauranga's open spaces, parks, and play spaces”.

19. Outcome measures are usually more challenging to measure and attribute directly to the council's actions, but they provide essential insights into the actual benefits that the council's activities deliver to the community.

Approach to reviewing measures for the 2024-2034 LTP

20. We conducted interviews with all activity managers and some supporting staff. LTP 2021-2031 measures were assessed and either retained, discarded, or amended, or new measures were proposed. We have sought to:

(a) Streamline the number of performance measures: Focusing on the most relevant and meaningful indicators for each group of activities. This will help to alleviate information overload and facilitate a clearer understanding of overall performance and progress towards goals.

(b) Maintain a balance between output and outcome measures: To provide a comprehensive assessment of the council's performance in achieving its objectives and delivering value to the community.

(c) Align performance measures with the Council's strategic framework: Ensure that all performance measures are closely aligned with the level of service statements and the Council's broader strategic framework, enabling the public to assess the Council’s performance effectively.

(d) Enhance the clarity and simplicity of performance measure descriptions: Enabling the public to better comprehend the Council's performance and progress.

(e) Review and update targets: Taking into consideration past performance, an assessment of improvements to be realised through capital investment/process efficiencies etc, and the professional judgement of the relevant Activity Manager.

21. Where an activity has one or just a handful of measures, we have generally favoured outcome measures, especially resident satisfaction, as the most essential means of assessing performance against the level of service statement. This is not inconsistent with other councils’ LTPs but does carry with it the risk of sentiment blow-back, where resident satisfaction rises or falls for reasons unrelated to the Council’s performance in that particular area.

Key changes to LTP measures

22. Changes are summarised in the table below:

Table 2: Summary of changes from LTP 2021-2031

	LTP 2021-2031	LTP 2024-2034
# measures	100	80
# mandatory DIA measures	24	23^{^[2]}
# of discretionary measures	76	57

23. A summary of the proposed changes by groups of activities, additions, and deletions, is provided in Attachment 1 – Appendix 13.

A note about measures proposed for deletion

24. Performance measures from LTP 2021-2031 are proposed for deletion where the existing measure:

(a) Does not meaningfully help the public assess the level of service of the major aspects of the Council’s groups of activities (the LGA test)

(b) Has poor data availability and/or frequency

25. In most instances where a measure is proposed for deletion, a similar, often higher-level measure, is adopted. For example, a measure of the level of satisfaction reported by a survey of Baycourt hirers was replaced with a city-wide resident satisfaction measure for the range and frequency of event experience in Tauranga.

26. Where measures are proposed for deletion, that data is still available to support good corporate decision-making within the groups of activities themselves, and more broadly across Council staff and governance, when needed. For example, the occupancy rate of the Historic Village leasable space is proposed for deletion as an LTP measure. But the Venues and Events team will continue to monitor and seek to improve that internal system-health indicator.

Strategic / Statutory Context

27. The statutory context of the non-financial performance measures for the LTP has been covered above in paragraphs seven to ten.

Legal Implications / Risks

28. Legislative issues are considered in the Background section to this report.

Consultation / Engagement

29. The LTP Consultation Document and supporting documentation is scheduled to be adopted in November 2023. After that adoption it will be consulted on with the community using the special consultative procedure outlined in section 93A of the LGA. The performance measures will form part of the supporting documentation.

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 well-being of the district or region

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

32. In accordance with the considerations above, criteria and thresholds in the policy, it is considered that the LTP and its contents is of high significance. However, this decision is considered to be of low significance.

ENGAGEMENT

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

Next Steps

34. Feedback on the proposed LTP measures is sought from the Strategy Finance and Risk Committee during or after the meeting of 7 August.

35. All feedback sent after the meeting should be emailed to the General Manager: Strategy, Growth & Governance by Friday 25 August 2023.

36. Once the preferred measures have been established, we will confirm data sources and assess baseline performance for new measures to refine or confirm the targets.

37. It is proposed that the performance framework will be provided to Council for formal endorsement on 11 September 2023 as part of the Groups of Activities section that will form the supporting information alongside the LTP Consultation Document.

