The corporate services committee meeting was held on 24 March 2016. Apologies were received from Crs Mirfin, Bouillir, Sangster and Ensor for absence, and Cr Dowler and the Mayor for lateness. The agenda included: (1) presentation from ASB Bank Economist, (2) remission application – policy on remission of excess metered water rate, (3) corporate services activity report, and (4) treasury report. I will summarise the main highlights.
Public forum included presentations from Maxwell Clark who spoke about the water usage charge for a Murchison commercial property, which had been subject to a leak. He believed that the remission policy was out of date and that the water charges were excessive. He also spoke about freedom camping. He considered freedom campers added value to the regional economy and should be welcomed.
A small business in Murchison sought a remission from water charge issued to them in December 2015 which was unusually high ($5,252.40) due to a water leak on the property. The business’s previous bill issued in June 2015 was for $1,194.90 and council records indicated that a letter had been sent to the customer stating their account was high.
The Council’s Policy on Remission of Excess Metered Water Rates states that the policy applies “to applications from ratepayers who have excess water rates due to a leak in the property’s internal reticulation.” The policy further defines internal reticulation as going “directly to the dwelling”, and states how the dwelling must be used only or mainly for residential purposes.
Cr Edgar argued that remissions came at a cost to budgets, and therefore other ratepayers would effectively subsidise the remissions.
In this instance the applicant was a business and they had been given prior notice of a potential leak. Accordingly, council (Cr Edgar moving the resolution) declined to issue the applicant a rates remission. Cr Bryant opposed this decision.
In my opinion it would be useful if an “over time” graph of water usage was presented on the invoice (ideally comparing earlier years) – so that unusual water consumption (ie leakage) could be easily identified by consumers. Digitisation (and on-demand printing of invoices, rather than using pre-printed invoices) would enable this kind of modification to invoices.
I am also of the opinion that there is the potential to do an end of year mop up in the water account and to pro-rata any surplus between valid remission applications submitted during the year. After all, the additional water consumption would not be planned and its likely the water account would have a corresponding surplus.
Corporate services activity report
Council received the corporate services manager’s report. Highlights included:
- Financials. Year-to-date expenditure was favourable against forecast by $147,000 with favourable variances across most budget lines. The forecast year-end position compared to the budget is a net overhead deficit of $50,000 once the impact of treasury interest costs (down on budget by 0.45%) and depreciation is removed. The driver of the forecast deficit is additional professional fees (ie programmed investment valuations as part of our ongoing review of assets for potential sale). There is a high level of activity with ongoing work on reporting and improved debtor management.
- Property. The revised Best Island land valuation was received at the start of March. Discussions were occurring with the Property Group and the Ashtons.
- Information Services. The Confirm Enterprise asset management system was updated to the latest version. Cameras for staff Skype calling, video conferencing and Webinar participation have now been added into the Heaphy, Wangapeka and Sabine rooms. The electronic document and records managements systems project continues with the new Council file structure being installed into the test system in late March. A workshop on the strategy was planned for early April. The Strategy will ensure a more externally-focused strategy with an emphasis on using technology and digitisation to improve functions and processes, providing improved service options and a better customer experience with council.
Council also instructed staff to place on hold the current disposal process for surplus land at Mapua pending a review and report back to council on potential alternate uses of this land.
Council’s debt (at 29 February 2016) totalled $139 million, with an average interest rate of 5.274% (June 2015 was 5.166%). The weighted average interest rate on borrowings is 5.274%. The Council’s cost of funds including interest rate swaps, bank margins and line fees being taken into account is 5.321%, compared to a budget of 5.70%.
At 29 February 2016 the Council had $147.78 million of interest rate swaps in place, including some “forward start” swaps. After adjusting for the forward start swaps, $144.78 million is ‘live’ which is equal to 104% cover over existing debt and 87% over forecast 29 February 2017 net debt (ie 12 month debt). The swap over-hang is due to debt being retired faster than forecast. The over-hang is expected to return to 100% within the next quarter as council takes on new debt.
Debt (funding) source
|Bank Debt||$19.0 M||13.7%|
|Private Placement||$30.0 M||21.6%|
|LGFA Debt||$90.0 M||64.7%|
|Bank||Cash/Cash Investments $m||Notional Swaps $million||Credit Exposure $million||Compliance|
|Westpac||$1.2 M||$63.05 M||$13.86 M||Within Policy|
|ASB||$10.7 M||$41.73 M||$21.82 M||Within Policy|
|ANZ||Nil||$43 M||$11.25 M||Within Policy|
Council’s cash investments total $11.9 million dollars with an average interest rate of 2.85% (June 2015 was 4.43%).
