Agenda of Ordinary Council meeting

Ordinary Council meeting Agenda

26 May 2025

11 Business

11.1 Annual Plan 2025/26 - Consultation and submission summary

File Number: A17909555

Author: Jeremy Boase, Manager: Strategy & Corporate Planning

Ceilidh Dunphy, Community Relations Manager

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

Purpose of the Report

1. To frame Council’s deliberations on the Annual Plan by outlining the consultation process undertaken and the feedback received on the key questions asked through that consultation process.

Recommendations

That the Council:

(a) Receives the report "Annual Plan 2025/26 - Consultation and submission summary".

Executive Summary

2. The draft Annual Plan 2025/26 consultation document was available for community consultation between 28 March and 28 April 2025. This consultation process was undertaken in parallel with consultation on Local Water Done Well, the draft development contributions policy, and user fees and charges.

3. The community engagement process included an extensive paid media advertising schedule, elected member-led community events, and a demographically representative market research survey.

4. The purpose of the extensive advertising was to encourage community participation in the joint Annual Plan / Local Water Done Well online submission form and community events.

5. Approximately 480 people attended the 24 community events held across Tauranga. Media engagement was significant with an estimated 5.8 million views of digital advertising and a 41% reach of the total target audience (being all people 18+ in Tauranga) through radio advertising.

6. In addition, 49,100 direct emails were sent to people on either or both of council’s customer contact database and engagement newsletter database.

7. The advertising, event costs, printing, and the demographically-sound survey cost approximately $115,000. Savings were made compared to previous years by in-housing design work and the large email mail-out. Significant staff time from the Community Relations team and senior leadership is involved in the engagement process.

8. In total, 968 submissions were received. This is substantially more than are generally received through an annual plan process, and may be partly reflect of both a new Council and dual consulting on Local Waters Done Well options. A total of 68 submitters spoke to their submission during hearings held on 13 and 14 May 2025.

9. In addition to the submissions, the demographically-sound survey obtained responses from 253 residents. The results of the submissions and of the demographically-sound survey are shown separately in this report.

10. The consultation document and online submission form asked six main questions in two groupings. The demographically-sound survey asked the same questions. Those questions related to:

· Future priorities

o Question 1 – future capex investment in the city

o Question 2 – future rates spending

o Question 3 – the balance of user contributions and rates funding

· Annual plan specific

o Question 4 – the overall annual plan

o Question 5 – the capital projects budget

o Question 6 – the operational budget.

11. In Question 1, the community was invited to allocate a nominal $100 of capital expenditure across priority investment areas. Compared to the existing budget, submitters and survey respondents both sought, on average, slightly less spending on transport and the city centre, and slightly more spending on waters, community infrastructure, and ‘other’ investment.

12. In Question 2, the community was similarly invited to allocate a nominal $100 of rates-funded operating expenditure across key council service areas. Compared to the existing rates-funded budgets, submitters and survey respondents both sought on average, slightly more spending on transport, sustainability and waste, and ‘other’, and slightly less spending on water services and spaces and places. For library expenditure, submitters sought slightly less spending and survey respondents sought slightly more spending.

13. In Question 3, a strong majority of both submitters and survey respondents supported the planned review of user fees and charges with a view to reducing the reliance on rates.

14. In comments attached to Question 4 there was a wide variety of ideas raised relating to user fees and charges, but the single biggest volume related to reducing costs rather than changing revenue structures.

15. In Question 4, significantly more submitters disagreed or strongly disagreed (49%) with the overall annual plan than agreed or strongly agreed with it (24%). In the demographically-sound survey this was reversed with a larger percentage supportive than in disagreement (34% to 28%).

16. In comments attached to Question 4, those disagreeing with the annual plan focused on the proposed rates increase and what is seen as wasteful spending on non-essential projects and ‘nice-to-haves’. Those agreeing with the annual plan highlighted support for investment in ‘catch-up’ infrastructure and investments that improve the quality of life of residents.

17. In Question 5, significantly more submitters (51%) sought reduced capital investment (and lower debt and rates) than those who were comfortable with proceeding with the planned approach or increasing capital expenditure (a combined 36%). Again, in the demographically-sound survey this was reversed with a larger percentage supportive of the plan or of increasing investment than the percentage looking to reduce investment (46% to 44%).

18. In comments attached to Question 5, those looking to reduce investment again referenced non-essential or ‘nice-to-have’ projects and highlighted concerns at council’s debt level and community affordability issues. Those supporting the plan or looking to increase investment referenced the need for continued investment in infrastructure as the city grows, particularly in transportation, community facilities, and water services.

19. In Question 6, more submitters (46%) sought to reduce council services and have lower rates increases than those who were comfortable proceeding with the planned approach or sought to increase council services with higher rates increases (a combined 39%). This was different to the demographically-sound survey where a larger proportion of respondents were supportive of the proposal or wanted to increase services and rates compared to those who sought reductions in services and rates increases (50% to 39%).

20. In comments attached to Question 6, those looking to reduce council services and rates increases highlighted staff numbers, costs and benefits; consultant and contractor costs; and a need to ensure value-for-money through efficiencies, a reduction in wasteful spending, and better management of resources. Those supportive of the proposed plan or of increasing services also commented on staff numbers and costs and consultant costs but noted that reducing staff costs can lead to reductions in service levels. This group also highlighted value-for-money and efficiency objectives.

21. This report is for information only. There are no decisions sought. Other than the expenditure incurred and noted above, there are no financial, risk or legal consequences associated with this report.

Background

22. This report covers two main topics:

· a summary of the engagement approach undertaken, and the number of responses received, covered in paragraphs 23 to 41

· a summary of the results from the online submission form and the demographically-sound survey, covered in paragraphs 42 to 96.

advertising and engagement approach

Engagement approach

23. At the Community, Transparency and Engagement Committee meeting of 18 November 2024, the Committee considered three options relating to the communications and engagement approach for the annual plan: a minimum option, a regular option, and an enhanced option. The committee resolved to take the enhanced approach which included, among other things:

· an extensive paid media schedule (mix of digital, newspaper, billboard and radio advertising)

· community drop-in sessions in each ward

· a large-scale ‘town hall’ event

· a demographically representative market research survey managed by a research company.

24. The estimate of costs for the enhanced approach, included in the report to the Committee, was between $80,000 and $200,000.

25. The next sections of this report outline the approach taken and the outcomes achieved by the engagement approach.

Engagement events summary

26. Around 480 people attended 24 events across Tauranga. Events were advertised across the city as an opportunity for the community to speak to the mayor and their local councillors. A variety of different formats were used including setting up stalls at shopping centres and markets, drop-in sessions at local halls, and more formal presentations.

27. At events, where appropriate, we had marble jars where people could allocate 10 marbles across six operating budgets to indicate where they would like council to invest. This question aligned with the online submission form where we asked people to apportion how they would split $100 across the different services.

28. The marble jars were intended as an interactive engagement option to help start conversations and to provide a simpler way for people to participate if they were unlikely to go online or otherwise make a submission. The concept proved difficult to explain in a quick interaction, so was not utilised across all sessions and results should be considered with this context.

29. The combined results of the marble jar voting process were:

· Transport: 77 votes

· Water Services: 105 votes

· Spaces and Places: 34 votes

· Community Services: 92 votes

· Sustainability & Waste: 105 votes

· Other (i.e. Regulatory services and compliance): 35 votes

30. These results can be compared to the response to Question 2 in the consultation document, outlined below in this report.

Advertising campaign

31. Our goal was to encourage community participation in the Annual Plan and Local Water Done Well online submission form and events. Although this draft Annual Plan was not a significant deviation from the Long-term Plan it was decided to consult and promote engagement opportunities as widely as possible as this was the first substantive opportunity for councillors to engage with the community. Some engagement events didn’t attract large numbers; however, we received far more online submissions than our annual plan consultations have generally achieved.

32. Bundling the Annual Plan and Local Water Done Well consultations enabled us to increase awareness and reach, as well as to streamline the submission process. A number of other councils seem to be taking a similar approach. Running the two consultations concurrently has likely helped drive the response rate.

33. The target audience for the engagement was all people 18+ in the Tauranga City catchment area – 131,000 residents.

Budget and staff resources

34. The budget and staff resources utilised through the engagement process included:

· Total media budget: $83,000 (Annual Plan: 70% [$58,000] Local Water Done Well: 30% [$25,000]).

· Other engagement costs (i.e. venue hire, catering, printing costs etc): approximately $7,500

· Design and customer contact database: Previously we have outsourced the design of the consultation document at a cost of around $10,000. This year we designed in-house saving costs and allowing for more flexibility to implement last minute changes. In addition, instead of outsourcing the email distribution to the customer contact database we also undertook this internally, saving around $7,000.

· Community relations staff resourcing: A number of Community Relations staff have worked across these two consultations whether it be on engagement planning and communications advice, design, writing content, booking media or planning and facilitating engagement events. It’s estimated this would equate to approximately six FTEs for three months (though spread across a number of staff working on multiple projects). In addition, each of the engagement events were attended by senior staff members to support elected members.

· The demographically-sound survey conducted by a market research company cost $24,270.

Approximate spend by media and potential audience reach

35. We have not yet, at the time of writing this report, received analysis from media companies on actual reach. As such, the figures below are estimates.

· Print: $12,100 (15%) – 360,000 (cumulative readership)

· Digital: $46,400 (56%) – 5.8 million views

· Radio: $13,500 (16%) – 41% reach of total audience

· Out of home: $11,000 (13%) – Bus backs: 50,000 people; digital billboards: 50,000 views.

Email campaign summary

36. For the second time we used the customer contact database to contact ratepayers directly. We also utlilised our engagement newsletter database, which has an additional 10,000 email addresses for people who wish to be contacted about council projects. The open rate was above a typical government piece of communication which is 40%. The click rate was lower than other TCC newsletters (10-15%) – possibly because the topics were less tangible.

37. Some key statistics from the email campaign are:

· Total dispatch: 49,100 emails sent

· Bounce rate: 8.2% (4,008 bounces, therefore 45,092 emails openable)

· Open rate: 67.5% (30,426 opens)

· Click rate: 7.5% of opens (2,291 clicks from unique users)

· Unsubscribe rate: 0.34% (153 unsubscribes)

38. The top-rating clicks^{^[1]} were:

· Annual Plan: 6.5% of opens (1,964 clicks)

· Local Water Done Well: 3.3% of opens (1,007 clicks)

· Community events: 2.1% of opens (664 clicks).

Submissions received

39. A total of 968 submissions were received^{^[2]}. Of these, 770 were responses to the online submission form and 198 were received by direct email or through the post. Where emailed or posted submissions responded directly to the questions raised in the consultation document, those answers have been aggregated with the online submission form results in the figures below.

40. A total of 68 submitters spoke in support of their submissions at hearings held on 13 and 14 May 2025.

41. The demographically-sound survey conducted by an independent market research company sampled 253 residents. A copy of the final survey report is included as Attachment 1 to this report.

responses to Key questions – priorities

42. The consultation document and online submission form asked three ‘framing’ questions, related to this year’s Annual Plan but also relevant to inform Council’s thinking for future processes. These questions related to:

1. Q1 Future capex investment in the city

2. Q2 Future rates spending

3. Q3 The balance of user contributions and rates funding

43. These questions were also asked in the separate demographically-sound survey.

44. Results from these questions are outlined below.

Q1 – How do you want to invest in the future of the city? (capex)

45. Submitters were provided with a high-level split of the current capital expenditure budget based on a nominal total of $100 and then invited to offer their opinion on what the right balance of capital spending should be.

46. Unfortunately, the consultation document and online submission form initially included incorrect figures for the current budget. This would have misinformed submitters as to the ‘status quo’ and may have led some to a different opinion on their version of the right balance than had the correct current budgets been included. We apologise for this mistake which was corrected once identified.

47. Because of the mistake, the responses to Question 1 are presented in Attachment 2 in two batches: the first 372 submissions, using the incorrect current budget numbers; and the subsequent 597 submissions, using the correct budget numbers. The figures below include aggregated results across all submissions.

48. The mistake was identified and corrected before the demographically-sound survey commenced.

49. In total, 669 submissions provided a response to this question. In the demographically-sound survey, 244 people answered this question.

50. Overall results from the submissions and from the demographically-sound survey were as follows:

Investment area	Correct current budget ($)	Average of all submissions ($)	Average per demographically-sound survey ($)
Transport	37	29.3	31
Waters (stormwater, wastewater & water supply)	22	30.6	25
Community Infrastructure (parks, reserves, and community facilities)	11	16.8	16
City centre development	21	11.0	16
Other (airport, waste infrastructure, digital, wharfs and jetties)	9	12.3	13
Total	100	100	100

51. Further details of the demographically-sound survey results are available in Attachment 1. Further details of the submission responses are included in Attachment 2.

Q2 – What do you want your rates to pay for? (opex)

52. Submitters were provided with a high-level split of the current rates-funded operating expenditure budget based on a nominal total of $100 and then invited to offer their opinion on what the right balance of such spending should be.

53. In contrast to the capex question, the opex current budget figures were correct throughout the process. As such all responses can be considered consistently.

54. In total, 675 submissions provided a response to this question. In the demographically-sound survey, 237 people answered this question.

55. Overall results from the submissions and from the demographically-sound survey were as follows:

Council service area	Current budget ($)	Average of all submissions ($)	Average per demographically-sound survey ($)
Transportation (maintaining and improving our roads and footpaths/cycleways, plus safety initiatives)	19	23.0	22
Water Services (stormwater, wastewater, & water supply)	35	30.3	29
Spaces and Places (activities including maintaining our parks, reserves, walkways, and community facilities)	23	20.0	20
Community Services (include our libraries and community centres, arts & cultural activities, evet facilitation, and community development activities)	11	10.8	12
Sustainability and Waste (kerbside collections and recycling/transfer station activities, plus climate change planning)	6	8.5	9
Other (Activities include City & Infrastructure Planning ($2); Regulatory (resource and building consents & environmental planning) and Compliance (parking, noise control, etc.) activities ($2); Economic Development activities ($1); and Emergency Management activities (<$1).)	6	7.4	8
Total	100	100	100

56. Further details of the demographically-sound survey results are available in Attachment 1. Further details of the submission responses are included in Attachment 2.

Q3 – Should we conduct a comprehensive review with a view to having more user contributions to fund things going forward?

57. On 3 March 2025, Council resolved to conduct a comprehensive review of user fees and charges during the 2025/26 year, and to include this proposal in the Annual Plan consultation document.

58. Submitters were informed that Council intends to conduct this review ‘look(ing) for opportunities to increase revenue via fees and charges to aid with the reduction of reliance on rates’. Submitters were asked whether they supported this review.

59. In total, 726 submissions provided a response to this question. In the demographically-sound survey, 253 people answered this question.

60. Overall results from the submissions and from the demographically-sound survey were as follows:

Do you agree that Council should do this comprehensive review?	All submissions	Demographically-sound survey
Yes	77.5%	85%
No	22.5%	15%

61. Submitters were also asked if there are specific areas where the balance between user fees and rates funding should change.

62. There was a wide variety of responses to this question. Topics with the largest number of comments^{^[3]} included:

· the introduction of boat ramp or boat parking charges, with the majority of comments in favour and a minority against

· the introduction of some form of road pricing or congestion charging or other form of charging for road use, with a small number of comments suggesting current tolls be removed

· the introduction of user charges at the museum and/or the art gallery (or for ‘arts and culture’ generally)

· parking fees, with some comments arguing for increases, some arguing for decreases, and mixed views as to the expansion of paid parking to other areas including the beach

· the principle that non-residents or non-ratepayers should pay more and, for some submitters, that residents or ratepayers should receive discounts or pay no user charges at all ‘because we have already paid in our rates’

· development contributions or other variations on ‘growth pays for growth’

· library user charges, with some arguing for increases and others arguing that facilities like libraries should be free of charge

· sporting facilities, with a wide range of opinions offered including some seeking to increase charges, some to remove them, some to establish equity across codes (or indoor vs outdoor), some to differentiate between adult and child use, and some to link charges with improved investment in such facilities

· community facilities and halls, with some arguing for increased fees, some for the removal of fees, and some for discounts for not-for-profit organisations

· visitor-related charges, including some version of a ‘bed tax’ on accommodation providers (including short-stay rentals and bed-and-breakfast providers), a charge on cruise ship visitors, or charges on major events that cause traffic congestion or road closures to recognise the impact caused.

63. Other topics with multiple comments included:

· introducing charges for heavy transport and/or the Port of Tauranga to recognise additional maintenance and congestion on roads caused by trucks

· swimming pool charges

· public transport charges (noting this is a Bay of Plenty Regional Council matter)

· user fees (rather than flat rates) for residential rubbish and recycling collection, and transfer station fees

· wastewater volumetric charges

· increased charges for events, event space, and event facilitation

· street dining charges

· mixed views on charges for unspecified ‘community services’

· user fees should be kept to a minimum.

64. Other areas where one or more submitter considered there was scope for introducing or increasing user fees included the waterfront playground, stormwater, walking tracks, cycle lanes (or a cycle licence fee), building consents, air pollution emitters, water, campgrounds, freedom campers, dog licences, cat licences, e-scooters, showers at the beach, and compliance activities.

65. The biggest volume of feedback related not to the balance of council revenue sources between rates and user fees, but to the extent of, and balance of, council costs. Reducing costs was seen by many submitters to be preferable to increasing user fees or increasing rates.

66. Other matters not directly related to user fees and charges that were raised included:

· various comments on the rating structure including: the balance of residential, commercial and industrial rates; the government paying rates; rating discounts for the aged; Māori land rating; the contribution of property owners versus residential tenants; rates based on number of occupants or on income not property value; holiday home owners paying higher rates; a flat level of rates regardless of property location; removing water rates; the Papamoa infrastructure targeted rate

· fluoridation of the water supply.

67. Respondents to the demographically-sound survey were also asked if there are specific areas where the balance between user fees and rates funding should change. These results have been summarised in Attachment 1 as:

· No change / no opinion – 35%

· Charge visitors more – 18%

· Transport / roading focus – 12%

· Developers / businesses pay more – 10%

· Better user fee targeting – 8%

· Oppose more user fees – 7%

· Council waste concerns – 6%

· Community services need support – 3%

· Environment / sustainability – 1%

68. This information from submissions and from the demographically-sound survey will be reviewed during the comprehensive review of user fees and charges to be started early in the 2025/26 financial year.

responses to key questions – annual plan specific

69. The consultation document and online submission form asked three questions directly related to this year’s annual plan. These questions covered:

4. Q4 The overall annual plan

5. Q5 The capital projects budgets

6. Q6 The operational budget

70. Each question also allowed for an ‘any comments’ response. In addition, Question 6 specifically asked submitters to identify any areas within council where more efficiencies could provide better outcomes for the community.

71. These questions were also asked in the separate demographically-sound survey.

72. Results from these questions are outlined below.

Q4 – What is your opinion on our proposed annual plan?

73. Submitters were provided with a high-level summary of the overall rates increase, the split of increases between residential, commercial and industrial properties, the operational expenditure savings committed to, the total capital expenditure budget, total debt, and the debt-to-revenue ratio. Submitters were then invited to offer their opinion on the overall plan.

Preference	Submissions		Demographically-sound survey
Preference	Number of responses	%	Number of responses^{^[4]}	%
Strongly agree	25	3.4%	8	3.0%
Agree	155	21.0%	76	30.1%
Neither agree nor disagree	135	18.3%	90	35.4%
Disagree	144	19.5%	50	19.8%
Strongly disagree	219	29.7%	19	7.4%
Other	21	2.9%	3	1.1%
Don't know	16	2.2%	8	3.3%
Comment Only	22	3.0%	-	-
Total	737	100%	253	100%

74. Key themes raised by submitters in the comments section attached to this question are summarised below.

75. Within the comments from those who ‘agreed’ or ‘strongly agreed’ with the proposed annual plan, the key themes were:

· support for increased investment in infrastructure to catch up with past underinvestment, noting that improving infrastructure is essential for the city's growth and development

· support for increased investment in community facilities, parks, and services to enhance the quality of life for residents

· recognising the necessity of raising rates to fund infrastructure projects and other city improvements but concerns about ensuring that rate increases and spending decisions are fair and equitable, particularly for low-income residents and specific communities.

76. Within the comments from those who ‘disagreed’ or ‘strongly disagreed’ with the proposed annual plan, the key themes were:

· strong opposition to the proposed rates increases, describing them as excessive, unsustainable, and unaffordable for residents, especially those on fixed incomes or low wages

· criticism of what is seen as wasteful spending on non-essential projects and ‘nice to haves’ instead of focusing on core services and infrastructure

· calls for council to operate more like a business, with better fiscal management, reduced debt, and a focus on essential services – many comments suggest cutting staff numbers, reducing salaries, and eliminating unnecessary expenditure

· a strong demand for greater transparency and accountability in council spending, with a need for council to be more open about its financial decisions and to ensure that public money is spent wisely.

77. The key themes in responses from those who ‘neither agreed nor disagreed’ or who opted for ‘other’ or ‘don’t know’ or who did not offer a direct response but who did leave a comment, were consistent with the key themes identified in the two paragraphs above.

78. Respondents to the demographically-sound survey were also asked if they had any comments on the overall annual plan proposal. Results from the 115 respondents who offered a comment have been summarised in Attachment 1 as:

· Rates increase concerns – 50%^{^[5]}

· Council spending criticisms – 40%

· Debt and financial management – 25%

· Infrastructure needs – 20%

· Equity and fairness – 15%

· Supportive comments – 10%

· Other points – 5%

· Neutral / no comment – 20%.