Attachments

1. Attachment 1 - Appendices 1-14 - LTP performance measures - A14888613 (Separate Attachments 1)

Strategy, Finance and Risk Committee meeting Agenda

7 August 2023

9.9 Parking Management Plan roll out adjustment.

File Number: A14811795

Author: Reece Wilkinson, Parking Strategy Manager

Authoriser: Nic Johansson, General Manager: Infrastructure

Purpose of the Report

1. Seeks to update and modify the roll out of Parking Management Plan (File Number: A13763600) in the city fringe.

Recommendations

That the Strategy, Finance and Risk Committee:

(a) Receives the report "Parking Management Plan roll out adjustment.

(b) Approves the following changes to the Parking Management Plan, to modify the implementation of parking restrictions across the city centre fringe and wider areas in Te Papa up to Eleventh Avenue as follows:

i. Parking restrictions to be introduced on First Avenue, Second Avenue West, Third Avenue, Fourth Avenue and Mclean Street from 1 November 2023.

ii. From 1 April 2024 paid parking will be expanded West of Cameron Road from Third Ave until Wharepai Domain. From 1^st September 2024 will see the introduction of time restricted zones down to 11^th Ave (map showing proposed changes in below report).

Executive Summary

2. The previously approved (on 3rd October 2022) parking management plan proposes the roll out of time restrictions for parking in the city centre fringe. The proposed parking restrictions were to take effect in the purple area outlined in the map below and were being introduced to encourage higher turnover in parking spaces along the city centre fringe.

3. In keeping with the parking management plan, we are due to roll out the next phase of changes from 1 November 2023 onwards. However, in light of a reduced number of all-day parking spaces in the city centre, disruption due to ongoing development and cost of living concerns among residents, we have the opportunity to consider three options regarding the roll out of further restrictions:

· We continue with the roll out of restrictions from the 1st of November as planned.

· We stagger the roll out of restrictions, starting with a defined area and expanding approximately one block out every 6 months (Recommended).

· We defer the expansion of restrictions in the city centre entirely focusing on other parts of Tauranga City and reviewing in 12 months.

Background

4. Changes approved in October 2022 outlined the below parking restrictions to take effect from November 1^st.

5. Since the approval of the above changes the council has been implementing frequent changes to tackle parking concerns in the city centre.

· Re-introduction of free weekend parking.

· Encouraging visitors to city centre over the weekend.

· Lease structure changes in the buildings.

· Making more spaces available to the public in the buildings.

· Development of temporary carparks for commuters into the city. First site is being established at 160-176 Devonport rd.

· More parking options for those seeking to access Devonport rd and the waterfront areas.

· Implementation of wayfinding signage at city centre entrances.

· Allowing people to easily find vacant carparks on their way into the city.

6. The below is an example of our occupancy signage on Devonport Rd at 0830 1^st of August.

7. Occupancy remains relatively low in the city centre buildings and on street, while the free time-restricted parking on the city centre fringe is in high demand. Some high-level figures from the 1st of June, on the state of the city’s parking network are below.

(i) 50%-60% on-street occupancy for city centre paid parking Mon-Friday.

(ii) 70% average peak occupancy for off-street parking (buildings and open-air carparks).

(iii) 68% of all on-street and open-air transactions from June 2023 were for two hours or less. Meaning we are getting the high turnover of parking spaces we aimed for in the pricing structure.

(iv) People parking for eight hours or more account for 11.6% of transactions for on street and open-air carparks.

(v) The two parking buildings make up roughly 20% of our parking transactions and are mainly made up of people parking their all day.

(vi) Parking transactions have remained steady in the city centre since 1st June 2023 with a very slight increase in demand during the week.

(vii) Parking occupancy is much higher on the city centre fringe (free parking areas) than in the city centre, as workers seek to avoid paying for parking.

(viii) A survey completed in June 2023 showed a third of cars parked at Memorial Park during the working week are there all day – suggesting they are city centre workers.