Agenda and minutes
The agenda and minutes are located at www.tasman.govt.nz/council/council-meetings/standing-committees-meetings/corporate-services-committee-meetings/?path=/EDMS/Public/Meetings/CorporateServicesCommittee/2016/2016-03-24.
The corporate services committee meeting was held on 26 November 2015. Apologies were received from Crs Bouillir, Dowler, and myself.
The agenda comprised: (1) treasury report, (2) corporate services activity report, and (3) Mapua causeway report. I will highlight the main points of interest. A workshop followed this meeting.
As at 31 October 2015, council debt was $144 million with an average interest rate of 5.240% (June 2015: 5.166%). The weighted average interest rate on borrowings was 5.240%. Council’s cost of funds (including interest rate swaps, bank margins and line fees being taken into account) was 5.331%, compared to a budget of 5.70%. The decrease is from refinancing of the bank facilities and favourable 2-4 year term swap rates.
A review of council banking facilities concluded that a reduced total bank facility amount of $42 million was appropriate (down from $70 million).
Standard and Poor’s Ratings Services completed their annual review of the Council’s credit rating and affirmed TDC’s “AA-” (long-term) and “A-1+” (short-term) credit ratings – with a “stable” outlook. This is a lower rating than Nelson City (“AA-” with a “positive” outlook). Amongst the positive comments for recent improvements there is comment on council’s very high debt levels and the negative financial impact that the Waimea Dam (as a large debt-funded capital project) will have on council debt.
As at 31 October 2015, the Council had $147.78 million of interest rate swaps in place, including some “forward start” swaps (yet to be begin) which is equal to 101% cover over existing debt, and 86% over forecast 31 October 2016 net debt (ie 12 month debt).
Corporate services activity
The managers report included the following items:
- Department performance. Overall the department had an adverse variance to budget of $21,000 (7%). The 2 big drivers for this were general operating costs and depreciation. The over spend in general operating related to a payment of $20,000 for a major water tank upgrade at Awaroa. This project used $15,000 of the surplus in the closed account. Depreciation was under budget in Information Technology (IT) as less capital was spent in 2014-15 than planned, and this has lowered depreciation costs in the following year (ie 2015-16). This is also a good example of cascading savings when costs are reduced earlier and upfront.
- Property. Best Island access discussions are now focused on valuation issues. Its expected that the matter will come back to council in early 2016 for consideration. Seismic repairs have been completed at the Richmond Town Hall. A preliminary design has been received for the Takaka Service Centre refurbishment. Depending on costs and budget, the work is expected to be undertaken in the early part of 2016 and the building will be reoccupied by July 2016. The incidence of cracked and broken tiles at the competition pool at the Richmond Aquatic Centre is increasing.
- Delegated authority. A number of documents were entered into, including: a partial surrender of easements for Greenacres Golf Club.
- Commercial activity. Shed 4 rebuild expected to be completed on 27 November 2015. A draft landscaping concept for the commercial precinct was presented to the Mapua Waterfront Advisory group for community feedback on 4 November 2015. The Forestry Management Contract tender process is expected to conclude consideration of the 3 accepted tenders (4 applications were made) by December 2015, with a recommendation to council expected in early 2016. Port Tarakohe cargo has shown a seasonal lift, but total volumes are still below last year’s figures. Dolomite is down 3.3 tonne on last year, wetfish is even, and mussels are up. Occupancy has dropped by 5% in the marina and 5% in pile berths during the past month/6 weeks to an average occupancy of 73% (comprising: moorings 100% (20 of 20) occupied; marina 73% (30 of 41) occupied; and pile berths 45% (9 of 20) occupied. The storage compound remains only 30% full.
- Information services. Council has successfully upgraded to Microsoft Office 2016 while maintaining integration with the NCS local government system, InfoCouncil, and SilentOne. Council’s local government computer system, NCS had a server upgrade on 5 November 2015. The old server was decommissioned and the system was moved into the main virtual server environment. This environment lowers risks of hardware failure and improves the system backup process, including the capability to back up the system out of region to our Auckland backup provider.