Q5 – What do you think we should do with the proposed list of capital projects for 2025/26?

79. Submitters were provided with a summary of the capital expenditure programme and a link to the detailed list of projects. Submitters were then asked about their preferred approach to the capital expenditure budget.

Preference	Submissions		Demographically-sound survey
Preference	Number of responses	%	Number of responses	%
Reduce investment, resulting in lower debt and lower rates in years to come	368	51.2%	111	44.0%
Proceed with the proposal, resulting in similar levels of debt and rates to the Long-term Plan	199	27.7%	101	39.8%
Increase council investment, resulting in higher debt and higher rates in years to come	62	8.6%	16	6.3%
Some other option	64	8.9%	4	1.8%
Don't know	21	2.9%	21	8.2%
Comment only	5	0.7%	-	-
Total	719	100%	253	100%

80. Key themes raised by submitters in the comments section attached to this question are summarised below.

81. Within the comments from those who selected ‘reduce investment …’, the key themes were:

· a strong sentiment to reduce investment in what are seen as non-essential or ‘nice-to-have’ projects and to focus on what are seen as ‘essential’ or ‘core’ infrastructure and services

· a focus on reducing, or not increasing, debt

· a recognition that ratepayers are struggling and cannot afford significant rate increases

· a view that there has been significant amounts of wasteful spending.

82. Within the comments from those who selected ‘proceed with the proposal …’, the key themes were:

· the importance of managing the budget wisely, avoiding unnecessary debt, and ensuring value-for-money including through transparent tender processes

· the need for continued investment in infrastructure, particularly in transportation, community facilities, and water services, as the city grows.

83. Within the comments from those who selected ‘increase Council investment …’, the key themes were:

· a recognition that the city had fallen behind, created a backlog of infrastructure needs and that the catch up can’t wait

· a focus on the city’s potential, both in responding to growth and driving future growth

· encouragement to complete infrastructure projects with specific mentions for the Memorial Park development, various city centre developments, and transportation including public transport investment

· a belief that civic investment will encourage private sector development.

84. The key themes in responses from those who selected the ‘some other option’ response were consistent with the key themes identified in the three paragraphs above.

85. Respondents to the demographically-sound survey were also asked if they had any comments on the proposed capex programme. Results from the 80 respondents who provided a comment have been summarised in Attachment 1 as:

· Reduce unnecessary spending / focus on essentials – 30%^{^[6]}

· Rates are too high / concern about affordability – 20%

· Infrastructure is critical (especially roads & public transport) – 18%

· Criticism of council spending / management – 15%

· Support for careful, future-focussed investment – 10%

· Cycleways & CBD upgrades seen as wasteful by some – 7%

· Positive comments / supportive of progress – 5%.

Q6 – Which option do you prefer for the overall direction for Council’s annual plan and future operational budget cost savings?

86. Submitters were provided with a summary of the operational budget, including savings already made, and a reference to other pages within the consultation document where further information could be found. Submitters were then asked about their preferred approach to the operational budget.

Preference	Submissions		Demographically-sound survey
Preference	Number of responses	%	Number of responses	%
Reduce council services, lower rates increase	337	45.8%	97	38.5%
Proceed with the proposal	241	32.7%	111	44.1%
Increase council services, with higher rates increase	44	6.0%	15	5.8%
Some other option	79	10.7%	12	4.8%
Don't know	25	3.4%	17	6.9%
Comment only	10	1.4%	-	-
Total	736	100%	253	100%

87. Submitters were also asked whether there are any areas within Council where they would like to see more efficiencies in providing better outcomes for the community. The responses to that prompt, and any comments associated with the above table, are summarised below.

88. Within the comments from those who selected ‘reduce council services …’, the key themes were:

· reduce costs, with a strong emphasis on reduction of staff numbers, costs and benefits

· reduce consultant and contractor costs

· ensuring value-for-money through efficiencies, reduction of wasteful spending, and better management of resources

· an emphasis on listening to the community and involving them in decision-making processes – some comments express frustration with the council's perceived lack of responsiveness to community feedback.

89. Within the comments from those who selected ‘proceed with the proposal’, the key themes were:

· the need for financial oversight, reducing unnecessary expenditure, and ensuring value for money including better tender outcomes

· suggestions to reduce consultant costs and staff numbers, costs and benefits, though some noted that staff cuts can lead to a risk of reduced service levels

· a focus on the balance between improved (or maintained) facilities and services and affordability.

90. Within the comments from those who selected ‘increase council services …’, the key themes were:

· emphasising the need to invest in the city's growth and development, including building infrastructure, undertaking legacy projects, and improving the city's appearance and functionality

· a focus on maintaining and improving council services rather than cutting costs – comments suggest that efficiency and value for money are important, but not at the expense of essential services.

91. The key themes in responses from those who selected the ‘some other option’ response were consistent with the key themes identified in the three paragraphs above, with a tendency to align most closely with the response from those who selected ‘reduce council services …’.

92. Respondents to the demographically-sound survey were also asked if they had any comments on the proposed opex programme. Results from the 76 respondents who provided a comment have been summarised in Attachment 1 as:

· Reduce council staff costs (incl. salaries, perks, middle management, consultants) – 26%^{^[7]}

· Cut wasteful spending / stop vanity projects – 22%

· Keep services, find efficiencies – 15%

· Reduce rates / rates too high – 14%

· More ‘user pays’ or targeted charges – 8%

· City centre / CBD concerns – 6%

· No additional comments – 25%

93. Respondent to the demographically-sound survey were also asked whether there are any areas within Council where they would like to see more efficiencies in providing better outcomes for the community. Results from the 121 respondents who provided a comment have been summarised in Attachment 1 as:

· Reduce internal costs (staff wages, coffee machines, perks) – 30%

· Infrastructure investment & maintenance – 15%

· Better financial management & transparency – 12%

· Public transport improvements – 8%

· Reduce consultant & contractor costs – 7%

· Community facilities (parks, recreation, sports clubs) – 7%

· Environmental initiatives and efficiencies – 5%

· Opposition to unnecessary projects (e.g. cycle lanes, CBD redevelopments, museums) – 5%

· Support for business and local economy – 3%.

responses to Other questions

94. Submitters and respondents to the demographically-sound survey were also asked two further questions:

Q7 Any comments on the separate rating policy changes, fees and charges schedule, or development contributions policy changes?

Q8 Any other feedback?

95. The issues raised by submitters in the responses to these questions are covered in separate reports on this agenda or in the ‘response to comments’ document that is under preparation and will be presented to Council for review and then adoption shortly.

96. A brief summary of points raised by respondents to the demographically-sound survey are included on page 26 of Attachment 1.

Statutory Context

97. This report is prepared in response to submissions on the consultation document on the Annual Plan 2025/26. The process for preparation of an annual plan is set out under the Local Government Act 2002 (LGA).

98. Long-term Plan Decision Making

99. Section 10 of the LGA states that the purpose of local government is to ‘enable democratic local decision-making and action by, and on behalf of, communities; and to promote the social, economic, environmental, and cultural well-being of communities in the present and for the future’. For the purpose of the Annual Plan, the decision-making responsibility lies with Council ‘on behalf of’ its communities.

100. Decision-making procedures are set out in sections 76 to 82 of the Act. Among those requirements is that Council must, ‘in the course of its decision-making process in relation to a matter, give consideration to the views and preferences of persons likely to be affected by, or to have an interest in, the matter’ (section 78(1)). This consideration includes, but is not limited to, the views and preferences expressed in written and verbal submissions on the Annual Plan consultation document.

101. In making good decisions, Council needs to consider all relevant matters, ignore matters that are not relevant to the decision, apply appropriate weightings to the different factors that are relevant to the decision, and make decisions on reasonable grounds based on supporting evidence. Formal submissions are a relevant matter when considering decision-making, both in terms of the number of submissions and the matters raised in those submissions, but they are not the only relevant matter that Council will need to consider in order to discharge its section 10 responsibilities in compliance with sections 76 to 82.

STRATEGIC ALIGNMENT

102. The Annual Plan contributes to the promotion or achievement of the following strategic community outcome(s):

	Contributes
We are an inclusive city	ü
We value, protect and enhance the environment	ü
We are a well-planned city	ü
We can move around our city easily	ü
We are a city that supports business and education	ü

103. The Annual Plan covers the activities and budget for all Council activities and projects which, taken together, contribute to all of the community outcomes.

Options Analysis

104. There are no options presented as part of this report. Options relating to a range of matters raised through the consultation process are included elsewhere on this agenda.

Financial Considerations

105. The direct external costs of the consultation process are addressed earlier in this report.

106. There are no further financial considerations related to this report. Financial considerations relating to matters raised through the consultation process are addressed in other reports on this agenda.

Legal Implications / Risks

107. The Annual Plan must be prepared in accordance with the Local Government Act 2002.

TE AO MĀORI APPROACH

108. There are no specific implications for Council’s Te Ao Māori approach related to this information-only report. Where there are implications relating to specific issues raised through the consultation process, these are addressed in other reports on this agenda.

CLIMATE IMPACT

109. There are no specific implications for Council’s approach to climate impact related to this information-only report. Where there are implications relating to specific issues raised through the consultation process, these are addressed in other reports on this agenda.

Significance

110. 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.

111. 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.

112. In accordance with the considerations above, criteria and thresholds in the policy, it is considered that the issue of the Annual Plan 2025/26 is of high significance, but that the decision to receive this report is of low significance.

ENGAGEMENT

113. 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

114. Following Council’s decisions on matters covered elsewhere on this agenda, the final Annual Plan 2025/26 will be prepared and presented for adoption by Council on 26 June 2025.

115. Council’s decisions and Council-approved comments on submission points will be communicated back to each submitter once the process is complete.

Attachments

1. Snapshot Survey - TCC Annual Plan 2025_26 and Local Waters Done Well Report - A18171117 ⇩

2. Detailed results from submission form questions - A18048714 ⇩

Ordinary Council meeting Agenda

26 May 2025

11.2 Executive Report to the 2025-26 Annual Plan

File Number: A18016331

Author: Kathryn Sharplin, Manager: Finance

Tracey Hughes, Financial Insights & Reporting Manager

Authoriser: Paul Davidson, Chief Financial Officer

Purpose of the Report

1. This report requests Council to approve proposed changes to the draft annual plan since consultation. These proposals arise from work undertaken to reduce costs in the business and therefore rates, along with adjustments to the capital programme and operational costs arising since the draft annual plan was prepared.

2. The implications of proposed capital and operational adjustments for annual plan key financials are presented in this report noting these revised financials could be altered further through deliberations decisions by Council.

Recommendations

That the Council:

(a) Receives the report "Executive Report to the 2025-26 Annual Plan".

(b) Agrees to the following changes to annual plan operational budgets from the draft annual plan to reduce Council expenditure by a further $10m to $589m, which brings the overall rates increase for the annual plan to 9.9% after growth. These adjustments include the following:

(i) reductions in operational expenditure of $9.85m, which are a net result of the reset savings partially offset by corrections and other cost adjustment updates as summarised in Attachment 1.

(ii) an additional $156k to fund Bay Venues Limited to continue to operate the indoor sports centre at Memorial Park.

(c) Agrees to amendment to the capital programme as outlined in Attachment 3, with the revised programme sitting at $498m including loan funded projects reported as operational costs.

(d) Notes the revised financials after all impacts from b and c above with total expenditure of $589m, total revenue of $636m, total capital of $498m, an overall rate increase of 9.9% and net debt at 30 June 2026 of $1.65b.

(e) Notes that resolutions (b) to (d) are subject to any changes that occur through other reports during deliberations

(f) Notes the revised balanced budget ratio (LGA prudence regulations) from these changes is 100.07%, which means that revenue (including capital subsidies) is $0.4m above operational expenditure and meets the Local Government Funding Agency (LGFA) requirements for a bespoke covenant.

(g) Notes that the operational budget deficit (excluding capital subsidies and other revenue) is $59m.

(h) Notes that the key financials in this report do not include additional budget requested for the potential Ratepayer Assistance Scheme (RAS) investment. It also excludes the impact of decisions sought from the community as presented in issues and options reports and other matters to be considered through deliberations.

Executive Summary

3. Council has undertaken consultation on the draft 2025/26 Annual Plan based on an overall rate increase of 12% after growth. Further expenditure reductions have been sought by Council to bring the overall rates increase after growth to 10%. The proposed budget reductions for which Council agreement is sought in this report are across salaries, consultants and other operating expenditure.

4. There have also been updates to the proposed capital programme for the 2025/26 year reflecting decisions of council and timing of projects because of lower delivery than budgeted for 2024/25. This lower current year delivery has resulted in significant rephasing of capital in the annual plan, with many project budgets moved into later years. The revised capital budget for the Annual Plan for the 2025/26 year for which agreement is sought by Council totals $498m.

5. This report requests Council approval of the proposed operational and capital expenditure adjustments which would bring overall expenditure down $10m to $589m, and the overall rate increase after growth to 9.9%. Net debt would be higher than the draft at $1.65b.

6. The bespoke covenants for LGFA require that Council maintains a balanced budget ratio above 100%, as defined in the Local Government Act Financial Prudence Regulations 2014. This balance is retained at 100.07% ($400,000 surplus revenue to expenditure). This is less favourable than the draft budget, primarily due to updates and corrections to user fees and capital subsidy revenues.

7. External requests for funding will be considered by Council through the deliberation process. These requests would either require rates to increase above the proposed 9.9% or debt to increase. Where loan funded opex is requested, there would be a reduction in the balanced budget ratio, which given it is only just above the 100% requirement, would be likely to result in a breach in the bespoke borrowing covenant.

8. Once deliberations are completed, the financial impacts of Council decisions will be processed and confirmed at Council’s meeting on 10 June 2025. Final adoption of the 2025/26 Annual Plan and the rates resolution will occur on 26 June 2025.

Background

Operational Reset and Adjustments

9. The draft annual plan was presented for consultation with a proposed overall rate rise of 12% after growth.

10. The consultation document noted that further work was being undertaken to reduce the rates requirement below the level in the draft financials.

11. The organisation has been reviewing its costs and the way we do things to achieve a reduction in rates requirement and has completed stage one of an organisational reset which was reflected in the draft annual plan taken to consultation.

12. There is a further stage of reset still underway looking at organisational form and function including leadership structures, with indicative budgets also incorporated in the proposed expenditure reductions in this report. While these budget changes have a strong basis, the detail of the changes have yet to be worked through.

13. While most of the reset work applied to the budget in the draft for consultation ($29m in rates-funded operational savings) an additional $10m of net budget reduction is now to be agreed by Council resulting from further work undertaken since the draft was prepared. Total proposed expenditure would be reduced to $589m. This equates to $7m reduction in rates requirement, bringing the rates requirement overall to $368m, which is a 9.9% overall rate increase after growth.

14. The table at paragraph 36 provides a summary of the key financials showing revenue and expenditure, capital and debt movements as well as key ratios related to our borrowing covenants. Further information on the expenditure and revenue adjustments made since the draft annual plan is shown in the Statement of Operating Revenue and Expense in Attachment 1, along with balanced budget information. The net impact on rates of the proposed changes is summarised in Attachment 2.

15. Council has agreed to continue to operate the Indoor sports Stadium at Memorial Park for a period as well as the new Cameron Rd Haumaru facility. The net annual operating costs of retaining indoor courts at Memorial Park’s Queen Elizabeth Youth Centre (QEYC) are estimated at $156,465 which is included as an increase to the operational grant in the proposed changes in paragraph 15 above. This amount to allow the facility to remain open, would continue until such time as a decision is made about the long-term future of QEYC.

Revision of Capital Budgets

16. There have also been updates to the proposed capital programme for the 2025/26 year reflecting timing of projects because of lower delivery than budgeted for 2024/25. This lower current year delivery has resulted in significant rephasing of capital in the annual plan. Initial project expenditure budgeted for 2025/26 in the LTP has been rephased to later years, mainly into 2026/27 (Capital budget in this year now at $614m).

17. The revised capital programme for 2025/26 is slightly below the original draft budget at $498m. The flow-on impacts of timing and other changes and Council decisions have been incorporated in the annual plan proposed revisions in this report. The detail is provided in Attachment 3. There has been no adjustment to digital programme budgets but there is ongoing work to assess the risks and priorities in moving off the current ozone ERP platform.

Contribution to the Proposed Ratepayer Assistance Scheme (RAS)

18. The timing of this executive report is ahead of an initiative yet to be presented to Council, which if supported would result in a loan funded amount of $500,000 to be included in the 2025/26 Annual Plan. The matter is discussed briefly here but no decision sought at this stage. There is a workshop proposed for 28 May and a Council paper to be considered on 10 June 2025 to determine whether to contribute $500,000 to this initiative in 2025/26.

19. The Ratepayer Assistance Scheme (RAS) is a local government initiative that has been in development for a number of years aimed at enhancing councils’ funding and financing toolbox - providing flexibility to councils as to how they charge for infrastructure and services, and for ratepayers in how they pay. To date the focus of the RAS has been on three applications:

(a) Deferred Development Contributions / Development Levies which enables developers to convert upfront DC / DL payments into annual payments over ~30 years while ensuring LAs still receive full payment upfront

(b) Property Improvement Loans to encourage investment in properties that has both private and public benefits, for example installation of solar panels and home insulation / heating

(c) Rates Postponement providing relief to ratepayers by using equity in their homes to defer payment of general rates (and could in-principle include all LA charges) until their house is sold

20. To move forward, the local government sector needs to confirm its support for the RAS and sufficient funding commitment to fund final development. The scheme also has the support of LGFA and LGNZ. TCC has already committed $100,000 to the development of the RAS. To get this scheme operational TCC needs to commit another $500,000. At this stage no budget has been included for this. If the scheme is successfully implemented the $500,000 would be converted to equity in the same way as was done for development of the LGFA.

Statutory Context

21. This executive report forms part of the deliberations process for the 2025/26 Annual Plan.

STRATEGIC ALIGNMENT

22. This contributes to the promotion or achievement of the following strategic community outcome(s):

	Contributes
We are an inclusive city	ü
We value, protect and enhance the environment	ü
We are a well-planned city	ü
We can move around our city easily	ü
We are a city that supports business and education	ü

23. The recommended changes to annual plan budgets aim to reduce rates requirement and ensure deliverability of a propriety capital programme through the 2026 Annual Plan.

Options Analysis

Reset and other amendments to operational expenditure and increases in revenue

24. Council can decide to approve all, some, or none of the changes to the operational revenue and expenditure proposed as part of the reset and other corrections and adjustments to costs (Attachments 1& 2).

25. Where proposed reductions in expenditure are not adopted there would be an associated increase in debt and or rates requirement from the revised annual plan key financials shown in Attachment 1.

Adjustments to the capital programme

26. Council can decide to approve all, some, or none of the changes to the capital programme as outlined in Attachment 3.

27. Where proposed changes to the capital programme are not adopted there would be an associated increase or reduction in debt and a change to the timing of projects as outlined in Attachment 3. This would impact the level of debt and capital expenditure to be included in the key financials from that currently shown in Attachment 1.

Financial Considerations

Revised Budgets proposed after reset

28. If Council accepts the proposed operational and capital revenue and expenditure adjustments, there will be a lower rate increase and slightly higher debt position for TCC for the 2025/26 Annual Plan. The overall rates requirement reduces by $7m which represents a reduction in rates requirement of 2.1% to 9.9% overall after growth. The detail of impacts for median ratepayers by category will be finalised once deliberations are completed and presented to Council on 10 June once Council’s decisions have been processed through the corporate planning system.

Lower Capital Delivery and Total Debt

29. The lower capital programme delivered in 2024/25 which has been rephased into 2025/26 and later years contributes to lower debt, but this has been more than offset by lower subsidies and grants (capital subsidies and Tauriko West reimbursements) and a downward revision to development contribution revenue through this period. Net debt is now forecast to be $1.65b by June 2025/26, which is $5m higher than the draft and $11m higher than that projected in the LTP (noting that, in the LTP, debt associated with Te Manawataki o Te Papa was not in this number as it was budgeted to be through Infrastructure Funding and Financing ($86m by the end of June 2026).

Balanced Budget Considerations

30. Council has a goal of moving toward a balanced budget, where operating revenue is sufficient to cover operating expenditure. Challenges over time that have in the past led to decisions to loan fund operating costs include:

(a) the change in accounting treatment of digital development related to software as a service restricting situations in which this can be capitalised

(b) one-off requests by the community for large grants to cover long term assets

(c) large capital investment projects requiring significant up front planning and consultation costs that cannot be capitalised (e.g. Te Manawataki o Te Papa)

(d) growth planning e.g. for new growth areas that cannot be capitalised

(e) the large increase in growth debt accompanied by a slowdown in growth affecting DC revenue which is not covering interest costs on the debt

31. As a result of these pressures the draft annual plan budget had a recorded deficit of $61m. The revised deficit after the reset has reduced to $59m. The impact of an unbalanced budget means that debt is increased and ratios used by S&P in assessing Council’s credit rating are less favourable.

32. Our lenders, LGFA, have set a condition of our bespoke borrowing covenant that the balanced budget ratio under the Local Government (Financial Reporting and Prudence) Regulations 2014 must be greater than 100%. This balanced budget calculation as shown in attachment 1 includes capital subsidy revenue. For next year it is 100.07%.