8. Transactions Mon-Fri from 1st June to 26th July 2023 for open air and on street carparks in the city centre.

9. Payment by time bought from 1st June 2023 in the city centre

10. Areas of highest demand in Tauranga City Centre based on parking transactions over the last 6 months.

11. It is well documented we are playing catch-up in terms of development in the city centre. This catch-up has resulted in significant impacts to parking and transport in the city centre. Additional upcoming parking disruptions include:

· The closure of The Strand waterfront and Masonic Park carparks

· The delayed completion of the Hamilton Street parking building

· Continued earthquake strengthening at Spring Street parking building

· The temporary closure of Elizabeth Street East and continued day by day disruptions from key building developments in the city centre.

12. An influx of work vehicles and delivery trucks that require loading zones and layover areas will continue to increase and impact current city centre parking spaces.

13. While implementing the ‘no parking on berms’ restrictions, proposed in the October 2022 plans, will be relatively straight forward to implement, the expansion of timed parking restrictions will be a more significant change, doubling the restricted parking coverage area.

14. Increased restrictions in the residential city fringe will be required over time as more properties are built without off-street parking, shifting the perceived responsibility from the landowner to the public. We are already beginning to see an uptake in parking enforcement requests in higher density residential streets. If we follow the pattern of Auckland’s higher density suburbs, we can expect to see a marked increase in requests for the restrictions outside of the traditional city centre over the next few years.

15. The expansion of paid parking is also an eventual necessity for the city. Currently based on our transaction data, Tauranga doesn’t have a shortage of parking available, it has a shortage of free all-day parking. Occupancy remains low and spaces are available for visitors into town.

16. To put the above numbers in context, efficient use of parking spaces - both in buildings and off street – should have an average occupancy of 85%. That average is not being met for on or off-street parking; however the city centre fringe continues to face occupancy issues limiting availability for residents.

17. We also cannot talk about parking changes in isolation from the experiences of our parking wardens and technicians in the field. Irrespective of the options picked we have witnessed a marked increase in conflict situations and threatening emails over the past 6-12 months. Paid parking generally returns lower levels of harassment and abuse than time restricted parking. This has been put down to the fact that when people are enforced for exceeding time limit, they feel they are being punished for using something that is free anyway. Paid parking meanwhile is well understood in most regional centres.

Strategic / Statutory Context

18. The current parking demand is highly variable with everything from macro-economic changes, weather and roadworks all factoring into the daily data results.

19. The city centre transport network is expected to be highly changeable over the next 18 months and we will need to ensure parking follows suit. A staggered roll out allows us time to continue monitoring the parking demand in the city centre and be more adaptable to ensure we are minimising further disruption for residents during the city centre transformation.

20. Pivoting the parking changes is a necessity at this stage of the city centre development. However, as the city centre transformation is progressed it will be an entirely new environment, requiring a new parking strategy to ensure the most efficient use of our assets and the best customer experience going forward.

Options Analysis

21. Given the current environment and for the reasons mentioned above our recommended approach is Option 2 (staggered roll out) however if this is not feasible Options 1 and 3 do have their own advantages and disadvantages.

22. Option 1: Continue as planned with November 1st roll out of city centre fringe parking changes. This plan is straight forward as it is purely sticking to the original plan with no further adjustment.

Advantages

Disadvantages

Easy to implement and fast

· Not adjustable to the reality on the ground

· Expected to be unpopular and create a negative response from visitors and residents to the city centre.

· Option is in conflict with our commitment to support the city centre during its period of transformation.

23. Option 2: Staggered roll out in the city centre. Introducing parking controls on Fourth Ave, First Ave, Second Ave west and Mclean Street from 1st of November. We then wait six months and move out a block. This will continue every six months until the changes proposed last year are met. The proposed first stage to take effect 1st of November is outlined in red below. We will continue

Advantages

Disadvantages

· Gives residents time to prepare and allows us an opportunity to regularly report on changes in city demand.

· Allows us to me more agile in our approach and make changes as we go.

· Has the potential to be confusing for people who are visiting and living in the area as they have to keep track of the regular changes.

24. Areas outlined in black are the pre-existing parking restrictions. Areas outlined in red are where we seek to expand paid parking from 1st November 2023.