Adventure Properties Limited (also known as Mapua Leisure Park) has asked the council to consider selling the Mapua causeway to them, and offered council easements to protect the public access to the coastline (but not vehicles) and to protect the infrastructure (water and sewerage) and the culverts which drain the estuary.
At present, the Mapua causeway is licensed to the owners of the Mapua Leisure Park (Adventure Properties Limited) until 2021. The license is not exclusive. and provides for public access and contractors to maintain the causeway and infrastructure. The license also provides that the road surface of the causeway is maintained by Adventure Properties Limited.
The Mapua causeway was originally constructed by a private landowner and subsequently legalised as a reclamation and vested in council (on Nelson Harbour Board) where it is held in freehold title.
The sale of land is not signaled in the Long Term Plan. Accordingly, public consultation would have to be undertaken with the Mapua community before any sale could take place.
Council resolved to consult with the public before any disposal was considered.
In my opinion, the only reasons for disposal would be raising capital for reducing debt, or mitigating any maintenance costs for council. Given the licensee (Adventure Properties Limited) is already obliged to maintain the road, there do not appear to be any immediate cost savings for ratepayers from this proposal. Thus the issue is whether the costs of disposal (ie public consultation and legal costs) would significantly offset debt servicing savings. And whether council have confidence in the easements being offered (ie walking (and cycling?), but no vehicles).
At first glance, the proposal looks appealing. But like all good looking deals, the devil is in the detail. I will be watching this space with interest.
Agenda and minutes
The agenda and minutes are located at http://www.tasman.govt.nz/council/council-meetings/standing-committees-meetings/corporate-services-committee-meetings/?path=/EDMS/Public/Meetings/CorporateServicesCommittee/2015/2015-11-26.
If minutes are not displayed at the above location, please request a copy of the draft minutes from council.
The full council meeting was held on 22 October 2015. Apologies were received from Cr Mirfin. All other councillors were present.
The agenda included: (1) Reserve classification of Rabbit Island, Rough Island, and Best Island, (2) Queen street reinstatement project, (3) Tasman historic wharves, (4) Krammer occupancy update, (5) Surplus treatment, (6) Tourist sign application, (7) Mayor’s report, (8) CEO’s report, and (9) Waimea community dam project status update report.
This was an eventful day. With one member of the public being asked to leave the council chamber under police escort, and council deciding at the last minute not to exclude the public from the Waimea community dam update deliberations. I will start with the public forum.
Maxwell Clarke questioned the purpose of reserve park classification and suggested that the process was part of a wider arrangement (agreed 8 earlier) to swap Rabbit Island for land needed in the construction of the Waimea community dam. He asked the mayor to confirm if this was the case (or not). He also suggested that weirs could have been constructed for the amount of money already spent investigating the viability of the dam. Mr Clarke stated that a report written by Fred diCanzo for the TDC had observed that the decline of the Waimea aquifer was because: (1) tree’s along the river prevented the naturally wide flood plain being fully used to replenish the aquifer, and (2) the lowering water table had caused deep channels in the river, which further reduced the river’s ability to recharge the aquifer.
Reg Turner (“an award winning accommodation provider of 41 years”) responded to the report at page 67 of the agenda. He disputed the contents and accuracy of the report (addressing a number of paragraphs in the report). Mr Turner also tabled an application letter from him to TDC (dated 23 July 2015), on paper displaying the logo of his accommodation business. I will discuss the report and Mr Turner’s presentation below.
Unfortunately, Mr Turner was not allowed to complete all of his presentation. This is because the speaking time for the public forum is only 5 minutes, and the mayor did not permit Mr Turner to speak any longer. On being asked to sit down, Mr Turner refused (stating he only needed an extra 2 minutes to complete his speech), the mayor then asked the CEO to remove him from the chamber.
In my opinion this was an unfortunate situation and was handled poorly by the mayor. There was no reason why Mr Turner could not have been provided more time, as there were no other presentations in the public forum. Further, he had come considerable distance (and at some cost) to present his case before the elected representatives of the community. As other councillors left the chamber, Cr Bouillir, Cr Higgins, and myself remained to hear the remaining 2 minutes of his presentation (along with two members of the public). A typed copy of his presentation was also tabled.
The media has since published a story on the event. I agree with Cr Bouillir’s comments in the media article. Mr Turner should have been allowed to finish. It’s why I stayed to hear him out (see http://nelsonlive.co.nz/news/2015/10/manthrowntdc-meeting/).