33. Several of the submissions to be considered in deliberations propose options of additional loan funded grants. If decisions are made to increase the level of loan funded grants the balanced budget covenant requirement from LGFA may not be achieved and there would be an unfavourable impact on our credit assessment by S&P.

34. The Key Financials table below and the further detail in Attachment 1 show the revised levels of expenditure, rates requirement, capital programme and debt position should all decisions within this executive report be agreed.

35. These financials will be affected by any subsequent decisions made by Council during deliberations regarding issues and options papers, possible investment in the RAS or other matters considered as part of deliberations.

Legal Implications / Risks

36. The process of considering the Executive report is part of the Annual Plan process required under the Local Government Act 2002.

Consultation / Engagement

37. No further consultation is required outside existing Annual Plan processes.

Significance

38. 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.

39. 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.

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

ENGAGEMENT

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

Next Steps

42. Decisions on this report and wider deliberations will be incorporated in the 2025/26 Annual Plan and a revised assessment of rates impacts undertaken and reported to Council on 10 June 2025, prior to finalisation of the Annual report for adoption on 26 June 2025 along with the rating resolution to apply to the 2025/26 financial year.

Attachments

1. Attachment 1 to Executive Report - Statement of Operating Revenue and Expense and balanced budget - A18173758 ⇩

2. Attachment 2 to Executive Report - Changes since draft Annual Plan - A18173717 ⇩

3. Attachment 3 to Executive Report - Capital Programme including Proposed Adjustments to the Draft 26 Annual Plan - A18173580 ⇩

Ordinary Council meeting Agenda

26 May 2025

11.4 Aquatic Projects Update and Next Steps

File Number: A17316467

Author: Ross Hudson, Manager: Strategic Planning and Partnerships, Spaces and Places

Alison Law, Manager: Spaces & Places

Authoriser: Barbara Dempsey, General Manager: Community Services

Purpose of the Report

1. The purpose of this report is to gain Council approval for the development of an Aquatic Network Plan and seek direction on the next steps for three Aquatics projects:

(a) Memorial Park Aquatic Centre

(b) Ōtūmoetai Pool

To confirm options for inclusion in the Aquatic Network Plan.

Recommendations

That the Council:

(a) Receives the report "Aquatic Projects Update and Next Steps"; and

(b) Notes the updates provided through this report on:

(i) Memorial Park Aquatic Centre

(ii) Ōtūmoetai Pool

(iii) Mount College Pool.

Memorial Park Aquatic Centre

(c) Notes that the site investigations currently underway for the existing Memorial Pool site (including geotechnical) will be available in early August 2025. If the results are favourable, this could present an opportunity to locate the new Memorial Aquatics Centre on that site and to retain the Queen Elizabeth Youth Centre for circa 15 years.

Ōtūmoetai Pool

(d) Supports the Ōtūmoetai Pool Working Group’s recommendations to retain and upgrade the Ōtūmoetai Pool and signals its intent to allocate indicative capital funding of $3.28m (uninflated) in 2027/28 and $2.43m (uninflated) in 2032/33 through the next Long Term Plan in line with those recommendations.

(e) Notes that if the Ōtūmoetai Pool is retained in the network the Development Contributions Policy will need to be amended to reflect the implications of that decision.

Mount Maunganui College 50m pool

(f) Confirms in-principle support for the Mount Maunganui College 50m Pool expansion proposal, including ongoing Council support to subsidise the community use of the pool, with:

(i) a $4.945m initial 10-year loan-funded operational grant for the pool construction, paid to the Mount Maunganui Aquatic Centre Trust over 2025/26 (2.59m) and 2026/27 ($2.355m), and

(ii) up to $340,000 annual operational grant, based on actual net operational costs, on an ongoing basis to meet the extra cost of providing a 50m community pool,

as outlined in the Mount Maunganui Aquatic Centre Trust proposal (attachment 4). Subject to: Annual Plan decisions and their impacts on the balanced budget financial benchmark, formal support for the proposal from Ministry of Education and Mount Maunganui College Board of Trustees, and the outcomes of resolution (f).

(g) Instructs staff to continue further due diligence and financial modelling, and to work with the Mount Maunganui Aquatic Centre Trust to finalise a funding agreement that provides:

(i) the legal and financial framework for the upgrade and ongoing operation of a new 50m pool,

(ii) long-term confidence to the Mount Maunganui Aquatic Centre Trust and the Council regarding the financial sustainability of the proposal, and

(iii) fair, equitable and safe community use of the pool, including non-structured community open use.

(h) If resolution (e) and (f) are not successfully implemented, signal in-principle support for option 2, 33m pool expansion to a wider 33m x 25m pool in 2025/26 and 2026/27 approving:

(i) an initial 10-year loan-funded operational grant of $2.6 mil for construction, and

(ii) an ongoing operational grant of up to $20,000 to cover the additional cost of meeting PoolSafe requirements,

as the alternative preferred option. Subject to Annual Plan decisions and their impacts on the balanced budget financial benchmark and formal support for the proposal from Ministry of Education and Mount Maunganui College Board of Trustees.

Aquatic Network Plan

(i) Approves the development of an Aquatics Network Plan, as outlined in this report, including targeted stakeholder engagement and broader community consultation.

(j) Notes that, subject to the above resolutions, staff will prepare an Aquatic Network Plan that outlines a roadmap for the future of aquatics in Tauranga, including:

(i) An aquatic centre at Memorial Park,

(ii) Retention of Ōtūmoetai Pool for at least 15 years, and

(iii) Support for the development of a 50m training pool at Mount Maunganui College.

The draft Network Plan will be brought back to Council to endorse for consultation.

Executive Summary

2. Council has been working through a range of aquatics projects and this report brings together an update and recommended next step for each project. The report proposes the development of an overarching Aquatic Network Plan to summarise proposed aquatic investments over time to meet current and future demand, to provide structure and clarity for the Council and the community.

3. Council resolved in November 2024 to cease the current Memorial Park Aquatic Centre design whilst alternative site, design and cost options are considered. This report outlines the next steps for this project, including the current site investigations (geotechnical) for the existing Memorial Pool site.

4. Staff have been working with representatives of pool user groups and the community of the Ōtūmoetai peninsula and technical experts, through the Ōtūmoetai Pool Working Group, to explore options for the future of the pool, considering geotechnical assessment, its condition, costs of upgrades and the context of the aquatics network. The conclusions and recommendations of the working group are that –

(a) Whilst there is historical and potentially some ongoing subsidence at the pool, this is considered non-critical and does not warrant major investment to rectify at this time.

(b) Council should invest in essential upgrades to the pool to improve its functionality and quality to provide a reasonable level of service for at least 15-20 years, allocating $3.28m (uninflated) in 2027/28, on the basis that the pool provides an important local asset, especially for learn-to-swim and water safety, and because it can meet local demand for an extended period of time, thus also enabling the Memorial Park Aquatics Centre to make a greater contribution to water space for population growth.

(c) Council should also provisionally allocate a further $790,000 (uninflated) of new capex towards a new resin floor and $1.64m from its renewals funds towards a replacement fabric roof, both to be undertaken in 2032/33 if demand for the pool persists after the Memorial facility opens. Alternatively, Council could choose to invest in these earlier alongside the other upgrades.

(d) Retention of the pool will also require an extension over the LTP period and beyond of the operational subsidy to Bay Venues of $472,000 per annum.

5. The Council has received a proposal from Mount Maunganui Aquatic Centre Trust (MMACT) to extend the current 33m x 13m pool at Mount College to a 50m x 25m pool, subject to Council funding the increased cost of providing a 50m community pool. The 50m pool expansion proposal has been prepared by MMACT with support of Council staff and others, in response to the large community demand for a 50m pool.

6. This report recommends Council support the proposal by way of an upfront operational subsidy of $4.945m to fund the increased construction cost of a 50m pool, and an ongoing operational subsidy of up to $340,000, noting that further work is required to finalise a prudent funding agreement.

7. Note, this is an alternative proposal to be considered in the place of the current Council supported proposal to expand the college pool to 33m x 25m in 2029/30, for which Council currently has $1.65m in the Long Term Plan 2024-34.

8. Feedback from the Council through this meeting will inform the development of an Aquatic Network Plan, which will be brought back to Council to approve a draft for consultation.

9. Council has heard from many in the community that the city’s sport and recreational facilities are not meeting the needs of the current and emerging population. The development and implementation of the Aquatics Network Plan is a key component of Council’s broader investment in sports, recreational and play facilities to enable people to socialise, play, compete.

10. Staff have been reviewing that programme of investment in the context of this Council’s emerging priorities, its intention to enable equitable, value for money outcomes and the concept of a benchmark of 30% of the capital programme annually for community infrastructure. We will be bringing programme level options for Council to consider in upcoming meetings.

Background

11. The Council currently provides an aquatic network across five sites managed by Bay Venues Ltd, comprising a range of lane pools, leisure facilities and learn to swim. The current Council provision is strongly focussed on structured sport and fitness swimming, with a large deficit in the leisure and recreation, and health and therapy provision. The overall provision of pool space in the city is also below the Council’s target level of service and the Sport New Zealand recommended level of service.

12. The current Council aquatic facilities include BayWave, Ōtūmoetai Pool, Greerton Pool, Mount Hotpools and the seasonal Memorial Pool.

13. On 29 October and 12 November 2024, the Council received a number of reports that provided the background and strategic direction of the aquatic network and Memorial Park Aquatic Centre and included the following key items:

· Extensive research, analysis and engagement went into determining the appropriateness of the current aquatic network provision, including demand (both current and future), current supply and the areas of greatest need for increased supply.

· Council had a project to develop an Aquatic Centre at Memorial Park, to meet the current deficit, as well as cater for future city population growth. The project was put on hold in September 2024, prior to the Council reports.

· Results of the community survey undertaken in October/November 2024:

o 5,292 respondents

o 73% of survey respondents support additional aquatic facilities.

o 72% of survey respondents support spending $80-105 million on Memorial Park Aquatic Centre.

o The ranking of pool features in priority order were:

§ A learn to swim pool

§ An indoor 50m lane pool

§ Leisure pool

Memorial Park Aquatic Centre

14. Through the 2024/34 LTP, The Memorial Park Aquatic Centre project was scheduled to commence construction in 2024/25, with a total project cost of $123m. Work undertaken by Apollo in 2024 and presented to Council in November 2024 produced updated project costings and two preferred options. A complete aquatic centre as previously designed, for $100m or the in-door only aspects of the aquatic centre for $80m.

15. On 12 November 2024, the Council resolved to cease work on the current Memorial Park Aquatic Centre design, pending further stakeholder engagement and assessment of options including project scope, costings, funding and alternative locations within Memorial Park.

16. The existing design has been put on hold whilst further options are investigated, including stakeholder engagement and location analysis. Three options have been identified for Council consideration.

Option 1 – Full Memorial Park Aquatic Centre development removing the Queen Elizabeth Youth Centre (QEYC).

Key Advantages	Key Disadvantages
Likely to be most geotechnically advantageous part of the site	No courts provided, doesn’t retain current QEYC building
Provides all facilities of proposed aquatic centre in shortest timeframe	Traffic and access adding extra pressure on 11th Ave
Minimal impact on existing greenspaces
Significant design work occurred and confidence in budget
Removes ongoing cost of maintaining QEYC

Option 2 – Staged Memorial Park Aquatic Centre development, commencing with the indoor aquatic facilities and building outdoor facilities at a future date, including removing the Queen Elizabeth Youth Centre (QEYC).

Key Advantages	Key Disadvantages
Likely to be most geotechnically advantageous part of the site	No courts provided, doesn’t retain current QEYC building
Minimal impact on existing greenspaces	Traffic and access adding extra pressure on 11th Ave
Significant design work occurred and confidence in budget	Doesn’t provide outdoor facilities at this time and the cost of outdoor facilities will likely increase over time
Removes ongoing cost of maintaining QEYC
Lower cost to deliver in the short-term

Option 3 – Relocate the Memorial Park Aquatic Centre to the site of the existing Memorial Pool and retain the Queen Elizabeth Youth Centre (QEYC) and Memorial Hall.

Key Advantages	Key Disadvantages
Retains current QEYC and Memorial Hall building and associated court facilities.	Greater uncertainty regarding budget, significant design rework and site investigations required
Provides greatest opportunity for elected members to influence the design, facilities and cost of the Aquatic Centre if a redesign is required.	Will take longer for construction to commence due to site investigation and design work required
Spreads traffic and access pressure across a few entrance points	Retains ongoing cost of maintaining QEYC, although this can be minimised where possible

17. Whilst Option 3, building the Aquatic Centre at the site of the existing Memorial Pool, has a significant benefit for the community in retaining the existing court facilities for on-going community use, the feasibility of Option 3 could be significantly impacted by the ground conditions of the site. Geotechnical investigation and analysis, topographical survey and location of main services work has been commissioned to understand the ground conditions and what impact that could have on an Aquatic Centre build.

18. The cost of further investigations required to complete the necessary geotechnical, ground condition and design analysis to enable a true understanding of the financial viability of this option and continue progressing option 3 is estimated in the following table. Note some items have been commissioned, with the outcome of this work anticipated in early August 2025. The further work required (outlined as stage 2 in the following table) will be dependent on the findings of the work already commissioned (stage 1).

Site Investigations required	Approximate cost
Stage 1: Commissioned:
Review all the available services to the site including power, stormwater, water supply and wastewater. This needs to include a full survey of above and below ground services	$15,000 + GST
Complete a topographic survey	$10,000 + GST
Complete a full geotechnical investigation, including bore logs etc and full assessment to understand the likely ground conditions and ground improvement requirements	$150,000 + GST
Total Commissioned	$175,000+GST
Stage 2: To be approved pending outcome of stage 1:
Complete a Civil Works concept for the site to explore levels and traffic access	$65,000 + GST
Update Resource Consent advice to understand any change in consenting risk based on the new site	$25,000 + GST
Develop the architectural, structural and services design	$250,000 + GST
Complete a detailed assessment of the existing QEYC to understand the extent of work required for compliance. Will include fire, structural, accessibility and geotechnical	$200,000 + GST
Total to be approved	$540,000+GST
Total Site investigations	$715,000+GST

19. Until the results of the geotechnical work are received, Council does not have enough information to make a final decision regarding the Memorial Park Aquatic Centre. However, through this report Council may wish to provide direction to staff on a preferred approach to the Memorial Park Aquatic Centre project, subject to the geo-technical results. This report seeks guidance from Council regarding the Memorial Park options to be included in the Aquatic Network Plan.

20. Once the stage 1 site investigations are complete, they will be reported back to Council to confirm the next steps for the project, and whether to commence with stage 2 site investigations. If the stage 1 site investigations are favourable, next steps are likely to include a redesign of the aquatic centre project scope, design and cost, as well as further transport planning.

21. Note the current Annual Plan 2025/26 budget for investigations for Memorial Park Aquatic Centre are $500,000. When the findings of stage 1 site conditions are reported back to Council, consideration will be given to the budget for next steps.

Queen Elizabeth Youth Centre

22. The QEYC will eventually require earthquake strengthening work to be undertaken by 2041. Further work is required to understand those costs, but it is expected that they may not be value for money and the facility may need to be removed at that time. However, in the meantime, retention of the QEYC for an indicative 15-year period would mean that, with the opening of the Haumaru (Cameron Road) courts, Council’s indoor courts network has a total of 14 courts and enables us to better meet the rapidly growing demand for court space. Beyond meeting current demand, it could also mean that both a small proportion of the Haumaru Courts and a significant proportion of the next indoor courts project would be providing for growth and thus potentially be eligible for Development Contributions (DC), reducing the ratepayer impact. Once Council has finalised its Aquatics Network Plan and is in a position to make decisions on the location, scope and timing of the Memorial Park Aquatics Centre, it can make any appropriate adjustments to its DC Policy.

23. Consideration was given to whether the new aquatics centre could be located adjacent to or be connected to the QEYC. That option was discounted for the following reasons –

(a) Any structural connection or triggering of works to the QEYC would likely trigger the need for a Building Consent, which would then necessitate full earthquake remediation

(b) Entrance levels, accessibility, operation, flow and user experience of the aquatics centre would be expected to be compromised

24. The net annual operating costs of retaining the QEYC are estimated at $156k. Budget for 2025/26 has been included through the Executive Report to the Annual Plan Deliberations meeting. If the QEYC is to remain open for the next 15 years, renewals budget of around $235,000 per annum would be required in total. Currently there is budget provision for $70,000 per annum for renewals until a decision is made about the long-term future of this facility.

25. The financial considerations and associated attachments (attachment 1) consider financial modelling undertaken on keeping the QEYC within the courts network.

Ōtūmoetai Pool

26. Following community concerns at the prospect of the closure of Ōtūmoetai pool, Council staff have been working with representatives of pool user groups and the community of the Ōtūmoetai peninsula, through the Ōtūmoetai Pool Working Group, to explore options for the future of the pool, considering its condition, costs of upgrades and the context of the aquatics network. The ‘Ōtūmoetai Pool Options Paper’ is at attachment 2.

27. The Working Group, which was set up at Council’s direction, has consisted of representatives of Ōtūmoetai College, Evolution Aquatics, community representatives and an independent aquatic facilities expert. We acknowledge the time, contributions and collaborative approach that the Working Group has adopted.

28. Whilst use of the pool is moderate and potentially impacted by the Memorial Park Aquatics Centre, it remains highly valued by the community, particularly for the role it plays in water safety, with use by Ōtūmoetai College and learn-to-swim providers. It also contributes to Council’s aquatics level of service and to an equitable distribution of pool space across the city. Retention of the pool in the network would thus enable the Memorial Park Aquatics Centre to make a greater contribution to meeting the projected growth in demand from new residents.

29. Assessments were undertaken of the condition of the pool facilities and its geotechnical stability. These informed the development of a set of options that considered a 15-year investment horizon.

30. The Ōtūmoetai pool has experienced subsidence in the past, raising concern regarding its structural integrity. General conclusions from the geotechnical assessment are that, whilst further gradual settlement is expected and further assessment and potential filling of minor voids may be required, the pool is not anticipated to undergo a major structural failure based on its geotechnical underpinnings. However, any upgrades, in particular consideration of replacement roof structures, should avoid adding to the structural load of the facility.

31. The geotechnical report is attached as attachment 3. Options were assessed for interventions associated with the geotechnical issues. These were:

1) Full rebuild on current site ($40m order of magnitude estimate)

2) Piled foundations ($3.6m estimate)

3) Ground improvement ($5.8m estimate)

4) Do minimum – renewal of essential pipework to increase resilience and relining the pool to increase resilience to settlement (covered through existing Renewals)

32. Given the costs associated with options (1) to (3) above, uncertainties about the longer-term future of the pool (beyond 15 years) and the conclusion that minimal intervention is required for now, the Working Group took the view that option (4) was appropriate.

33. A facility condition assessment identified a set of investments that could be made to enable the pool to be retained within the network under different scenarios. Potential investments include:

	Potential Upgrades	Cost estimate (uninflated)
1	Plantroom and Pool Water Services to meet modern water quality and safety requirements	$970,000
2	Accessibility upgrades, including pool entry ramps	$710,000
3	Separate Pool Filtration to enable the learn-to-swim pool to run at a warmer temperature	$1,600,000
4	Resin Flooring to mitigate water damage to services and improve safety	$790,000
5	Fabric roof (like-for-like replacement to avoid increased weight)	$1,637,000

34. These potential capital investments were considered alongside projected renewal costs and ongoing operational costs. Together, they informed the development of three investment options.

35. Option 4a – “Sweat the Asset” – investing the minimum required to keep the pool open until the Memorial Park Aquatics Centre opens, assumed by the Working Group to be in 2030.

36. Option 4b – “Maintain & Modernise” – investing in upgrades and renewals to ensure the pool can provide a reasonable service for at least 15 years (upgrade items 1-3 above).

37. Option 4c – “Invest to Transform” – investing in upgrade items 1-5 to ensure the pool can provide a good service for at least 15-20 years.

38. The options were considered by the Working Group, and they came to the following conclusion:

With the prospect of the facility being retained (see Geotech Options Evaluation) there were different views as to its proposed lifespan. The members of the OPWG ranged in their opinions. Ōtūmoetai College and the community representatives preferred that the pool remains open permanently as the school’s level of usage will be maintained because of the pool’s location. TCC and Bay Venues staff believe the proposed Memorial Pool complex could meet current aquatic demand from the catchment Ōtūmoetai pool currently serves but note and support the importance of the Ōtūmoetai pool for the local community. Collectively the consensus was that the future of Ōtūmoetai Pool should be revisited once the Memorial Pool complex has opened.

39. Based on the feedback from the Working Group, the recommended approach is that Council upgrade Ōtūmoetai pool as per Option 4c, but with a seven-year deferral of the proposed new resin flooring and the like for like fabric roof replacement, pending an understanding of the impacts of the Memorial Park Aquatics Centre on use of the pool. Over that time the approach to asset management would be proactive. There was some variance in views, with some community representatives preferring early and full investment in Option 4c. The recommended hybrid of options 4b and 4c proposes Council upgrades items 1-3 in 2027/28 (following major upgrades to Baywave in 2027/28) and allocates budget provisionally for items 4-5 in FY33, pending review of use after Memorial Park Aquatics Centre has been open for 18-24 months.