25. Further changes will be reviewed every 6 months with the goal of reaching 11^th Ave in 18 months.

26. Option 3: Put the rollout of any further changes in the city centre on hold for 12 months. We could instead use the opportunity to focus on areas outside the city centre which are facing parking pressure for parking spaces. The crunch on space in the suburbs is starting to affect workload of our enforcement officers and council staff as we have to monitor and restrict an increasingly large swath of the city. With the city centre facing heavy development and an impending cost of living crises we could use the time to focus in other areas.

Advantages

Disadvantages

· Expected to be broadly popular among city residents

· Gives us a chance to monitor parking in the city waiting for completion of work.

· Doesn’t drive change and doesn’t remove the need for that change in behaviour.

Financial Considerations

27. Financial considerations in this case are limited to the expected increase in revenue from expanding parking in the city fringe and enforcement of time limited parking areas.

28. The roll out is expected to cover and increase of approximately 30 parking machines to the 80 we currently have operating in the city centre.

Expected Revenue

29. Parking – $316,000pa

30. Enforcement – Revenue is highly dependent on abuse. We expect more notices to be issued at a lower rate of $12-$15 from the time limited zones than the paid parking areas. Unfortunately, the low cost of the fines in time limited parking means once labour and equipment is taken into account and as long as our 40% payment rate for parking tickets holds, we expect to barely break even on enforcement. The update of the Land Transport Act is currently sitting with Waka Kotahi, and we expect no change with this until after the general election.

31. Staggering or holding off the approved plan will delay and split up projected revenue, but costs of implementation will also be spread out.

Legal Implications / Risks

32. It is important to acknowledge the potential risk that the public may not engage with the proposed changes. We may see the public not adjust their transport habits as parking restrictions extend resulting in an impact on parking in the non-restricted areas when changes are rolled out.

33. We will monitor the situation as we roll out and if this appears to be happening, we may need to recommend a full roll out as planned.

Consultation / Engagement

34. The initial approval for the proposed changes on the 1st of November came after public consultation on the Parking Strategy the approved changes where the implementation of this.

35. The recommendation to stagger the roll out is the result of public discourse regarding parking in the CBD.

Significance

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

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

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

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

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

ENGAGEMENT

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

Click here to view the TCC Significance and Engagement Policy

Next Steps

40. Once the proposed changes to the roll out of parking restrictions are approved the implementation process will commence immediately under the guidance of the Parking Strategy Manager. We will work in close partnership with the communications and city development teams to ensure the information is clear across all avenues of communication with our residents.

Attachments

Nil

Strategy, Finance and Risk Committee meeting Agenda

7 August 2023

9.10 Street Use Policy Review - Issues and Options Report

File Number: A14622141

Author: Vicky Grant-Ussher, Policy Analyst

Authoriser: Nic Johansson, General Manager: Infrastructure

Purpose of the Report

1. To seek direction on several issues raised in the review of four street related policies in order to develop a consolidated draft policy.

Recommendations

That the Strategy, Finance and Risk Committee:

(a) Receives the report "Street Use Policy Review - Issues and Options Report".

(b) Gives direction on the following issues to inform the creation of a combined street policy:

Issue One: Principles of the policy

(i) Include the proposed tailored policy principles (outlined in Attachment One)

Issue Two: Inconsistent charging for street and balcony dining

(ii) Include eligibility criteria for a temporary reduction in street dining fees

(iii) Include zoned dining charges for street dining

(iv) Include aligned charges for balcony dining and street dining

Issue Three: Compliance issues

(v) Require application fees reflective of the costs of inspection and administration and require bonds to cover potential remediation that could be required from private or commercial users of the street

(vi) Waive application fees and bonds where an activity is a community activity or has a primarily community benefit

(vii) Do not require design features or verandas approved by council to have a lease or licence to occupy, and do not require ongoing fees

Issue Four: Accessibility

(viii) Progress accessibility improvements through a working group made up of council, businesses, disability representatives, mainstreet associations, and community members

Issue Five: Other matters

(ix) Include a reference to street dining aesthetics and design guidelines in the policy

(x) Include smoke-free and vape-free requirement for new licences or leases for street dining

(xi) Include information on vehicle crossing relocations in the policy

(xii) Do not permit artificial grass in the policy.