Waimea community dam update
The council resolution for the Waimea community dam project status update report originally proposed to exclude the public from deliberations. However, the resolution did not receive the support of council and therefore the report was considered in public.
The report focused on two items: (1) the recently acquired resource consent (for the Dam), and (2) WCDL’s proposed financing and governance structure for a proposed Dam company. A highlight of this report for me was council doing a u-turn on gifting $300,000 to Waimea Community Dam Ltd (WCDL) under a loan arrangement that was unlikely to be recovered if the dam did not proceed. See some of my earlier posts on the dam (www.greeningtasman.wordpress.com/2015/06/02/long-term-plan-meeting-full-council-28-may/, www.greeningtasman.wordpress.com/2015/09/08/full-council-meeting-30-july/, www.greeningtasman.wordpress.com/2015/09/20/full-council-meeting-10-september/)
On 10 September 2015, the council considered a late confidential item concerning Waimea Community Dam Ltd’s (WCDL’s) refusal to handover a resource consent it had obtained under a prior funding and support agreement (dated 3 October 2014) with council.
Under that agreement, the council undertook to provide funding to WCDL to secure a resource consent (for the proposed Dam) for the council. This was because the council could not apply for a resource consent itself, and WCDL was a vehicle that was already formed, that could be used to test if a resource consent could be obtained for a dam. If a resource consent could not be obtained, then the dam project would be parked, and other water augmentation solutions explored. Using WCDL, avoided the need for council to form a company itself. To protect ratepayer funds, council entered into a funding and support agreement with WCDL, whereby WCDL agreed to handover the resource consent to council by a specified date, or on formation of a CCO, whichever occurred earlier.
Unfortunately, WCDL considered that this was not what was agreed, and refused to handover the resource consent to council on the specified date (in the absence of a CCO being formed). WCDL argued that a CCO had not been formed, and that they would only hand the resource consent to the entity choose to form the dam (not council).
In my opinion, this was an extraordinary position for WCDL to adopt. They had obtained a resource consent, funded totally from ratepayer money, and had signed a written agreement that set out the conditions for the handing over the consent to the people funding the exercise (council).
Council was faced with two options. It could proceed to court (more legal costs to enforce the agreement), or it could negotiate a solution that avoided such an outcome. Council’s preference was for a negotiated solution to be explored first. A suggested solution, was to both hold the resource consent – but without compromising councils legal rights to the consent (and the money spent to secure it). In my mind, if the dam did not proceed, the resource consent would be worth very little to council. Hence council were, in reality, giving up very little.
Accordingly, council resolved to instruct the CEO to “take necessary measures to have WCDL meet its obligations” under the funding and support agreement. At the project steering group (PSG) meeting (of 24 September 2015), the proposal for “joint holder status” was put to WCDL to avoid escalating the issue (on a without prejudice basis) to the courts.
Under this new proposed arrangement (to register WCDL as a joint holder of the resource consent), WCDL would hold the councils interest in the resource consent (as a trustee) under trust (with the council being the beneficiary). This meant WCDL could not use, transfer, or encumber the resource consent in any way. For example, it could not use the resource consent as security to raise funds for irrigators or sell it to another party. This also meant that WCDL could not ignore that fact that the value of the consent remained councils (as it was not theirs). Council also undertook not encumber or transfer the consent.
As part of this new arrangement, council would continue to advance $70,000 of water levy funds (that council could levy water users under its legislative powers) to WCDL, but would not advance $300,000 (as originally proposed in the LTP). The removal of the $300,000 grant was a good outcome. As some readers will be aware (from earlier posts on the LTP), I was opposed to council giving ratepayer funds to a private company – as was Cr Canton and Cr Bouillir.
However, at this meeting it was clear that WCDL continued to advance the argument that they did not want costs council had incurred up to now, to be considered to be part of councils final contribution to the dam. Accordingly, I was at pains to emphasise to WCDL (and councillors), that joint holder status should not be confused with joint ownership. By registering WCDL as a joint holder it could be perceived that we are giving WCDL half the value of the consent (like registering someone on the ownership papers of a car).
I was at pains to emphasise that if council thought it was doing this, then it should not support joint registration. If WCDL thought council was doing this, then they needed to think again. Rather this was an arrangement formed under trust law – whereby the beneficial interest was not given up. And council would continue to treat the cost of the resource consent as part of its financial contribution to any dam construction.