40. The table below summarises the costs and considerations of the options –

Option	Description	Capex (inflated)	Renewals (over 15 years)	Operating grant (per annum)	Considerations
4a “Sweat the Asset”	No capital investments; basic renewals, assuming potential closure in 2030	$0	$471k (De-commissioning cost of $3m)	$472k	No capex or long-term costs but removes pool from network dis-benefitting user groups and compromising DC funding for Memorial Aquatics.
4b “Maintain & Modernise”	Make necessary minimum upgrades to keep reasonable service for 15+ years	$3.8m	$2.1m	$472k	Additional capex and opex with uncertainty of future demand but enables pool to meet local community need and enables significant potential increase in DC funding for Memorial Aquatics
4c “Invest to Transform”	Make upgrades to ensure good service for 20+ years.	$4.8m	$4.2m	$472k	As 4c above, but with greater potential longevity and certainty of service quality.

Note that the capex figures above include a 10% contingency and inflationary assumptions. Under option 4c, the roof replacement would be a renewal. Further due diligence to refine costs would be undertaken prior to LTP 2027/37. The Aquatics Funding Summary (attachment 1).

Mount College Pool

Introduction

41. The Council has received a proposal from the Mount Maunganui Aquatic Centre Trust (the Trust) to extend the existing 33m pool at Mount Maunganui College to a 50m pool, for consideration alongside the Annual Plan 2025/26.

42. The Trust has been operating the existing Mount College Pool for the last 13 years, contracting Omanu Swim Club to manage the facility. The majority of the use of the pool has been by the College and Omanu Swim Club, but the Swim Club has facilitated some wider community use of the facility, both structured and open.

43. Whilst the majority of the pool’s users have historically been from the school and the Omanu Swim Club, additional structured swimming has been provided for other swim and surf clubs, and the pool has been open to public recreational swimming during school summer holidays.

44. Through the Long Term Plan 2024-34, Council agreed to support the Trust with an upgrade to the existing 33m pool, from a 6 lane to a 10 lane pool, by way of a loan-funded operational grant for $1.65m in 2030. The grant was to help fund construction of the expansion, with no ongoing operational funding support provided by the Council.

45. Following a strong community response requesting a 50m pool during Council’s Memorial Park Aquatic Centre survey, the Trust has identified an opportunity to work with the Council to provide a 50m training pool, at Mount Maunganui College, as part of the planned pool upgrades.

46. Alternatively, the Trust has identified an opportunity to speed-up the provision of additional lane space in Tauranga, by providing their planned expansion to a 33m x 25m pool during 2025-27. This would require the funding Council has currently allocated in 2029/30 to be brought forward to 2025/26 and 2026/27 and the total sum increased from $1.65m to an estimated $2.6m, reflecting the Trust will have less time to acquire alternative funding.

50m Pool Proposal

47. The Trust, in collaboration with staff, have prepared a proposal (attachment 4) for Council’s consideration. The proposal presents an opportunity for the Council to support the provision of a 50m training pool for the Tauranga community, without having to meet the full cost of building and maintaining the pool.

Community Demand

48. Competitive and club swimmers have voiced demand for a 50m pool since before the development of Baywave in 2001. However, through both the Baywave Aquatic Centre and now the Memorial Park Aquatic Centre design phase, combining a 50m pool within an aquatic centre has been considered unaffordable for the community.

49. Feedback that the Council has received through various Long Term Plans^{^[8]} and user-group engagement has again highlighted the community demand for a 50m pool.

50. In late October to early November 2024, the Council undertook a community survey targeted specifically at the aquatic needs of the whole community. This survey received a significant 5,292 responses from a broad range of community members, including existing aquatic users (75%) and non-aquatic users (25%). The key takeouts from the survey relevant to this proposal include:

· 73% of respondents think we need more aquatic facilities in Tauranga, of these -

o The second highest priority pool feature was an Indoor* 50m lane pool.

o 45% of respondents had an indoor* 50m lane pool in their top 3 ranked features.

o Of the 2,511 ‘other pool features’ provided, a 50m pool was mentioned 4x more than anything else - 929 additional suggestions for a 50m pool.

*Note the survey specifically asked about an ‘indoor’ 50m pool.

51. Council’s Annual Resident Survey in 2024 showed a decline in visitation for Council’s swimming pools. The narrative provided by residents suggests that this decrease is due to the lack of availability of lanes at the time of visit, outdated facilities and high costs.

52. Targeted engagement was undertaken during January and February 2025 regarding the structured swimming and water sports community’s aquatic needs (see attachment 5 – Structured Aquatic Users – summary of needs):

· Overall, it was clear that the needs of different user groups varied dependent on sport. A variety of facilities, through a coordinated network approach, is required to meet aquatic user needs.

· For the swim clubs and surf clubs, a 50m pool is a high priority. For these clubs, a 50m pool would not mean they stop using other Council pools, but they will no longer need to travel to Rotorua for training in preparation for long-course events. For some, there is a desire for an indoor competition grade 50m pool.

· Depth is a greater priority for water-sports and for some, being indoors is important. Storage, dry land space and seating are also important. Providing 2-3m deep pool space indoors would be ideal for these groups.

· Across all users there is a definite perception that lane availability is an issue, and this may be helped with the provision of any new lane space.

53. The provision of a 50m pool within the city’s aquatic network will have an impact on the wider pool network. Consultation with structured aquatic users identified that a range of clubs would look to shift at least some of their training sessions to the 50m pool. This may have a small impact on Greerton and Ōtūmoetai pools, as the clubs that use those pools are more likely to use the 50m pool for additional training. But for current Baywave users there is likely to be a large portion of training moved from Baywave to the 50m pool if scheduling and access are well managed. Based on current demand, waitlists and scheduling conflicts, it is anticipated that this would free up other uses of Baywave, not create a reduction in use of Baywave. Based on best estimates, it is likely that up to 115 hours per week of training could move from Baywave to the 50m pool, and this space at Baywave would be expected to be filled straight away by other users. Ensuring equitable management of the new 50m pool booking system would be integral to realising these gains. Staff propose continuing to work with the Trust to ensure a fair and transparent booking system.

Option 1: Status Quo – Council support 33m x 25m pool upgrade in 2030

54. Operational grant of $1.65mil for wider 33m x 25m pool in five years (already included in LTP budgets) and an ongoing operational grant of $20,000 per annum. Note the ongoing operational grant has not been requested by the Trust, but is intended to cover the increased cost of meeting PoolSafe requirements.

As per LTP submission proposal.

Advantages	Disadvantages
Low cost – this is the cheapest option for Council, with a one-off investment and ongoing ratepayer funding required to cover the extra cost of PoolSafe requirements.	Delayed increase in lane space – the Mount College pool would not be expanded until 2030, unless the college is able to secure alternative funding.
Limited liability – Council will not be involved in the running of the pool and therefore not be responsible or liable for the operation of the facility. However, as a funding partner, Council may want to stipulate that the pool is operated within PoolSafe requirements for community use.	No 50m pool in Tauranga for now – The opportunity to provide a 50m pool for the Tauranga community through this joint venture will be lost. Council will need to develop an alternative solution if providing a 50m pool is a priority.
Consistent - This is in line with Council’s LTP and current commitment to the Trust.

Option 2: Council support 33m pool upgrade in 2025/26 and 2026/27

55. Operational grant of $2.6 mil for wider 33m x 25m pool next year, and an ongoing operational grant of $20,000 per annum. Note the ongoing operational grant has not been requested by the Trust, but is intended to cover the increased cost of meeting PoolSafe requirements.

Advantages	Disadvantages
Increased lane space – the Mount College pool would be expanded by October 2026, providing more lane space for the college, Omanu Swim Club and other structured and recreational aquatic users.	Medium cost – this is the second cheapest option for Council, with a larger one-off investment and ongoing ratepayer funding required to cover the extra cost of PoolSafe requirements.
Limited liability – Council will not be involved in the running of the pool and therefore not be responsible or liable for the operation of the facility. However, as a funding partner, Council may want to stipulate that the pool is operated within PoolSafe requirements for community use.	No 50m pool in Tauranga for now – The opportunity to provide a 50m pool for the Tauranga community through this joint venture will be lost. Council will need to develop an alternative solution if providing a 50m pool is a priority.
The Trust are happy to progress this option as it meets their needs.

Option 3: Council support 50m pool upgrade in 2025-27 and ongoing operational support

56. Operational grant of $4.9mil in 2025-27 and ongoing grant of up to $340,000 annually for a 50m pool.

Mount Maunganui College pool expanded as outlined in the Mount Maunganui Aquatic Centre Trust proposal (attachment 4).

Advantages	Disadvantages
Increased lane space – the Mount College pool would be significantly expanded by October 2026, providing more lane space for the college, Omanu Swim Club and other structured and recreational aquatic users.	High cost – this is the most expensive option for Council, with a much larger one-off investment and significant ongoing ratepayer funding required.
A 50m pool in Tauranga – the Tauranga community will have a much sought after 50m pool to enhance training, reduce travel, improve performance and swimmer competitiveness and attract visitors to the city.	Liability – As Council would be funding the pool on an ongoing basis, Council will need to ensure that appropriate health and safety standards are met, and risks are managed. Council will also incur the financial liability of the pool failing to meet the financial outcomes calculated in the Trust’s proposal.
The Trust is happy to progress this solution if this is Council’s preferred option and there is no additional cost to the Trust.
Affordable aquatic provision – whilst this is the most expensive option, the per swim subsidy from Council ($3.37 per swim) would be less than the Council subsidy provided for Ōtūmoetai ($12.07 per swim), and Greerton ($5.97 per swim), but more than Baywave ($0.67 per swim).

Key Considerations

57. Pool size: Analysis of various pool size options has been undertaken to balance maximising the usability and function of the pool for various pool-users, with building a cost-effective pool to operate:

50m pool width options	25m	22.5m	20m
Annual cost to operate	$715,350	$693,350	$673,350
Number of lanes	10 (also allows for 25m lane widths)	9	8
Cost per lane per hour	$24.75	$26.66	$29.12

The proposal from the Trust is for a 50m x 25m pool and staff support this size, but propose continuing to work with the Trust and other aquatic users on optimal dimensions to ensure the maximum benefit for the community.

58. Pool depth: Pool size analysis has also covered different pool depths. Again, looking at a depth that allows for greatest usability without impacting cost. The cost impact of a deeper pool is in heat up costs when the pool is first filled. With an in-the-ground and insulated pool the heat loss for the larger pool volume is minor compared to the evaporation to the air. Therefore, the driver in heat loss is the area of the pool not the volume. The proposed pool depth ranges from 2m in the deep end (allowing for water-polo, surf-lifesaving etc) to 1.2m in the shallow end (allowing for learn to swim, flipper ball and tumble turns). This depth is supported by staff, but staff will continue to work with the Trust and other aquatic users to ensure the maximum benefit and flexibility for the community.

59. Budget sensitivity: Whilst the cost and income numbers provided through the proposal present a reasonable estimate for the new pool operation, they are based on some high-level assumptions. Any variation to the underlying assumptions could have a significant impact on the overall operating subsidy required to operate the pool. As an example, many pools charge a different fee for youth, squads, or have a membership rate.

Current pool fees	Adult 16+	Senior 65+	Child 5-15	Child 2-4
Baywave - casual swim	$9.40	$6.00	$5.90	$4.50
Ōtūmoetai, Greerton, Memorial Pools – casual swim	$6.90	$4.80	$4.20	$3.50

60. The income expectation in the proposal assumes a flat $7 per swim. The following table provides some comparative revenue and subsidy expectations based on different swim fees or a different level of demand (5 swimmers per lane rather than 6). The actual fee and lane usage will vary, but this table intends to indicate the price sensitivity of the numbers, and the potential impact for the Trust and the Council.

Cost per swim	Swimmers per lane	Estimated income from Fees	Potential required subsidy
$9	6	$425,250	$245,100
$8	6	$378,000	$292,350
$7 (proposal)	6	$330,750	$339,600
$6	6	$283,500	$386,850
$5	6	$236,250	$434,100
$4	6	$189,000	$481,350

$7	5	$275,625	$394,725

Staff propose continuing to work with the Trust to ensure the proposal is financially sustainable and minimise the financial risk for the Trust, the college and the Council.

61. Relative cost: To understand how this proposal compares to the cost of operating other Council pools, staff have analysed a cost comparison, to compare the proposal to other Bay Venues operated pools.

	50m pool proposal	Ōtūmoetai	Greerton	Baywave
	50m pool proposal	2025/26 budgets
Annual cost to operate*	$552,241	$657,160	$987,505	$2,230,472
Revenue	$375,750	$185,319	$345,319	$1,929,833
Net cost to operate	$176,491	$471,841	$642,186	$300,639
Visits per annum	52,380	39,091	107,487	450,617
Net cost to Council per visit	$3.37	$12.07	$5.97	$0.67

*Less depreciation/renewal allowance/overheads

The cost to Council (ratepayers) for the proposed 50m pool is less than other Council pools and the Council subsidy per swim represents good value, although not as good as Baywave, which represents exceptional value for money for ratepayers for a community pool.

62. Value for money: Overall, staff recommend option 3, if meeting the community demand for a 50m pool is a priority for Council. Delivering a stand-alone indoor 50m pool would cost Council significantly more money to build and operate alone. Delivering a pool through a school means that off-peak times (during school hours) the pool is still being well utilised. This proposal does not meet the community demand for an indoor event 50m pool facility, which would be a much more costly project, and the school location would not be ideal for that facility. Council may consider an indoor 50m pool capable of hosting large events in future years as part of the Aquatic Network Plan. However, this proposal presents a relatively quick and value for money solution to meet the majority of the 50m pool community training demand.

Recommended Next Steps

63. Having worked with the Trust to undertake some due diligence on revenue and cost assumptions and help develop a sustainable and feasible proposal, staff believe that there is merit in the option of expanding to a 50m pool at Mount Maunganui College, with Council’s support. However, there are a number of assurances that Council will want to have confidence in the outcomes. Staff propose to continue working through the detail of these items with the Trust, if the Council support option 3. These items include:

64. Health and Safety requirements: this includes supporting the Trust, through additional in-kind support, to develop user agreements, Normal Operating Procedures (NOP), qualified pool lifeguards and ensure processes and documentation is in place to achieve annual PoolSafe accreditation. The Council, through Bay Venues, could provide in-kind support for the pool lifeguard training which costs $250 per person to train.

65. Water Quality: provide support to the Trust to ensure the design and construction of the pool, as well as ongoing operation and maintenance regimes meet the NZ Water Quality standard.

66. Equity of use: Shifting from a pool managed and substantially utilised by Omanu Swim Club to a pool funded by and for the use of the wider community will be a significant change for both the Omanu Swim Club and other aquatic users. It will be essential that there is a transparent, equitable and open process for lane allocation and to ensure all users have the appropriate access to the pool. Staff propose working with the Trust to ensure this equity exists. A formal expectation of the level of service and access the community will receive will be part of any conditions for funding. The proposed pool will also include an accessibility ramp to ensure maximum community accessibility, and staff will work with Council’s Advisor: Accessibility to ensure the design is appropriate.

67. Financial sustainability: For the Council to provide funding for a facility that is managed by an external party leaves Council vulnerable to escalating costs. Any escalating or unexpected costs or drop in revenue will impact the net operating cost and this liability will fall back on Council. As well as continuing to work with the Trust to ensure thorough interrogation of the assumptions used in developing the financial costs, it is also proposed that staff work closely with the Trust regarding ongoing operations. This could include through an annual reporting process, or through co-opting to the Trust a Council representative. Staff also recommend working with the Trust to develop a prudent financial management process that provides certainty around fund use, depreciation funding and any cost variation in each operating year.

68. School Relationship: To date, discussions have been held primarily with the Trust, who hold the relationship with the school. The Principal and Deputy Principal are both on the Trust Board. However, there will need to be an agreement between all parties to move forward with this project. If Council support the continuation of a 50m pool concept, then Mount Maunganui College and Ministry of Education (MoE) will need to approve the concept formally (to date support has been verbal, subject to Council support). There are a few areas that require finalising through this agreement including support from the school to; continue funding the changing rooms and conveniences associated with the pool, continuing to cover the insurance costs for the pool, continue contributing to the operational cost of the pool (circa $45,000 per annum), approve the new floor area and construction, and support for the ongoing use of the facility on school grounds, as proposed. Formal agreement between MoE and MMACT securing long-term access, tenure, or development rights needs to be sighted by Council. If school or MoE support is not provided, then the staff recommendation would be for Council to revert to option 2 - Council support 33m pool upgrade in 2025/26.

69. Carparking: The proposed 50m pool layout encroaches on current carparks. The Trust is working with the Council to look at repositioning the carparks onto the adjacent reserve. This will ensure there is no loss of car parking. The school agreement to the overall proposal will be dependent on there being no reduction in the number of carparks available for staff use during school hours.

70. Funding Agreement: Staff will work with the Trust to develop the appropriate level of documentation, including reporting structures, to provide certainty regarding the above items in paragraphs 64-69. The Council funding will be conditional on this agreement, including

· Defined service level expectations.

· Annual performance reporting.

· Demonstrated public benefit.

The Council may also consider requesting a Council representative be co-opted to the Trust.

Aquatic Network Plan

71. The purpose of an Aquatic Network Plan is to provide a pathway for the Council that informs future decisions regarding aquatic network investment, whilst also providing the community with an outline of future aquatic provision. It provides an opportunity for a community discussion on priorities and will enable a common understanding of the plan for the network over the next 10 to 20 years.

72. The development of an Aquatic Network Plan is proposed to build on the strategic planning and needs analysis undertaken to date. Pulling together information from various studies and strategic plans to outline a pathway forward for Tauranga aquatics.

73. The plan will be informed by previous engagement to date, both targeted stakeholder engagement, and broader community engagement.

74. The proposed process to develop an Aquatic Network Plan includes opportunities for further targeted and broad community consultation.

75. The Network Plan will be drafted to include options informed by the latest information on various aquatic facilities across the city and identify Council’s proposed approach for the network based on the direction provided by Council through this report.

76. Council’s decisions at this meeting will inform the basis of an Aquatics Network Plan for community consultation.

77. Beyond the proposed investments outlined here, the Network plan will also consider options for future investments in the aquatics network. Current network planning suggests a need for a community-scale facility with a mix of water spaces that could be constructed in the mid-2030s in the Wairakei area, to serve the growing Eastern part of the city. Council’s land at the Papamoa East Interchange is a potential site for an aquatics centre. The location is also potentially well-suited to a larger regional scale facility that could house a 50m indoor events pool and/or more extensive aquatic recreational features. Options development and feasibility are proposed to be explored in due course with a range of local, regional and national stakeholders.

78. Future provision for the Western Corridor is considered to be a longer-term matter. It is proposed that a review of population growth trajectories and condition and use of the network of facilities on the Tauranga side of the harbour is undertaken in the early 2030s.

79. Whilst the Aquatic Network Plan will outline a roadmap and help to articulate the community need and growth demand, the Network plan will not be a decision-making document. Instead, it will help to inform future Council planning, with any decisions around facilities and funding considered through Council’s Long Term Plan (LTP) 2027-47 and beyond.

80. The draft Aquatic Network Plan will be brought to Council for consideration and approval, prior to a period of targeted and community-wide consultation. Feedback from the community will help to inform the final Aquatic Network Plan, in time to inform planning for the 2027-37 LTP.

Financial Considerations

81. We have assessed the funding implications of a set of aquatics (and indoor courts) investment options (attachment 1), including consideration of estimated external charitable funding and potential DCs.

82. The table below compares the financial implications of two alternative options across the three projects this report addresses. It shows that, when Ōtūmoetai Pool is upgraded so it can be retained for an extended period of time, this enables the Memorial Aquatics project to provide a greater and longer-term contribution to demand associated with population growth, potentially justifying a greater DC component to the funding of that project. This, in combination with the option to deliver more pool space at Memorial Park (indoor and outdoor pool spaces), would create a significant ($12.1m) net reduction in the ‘rates-funded debt’ component across the set of projects.

83. Note that the potential additional water space at Mount College is excluded from level of service calculations as it would not be a Council asset.

	Net TCC Debt Funded Cost	DC Contribution	Net Total Operating Deficit or Rates Impact Per Annum (including depreciation and interest costs)	NPV (15 Years)	Outcome
*1. Close Ōtūmoetai Pool, and build indoor only at Memorial Park; Mount College 33m pool grant*	$81.8m	$0	$8.7m	$100.6m	Slightly lower cost to ratepayer, poorer community outcome
*2. Upgrade Ōtūmoetai Pool and build indoor and outdoor at Memorial Park; Mount College 50m pool grants*	$69.7m	$26.3m	$9.5m	$90.6m	More equitable distribution of costs between ratepayer and DC payer; better community outcome
Variance	-$12.1m	+$26.3m	+$0.8m	-$10.0m

84. Note that the net debt funded cost above accounts for estimated contributions from charitable funders.

85. We have also considered the funding implications of including the Mount Hotpools in the aquatics network. The facility has not been included in Level of Service calculations previously on the assumption that it provides more of a visitor experience than a core level of service offering. Whilst inclusion of the facility in the Level of Service calculation could imply a significant additional DC component to the Memorial Park Aquatics project (modelled at $44.5m based on $100m development option), doing so would imply that the new facility was able to provide for growth for circa 40 years. It would also imply that DCs would then not be applicable to the next aquatics project, proposed to be in the Wairakei area if constructed in the mid-late 2030s. It would also leave debt on the balance sheet for longer, with a higher overall interest component.

86. The intention would be to provide a ‘loan-funded opex’ grant for the capital costs of the Mount College Pool in 2025/26 and 2026/27, with the loan to be retired over a 10-year period. This would be subject to Annual Plan decisions and their impacts on the balanced budget financial benchmark.