Executive Summary

1. The council currently has four policies and one bylaw outlining how streets may be used by businesses, residents, and the community. The policies relate to the licensing or leasing of streets for activities such as dining, parking, planting, verandas, balconies, and other infrastructure. The policies do not cover the use of the roadway. The four polices are:

· lease of airspace above roads 2000

· lease of subsoil below roads 2002

· licences for occupation of road reserves and unformed road 1997

· occupation of road berms for public parking and for planting on berms in front of private residences 2000^{^[3]}.

2. The policies are more than twenty years old, and we are reviewing them to assess their relevance and whether they are fit for purpose, with the intention of consolidating them into one policy covering street use.

3. We have engaged with internal staff, mainstreet associations, and representatives of the disability community. Our review has highlighted that within the existing policies there are gaps in policy positions, and inconsistent approaches to some issues.

4. We are seeking your direction on these issues:

· developing principles for the policy

· addressing inconsistent charging for street and balcony dining^{^[4]}

· compliance matters

· accessibility matters

· other matters, such as artificial grass, vehicle crossing relocations and smoke-free requirements.

Background

5. Currently we have four street related policies that primarily deal with the leasing, licencing, or use of street spaces adjacent to but not including the roadway. We have 114 leases or licences to occupy the street space, these include:

· 82 road reserve leases or licenses to occupy (which include balconies, retaining wall, parking, landscaping),

· two subsoil leases

· 30 footpath licences for street dining.

Not all street dining requires a licence to occupy as the activity is permitted by the Street Use and Public Places Bylaw providing furniture is removed outside of business hours (and subject to conditions being met).

6. As part of the review, we referred to the engagement material from the use of council land review, including community survey responses and feedback from Te Rangapū on relevant matters. We engaged with Greerton Mainstreet, Downtown Tauranga and Mount Business Association on the principles of the policy and street dining issues. We conducted an accessibility audit of the street dining at Mount Maunganui to inform the coverage of the accessibility issues. Further engagement with the disability community is planned as part of the consultation on the draft combined policy.

7. Since the four existing policies were created streets, especially in central suburbs, have become increasingly important as public spaces and policies on the use of these spaces need to reflect their role in providing vibrancy and amenity value. However, streets are a primary part of the infrastructure of the city and ensure people can move about the city easily. As the city intensifies the pressure on street spaces will increase. To address this pressure, a consistent approach is needed to guide when, how, and for what purposes leases and licences will be provided for the use of the street.

Strategic / Statutory Context

8. The City Vision adopted by Council and developed in conjunction with the community outlines our collective vision for the city. ‘Tauranga, together we can’ captures the vision for a collaborative approach to realising a city that ‘prioritises nature’, ‘lifts each other up’, and ‘fuels possibility’. These three pillars inform council’s refreshed strategic framework, with our five primary strategies geared towards delivering the five community outcomes that together contribute to the vision.

9. The vision and strategic framework inform the council’s plans and policies, which guide the implementation of these higher-level strategies in council’s day-to-day activities. It is therefore important that council’s approach to street use is aligned with the council’s strategic direction. More specifically, the policies for how streets can be used by businesses and the community should deliver public benefits through easy movement and accessibility and provide inclusive, diverse, and vibrant spaces.

Options Analysis

Issue One: Principles of the policy

10. We are proposing a set of principles to guide decision-making on the use of streets. The principles support the city vision strategy and reflect the role the use of streets can play in achieving community outcomes. We recommend:

· including the principles (as outlined in Attachment One) in the draft policy.

Issue Two: Inconsistent charging for street and balcony dining

11. There are both public and commercial benefits from street and balcony dining. Well-planned street and balcony dining creates vibrancy and interest in city centres. Premises with street dining or balconies create an inviting atmosphere and encourage people to congregate increasing passive surveillance and feelings of safety. Currently fees for street and balcony dining are not consistently applied leading to similar activities being charged differently.

12. We recommend three key changes to provide more consistent charges for street and balcony dining including:

· eligibility criteria for a temporary reduction in street dining fees – this will allow council to consider reducing fees in times of disruption (as is the case in the city centre at present)

· zoned dining charges for street dining – this approach provides greater consistency and transparency across different areas of the city (further analysis and other options considered are provided in Attachment Two)

· aligned charges for balcony dining and street dining^{^[5]} – this will ensure that any changes to street dining fees flow through to balcony dining fees, reflecting the similar nature of these activities.

Issue Three: Compliance requirements

13. The council as the landowner of the street may specify certain requirements within leases or licences to occupy to ensure policy conditions are met. For example, council may require balconies to have regular inspections, or berm planting to be maintained or otherwise returned to grass. We recommend three changes to the way we approach compliance:

· require application fees and bonds for commercial or private use of the street (this ensures council is not left with a bill if the street is damaged)

· waive application fees and bonds for use of the street where an activity is a community activity or has a primarily community benefit

· do not require voluntary design features or verandas approved by council to have a lease or licence to occupy or to pay ongoing fees, bringing settings into line with design features or verandas required by the City Plan.

Issue Four: Accessibility

14. Our Tauranga Mataraunui - Inclusive City Strategy sets out Council’s goals to achieve an inclusive city and a key part of this is access that works for all, where no-one experiences physical barriers. However, street dining, alongside other street items is causing issues in Mount Maunganui at present as outlined in Attachment Three. We recommend:

· Council to progress accessibility improvements through a working group^{^[6]}.

Issue Five: Other matters

15. Through the review a range of other matters were raised for consideration, these are outlined in Table One below.

Table One: Other matters

Issue	Recommendation
Aesthetic and design elements of street furniture and decorative elements lack cohesion	Provide a reference in the policy to aesthetic and design guidance developed with working group of council, street dining businesses, disability representatives, mainstreet organisations, and community members
No position on smoking or vaping for street or balcony dining on council land	Include smoke-free and/or vape-free requirement for new licences or leases for street dining
Need to clarify when council will relocate vehicle crossings^{^[7]}	Include key considerations for determining when a vehicle crossing may be relocated including: · when a street or area is being redeveloped and the existing vehicle crossing obstructs the desired outcome from the redevelopment; and · a suitable alternative vehicle crossing is already available to service the property, or a relocated vehicle crossing could be developed to service the property.
Need to clarify position on the use of artificial grass on berms	Include position in the policy that clarifies that artificial grass will not be permitted for berms

Financial Considerations

16. Issue two, would have financial implications. The recommended approach is expected to increase revenue overall, however specific financial implications would be dependent on the set level of charge, in line with the policy direction, which would be determined through user fees and charges.

17. For issues three to five, the options would require additional administrative, or compliance staff resource to support the proposed changes.

18. For issue three, no longer requiring a lease or licence to occupy for a veranda or design feature may have a small fiscal cost. Not all verandas or design features incur fees, for those that do these are often in the range of several hundred dollars a year. The administrative savings may offset some of this cost.

Legal Implications / Risks

19. There are no identified legal implications.

Significance

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

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

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

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

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

ENGAGEMENT

23. Taking into consideration the above assessment, that the issue is of medium significance, officers are of the opinion that, following the adoption of a draft policy, targeted consultation/engagement is suggested under the Local Government Act 2002.

Next Steps

24. Following any direction on the issues in this paper a draft policy will be prepared for consideration at the 18 September 2023, Strategy, Finance and Risk Committee meeting.

Attachments

1. Principles for the Policy - A14905876 ⇩

2. Street Dining Charging Options - A14905883 ⇩

3. Accessibility Audit - A14885591 ⇩

Strategy, Finance and Risk Committee meeting Agenda

7 August 2023

9.11 Water Services Reform Update

File Number: A14671986

Author: Diane Bussey, Contractor - Three Water Reforms

Authoriser: Nic Johansson, General Manager: Infrastructure

Purpose of the Report

1. To provide a progress update on the Water Services Reform project, legislative update and the expected activities in coming months.