87. In combination, the projects as set out in this report and in the above table are considered to constitute a value for money investment pathway to meet current and future residents’ aquatics interests that is consistent with Council’s overall financial principles and would form part of a balanced overall programme of investment in sports, recreation and play over the LTP period.

Statutory Context

88. Council is not statutorily required to provide aquatic facilities, however there are some legislative requirements that Council must consider when making decisions regarding service delivery. The provision of aquatic facilities contributes significantly to community well-being, creating a thriving environment and contributing to community safety, health, social connection and enjoyment. Section 14 of the LGA further defines principles under which councils should operate, and this includes being democratic and taking account of the diversity of views and interests of the community and ensuring prudent stewardship and efficient and effective use of resources.

89. The process for making decisions is further defined in part 6 of the LGA, including the process of community consultation, developing and amending Long Term Plans in consultation with the community and reporting and accountability. Whilst under section 93(6)(e) the purpose of a long-term plan is to provide a basis for accountability of the local authority to the community, section 96 clearly states that no person is entitled to require a local authority to implement the provisions of a long-term plan, and the Council is free to make a decision that is inconsistent with the contents of any long-term plan.

90. There are however requirements to follow when altering plans and certain decisions that can only be taken if provided for in a long-term plan. If Council was to choose to cease the Memorial Park Aquatic Centre project in its entirety, this decision might trigger LGA section 97(1)(a) a decision to alter significantly the intended level of service provision for any significant activity undertaken by or on behalf of the local authority, including a decision to commence or cease any such activity. This may require Council to make the decision to cease the Memorial Park Aquatic Centre project through a Long Term Plan Amendment, including community consultation.

STRATEGIC ALIGNMENT

91. This contributes to the promotion or achievement of the following strategic community outcomes:

	Contributes
We are an inclusive city	ü
We value, protect and enhance the environment	☐
We are a well-planned city	ü
We can move around our city easily	☐
We are a city that supports business and education	ü

92. In August 2023, the Council adopted the ‘Our Public Places Strategy’ with the ambition of:

Together we can have public places to play, relax, be inspired, and connect with people and nature.

93. In August 2023, the Council also adopted a Play, Active Recreation, and Sport Action and Investment Plan, 2023-33 (AIP).

94. This AIP focuses on the Our Public Places Strategic Plan objective of: Increasing participation by providing easily accessible opportunities for organised and informal play, active recreation, and sport for people of all ages, backgrounds, and abilities.

95. The AIP identified Memorial Park Recreation Hub as a priority action:

Action No.	Actions and programmes of work	Proposed timeframes	Indicative cost	Who	Priority
33.	Replacement of Memorial Pool with Memorial Park Recreation Hub (indoor and outdoor pools).	Short Term	$$$$ LTP 2026- 2028	TCC	Priority action

Key: $$$$ = more than $5m

96. The current network plan (based on catchment analysis and condition assessments) supports the Memorial Park Aquatic Centre upgrade with further projects for other local facilities – Greerton, Ōtūmoetai (upgraded), and in the future - Wairakei and Tauriko. There is currently $61m in 2041-43 for a new community aquatic facility.

Legal Implications / Risks

Memorial Park Aquatic Centre

97. The Council is balancing the risk of delaying the Memorial Park Aquatic Centre creating a negative response from the aquatic community who have an expectation of the aquatic centre being delivered, with ensuring the optimal value for money solution for the community. The site investigations will help Council mitigate the risk of uncertainty regarding project costs, if moving the Aquatic Centre onto the existing Memorial Pool site. Ground conditions and suitability for construction of this nature is the major risk of relocating the aquatic centre.

Ōtūmoetai Pool

98. The Council has received technical advice on the development of the Ōtūmoetai Pool, given existing ground conditions and historic ground movement. The proposed approach is intended to limit future changes to the pool structure and load, and therefore minimise the risk of significant ground movement in the medium term (approx. 15 years). This is the preferred solution to continue providing a pool in Ōtūmoetai, whilst not spending money remediating the ground condition issue.

Mount College Pool

99. As a funding partner, the main risk for Council is in the funding agreement and terms agreed with the Trust. This report recommends ongoing due diligence and for staff to work with the Trust to develop a legal and financial framework for the upgrade and ongoing operation of a new 50m pool. This will include risks to the financial sustainability of the Trust. This report also recommends Council support the accreditation with PoolSafe and adherence with PoolSafe requirements to mitigate potential health and safety risks associated with the pool.

TE AO MĀORI APPROACH

100. It is proposed that the final Memorial Park Aquatic Centre design will incorporate a cultural narrative framework, to be developed jointly with mana whenua, with ongoing engagement as the design response is refined. To date, hui undertaken with mana whenua during the concept design phase of the project has led to a Tauranga Moana design principles, Memorial Park cultural design drivers and design outcomes. Mana whenua are seen as partners in the design process and work developed to date has been to establish cultural narratives, understanding and objectives to set a strong foundation for the project to move ahead upon. A foundation for the design is embedding the history and cultural narrative of the place, seamlessly connecting the people to the place.

101. Consultation on the Aquatic Network Plan is proposed to include specific mana whenua engagement to ensure the needs and expectation of mana whenua are incorporated within the city’s future aquatic plans.

CLIMATE IMPACT

102. The Memorial Park Aquatic Centre has been designed to incorporate modern sustainability principals. It is important however that these features do not add significant cost for little value. The current design (Option A of this report) is expected to achieve a Greenstar 5 rating. Key features include stainless steel pools, which are considered to have lower embodied carbon than concrete and 25% of the ongoing maintenance costs, highly insulted cladding and energy efficient lighting and mechanical systems. For options that include the geothermal bore, further emission and cost reductions will be achieved.

103. Embodied carbon associated with the development of any new aquatic facility will be higher than utilising existing facilities. Whilst the specific options in this report have not been quantified, the preferred option of retaining QEYC is a lower carbon solution than building additional court facilities. Extending the lifespan on the Ōtūmoetai pool also extends the benefit of the embodied carbon of the existing pool. Similarly expanding the Mount College Pool is a lower carbon solution than building a new purpose built 50m pool facility from scratch.

104. For a new Memorial Park Aquatic Centre facility, measures have been considered to reduce the embodied carbon including, partnering with subcontractors and suppliers who share a carbon reduction mindset, concrete additives, prioritising Bay of Plenty and then New Zealand supplied materials, diverting waste and re-using materials on-site.

105. Work has been undertaken at Memorial Park and Ōtūmoetai pool to understand and quantify the ground conditions and the work that might be required in the future to address a changing climate, and in particular the impact of the water table and ground conditions on the facilities.

Consultation / Engagement

106. There has been extensive consultation over many years and Council planning processes regarding the aquatic needs of the Tauranga Community, including the Community survey in 2024.

107. Specific targeted stakeholder engagement regarding the specific projects outlined in this report has included the Ōtūmoetai Pool working group, aquatic user group stakeholder meetings and Bay Venues led aquatic user forums.

108. The development of an Aquatic Network Plan will provide the community with an understanding of Council’s proposed planning, outcomes and priorities in the aquatic space. This will incorporate all of the community engagement to date and present a document that the community can provide comment and feedback on, before Council adopts it as a pathway for the future of the network.

Significance

109. 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.

110. 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.

111. In accordance with the considerations above, criteria and thresholds in the policy, it is considered that the proposal to support the expansion of the Mount Maunganui College Pool to a 50m x 25m pool is of medium significance.

112. The other matters considered through this report are not seeking a Council decision at this stage and therefore are not considered of high significance.

ENGAGEMENT

113. Taking into consideration the above assessment, that the proposal to support the expansion of the Mount Maunganui College Pool is of medium significance, officers are of the opinion that no further engagement is required prior to Council making a decision.

114. The Aquatic Network Plan will be subject to community consultation.

Next Steps

115. Depending on the Council’s decisions from this meeting, the following next steps are proposed for each project:

116. Memorial Park – the results of the site investigations currently underway will be reported back to Council to inform the next step for the Memorial Park Aquatic Centre project. If the site investigations are favourable, the next step is likely to include reviewing the Aquatic Centre design to ensure the project has the right scope, design and cost to deliver value for money to the community.

117. Ōtūmoetai Pool – The costs for the hybrid option will be incorporated into the Long Term Plan 2027-37, to commence in 2028.

118. Mount Maunganui College Pool – Staff will continue to work with the Trust to complete due diligence and finalise an agreement that appropriately addresses the items outlined in this report. The Council will consider the inclusion of budget to fund the 50m pool alongside Annual Plan deliberations at the Council meeting commencing 26 May 2025. Staff will work with the Trust to gain formal agreement from the College and MoE.

119. Aquatic Network Plan – Staff will prepare an Aquatics Network Plan that incorporates the Council decisions from this meeting and bring it back to Council as a draft for endorsement to consult.

Attachments

1. Attachment 1 - Financial Model for Aquatics and Courts - A18154092 (Separate Attachments 1)

2. Attachment 2 - Otumoetai Pool Options Paper - A18181641 (Separate Attachments 1)

3. Attachment 3 - Otumoetai Pool - Geotechnical Assessment and Options Report - A18181646 (Separate Attachments 1)

4. Attachment 4 - Proposal - Mt College 50m Pool - A18154213 (Separate Attachments 1)

5. Attachment 5 - Structured Aquatic Users – summary of needs - A18181650 (Separate Attachments 1)

Ordinary Council meeting Agenda

26 May 2025

11.5 Local Water Done Well - Deliberations

File Number: A18001483

Author: Stephen Burton, Transformation Lead - Water Services

Cathy Davidson, Manager: Directorate Services

Kathryn Sharplin, Manager: Finance

Fiona Nalder, Principal Strategic Advisor

Authoriser: Paul Davidson, Chief Financial Officer

Purpose of the Report

1. This report presents a summary of the submissions received by Council in response to community consultation on ‘Why wai matters: Local Water Done Well’, ahead of seeking a decision on the preferred water services delivery model for Tauranga on 15 July 2025. This report also seeks a decision as to whether to maintain a fully integrated approach for the delivery of water services (three waters – water supply, wastewater and stormwater) regardless of the future service delivery model for waters.

Recommendations

That the Council:

(a) Receives the report "Local Water Done Well - Deliberations".

(b) Notes the community consultation findings, as presented by this report.

(c) Approves an integrated, three-waters approach for the delivery of water services, with all three water services (water supply, wastewater and stormwater) delivered through the same organisation.

(d) Approves that a multi-Council Controlled Organisation continues to be the preferred model, noting that a Council workshop on the in-house developed financial model will be held in June, with the final decision on the water delivery model being made by Council prior to the finalisation of the Waters Service Delivery Plan.

(e) Notes that Council will receive the following future reports:

(i) Approval of a Water Services Delivery Plan for submission to the Department of Internal Affairs by the government prescribed deadline of 3 September 2025.

(ii) Approval of key establishment principles / guidelines which will guide the establishment process if a multi-council controlled organisation is the final approved approach for Tauranga.

Executive Summary

2. This report presents community consultation findings and analysis regarding the future delivery model for Tauranga’s water services. Three potential models were consulted on:

· The proposed model: a multi-Council Controlled Organisation (multi-CCO).

· An alternative model: a sole Tauranga City Council Controlled Organisation (Tauranga only-CCO).

· The current delivery model: retaining water service delivery in-house, with changes to meet new government legislative requirements (in-house).

3. This report also seeks a decision as to whether to maintain an integrated approach for the delivery of water services (three waters – water supply, wastewater and stormwater) regardless of the future service delivery model for waters.

4. A further report (15 July 2025) is planned to seek a Council decision as to which water services delivery model will be progressed for Tauranga (in-house, multi-CCO or Tauranga only-CCO).

Submissions and Survey Analysis

5. Consultation on ‘Why wai matters: Local Water Done Well’ was integrated with Council’s Annual Plan process and ran for four weeks from 28 March to 28 April.

6. Out of the 968 submissions received, a total of 726 people provided submissions addressing ‘Why wai matters: Local Water Done Well’ via Council’s online submissions form. Council received further submissions via email. In addition to the submission process, a market research company was contracted to complete a demographically sound survey of 253 people from across Tauranga.

7. Submitters who used Council’s online submission form were asked to rank the importance of five statements and then asked to rank the three delivery models in order of preference (and say why they liked and disliked each model).

· Community, tangata whenua and stakeholder influence - everybody’s ability to shape water service decisions - 53.88% of submitters rated this as very important or somewhat important.

· Governance - an independent and competency-based professional board of directors that focuses on water services only - 58.6% of submitters rated this as very important or somewhat important.

· Access to sufficient funding - to deliver necessary water infrastructure and services without constraining other council activities - 74.13% of submitters rated this as very important or somewhat important.

· Managing debt levels - the ability to sustainably invest in the infrastructure that a growing city like Tauranga needs - 87.9% of submitters rated this as very important or somewhat important.

· Ring fencing - Tauranga revenue and debt stays with Tauranga to avoid any cross-subsidisation with other communities which are also in the multi-CCO - 68.16% of submitters rated this as very important or somewhat important.

8. Multi-CCO: 41.7% of submitters ranked this as their first preference. Almost 400 comments were provided regarding this option, with approximately 30% of comments positive and 50% of comments negative:

· Positive: regional cooperation, economies of scale, increased access to funding and financing and better long-term planning.

· Negative: loss of local control, financial risks, and potential for increased complexity and cost.

9. Tauranga only-CCO: This option was least preferred as a first choice (19.3%), but the most popular second choice (61.6%). Approximately 300 comments were provided, around 16% of those comments were positive, and 65% negative.

· Positive: professional governance, autonomy, local control and strategic focus.

· Negative: cost concerns, potential inefficiencies (replication of services and functionality between Council and the CCO), and reduced accountability.

10. In-House Model (current delivery model): 39.2% of submitters ranked this option as their first preference. Approximately 300 comments were provided with around 47% of those comments positive and 29% negative.

· Positive: local control, perceived cost-effectiveness, and trust in current operations.

· Negative: funding limitations, lack of scale, and political decision-making impacting on sustainable planning and delivery.

11. Survey results mirrored these trends, with the multi-CCO model slightly more favoured, particularly among younger and female respondents.

12. Council staff engaged directly with Te Rangapū Mana Whenua o Tauranga Moana partnership (Te Rangapū) an autonomous body made up of 17 representatives from each of the hapū and iwi in the Tauranga City Council area. Te Rangapū, along with iwi and hapū, were invited to provide submissions via email.

13. Council received a submission from Te Rangapū supporting the creation of a multi-CCO and requesting that Council ensures tangata whenua representation on the board of any CCO, and that co-governance and co-design principles are built into the establishment and operations of any future waters CCO.

14. Submissions were also received by several iwi, hapū and Māori landowners, Bay of Plenty Regional Council, Bluehaven, the Disabilities Resource Centre Trust, the Property Council New Zealand, the Urban Taskforce for Tauranga, PriorityOne and EnviroHub. Feedback was also proactively sought from high water users and Council staff. Summaries of these submissions and feedback is provided in the body of this report.

Three waters versus two waters

15. Council, in addition to water supply and wastewater management, manages stormwater, the runoff of rainwater from hard surfaces such as buildings, footpaths and roads. The complexity of the stormwater system, which sits across private and public land, transport infrastructure, reserve land and open spaces, and which includes both built infrastructure and natural landforms, means that it has strong planning linkages with a range of Council functions.

16. The Local Government (Water Services) Bill provides councils with the option of:

· Continuing to deliver stormwater services directly.

· Transferring all or some aspects of stormwater services provision to a council-controlled water services organisation (CCO); and/or,

· Contracting a third party (this could be a CCO) to provide all or some aspects of stormwater delivery.

17. Providing the choice of how to deliver stormwater services recognises the complexity of stormwater management, the linkages between stormwater and other non-water Council activities, and the unique stormwater challenges faced by each council. There are four primary reasons for proceeding with a three-waters approach versus a two-waters approach:

· Avoids duplication of knowledge and compliance in the new regulatory environment.

· A three-waters approach is better able to deliver a co-ordinated response in the event of an emergency.

· Establishing a three-waters CCO supports future scale and efficiency gains by not limiting prospective partner Councils to two-waters.

· A CCO has the ability to borrow up to 500% of revenue and this creates slightly more investment opportunity for stormwater and flood management improvement works.

18. If Council chooses to transfer stormwater to a CCO, stormwater reserve land which provides environmental and recreational amenity value will be retained under Council ownership. (e.g. catchment reserves like Gordon Carmichael Reserve).

Financial considerations

19. Financial modelling: MartinJenkins (MJ) completed financial analysis for Council using data from the Long-Term Plan (and since updated with the most recent Annual Plan data). The key financial conclusions from the MJ modelling are that:

· A CCO results in a lower water charge than continuing with the current in-house arrangement based on application of assumed efficiency savings.

· Community affordability improves slightly under the CCO model.

· The assumed efficiencies continue to compound beyond 2034 and therefore there will be even greater savings in the water charge in years beyond 2034.

· The assumed efficiencies in capital delivery also mean that there will be more infrastructure delivered under the CCO for the same level of capital programme investment as under an in-house arrangement.

· The larger the CCO the greater the cumulative savings over time (i.e. higher peak savings)

· Overall, a CCO model has a small to moderate amount of increased debt capacity when compared to the in-house model based on maintaining a ratio of Free Funds from Operations to Debt (FFO:Debt) at 10%.

20. All the modelling work to-date has produced consistent results, as would be expected because all modelling has been based on data provided by Council and assumptions for savings have been those consistently provided by MJ. The savings assumptions are based on international experience.

21. Council is currently developing an in-house financial model to better enable consideration and display of multi-council and Tauranga only options and to test different scenario assumptions. The in-house model will be presented to Council alongside the draft Water Services Delivery Plan (WSDP). The intention is that the in-house model will be publicly available.

22. Treatment of overhead activities - Within Council’s wider business, there are a number of activities that currently recover their costs from the water services activity, such as the water billing operations within finance and asset management services. Others are overhead activities with part of their costs allocated to water services based on key drivers including total expenditure and number of full-time equivalent staff (FTEs), e.g. digital services, communications

23. Under a CCO there will be different or duplicated costs to those under a Council structure, and the likelihood of some stranded costs left with Council that would need to be reduced over time.

24. If Council decides to move the delivery of water services to a CCO there is work to identify which services will be contracted back to the parent council/s and for what period, and to understand what other mitigations would be required to minimise stranded overhead costs remaining with Council.

25. Financial sustainability – community affordability will be an ongoing challenge for water service delivery, regardless of which option Council chooses to proceed with. Financial sustainability for waters is challenged by the high level of future capital investment required. Future capital investment is needed to meet the level of growth required under the National Policy Statement – Urban Development and to meet current understandings of future regulatory requirements.

Options Analysis – Three versus two waters

26. This report seeks a Council decision as to whether to maintain an integrated approach for the delivery of water services. If Council chooses an integrated approach, this would mean that all three water services (water supply, wastewater and stormwater) would be delivered through the same organisation.

27. The report recommends an integrated approach as it has benefits of integrated planning, service delivery and customer support, holistic water management and tangata whenua values, reduced risk in emergency management and reduction of duplication in the new regulatory environment. If the approved approach is a CCO it has further benefit of slightly greater access to finance.

28. An integrated approach in a CCO model will require service level agreements with Council, particularly for transport, city planning and spaces and places activities

Statutory Context and Legal Implications

29. The Local Government (Preliminary Arrangements) Act 2024 requires councils to adopt a financially sustainable water delivery model and submit a Water Services Delivery Plan by 3 September 2025. Failure to do so may result in the appointment of a Crown facilitator.

30. The Local Government (Water Services) Bill, due to be enacted mid-2025, provides for a new economic regulation and consumer protection regime for water services, and changes to the water quality regulatory framework and the water services regulators.

Next steps

31. The next steps will be to decide on a preferred delivery model for Tauranga (15 July 2025) and finalise a Water Services Delivery Plan (5 August 2025), which will then be submitted to the Department of Internal Affairs by the government perscribed deadline of 3 September 2025. Key milestones are provided by the table below.

Date	Milestone
26 May 2025	Council meeting - Deliberations report
June 2025	Public workshop – Financal model (date tbc)
July 2025	Public workshop – Water Services Delivery Plan
15 July 2025	Council meeting – Decision on preferred delivery model and adoption of key establishment principles (only relevant if chosen delivery model is a CCO)
5 August 2025	Adoption of Water Services Delivery Plan
Prior to 3 September 2025	Submit Water Services Delivery Plan to Department of Internal Affairs

Background

32. This report builds on the information contained in the following Council reports.

· Local Water Done Well – Indicative Business Case on the Future for Water Service Delivery (9 December 2024)

· Local Water Done Well – Adoption of Consultation Document and Update on Progress (24 March 2025)

33. Whilst some information from these past reports is repeated in this report, these past reports provide essential background and context for this report.

Submissions and Survey ANALYSIS

34. Consultation on ‘Why wai matters: Local Water Done Well’ ran from 28 March to 28 April. This consultation was integrated with Council’s Annual Plan consultation.

35. Out of the 968 submissions, a total of 726 people provided submissions addressing ‘Why wai matters: Local Water Done Well’ via Council’s online submissions form. Council received further submissions via email. Submissions provided via email did not follow the same format as those provided via Council’s online submission form.

36. Council’s online submission form asked submitters to rate the importance of statements regarding governance, organisational structure, and funding and financing, to rank their preferred water delivery model (from 1 to 3) and to comment on what they did and didn’t like about each of the models.