Recommendations

That the Strategy, Finance and Risk Committee:

(a) Receives the report "Water Services Reform Update".

(b) Notes that a joint submission on the Water Services Entities Amendment Bill was submitted on 5 July 2023 (Joint between TCC and Te Rangapu).

(i) Engage with the remaining legislative processes for Water Services Reform, with relevant communication and engagement activities,

(ii) Completion of outstanding deliverables, per National Transition Unit (NTU) advice, and revise transition planning for reforms, once the establishment date for Entity C and regional transition approach have been confirmed.

Executive Summary

2. Tauranga City Council (TCC) continue to participate in the Water Services Reforms and are meeting all obligations placed upon TCC with the enactment of the Water Services Entities Act, 7 December 2022.

3. Government announced a ‘Reset’ position for Water Services Reform, requiring a fourth piece of legislation to be introduced to the house on 22 June 2023, the Water Services Entities Amendment Bill. TCC and Te Rangapu completed a joint submission on 5 July, with the Select Committee report expected 27 July 2023. Government has confirmed the intention for all required legislation to be passed by 31 August 2023, when the house rises ahead of the general election.

4. The water services currently provided by TCC, will now transition to Entity C, made up of six Bay of Plenty councils. Previous to the ‘reset’, TCC was to transition to Entity B, consisting of 22 councils from Bay of Plenty, Waikato and Taranaki.

5. The establishment date for Entity C is unknown, increasing uncertainty for impacted staff and the current transition project. National Transition Unit (NTU) have provided entity sequencing principles and criteria to support the consultation with councils and iwi to determine an establishment date for all WSE.

6. NTU have advised a change in transition approach, moving from the current central model to a more regional based model.

7. Project risks continue to be monitored, with new risks and opportunities being identified post ‘reset’. The key risk continues to be the impact of the increased uncertainty on staff and the ability to continue service levels within our community through the longer transition period.

Background

8. Central government announced a ‘reset’ for the proposed ‘Three Waters Reforms’, now referred to as Water Services Reforms. Significant changes to reforms and impacts include:

(a) Moving from four Water Services Entities (WSE) to ten, to enable all territory authority owners representation on Regional Representation Groups (RRG), this meant Tauranga City Council (TCC) moving to Entity C, along with Western Bay of Plenty District Council, Whakatane District Council, Kawerau District Council, Opotiki District Council and Rotorua Lakes District Council.

(b) The previous WSE establishment date of 1 July 2024 remains in place for Entity A (Northland and Auckland), with the other nine WSE being established, on a staggered basis, through to 1 July 2026.

(c) The transition approach of the National Transition Unit (NTU) will change to enable support across ten WSE transitioning on a staggered timeline through to 1 July 2026.

(d) Council planning and reporting documents will be required to reflect that they will continue to be responsible for provision of water services until the, yet to be confirmed, handover date. This includes the 2024-34 Long Term Plan.

(e) The second tranche of ‘Better Off’ funding has been discontinued. ‘No Worse Off’ and Transition Support funding will continue, further details regarding specific methodology and allocations are yet to be provided.

9. TCC have, as a result of the ‘reset’ announcements adjusted the approach of the Water Services project, which was established to support the transition of council water services and staff to a larger proposed WSE B.

water services legislation update

10. There are now four pieces of legislation that are required to establish the WSE:

(a) Water Services Entities Act (WSE Act);

(b) Water Services Entities Amendment Bill introduced 16 June 2023 as a result of central government ‘reset’ position. First reading was 22 June 2023;

(d) Water Services Economic Efficiency and Consumer Protection Bill.

11. TCC and Te Rangapu provided a joint submission to the Governance and Administration Select Committee on the Water Services Entities Amendment Bill, within the 13-day period provided. The Select Committee report is expected 27July 2023. The joint submission is attached to this report, and has been published on the external website.

12. The Select Committee report on both the Water Services Legislation Bill, and Water Services Economic Efficiency and Consumer Protection Bill was released on 7 and 8 June 2023. Simpson Grierson provided analysis of this report and provided a briefing to Commissioners on 27 June 2023. As a result of that briefing, Simpson Grierson are developing a Supplementary Order Paper (SOP) for TCC outlining an ongoing concern as regards the lessened powers of a WSE to enter private property.