37. 726 submitters used Council’s online submission form, not all submitters answered every question. A full copy of submissions, both those provided via Council’s online form and those provided via email, was provided as Attachments 2 to 6 of the Council report ‘Annual Plan 2025/26 and Local Water Done Well – Hearings’ (13 May 2025). Attachment 1 to this report contains the submission references for those submissions provided via email.

38. Council also contracted an independent market research company to conduct a survey across Tauranga, with respondents selected to ensure age, gender and location were demographically representative of the city’s population. A total of 253 people (18 years and older) were surveyed from across Tauranga. These survey respondents were asked the same questions as were in Council’s online submission form. A full copy of the survey report is provided as Attachment 1 of the Council report ‘Annual Plan 2025/26 – Consultation and feedback’ (26 May 2025).

Governance, structural and financial questions

Community, tangata whenua and stakeholder influence - everybody’s ability to shape water service decisions.

39. A total of 722 submitters rated this statement.

· 53.88% rated it as very important or somewhat important.

· 26.73% rated it as not at all important or not important.

40. The survey results had more people rating this as very important or somewhat important – 64%.

41. Rating	Submissions		Market research survey
41. Rating	Number of responses	% of responses	% of responses (253 respondents)
Not at all important	109	15.1%	6%
Not important	84	11.6%	9%
Neutral	140	19.4%	21%
Somewhat important	195	27.0%	41%
Very important	194	26.9%	23%
TOTAL	722	100%	100%

Governance - an independent and competency-based professional board of directors that focuses on water services only.

42. A total of 715 submitters rated this statement.

· 58.6% rated it as very important or somewhat important.

· 26.85% rated it as not at all important or not important.

43. The survey results aligned with submissions, with 59% of people rating this as very important or somewhat important.

44. Rating	Submissions		Market research survey
44. Rating	Number of responses	% of responses	% of responses (253 respondents)
Not at all important	111	15.5%	3%
Not important	81	11.3%	10%
Neutral	104	14.5%	29%
Somewhat important	197	27.5%	41%
Very important	222	31.0%	18%
TOTAL	715	100%	100

Access to sufficient funding - to deliver necessary water infrastructure and services without constraining other council activities.

45. A total of 715 submitters rated this statement.

· 74.13% rated it as very important or somewhat important.

· 8.26% rated it as not at all important or not important.

46. The survey results had slightly more people rating this as very important or somewhat important – 80%.

47. Rating	Submissions		Market research survey
47. Rating	Number of responses	% of responses	% of responses (253 respondents)
Not at all important	31	4.3%	1%
Not important	28	3.9%	2%
Neutral	126	17.6%	18%
Somewhat important	243	34.0%	47%
Very important	287	40.1%	33%
TOTAL	715	100%	100%

Managing debt levels - the ability to sustainably invest in the infrastructure that a growing city like Tauranga needs.

48. A total of 716 submitters rated this statement.

· 87.9% rated it as very important or somewhat important.

· 2.94% rated it as not at all important or not important.

49. The survey results aligned with submissions, with 88% of people rating this as very important or somewhat important.

50. Rating	Submissions		Market research survey
50. Rating	Number of responses	% of responses	% of responses (253 respondents)
Not at all important	10	1.4%	1%
Not important	11	1.5%	1%
Neutral	65	9.1%	9%
Somewhat important	233	32.5%	39%
Very important	397	55.4%	49%
TOTAL	716	100%	100%

Ring fencing - Tauranga revenue and debt stays with Tauranga to avoid any cross-subsidisation with other council areas which are also in the multi-CCO.

51. A total of 710 submitters rated this statement.

· 68.16% rated it as very important or somewhat important.

· 7.75% rated it as not at all important or not important.

52. The survey results aligned with submissions, with 68% of people rating this as very important or somewhat important.

53. Rating	Submissions		Market research survey
53. Rating	Number of responses	% of responses	% of responses (253 respondents)
Not at all important	25	3.52%	1%
Not important	30	4.23%	2%
Neutral	171	24.08%	29%
Somewhat important	206	29.01%	43%
Very important	278	39.15%	25%
TOTAL	710	100%	100%

Ranking of the three water delivery options

54. A total of 515^{^[9]} submitters ranked the three options, with 1 indicating their most preferred option and 3 indicating their least preferred option.

Council online submissions: Preferred options

Option	1 (most preferred)		2		3 (least preferred)
Option	No.	%	No.	%	No.	%
Proposed model: A multi council-controlled organisation.	215	41.7%	65	12.0%	235	45.6%
Alternative model: A standalone Tauranga City Council CCO.	99	19.3%	317	61.6%	99	19.2%
Current model: The current delivery model (in-house), with changes to meet new legislation.	201	39.2%	133	25.8%	181	35.2%
Total	515	100%	515	100%	515	100%

55. This question demonstrates that there is not a strong community preference for either the multi council CCO or for the current delivery model. Community views are close to being evenly split between these two options, with a standalone Tauranga Council CCO being the least preferred first option.

56. The popularity of the standalone Tauranga Council CCO as people’s second preference, compared to it being the least preferred first option, shows that many view this option as a compromise approach.

Market research survey: Preferred options

Option	1 (most preferred)		2		3 (least preferred)
Option	No.	%	No.	%	No.	%
Proposed model: A multi council-controlled organisation.	83	39%	44	20%	88	41%
Alternative model: A standalone Tauranga City Council CCO.	72	33%	89	42%	54	25%
Current model: The current delivery model (in-house), with changes to meet new legislation.	60	28%	82	38%	73	34%
Total	215	100%	215	100%	215	100%

57. The market research differed from submissions. While the proposed model (a multi-CCO) remained the most popular first choice, the alternative model (a standalone Tauranga CCO) was preferred over the current model. It also found that the proposed model of a multi-CCO was most preferred by females (43%) and younger residents, aged 18-49 years (42%).

Commentary on the three options

58. Submitters using Council’s online form were asked to provide comments on what they liked and didn’t like about each model. Not all submitters provided comments. Overall, there was a greater proportion of comments provided in support of the current model, whilst (as shown above) submitters’ ranking of preferred options was relatively evenly split between the current model and the proposed model. This could be interpreted as people wishing to see the current model retained as more motivated to provide comments.

59. Key themes expressed by comments are summarised below.

Proposed model: A multi-CCO

60. Close to 400 comments were provided in relation to the proposed model of a multi-CCO. Around 30% of those comments were positive, 50% negative and the remainder either provided comments outlining both positive and negative aspects of the proposed model (or were unclear).

61. The key themes from comments made in support of the proposed model, a multi-CCO were:

· Economies of scale – such as shared infrastructure and resources.

· Expertise and efficiency – pooling expertise, particularly technical and specialist knowledge, was seen as more efficient. Additionally, a CCO was seen as offering a less political approach, with professional expertise driving decision making.

· Funding and financing benefits – a multi-CCO was viewed as potentially providing better funding opportunities and improving financial sustainability.

· Regional approach – many submitters saw advantages in adopting a water management approach that transcends council boundaries.

· Transparency and governance – the multi-CCO was viewed as providing a more focussed and accountable approach to managing water services

· Long-term planning – this model was viewed as a better vehicle for long-term strategic planning (potentially this is as it would be less influenced by councils’ three-yearly election cycles).

· Community and environmental benefits – such as more sustainable and holistic water management practices and improved service delivery

· Tangata whenua – a number of submissions highlighted the opportunity, and need, to include tangata whenua in governance and decision-making processes, recognising their role as kaitiaki (guardians).

62. The key themes from comments which expressed a negative view of the proposed model were:

· General distrust – negative comments conveyed a general mistrust of Council, government and consultants, as well as a distrust of the financial modelling which has been completed and a fear that true costs and benefits are being hidden, coupled with a view that the current model is working well.

· Cost concerns – one of the most frequently expressed negative comments, there was a view that a multi-CCO would have high set up costs, including duplication of services already existing at Council, and that a CCO would be more expensive on an ongoing basis due to the costs of paying for board members, senior staff, consultants and additional bureaucratic layers.

· Bureaucracy and inefficiency – linked to the comments on cost, many submitters were concerned about additional bureaucracy leading to inefficiency and slower decision-making, as well as duplication of roles and responsibilities which already exist in councils (and stranded overheads).

· Loss of local control – a fear that a multi-CCO will dilute local decision-making and accountability, overlook local needs, and increase the potential for privatisation of water as well as that having multiple councils involved could become too political.

· Financial risks – a fear of increasing debt levels and of well-managed councils subsidising those areas who have underinvested in their infrastructure, as well as scepticism and doubt as to the financial modelling, and projected savings and efficiencies.

· Governance – concerns that the governance structure of a multi-CCO would be ineffective.

Alternative model: A Tauranga only-CCO

63. Approximately 300 comments were provided addressing the alternative model of Tauranga only-CCO. Around 16% of those comments were positive, 65% negative and the remainder either provided comments outlining both positive and negative aspects of the proposed model (or were unclear). There was a higher percentage of negative comments relating to this option than the other two options, perhaps reflecting that this model was ranked as the least preferred option.

64. The key themes from comments made in support of the alternative model, a Tauranga only-CCO were:

· Local control and accountability – there were a number of comments emphasising the need for water services to stay under local control, and to be answerable only to the people of Tauranga (versus multiple geographic areas).

· Efficiency and focus – a CCO was seen as potentially being able to operate in a more streamlined manner than Council and to be free to concentrate solely on water services.

· Expertise and professionalism – a CCO was viewed as offering an approach to water management that was less political and instead driven by subject matter experts.

· Financial considerations – some submitters found this option more appealing as funds and infrastructure remained Tauranga owned and focused, and the greater flexibility around financing and funding was also seen as a benefit.

· Autonomy and simplicity – this option was viewed by some as a more straightforward model than a multi-CCO and as a way to avoid potential disagreements that may arise due the involvement of multiple communities.

· Strategic planning and stability – removing water services from Council was seen as offering the ability to plan effectively beyond three-year political cycles.

65. The key themes from comments which expressed a negative view of the alternative model were:

· Cost and financial concerns – many of these comments focussed on the expense of establishing and running a standalone CCO, including duplicated management, overheads, and board fees. There was also concern expressed that the model would lead to higher costs for ratepayers and increased borrowing, with little to no benefit, as well as concerns about the lack of transparent financial modelling.

· Bureaucracy and inefficiency – this model was seen as adding unnecessary bureaucracy and potentially duplication of roles with Council.

· Loss of accountability and control – a CCO was viewed as being less accountable to ratepayers and elected representatives, as well as potentially a step towards privatisation of water.

· A desire to maintain the current status quo – a view that water is already managed well on a local basis by existing staff and structures, and that change is unnecessary

· Lack of economies of scale – a Tauranga only CCO was seen as not delivering the economies of scale that could be achieved by a multi-CCO.

· Strategic and longer-term risks – a standalone CCO was seen as possibly inflexible or unable to adapt to regional growth and infrastructure needs, and as having the potential to hinder innovation, funding access, and regional cooperation.

· General distrust – there was a view that CCO model was being proposed to shift debt off the Council’s books or to enable more borrowing, with this being seen as negative (rather than as an advantage).

Current model: The current delivery model (in-house), with changes to meet new legislation

66. Approximately 300 comments were provided addressing the current delivery model. Around 47% of those comments were positive, 29% negative and the remainder either provided comments outlining both positive and negative aspects of the proposed model (or were unclear).

67. The key themes from comments made in support of the current approach, in-house delivery, were:

· Satisfaction with current performance – Tauranga was viewed as having an excellent water service, with no major issues, high quality water, well maintained infrastructure and as reliable and well run, with confidence expressed in the existing water services staff.

· Local control and accountability – this approach was viewed as being transparent, with commenters valuing having elected members being directly responsible and being able to contact elected members and/or staff directly in the event of issues.

· Cost effective – commenters liked that an in-house model would avoid additional costs of a CCO board, senior management and administrative layers, and that creation of a new entity would be costly.

· Ownership and asset retention – there is strong support for retaining local council ownership of water infrastructure and a fear that overtime a CCO model could lead to asset sales, privatisation of water and loss of public control.

· Ability to adapt to new legislation – submitters felt that the Council could adapt its water delivery to the new legislation without creating a CCO.

· Opposition to alternatives – there was a high level of scepticism expressed as to the efficiency of a CCO, with CCOs viewed as costly, bureaucratic, and less accountable, many people also viewed the additional debt capacity created by moving to a CCO model as a negative, leading overtime to increased borrowing and high debt repayment costs.

68. The key themes from comments which expressed a negative view of the current, in-house model were:

· Finance and funding limitations – comments highlighted that the in-house model restricts the council’s ability to invest in necessary infrastructure due to overall debt limits, as well as expressing concerns that water budgets are not protected, potentially resulting in underfunding.

· Governance – many submitters who criticised the in-house model highlighted the risk of Councillors making decisions without the necessary expertise, often influenced by short-term political agendas, and felt that that water services should be governed by independent, qualified boards rather than elected members.

· Operation inefficiencies – water services are seen as competing with other council priorities for funding and attention, leading to inadequate levels of investment and a failure to plan adequately for future growth, additionally the in-house model was viewed as inefficient and overly restrained by process/red-tape.

· Lack of scale and specialisation – an in-house, Tauranga centric model was viewed as losing out on the ability to capitalise on cost-efficiencies that could be gained from a regional/multi-council approach, additionally in-house structure is seen as less attractive to skilled professionals compared to a specialised entity.

· Infrastructure and service delivery – the in-house model is seen as insufficient to handle Tauranga’s rapid growth and increasing water needs, with the current system already under strain, not equipped to maintain high standards and suffering from delayed upgrades.

· Strategic and legislative misalignment – submitters commented that an in-house model makes planning and implementation at a regional level more challenging, with broader initiatives like SmartGrowth and regional water strategies struggling. Additionally, the new legislative and regulatory frameworks were viewed as potentially harder to manage with an in-house delivery model.

Themes from the market research survey

69. The full report providing the results from the market research survey is available as Attachment 1 of the Council report ‘Annual Plan 2025/26 – Consultation and feedback’ (26 May 2025).

70. The proposed model, a multi-CCO, was ranked as the most preferred model by participants in the market research survey. A multi-CCO was viewed as potentially more efficient and as promoting regional collaboration and increased expertise. Concerns raised with the model were mainly around potential lack of local control and the bureaucracy and additional cost that the increased layers of governance can bring.

71. The alternative model, a Tauranga only-CCO, was the second most popular choice by participants. Positive comments focused on the advantages of local control and accountability. Concerns centred around increased costs, lack of trust in Council, and missed opportunities (due to being a single council CCO).

72. The current, in-house model was the least favoured by participants. Negative comments focused on cost, inefficiency, frustration with Council performance, and accountability, whilst positive comments centred on the current model working well.

Submissions which did not use Council’s online form

73. Council received 16 submissions via email which provided feedback on Local Water Done Well. As these submissions did not use Council’s online form, they do not form part of the analysis above. The content of these submissions is discussed below. Emailed submissions can be found in full in Attachments 2 to 6 of the Council report ‘Annual Plan 2025/26 and Local Water Done Well – Hearings’ (13 May 2025). Attachment 1 to this report contains the submission references for submissions provided via email.

Tangata whenua

74. Council staff engaged directly with Te Rangapū Mana Whenua o Tauranga Moana partnership (Te Rangapū) an autonomous body made up of 17 representatives from each of the hapū and iwi in the Tauranga City Council area. Te Rangapū, along with iwi and hapū, were invited to provide submissions via email.

75. Council received a submission from Te Rangapū supporting the creation of a multi-CCO and requesting that Council ensures tangata whenua representation on the board of any CCO, and that co-governance and co-design principles are built into the establishment and operations of any future waters CCO.

76. Board representation, co-governance and co-design are viewed by Te Rangapū as essential for the following reasons:

· To give effect to the principles of Te Tiriti o Waitangi.

· To ensure that the principle of kaitiakitanga is upheld and the mauri of wai is protected.

· To ensure access to the knowledge that tangata whenua hold regarding the taiao (natural environment).

77. Overall, the Te Rangapū submission argues that tangata whenua partnership is essential to any CCO achieving long-term positive outcomes.

78. Council also received submissions from the following iwi, hapū and Māori landowners, largely focused on infrastructure and land ownership.

· Otanewainuku Whanau Trust – this submission requests that Otanewainuku is formally acknowledged as the sacred source of Tauranga’s water supply, that Waoku 2A is returned to the Otanewainuku Whānau Trust with the urupā protected and that further engagement is undertaken regarding the Public Works acquisitions at Oropi No.2 and adjacent blocks.

· Maungatapu Marae Committee and Trustees – request, integration of Maungatapu Marae-specific needs into the Local Water Done Well planning and project frameworks, and continued collaboration with Council and/or CCO to develop effective measures for stormwater, wastewater, and water supply resilience for Maungatapu Marae.

· Ngāti Pūkenga ki Tauranga – this submission provides detail regarding Ngāti Pūkenga’s values, aspirations, and responsibilities as kaitiaki and seeks opportunities to be involved in any CCO that may be established.

Interest groups/organisations

79. The following organisations/interest groups made submissions relating to Local Water Done Well

· Bay of Plenty Regional Council – this submission does not clearly endorse any option.

· Bluehaven – supports establishment of a multi-CCO to deliver all three water services (water supply, wastewater and stormwater) and highlights the involvement of Bay of Plenty Regional Council as part of ensuring a comprehensive sub-regional waters response.

· Disabilities Resource Centre Trust – supports a regional approach to the management of water and requests that any CCO prioritises community wellbeing and actively seeks to include the voices of disabled people and older adults in any future decision-making processes.

· The Property Council New Zealand – supports establishment of a multi-CCO to deliver all three water services (water supply, wastewater and stormwater), as this approach provides improved governance, is more strategic, and delivers better access to funding and financing, and efficiencies of scale.

· Urban Taskforce for Tauranga – supports establishment of a multi-CCO with Western Bay of Plenty District Council. Their perspective was that it is the first towards local government amalgamation, and that it will deliver efficiencies and provide more funding options. It supports all three water services (water supply, wastewater and stormwater) transferring to a CCO.

80. Two organisations that work closely with Council provided their submissions via Council’s online form. Their answers to the questions are captured in the analysis earlier in this section, and their comments are summarised as follows.

· PriorityOne – supports establishment of a multi-CCO but cautions that Council needs to be careful regarding the readiness of other councils, if it is considering going outside of known partners.

· EnviroHub – supports the creation of a multi-CCO to deliver water supply and wastewater but is concerned about the impact of transferring the delivery of stormwater to a CCO. Most stormwater reserves double as open space and are a critical part of supporting biodiversity and other environmental outcomes. Separation of stormwater from Council may compromise the holistic management of these spaces.

Others

81. Council received six email submissions from private individuals, these submissions included the following points.

· Support for establishment of a multi-CCO (x1).

· Support for a board elected based on skill (x2).

· The need for participating Councils to have resources consents in place (x1).

· Support for water service delivery to remain in-house (x4).

· That Council should wait to make a decision until all legislation is passed and it is clear whether government will make financial contributions towards the cost of delivering water services (x1).

· That Council should wait to make a decision until financial modelling has been completed which can be shared in full with the community (x2).

· That any tangata whenua interest/involvement should be fully articulated and disclosed (x1).

· That the consultation document does not provide the information needed for people to decide on a model (x1).

High water users

82. Council staff reached out to commercial high water users “top 10”. Of those, staff consulted directly with four of the city’s highest water users, each of these users has an annual water bill exceeding $100,000. There was general support expressed for the concept of a CCO, with the following factors viewed as most important:

· Pricing certainty, with an expressed desire to have advance notice of water pricing (ideally 2 to 3 years ahead) to allow for business planning.

· Continuity and certainty of service, as several of these businesses run continuously.

· Security of supply, being certain that they can access the amount of water they need, when they need it.

· Water quality, particularly important for businesses manufacturing products used in food production.

Other feedback

Informal community feedback

83. Council received informal feedback via promotion of the ‘Why wai matters: Local water done well’ consultation on social media. These comments, as they cannot be reliably attributed to individuals, are not considered submissions and a full analysis has not been completed. However, two overwhelming themes can be identified from the comments posted on social media.

· A general distrust of Council, government more generally, and the decisions made by Council.

· A desire for costs to remain low, regardless of which water services delivery model is chosen.

Staff survey

84. 150 staff who have a high proportion of their days’ work focused on water service delivery for the city were invited to provide their views on the three proposed water service delivery models. 76 staff responded with feedback. Whilst some of this feedback directly relates to staff, and their work and roles within Council, many of the themes are similar or the same as those provided via community submissions. A summary of staff feedback is provided below.

Staff feedback on the proposed model: A multi-CCO

What staff like

What staff are concerned about

Efficiency & economies of scale.

More opportunities for career development & increased professional reputation.

Improved service delivery due to regional planning and investment, and reduced political involvement.

Have a professional board, with strong focus on delivering improved services and driving efficiencies.

Have greater size and scale which translates to better resourcing (in-house skills and expertise), as well as ability for ongoing investment

Enhanced inter-council collaboration and sharing of best practices and technical expertise. Building on what is already happening between the councils.

Improved strategic focus due to being a dedicated water services provider, resulting in more resilient and future-ready infrastructure.

A complex governance structure and issues with conflicting council priorities.

A fear of absorbing debt and underinvestment from other councils and concerns about unfair cost distribution and rate increases.

Concerns that partner Council’s data and asset quality may not be at the same level as Tauranga’s.