13. It is government’s intention to have all four pieces of legislation passed, before the house rises for the general election on 31 August 2023.

14. TCC continue to participate and engage with the water reform legislative process.

Transition approach

15. A standard transition approach (‘transition runway’) to establishing all ten WSE was presented by NTU at a roadshow for Entity C Councils and iwi on 30 June 2023. NTU advised their intention of using this standard transition approach, which outlines 12 - 15 months of activities prior to a WSE establishment date, to establish Entity A. Adjustments will then be made for any lessons learned.

16. NTU advised a change from the central NTU model to a more regional based model, further details as to how this model will be implemented are yet to be provided. TCC has continued to participate with all Local Transition Team meetings, engagements and NTU Reference groups.

Transition timing

17. At the roadshow on 30 June 2023, NTU advised:

(a) Entity A has a legislated establishment date of 1 July 2024.

(b) All other WSE establishment dates will be determined using the following principles:

(i) A maximum of three WSE able to be established on the same date;

(ii) Required to spread WSE establishment on a scale and regional basis;

(iii) Go live dates will be aligned to financial quarters; and

(iv) Go live must achieve all future state capabilities in scope.

18. NTU also provided the sequencing criteria they will be using to determine WSE establishment, in consultation with Councils and iwi. NTU will be required to support the transition of 10 WSE at different stages of transition over a two-year period, with limited resources and capacity.

19. TCC, along with other Entity C councils and iwi have commenced discussions regarding a preferred establishment date for Entity C.

20. NTU have advised confirmed WSE establishment dates will be available no later than 31 December 2023. The roadshow presentation indicated this information may be available August / September.

21. The outcome of the general election in October may impact Water Services Reforms.

impact on water services reform project

22. The ‘reset’ position has impacted all project workstreams with most planned deliverables, dates and approach now awaiting confirmation of an establishment date for Entity C, and confirmation of the central v regional led transition approach.

23. The TCC team continue to support the ongoing work regarding development of national frameworks and the Customer, Data and Digital workstream as regards data migration.

24. Contracted project support has had an agreed reduction in hours required for transition support functions, until such time as there is greater clarity around project requirements.

25. The current project team are continuing to complete deliverables requested by NTU, including the Position and Pathway Consultations for all impacted staff.

26. Internal communications and engagement activities continue, with internal engagement via monthly newsletters. External communication, specifically regarding legislative implications are continuing.

27. The project governance continues to meet monthly, or as required, with regular project status updates.

Next Steps

28. Finalise the Supplementary Order Paper – Water Services Legislation Bill.

29. Analyse and communicate impacts of the Select Committee report on Water Services Entities Amendment Bill.

30. Support the discussions and NTU consultation to determine transition date for Entity C.

31. Transition planning once Entity C establishment date and transition approach is known. This will ‘reset’ the TCC water services reform project.

32. Finalise Position and Pathway consultations for impacted staff.

33. Finance and Settlement – confirm settlement process being revised for 10 WSE being stablished over staggered timeline.

34. Relationship and Service Level Agreements – review draft and determine TCC impacts.

35. Review ‘No Worse Off Funding’ methodology when released, determine TCC impacts.

Attachments

1. Attachment 1 - Final Submission Water Services Entities Amendment Bill - A14898673 ⇩

[2] Two measures related to drinking water standards have been combined due to the introduction of the New Zealand Drinking Water Standards.

[4] Balcony dining is where balconies protrude into the airspace above the street, at first floor level, and provide for open air dining.

[5] Different application fees and bonds may apply.

[6] The working group would include relevant council staff, businesses, disability representatives, mainstreet associations, and community members.

[7] Vehicle crossings are the portion of a driveway located on council land between the road and the property boundary


AGENDA Strategy, Finance and Risk Committee meeting Monday, 7 August 2023
I hereby give notice that a Strategy, Finance and Risk Committee meeting will be held on:
Date:	Monday, 7 August 2023
Time:	9.30am
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