Integration of systems, policies, and staff could be slow and costly.

Potential job losses and role redundancies.

A desire not to lose direct accountability and connection the local community.

Concerns about the model being too similar to the unpopular Three Waters reforms.

Staff feedback on the alternative model: A Tauranga only-CCO

What staff like

What staff are concerned about

Maintains local control and focuses on Tauranga’s specific needs, making it easier to align with community and Council priorities.

It is less complex than a multi-CCO model and easier and faster to implement.

As it would be a dedicated professional water services entity, it could improve service delivery and would have less political involvement.

Financial benefits including enabling better debt leveraging for water infrastructure and keeping water-related finances separate from broader Council budgets.

Misses out on economies of scale and shared resources that would be achieved via a multi-CCO, making it less efficient over the long term.

Risk of duplicating governance, management, and support services which already exist in Council and there would be potentially high setup and operational costs.

Limited collaboration and innovation with reduced opportunity to share knowledge and expertise with other councils and missed opportunities for regional planning.

Concerns about long-term sustainability and capacity to manage large infrastructure projects.

Staff feedback on the current model: The current delivery model (in-house), with changes to meet new legislation

What staff like

What staff are concerned about

Staff feel part of a tight-knit, supportive team with shared goals.

Staff are proud of Council’s quality of service, data, and assets.

Direct accountability to the community and elected members.

No disruption from structure change.

There are close working relationships and high levels of internal collaboration with other departments (e.g. open space team, transportation, finance).

Avoids the setup costs of a new CCO as existing systems and overheads already in place.

There are frequent shifts in priorities with each election cycle which means that long-term planning and investment is often compromised.

Councillors lack technical expertise.

There are greater financial constraints as there is limited borrowing capacity and funding flexibility and water services competes with other areas for Council funding.

Some of the teams are under-resourced and bureaucratic processes can slow delivery.

Difficulty attracting and retaining skilled staff.

Strategic limitations, including a lack of focus on water services as a core business, missed opportunities for economies of scale and innovation.

Council’s ability to meet future legislative and compliance demands effectively.

Staff Feedback survey: Preferred options

Option	1 (most preferred)		2		3 (least preferred)
Option	No.	%	No.	%	No.	%
Proposed model: A multi council-controlled organisation.	42	66%	11	17%	9	14%
Alternative model: A standalone Tauranga City Council CCO.	11	17%	39	61%	12	19%
Current model: The current delivery model (in-house), with changes to meet new legislation.	9	14%	12	19%	41	64%
Total	62	100%	62	100%	62	100%

How consultation may influence next steps

85. Some of the community consultation findings are almost evenly split, with a multi-CCO model being the first preference for 41.7% of submitters, and the in-house delivery model being the first preference for 39.2% of submitters (a Tauranga only-CCO was the most popular second choice, with 61.6% of submitters ranking it as their second preference). This means there is not a clear community mandate for either option.

86. However, there was community support for each of the following statements.

· Community, tangata whenua and stakeholder influence - everybody’s ability to shape water service decisions - 53.88% of submitters rated this as very important or somewhat important.

· Governance - an independent and competency-based professional board of directors that focuses on water services only - 58.6% of submitters rated this as very important or somewhat important.

· Managing debt levels - the ability to sustainably invest in the infrastructure that a growing city like Tauranga needs - 87.9% of submitters rated this as very important or somewhat important.

· Ring fencing - Tauranga revenue and debt stays with Tauranga to avoid any cross-subsidisation with other council areas which are also in the multi-CCO - 68.16% of submitters rated this as very important or somewhat important.

87. Some of the statements above will be easier to achieve under a CCO model, such as access to funding and being able to invest in needed infrastructure, with further work required as to how best to ensure stakeholder interests are represented if a CCO is established.

88. Tangata whenua support the establishment of a multi-CCO and have also clearly told Council that, if Council proceeds with establishing a CCO, they wish to be involved at a governance level.

89. Given the split stance of the community, Council will need to factor in other considerations, not just community feedback, when deciding which water service delivery model to progress. Factors such as funding and financing arrangements, long-term affordability and government’s aspirations for Long Water Done Well arrangements will be critical contributors to Council’s decision-making.

90. If, at a later date, Council chooses to proceed with a CCO option, it will also need to adopt key principles to guide the establishment negotiations and the structure of any future CCO. Submissions have given Council a strong sense of what principles are most important to the community.

Three waters versus two waters

91. Council, in addition to water supply and wastewater management, manages stormwater, the runoff of rainwater from hard surfaces such as buildings, footpaths and roads. Managing stormwater is about protecting public health and safety by reducing the impacts of flooding on people, property, water quality and eco-systems. The challenge of managing stormwater is increasing with Tauranga’s growing population and changing urban form, and the worsening impacts of climate change.

92. Council’s stormwater network consists of underground pipes, open drains, ponds, wetlands and outlets. Roads and streets are also used as part of Council’s stormwater management approach, as are overland flowpaths (which cross private and public property).

93. The complexity of the stormwater system, which sits across private and public land, transport infrastructure, reserve land and open spaces, and which includes both built infrastructure and natural landforms, means that it has strong planning linkages with a range of Council functions. These include:

· Land use planning and planning for growth and urban form

· Transport corridors

· Spaces and Places, the management of parks, open spaces and active reserves

· Regulatory Services and Environmental Compliance

· Emergency Management

94. The Local Government (Water Services) Bill provides councils with the option of:

· Continuing to deliver stormwater services directly.

· Transferring all or some aspects of stormwater services provision to a council-controlled water services organisation (CCO); and/or,

· Contracting a third party (this could be a CCO) to provide all or some aspects of stormwater delivery.

95. Under the Local Government (Water Services) Bill, councils must develop Stormwater Network Risk Management Plans to map infrastructure, identify critical assets, assess risks, and implement mitigation strategies. They can establish stormwater bylaws to regulate activities affecting infrastructure and require landowners to report potential impairments. Councils may also recover costs associated with maintaining and protecting the stormwater network, including costs incurred from mitigating risks or addressing impacts caused by landowner activities.

96. Providing the choice of how to deliver stormwater services recognises the complexity of stormwater management, the linkages between stormwater and other non-water council activities, and the unique stormwater challenges faced by each council. Councils are being encouraged to think innovatively about how best to deliver stormwater services and the legislation recognises that for some councils, this may mean separating the management of stormwater from water supply and wastewater.

97. There are five primary reasons for proceeding with a fully integrated, three-waters approach versus a two-waters approach:

· A three-waters approach is better able to deliver a co-ordinated response in the event of an emergency.

· Avoids duplication of staff, and duplication of knowledge and compliance in the new regulatory environment.

· The changes to stormwater delivery would be largely operational and internally facing, i.e. they will impact on how Council staff do things internally, and how they liaise with the stormwater function. Establishing a three-waters CCO supports future scale and efficiency gains by not limiting prospective partner Councils to two-waters. The operational and planning challenges may be managed via service level agreements, internally facing documentation. There will be no change to the level of customer service provided by the stormwater activity, regardless of whether it is delivered by Council or by a CCO.

· A CCO has the ability to borrow up to 500% of revenue and this opens up investment opportunity for stormwater and flood management improvement works.

· A three-waters model has potential to deliver greater capex and opex efficiencies. The modelling completed by MartinJenkins, and presented as part of this report, provides financial forecasting for the potential CCO options (a CCO only servicing Tauranga, versus a CCO servicing two or more local government areas). It is based on a three-waters scenario. The operational and financial efficiencies identified in this modelling would not be fully realised if a two-waters approach was adopted. In addition, existing waters staff have significant experience in stormwater planning, management, operations, renewals and consenting. This makes an attractive partner for future growth prospects for the CCO. If a two-waters approach was adopted, this existing knowledge of stormwater systems would be lost to Council and need to be replaced.

98. This report recommends that Council approve an integrated three-waters approach for the delivery of water services, with all three water services (water supply, wastewater and stormwater) delivered through the same organisation.

99. If a CCO is established Council, as local authority retains its role as “Plan Maker”, strengthened through the Statement of Expectation, and the proposed CCO responds as “Plan Taker” through the Water Services Strategy. Whilst the advantages of adopting a three-waters approach outweigh those of a two-water approach, the challenges of moving water delivery and management in full to an external organisation will need to be addressed. It is intended that these will be managed via the service level agreements between Council and the proposed CCO.

100. If Council chooses to transfer stormwater to a CCO, Council will retain ownership of all stormwater reserve land which also provides environmental and recreational amenity. This includes walkways, open spaces and catchment reserves.

101. It also should be noted that Section 13 of the Local Government (Water Services) Bill allows for stormwater to revert from a CCO back to Council should it have reason to do so.

Financial Considerations

102. The financial analysis to support the decisions to-date on a preferred three waters structure have been based on a number of different models at different stages of the process, all of which used Council data (from the Long-Term Plan or updated Annual Plan):

· Better Business Case analysis based on Long-Term Plan (LTP) data in November 2024, used to identify a preferred way forward.

· Department of Internal Affairs template and analysis based on the LTP to support the Bay of Plenty grouping (formerly entity C).

· MartinJenkins modelling of council data from across the region to enable consistent presentation of financial implications through the consultation process on three options.

· Council is currently developing an in-house model to support future decisions.

MartinJenkins financial modelling

103. MartinJenkins (MJ) completed independent modelling for four councils (including different combinations of councils). The MJ analysis used in the consultation document was based on Council financial data provided in January 2025, which was amended slightly since the LTP for the Annual Plan. The MJ model was applied to three other councils who may be potential multi-CCO partners. It was based around maintaining a Funds from Operations:debt ratio (FFO:Debt) of 10% with the price path and capital availability coming from the data provided by the councils. Tauranga’s consultation used a ring-fenced pricing option.

104. The table below summarises the outcomes from this modelling for Council.

105. The key financial conclusions from the MJ modelling are that:

· A CCO results in a lower water charge than continuing with the current in-house arrangement.

· Community affordability improves slightly under the CCO model.

· The positive efficiencies continue to compound beyond 2034 and therefore there will be even greater savings in the water charge in years beyond 2034.

· The efficiencies also mean that there will be more infrastructure delivered under the CCO for the same level of capital programme investment as under an in-house arrangement.

· The larger the CCO the greater the cumulative savings over time (i.e. higher peak savings).

· Overall, a CCO model has a small to moderate amount of increased debt capacity when compared to the in-house model. This would enable more investment in water (CCO) and non-water infrastructure (Council), and along with the efficiency savings to capital delivery, would enable more investment to be delivered to communities for the same cost.

Financial modelling work to support future decisions

106. Council is currently developing an in-house financial model to better enable consideration and display of in-house delivery versus delivery by a council-controlled organisation (multi-council and Tauranga only options). This model will provide key metrics to enable comparison of options, different assumptions and consideration of the implications of key principles. The updated data used in the in-house model will also support the Water Service Delivery plan financials which will be prepared using the Water Services Delivery Plan templates.

107. The model is still in development at the time of writing this report. An independent peer review of the model has been completed by Mafic. Initial review is also underway by other councils, who may subsequently choose to make use of the model with their own data.

108. Once finalised, Council may also use the model as part of a due diligence process reviewing the financial information provided by other councils. At this stage Council has not completed a review of Western Bay of Plenty District Council’s financial information or the financial information of any other councils. This work will be part of due diligence if, at a later date, Council chooses to progress a multi-CCO.

109. All the modelling work to-date has produced consistent results.

110. A Council workshop will be held in June 2025 to present the model and the outcome of the peer review. This will provide an opportunity for elected members to understand the model and its outputs more fully. It is the intention that the model will also be made publicly available.

Requirements of Local Water Done Well policy

111. Local Water Done Well introduces new legislation (the Local Government (Water Services) Bill) that implements a new economic regulation regime and a new planning and accountability framework. This will increase the cost to local government of providing water services, due to the costs of resourcing the new regulatory and reporting requirements and potentially also due to additional future investment requirements. Council is recognised as a relatively high performing council in its infrastructure investment to-date and the quality of its service delivery. Despite the high performance of Council’s water services, service delivery under the new policy will still cost more (regardless of the delivery model). Assumed efficiency savings from a multi-CCO (and to a lesser extent, CCO) model will offset some of these cost increases.

112. Under Local Water Done Well, the costs of supplying the three water services (water supply, wastewater and stormwater) will need to be separately identified (ring-fenced) and reported. For Council this is a relatively easy change as Council, for over 20 years, has ring-fenced its water supply and wastewater activities and charged targeted rates and fees covering all operating costs for each of these activities. A full balance sheet has been produced for each of the three water services.

Transfer of assets and liability to a new entity

113. Water service infrastructure assets totaled $2.29b in the 2024 Annual Report. If, at a later date, Council chooses to proceed with a CCO delivery approach, minimal land is expected to be transferred and transfer of land would be based on Council decision. Legal arrangements would be put in place for assets not transferred. Land with amenity value would stay with Council, such as reserve land.

114. Whilst debt is currently reported at the whole of Council level, the individual debt levels of each of the three water service activities can be readily identified.

115. At the end of the 2025/26 financial year, water services debt is estimated at $550m If a CCO was created, Council and the new entity would need to agree on the approach to transfer of debt, as part of the wider negotiation regarding asset transfer arrangements and shared services.

116. While the detail of Commerce Commission regulation is yet to be outlined for councils or consulted on, high level review of other regulated utiities suggests that CCOs would want to have floating debt at the commencement of regulation to enable organisations to match their hedging profiles with regulatory settings. Council is working through what this means for the level and duration of hedging prior to the commencement of regulation in July 2028.

117. If a multi-CCO is created, Council is likely to be the largest shareholder and hold well above 50% of shares. Further work is required to understand options to limit the guarantee of the new CCO’s debt at commencement with other councils, and over time. The level of debt of the multi-CCO would have implications for the credit rating of Council as a major guarantor and parent council.

118. If Council decides to proceed with a multi-CCO, Council will also need to adopt establishment principles which would in turn will guide the financial approach taken by the multi-CCO.

Treatment of overhead activities

119. Within Council’s wider business, there are a number of activities that currently recover their costs from the water services activity, such as the water billing operations within finance and asset management services. Others are overhead activities with part of their costs allocated to water services based on key drivers including total expenditure and number of full-time equivalent staff (FTEs), e.g. digital services and communciations.

120. In the 2026/27 year (based on inflated 2026 Annual Plan data) the activities directly recovering or allocating a share of their costs to water services charge a total of $28m.

121. Under a CCO there would be different or duplicated costs to those that exist under a Council structure, and the likelihood of some stranded costs left with Council that would need to be reduced over time. Duplicated costs would be likely to include the costs of governance and executive officers, as well as the cost of specialists across areas of business outside of the core engineering and asset management aspects of water services.

122. For example, a water services CCO would require finance, corporate planning, legal, procurement, communication, human resources and digital leadership in-house, even if there was a decision to contract back to parent councils for a portion of these services. The extent to which a future CCO could contract back to parent councils would depend on what decisions are made regarding the digital patforms to be used by any new entity.

123. If Council decides to move the delivery of water services to a CCO there is significant work to identify which services are to be contracted back to the parent council/s and for what period, and to understand what other mitigations would be required to minimise stranded overhead costs remaining with Council.

124. If Council decides to proceed with multi-CCO approach, further work will be completed to develop a collaborative model with other councils, including exploring the potential for shared services, as part of reducing the impact of stranded overheads on Council. Early thinking on this matter has commenced particularly in the area of digital systems.

Financial sustainability

125. Affordability will be a challenge for water service delivery, regardless of which option Council chooses to proceed with. Financial sustainability for waters is challenged by the high level of future capital investment required. Future capital investment is needed to meet the level of growth required under the National Policy Statement – Urban Development and to meet current understandings of future regulatory requirements.

126. Increasing capital investment is particularly difficult when the waters activity already carries a large amount of debt relating to growth investment, such as the new Waiāri water supply and treatment facility costing approximately $300m over the next 30 years. CCO options provide a better overall access to debt at competitive prices through LGFA by providing a higher borrowing limit overall (500% on waters activities and 280-350% overall on other council activities) without the council having to accommodate higher waters debt within its total borrowings.

127. Financial sustainability under Local Water Done Well also requires that there is adequate revenue able to be raised to pay the operating costs of the business, to meet borrowing requirements, and over time to repay debt to provide headroom for future investment. None of the options assessed above provide revenue sources other than those mentioned above, and therefore, the ability to charge enough to meet ongoing operating and borrowing requirements is limited to assumptions around affordability for users.

Statutory Context

128. Local Water Done Well is the Coalition Government’s plan to address New Zealand’s longstanding water infrastructure challenges and replaces the former government’s Three Water Reforms Programme. It provides councils with the flexibility to determine the optimal structure and delivery method for water services, including the establishment of new, financially separate water organisations with greater access to funding (CCOs). Whichever model councils choose, assets will remain in public ownership given a CCO is owned by Council.

129. Local Water Done Well will also introduce new regulatory requirements for local government and this new regulatory regime is expected to contribute to some of the projected cost increases in Council’s financial modelling (alongside cost increases due to the need for ongoing capital investment to meet growth demands).

130. The third and final Local Government (Water Services) Bill was introduced in December 2024 and is anticipated to be enacted by mid-2025. Until legislation is enacted there will be uncertainty over the specific provisions.

131. All councils need to develop a Water Services Delivery Plan to publicly demonstrate the intention and commitment to deliver water services in ways that are financially sustainable, meet regulatory quality standards for water infrastructure and water quality, and unlock housing growth. Councils must commit to a service delivery model (e.g. a multi-CCO) as part of their Water Services Delivery Plan process.

132. This approach aims to provide transparency to communities in relation to costs and financing of water services. Water Services Delivery Plans need to be submitted to the Department of Internal Affairs by 3 September 2025.

STRATEGIC ALIGNMENT

133. This contributes to the promotion or achievement of the following strategic community outcomes:

	Contributes
We are an inclusive city	☐
We value, protect and enhance the environment	ü
We are a well-planned city	ü
We can move around our city easily	☐
We are a city that supports business and education	☐

134. The health and wellbeing of our communities rely on adequate, reliable, and resilient water networks. Choosing the water service delivery model best placed to plan, implement and manage effective, safe and sustainable water networks is key to the long-term wellbeing of the people of Tauranga and its environment.

Options Analysis – ThRee verus Two Waters

Option i. Maintain an integrated, three-waters approach towards the delivery of water services (RECOMMENDED)

135. Maintain an integrated approach towards the delivery of water services, regardless of the future delivery model for water. If Council decides to establish a CCO for the delivery of water services, all three water services (water supply, wastewater and stormwater) would be transferred to the CCO.

136. Description: Stormwater services would transfer to the newly created CCO, along with certain built infrastructure such as pipes. The ownership of most stormwater reserves would remain with Council, as many of these also provide amenity and environmental value. Relationship Agreements and/or Service Level Agreements would be developed to govern how the CCO interacted with key partners within Council (such as the transport and spaces and places activities).

137. Costs: Financial modelling completed by MartinJenkins and referenced earlier in this report is based on all three water services transferring to a CCO.

138. Key risk: That Service Level Agreements between Council and the CCO are not well designed/thought out and well implemented, leading to compromised outcomes.

Pros

Cons

· Economic and environmental regulation – all water services can be regulated by one team.

· Optimises resources, capacity and capability.

· A holistic perspective of water - supports a water sensitive city and aligns with tangata whenua ‘one water’ world view

· Specialised team to respond to emergencies.

· Customers have one point of contact for all water related enquiries.

· Operations and maintenance contract services is for all water related work, delivering cost efficiencies.

· Potential for more innovation gains (technology).

· Integrated asset management and procurement.

· A fully integrated approach to water is beneficial for growth.

· Consistent approach to levels of service across all water services.

· Wastewater and stormwater are interconnected.

· Enables integrated management of water during emergency events

Benefits in CCO model

· Stormwater can be funded by CCO balance sheet – able to access more funding.

· Council retains ownership of all stormwater reserve land which also provides environmental and recreational amenity. This includes walkways, open spaces and catchment reserves.

· May make Tauranga a more attractive CCO partner for other councils.

· Concern on integration for growth/spatial planning.

· Adhering to Council consenting timeframes.

· Less integration between key partners on stormwater management (such as the Community Services Group which owns, manages and maintains many reserves which also have a stormwater function).

· Greater investment into relationship management and maintenance with Council activities such as transport, city planning, emergency management, spaces and places etc.

· Emergency management – Council will remain responsible for emergency management / Civil Defence activities, with the CCO responsible for incident management.

Option ii. Maintain the delivery of stormwater services by Council if CCO is established (NOT RECOMMENDED)

139. If Council decides to establish a CCO for the delivery of water services, only two water services (water supply, wastewater) would be transferred to the newly created CCO and stormwater would be retained within Council.

140. Description: Stormwater services would remain with Council, along with ownership of all stormwater assets.

141. Costs: Unknown, all financial modelling to-date has assumed transfer of all three water delivery services.

142. Key risk: That duplication of resourcing and expertise leads to increased costs for both organisations (and ultimately the community) and that overall management of water is compromised due to splitting stormwater from water supply and wastewater

Pros

Cons

· Supports integration of stormwater and wider city planning considerations during the early planning and development phases.

· As stormwater and transport are key to spatial planning, structure planning and rezoning, stormwater may potentially be better led by Council.

· Better accountability for interactions between stormwater and emergency management planning.

· Avoids developers from needing to liaise with two organisations.

· Development engineers can take on more autonomy (make decisions on drainage matters).

· Better placed to update flood hazards as there is better linkages to the City Plan.

· Council is able to manage consenting timeframes independently.

· Land development, designation and acquisition will be more easily managed.

· Strategic land purchases (flood zone, retreat) are more easily managed.

· Council may need additional resourcing to respond to increased regulatory requirements under Local Water Done Well.

· Resourcing and expertise split and potentially duplicated between Council and the CCO.

· With legislation changes, Council is accountable for private stormwater overland flow paths and urban waterways.

· Stormwater, if funded via Council’s balance sheet, is likely to be more constrained.

· Customers may experience confusion about which organisation to contact regarding water queries.

· Procurement and planning separated.

· High level of interface required between Council and the CCO for planning and delivery of capital programmes.

· Stormwater still needs to be ringfenced from Council activities.

· It will be more complex to manage operational responsibilities and crossovers between stormwater and wastewater (overflows, inflows).

· Water management is not holistic, creating an unnatural separation of activities and misaligning with the tangata whenua preference for a ‘one water’ approach.

· May make Tauranga a less attractive CCO partner.

Legal Implications / Risks

143. Council is required to submit its Water Services Delivery Plan by the government prescribed deadline of 3 September 2025 in order to comply with the requirements of the Local Government (Water Services Preliminary Arrangements) Act 2024. The Water Services Delivery Plan must demonstrate that Council has chosen a financially sustainable model for the delivery of water.

144. If Council misses the deadline of 3 September, the Minister of Local Government may choose to appoint a Crown facilitator.

TE AO MĀORI APPROACH

145. In Te Ao Māori (the Māori worldview) humans are connected physically and spiritually to land, water, air and forests. People are an integral part of ecosystems, and ecosystems are an essential part of heritage and genealogy (whakapapa). For Māori, talking about the well-being of waterbodies also means talking about the well-being of people.

146. Under Local Water Done Well, the use of a more independent entity to manage water service delivery may have an impact on the ability to contribute to decision making impacting the principles of rangatiratanga (self-determination) and kaitiakitanga (stewardship of the natural environment).

147. If Council chooses, to proceed with CCO water delivery model, the CCO will need to determine (with direction from the shareholding Councils, if there are any), how tangata whenua participation will be developed to ensure the significant relationship between tangata whenua and water is maintained and that provision is made for continued involvement.

148. Te Rangapū Mana Whenua o Tauranga Moana partnership support the concept of a multi-CCO and emphasise the importance of tangata whenua being involved in governance arrangements and service delivery.

CLIMATE IMPACT

149. The built environment, including water networks, play a crucial role in the resilience of our city. Water infrastructure is a long-term investment, and the infrastructure built today may still be operating 100 years from now. Any future service delivery model needs to prioritise sustainability and consider how climate change may impact infrastructure and the supply and management of water.

Consultation / Engagement

150. Consultation on ‘Why wai matters: Local Water Done Well’ was integrated with Council’s Annual Plan consultation and ran from 28 March to 28 April. Feedback from the community is discussed earlier in this report.

Significance

151. 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.

152. 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.

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

ENGAGEMENT

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

Next Steps

155. The next steps are as follows.

· Finalise the financial model being developed by Council staff and have the peer review completed. Present the in-house financial model to Council in a workshop in June.

· Seek a Council decision as to which service delivery model will be established for Council (in-house, multi-CCO or Tauranga only-CCO). This decision will be informed by Council’s in-house financial model, and key establishment principles will be provided to Council for consideration as part of this report (to be used if that Council decides on a CCO model). (July 2025)

· Provide the Water Services Delivery Plan to Council for consideration and approval. (August 2025)

· Following Council consideration and approval, submit the Water Services Delivery Plan to the Department of Internal Affairs by the government prescribed deadline of 3 September 2025.

Date	Milestone
26 May 2025	Council meeting - Deliberations report
June 2025	Public workshop – Financal model (date tbc)
July 2025	Public workshop – Water Services Delivery Plan
July 2025	Council meeting – Decision on preferred delivery model and adoption of key establishment principles (only relevant if chosen delivery model is a CCO)
August 2025	Adoption of Water Services Delivery Plan
Prior to 3 September 2025	Submit Water Services Delivery Plan to Department of Internal Affairs

Attachments

1. Attachment 1 - Submission references - A18123139 ⇩

Ordinary Council meeting Agenda

26 May 2025

11.9 2025/26 User Fees and Charges Deliberations

File Number: A18025674

Author: Sarah Holmes, Corporate Planner

Shawn Geard, City Centre Infrastructure Lead

Josh Logan, Team Leader: Corporate Planning

Authoriser: Paul Davidson, Chief Financial Officer

Purpose of the Report

1. To consider submissions made to the Draft Schedule of User Fees and Charges 2025/26 and adopt the Schedule of User Fees and Charges 2025/26.

Recommendations

That the Council:

(a) Receives the report "2025/26 User Fees and Charges Deliberations".

(b) Provides transparent reporting on the street dining revenue and what it is being spent on.

(c) Adopts a half year street dining permit where a business is only entitled to utilising the space October to March, at 65% of the total annual fee.

(d) To address concerns raised around the economic viability of street dining charges:

(i) Splits the fee into two rates, one for urban centres (Inner City Centre and Mount Mainstreet, Zones A & C), and urban centre fringes (South City Centre and Mount Central, Zones B & D),

(ii) Provides a 20% discount to zones where significant investment has not been experienced in the last 25 years,

(iii) Amends the discount to 80% for the 2025/26 Annual Plan period based on feedback of hospitality businesses struggling in the current economic climate,

(iv) Defers the charging of street dining fees altogether.

(e) Adopts the Schedule of User Fees and Charges 2025/26 contained in Attachment 1, with amendments from resolutions (b) to (d).

(f) Authorises the Chief Financial Officer to make any necessary minor drafting or presentation amendments to the Schedule of User Fees and Charges 2025/26 before going to print.

Executive Summary

2. Council adopted the Draft Schedule of User Fees and Charges and Statement of Proposal in March 2025 with the consultation period opening on 28 March 2025. Public consultation on the Draft Schedule of User Fees and Charges 2025/26 was undertaken between 28 March and 28 April 2025, alongside the Annual Plan.

3. The summary of the consultation process, engagement levels, and statistical survey responses are contained within a separate report on the agenda. Feedback regarding the comprehensive review of user fees and charges are also included in a separate report.

4. This report is presented to Council to deliberate on the issues raised and feedback received throughout the consultation period and hearings on Draft Schedule of User Fees and Charges 2025/26, planned to come into effect on 1 July 2025.

5. Recommendations are made to confirm the proposals for inclusion in the final Schedule of User Fees and Charges 2025/26 and adopt the Schedule of User Fees and Charges.

6. Some minor errors and administrative changes not affected by the consultation have been noted since the public consultation period, and these have been corrected and highlighted below.

Background

7. Council adopted the Draft Schedule of User Fees and Charges and Statement of Proposal in March 2025 with the consultation period opening on 28 March 2025.

8. Public consultation on the Draft Schedule of User Fees and Charges 2025/26 was undertaken between 28 March and 28 April 2025, alongside the Annual Plan.

Statutory Context

9. The recommendation meets the requirements of the Local Government Act 2002 (LGA).

10. Council is authorised to set fees and charges under specific legislation, including:

· Local Government Act 2002

· Resource Management Act 1991

· Dog Control Act 1996

· Building Act 2004

· Reserves Act 1977

· Waste Minimisation Act 2008

· Local Government Official Information and Meetings Act 1987

· Food Act 2014

· Food Hygiene Regulations 2015

· Impounding Act 1955

· Health Act 1956

· Sale of Alcohol Act 2012

STRATEGIC ALIGNMENT

11. This contributes to the promotion or achievement of the following strategic community outcome(s):

	Contributes
We are an inclusive city	ü
We value, protect and enhance the environment	ü
We are a well-planned city	ü
We can move around our city easily	ü
We are a city that supports business and education	ü

12. The recommendations in this report relate to all user fees and charges which contribute to promotion or achievement of all council’s community outcomes.

Submissions and recommended changes to user fees and charges

License to Occupy – Street Dining

13. 15 submissions were made on the Annual Plan regarding charging a fee for street dining, with 13 responses opposed to the fee as currently proposed and 2 in support of charges.

(a) Half of submissions opposing the charges indicated support in principle for a fee in the future; however current economic conditions mean that the fee as proposed would significantly impact businesses currently. Most submissions did not support the proposed fee structure.

14. Submissions predominantly focussed on four key points:

(a) Current economic strain – Hospitality is currently facing increased costs across the board, with some concern from submissions that economic activity is likely to continue a reduction in hospitality demand. A majority of submitters noted that a fee at the current rate would discourage street dining given the current economic climate, with requested further reductions for the upcoming year. It was also noted is that this is one of several increased costs being implemented by Council affecting hospitality businesses.

(b) Fairness – Half of submissions do not believe a flat rate across the city is fair, due to uneven amounts of Council investment that has been received to enhance areas affecting their trading. One submission notes that the proposed flat fee rollout would have a significant adverse effect on businesses in the fringe zones (B & D), as previous fee estimates here had been low A discount for areas that have not seen significant Council investment to support enhanced street dining has been suggested to help address the inequities of a city-wide fee structure.

(c) Seasonal Considerations – Half of submissions note that often street dining is not used all year round as some areas are uncovered, requesting consideration of factors such as these in pricing.

(d) Financial Transparency – Several submissions advocated that council should provide transparency on issues such as: understanding how fees are comprised, where the fee is going, and transparency in administration costs. Some submissions suggested a ring-fenced fund where fees collected in an area can contribute to enhancing areas supporting local street dining.

15. The following potential options are provided to respond to submissions (of which any or all could be adopted):

(a) Reporting on street dining revenue and expenses, enabling income to be allocated to outcomes submitted on by businesses paying with a zone.

(i) This would enable small changes to streets/ activities that support interests requested by businesses, enabling those paying the fee to understand and input into how it is spent.

(ii) There would be some additional administrative costs associated with implementing this option.

(b) Enable a half year street dining permit where a business is only entitled to utilising the space October to March. Recommend being set at 65% of the total annual fee.

(i) Often outdoor dining spaces are weather dependant and at times not well utilised during the winter period,

(ii) This option would incur some additional administration. However, giving a defined period set by TCC this would be minimised, setting the dates across all businesses would ensure less ambiguity and create a rule that is more easily enforceable than allowing individual businesses to define a license period,

(c) Split the fee into two, one for urban centres (Inner City Centre and Mount Mainstreet, Zones A & C), and urban centre fringes (South City Centre and Mount Central, Zones B & D),

(i) This could be used either to provide fringe areas a higher discount owing to the significant increase between the proposed fee and previous expectations, or to set a lower overall fee.

(d) Provide a discount (Recommend 20%) to zones where ‘significant Tauranga City Council investment has not been experienced in the last 25 years’, for this period that would be defined as all zones except Inner City Centre (Zone A),

(i) This would address concerns raised by Mount Mainstreet businesses, in particular the argument made by Mount Mainstreet that vibrancy is due to private investment rather than stimulated by Council,

(ii) of the definition of ‘significant TCC investment’ is open to interpretation. It may be well understood currently, but this is less likely to be the case over time and would require further work if intended to be ongoing, 25 years is recommended as that is often the period where some assets start to show initial signs of age.

(iii) A respondent in the city centre has made the argument that disruption caused by current developments had meant that council investment is actually a detriment to their business.

(e) Defer the charging of fees or amending the discount to 80% for the 2025/26 Annual Plan Period based on feedback of hospitality businesses struggling in the current economic climate,

(i) As previous deferrals have occurred through a 100% discount, a continuation of this approach could result in businesses viewing this as a permanent arrangement and not planning for a following year where fees would be implemented.

(ii) An 80% discount could indicate that fees are being introduced, however at a slower than previously indicated due to hospitality economic concerns.

(iii) Up taking an 80% discount would likely result in LTO fees for the current four zones breaking even with administration effort for the financial year.

16. It is recommended that Options (a) and (b) are included within the upcoming Annual Plan as they address a significant number of key concerns raised through the consultation process. To address concerns raised around economic viability it is recommended that Council consider adopting one of options (c), (d), or (e).

17. Current revenue included in 2025/26 Annual Plan budgets for LTO is based on all users taking up the street dining opportunity at the rate of $50 per square metre annually, discounted 50% from the full $100 rate.

Cemeteries

18. Two submissions (#653 and #515) were received on the cemetery fees, one submission was a combined submission from a group of funeral directors.

19. Key issues raised by submission #653 (combined funeral directors) were:

(a) The removal of the 10% funeral director discount places full credit risk on funeral homes, as they often wait weeks or months for payment from estates. Request to retain the discount or explore alternatives like a tiered discount system based on payment promptness or service agreements.

(b) Introduction of the $200 same day cremation processing fee is seen as unjustified since same-day cremations do not typically require additional staffing. Request to remove the fee entirely as it unfairly penalises families.

(c) The non-resident burial fee is inequitable for residents of the Western Bay of Plenty District who live close to Tauranga City. Request to apply the fee only to individuals residing outside the Western Bay of Plenty District.

(d) The backfilling fee penalises families for participating in culturally or personally significant acts. Request to review and adjust the process to accommodate family-led backfills without additional charges.

(e) The public holiday fee appears excessive, and the cemetery is currently closed on public holidays. Clarify if burials or cremations will be allowed on public holidays if the fee is paid.

20. The withdrawal of the 10% discount is recognising that this essentially costs the cemetery in lost revenue. As an example for the month of March 2025, this amounted to just under $15,000. It is acknowledged that this may place some additional risk on funeral directors in managing cashflow, but issues can be addressed on a case by case basis. No changes to the proposed 2025/26 fees are recommended.

21. The non-resident burial fee recognises that the provision of the Pyes Pa Cemetery is primarily to meet Tauranga City Council’s statutory requirement to provide burial services to its district. Council retains discretion to waive fees on a case by case basis and this could apply to situations where a burial is for a person who resided close to the cemetery. However, we note that demand for non-resident burials is coming from areas like Ōmokoroa some distance from the cemetery. No changes to the proposed 2025/26 fees are recommended.

22. The proposed new fee for backfilling and public holidays reflects the extra work incurred by staff to ensure the safety of the cemetery environs. No changes to the proposed 2025/26 fees are recommended.

23. In general, burials and cremations are not currently accommodated on public holidays except in exceptional circumstances. Due to the logistics of our regular cremations and burials, a ‘same day’ service causes disruption and additional cost, which is why that cost is reflected in the charges. No changes to the proposed 2025/26 fees are recommended.

24. Submission #515 opposed the proposed increase in the cemetery administration fee to $500 for cases without a funeral director, arguing that the additional administrative time does not justify the fee, especially when services are provided by a trained doula.

25. The administration fee was put in place several years ago to address the increased costs associated with persons desiring funeral and cremation services without engaging with a funeral director. While council supports this approach, administration staff are spending significant time with families to address questions that would normally be managed by a funeral director. The administration fee covers this time, as well as the cost to ensure paperwork submitted for cremations is correct and to ensure that there is nothing placed in the caskets which should be put through the cremator. These tasks would usually be undertaken by the funeral director. No changes to the proposed 2025/26 fees are recommended.

26. On 3 March 2025, Council resolved to conduct a comprehensive review of user fees and charges during the 2025/26 year. The feedback received on cemeteries fees will be considered during this process. Funeral homes and end of life doulas are key stakeholders and will be invited to participate in the review.

Libraries and Community Hubs

27. Two submissions (#511 and #419) were received on library fees. Submitter #419 noted the fees seem fair, which is noted but not deemed to require a direct response.

28. Submitter #511 suggested that the charges for printing As-Built Plan, Code of Compliance Certificate, and Resource Consent Decisions should be the same as the photocopying charges as these documents are easy to find and should only incur printing costs.

29. The proposed charges for the provision of As-Built Plans, Code Compliance Certificates, and Resource Consents are designed to reflect the average costs associated with the storage, retrieval, and delivery of these documents. These fees serve as a cost-recovery mechanism to ensure the sustainability of this service. While some documents may be readily accessible, others require more extensive effort to locate. In many cases, multiple records must be reviewed to verify the accuracy and completeness of the information provided. This process can be time-consuming and resource-intensive for staff, and the proposed charges account for this variability. No changes to the proposed 2025/26 fees are recommended as a result of this submission.

Minor error corrections and administrative changes

30. Dog registration fees have been updated to align with resolutions from the council meeting on 28 April 2025.

31. The Ministry for Primary Industries mandated food levy fee was stated as being $63.25 in the consultation document, however the new levy rate for 2025/26 is $66.13 and this has been corrected in the schedule.

32. Forresters Lawn has been removed from the outdoor venue hire rates at the Historic Village as this space is now leased to a new tenant occupying the adjacent building.

33. Devonport Road carpark was mistakenly not included in the off street paid parking area and has now been included alongside TV3 and Wharf Street.

34. Minor rounding and wording changes have been made.

Financial Considerations

35. Any changes to the user fees and charges as a result of this report have not been reflected in 2025/26 Annual Plan revenue budgets.

36. If council decides to amend the proposed fees and charges, there will need to be some changes made to revenue budgets.

Legal Implications / Risks

37. The recommendation meets the requirements of the Local Government Act 2002 (LGA).

Consultation / Engagement

38. Consultation was undertaken with the Annual Plan 2025/26 and Local Water Done Well.

39. The consultation period was open 28 March - 28 April 2025.

40. The summary of the consultation process, engagement levels, and statistical survey responses are contained within a separate report on the agenda.

Significance

41. 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.

42. 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.

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

ENGAGEMENT

44. 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

45. Following Council’s decisions, the Schedule User Fees and Charges 2025/26 documents will be prepared, including any changes as a result of this meeting and will be made available on Council’s website and in hard copy format where requested.

46. The User Fees and Charges will take effect on 1 July 2025.

47. All submitters will be sent a letter or an email with a response to their submission within one month of adoption of the Schedule of User Fees and Charges.

Attachments

1. 2025/26 User Fees and Charges Schedule - A18174753 (Separate Attachments 1)

[1] Some recipients of the email clicked more than one link, therefore the breakdown of individual clicks adds to greater than the ‘click rate’ identified in the previous paragraph

[2] Submissions are numbered 1 to 970, but two were subsequently withdrawn by the submitters before the submission period closed.

[3] At least ten separate comments and often many more

[4] Note that the actual responses to the survey have been weighted by the research company to ensure that they are demographically consistent with the census. As such, the number of responses is a calculated weighted figure (to multiple decimal points) not a round number. This explains why the calculated percentages appear slightly different to what may be expected i.e. in the first row the figure is 8 and 8 / 253 = 3.16% but the calculated weighted figure is actually 7.58 and therefore 7.58 / 253 = 3.0% which is as shown in the table. This approach also applies to responses to questions 5 and 6 below.

[6] Note that some comments included multiple themes. As such this list adds to more than 100%.

[7] Note that some comments included multiple themes. As such this list adds to more than 100%.

[8] 41% of submissions to Council’s LTP 2018, 2021 and 2024 that related to aquatics facilities focused on the need for a 50m pool.

[9] The number of responses captured here is lower than the responses above. This is due to a technical error, resulting in lost responses to this question. Submitters were contacted and asked to resupply their responses, and some responded, re-answering this question. Despite this there remains a lower response rate for this question.


AGENDA Ordinary Council meeting Monday, 26 May 2025
I hereby give notice that an Ordinary meeting of Council will be held on:
Date:	Monday, 26 - 29 May 2025
Time:	1.00pm
Location:	Tauranga City Council Chambers Level 1 - 90 Devonport Road Tauranga
Please note that this meeting will be livestreamed and the recording will be publicly available on Tauranga City Council's website: www.tauranga.govt.nz.
Marty Grenfell Chief Executive

Chairperson	Mayor Mahé Drysdale
Deputy Chairperson	Deputy Mayor Jen Scoular
Members	Cr Hautapu Baker Cr Glen Crowther Cr Rick Curach Cr Steve Morris Cr Hēmi Rolleston Cr Marten Rozeboom Cr Kevin Schuler Cr Rod Taylor
Quorum	Half of the members present, where the number of members (including vacancies) is even; and a majority of the members present, where the number of members (including vacancies) is odd.
Meeting frequency	Three weekly or as required

Public Excluded Attachment	Reason why Public Excluded
Item 11.6 - Annual Plan 2025/26 Deliberations - Other issues and options papers - Attachment 7 - Accessible Properties	s7(2)(i) - The withholding of the information is necessary to enable Council to carry on, without prejudice or disadvantage, negotiations (including commercial and industrial negotiations).
Item 11.6 - Annual Plan 2025/26 Deliberations - Other issues and options papers - Attachment 8 - Submission 27 - Confidential	s7(2)(b)(ii) - The withholding of the information is necessary to protect information where the making available of the information would be likely unreasonably to prejudice the commercial position of the person who supplied or who is the subject of the information.

Advantages	Disadvantages
· Staff can model the rates budget after final deliberations to bring to council for the adoption of the annual plan on 10 June.	· Industrial ratepayers may feel that they have an inequitable allocation of general rates.
Key risks	Negative feedback particularly from industrial sector
Recommended?	Yes (Section 101(3)(b) decision)

Advantages	Disadvantages
· Council can make changes to the proposal following submissions and deliberations.	· Further options papers may be needed, if the amendments are significant, which could delay the adoption of the 2025/2026 Annual Plan.
Key risks	Any changes will impact on other rating categories
Recommended?	(Section 101(3)(b) decision)