WCDL’s proposed structure
The report advised that the PSG had met with WCDL in late August to hear about WCDL’s proposed business model for dam construction. At that meeting WCDL proposed a preferred joint venture businesses model that would enable the formation of a CCO that would then enable the CCO to utilise the Public Works Act. The PSG undertook at this meeting to brief council of WCDL’s suggested business model at this meeting.
The report outlined the key structural elements of the proposed joint venture structure. Which is illustrated below.
The key structural elements were:
- 50:50 ownership of co-operative company called Dam Co – thus holding the status of a CCO.
- Dam Co construct, owns, and operates the dam.
- Dam Co enters into water supply agreements with TDC and WCDL.
- WCDL enters into water supply agreements with irrigators.
The key financial elements of the proposal were:
- Dam costings use P50 pricing model (estimated to be $65 million).
- WCDL and TDC invest $20 million each.
- WCDL’s $20 million would include a $8.7 million loan from CIL.
- Dam Co raises $17 million debt. This would appear to be paid off (funded) by subsequent irrigator uptake. However, liability for the debt (and servicing interest) would appear to be the responsibility of the current shareholders (and apportioned according to the shareholding at that time).
- Dam Co received $8 million of grants.
Understandably, council had concerns with a number of the financial elements of the proposed joint venture structure. These were:
- Pricing methodology (use of P50 over P95 pricing estimates).
- $20 million equity from WCDL (for a $65 or $75 million dam).
- $25 million from alternate sources (possibly $35 million if the dam is $75 million). In particular, debt funding of $17 million (and top up grants of $8 million).
A P95 estimate provides 95% certainty of pricing. A P50 provides 50% certainty over price. Commencing a project with a P50 rather than P95 pricing estimate increases risk of cost over-runs, without clarity over who will fund the over-run. Under a normal joint venture (50:50 ownership) both parties would be equally responsible. Any investment of council funds would have to have P95 security level.
WCDL’s initial investment
While this fits with the appearance of a 50:50 ownership model, 66% of dam water is intended for irrigators, and the total cost of the dam is $75 million (or $65 million under a P50). At the start, council is expected to take up irrigation for 1400 ha of land (this figure includes current and future users) and irrigators 2600 ha (expected to increase to 4500 ha). At a very simple level the numbers do not add up to legitimately justify equal ownership.
In my opinion, the drive for equal ownership appears to be an attempt to fit the proposal into the legal requirements for a CCO under the Local Government Act and the Public Works Act. To be a CCO, council must have control over the objectives of the organisation (either through 50% ownership of the entity, or control of the board). Such control must be “real” and effective. The Public Works Act requires the council has control over the construction of the works. This requires that the council has financial responsibility for the works. A CCO model might do this if the control is real and the financial contribution is real.
In my mind, a potential problem is the works will cost $65 or $75 million, yet councils commitment is only $25 million at best. How can council have “real” control or real financial responsibility for works (or even half the works), when the financial contribution of council will never add up to even half the cost of the works? The same could be said of a model that contemplates shifting subsequent ownership to irrigators as more irrigators come on board – which the ownership model already contemplates.
Debt funding of $17 million
At a simple level, joint ownership of the company holding the debt would mean council would be liable for half the debt (and the interest payments). At present, council have only committed to a $25 million contribution. So any additional liability (half the $17 million debt) would be outside any authorised investment by council. Arguably, this could be mitigated by wrap-around-agreements, whereby WCDL underwrite the council’s debt liability (and interest liability).
However, questions then arise about WCDL’s ability to undertake and honour that liability. Not to mention WCDL’s history of not honouring agreements. For example, the recent resource consent funding and support agreement. There is also a question about the debt being used to enable the “appearance” of 50:50 ownership model, when the “real” ownership arrangement is more likely to be less than 50:50 for council. Especially if any debt is underwritten by WCDL (or associated parties).
In my opinion, council is rapidly running out of time to put in place a solution that protects urban water consumers from the new water allocation (and restriction) rules. If a dam cannot be financed under a satisfactory model, then council needs to quickly undertake development of Plan B water augmentation solutions.
WCDL acknowledged in its presentation that there were effectively two options. The first was their proposed joint venture proposal, and the second was a private ownership model, whereby council was treated as just another water consumer (or irrigator investor). The later approach might be where this plane lands if a joint venture is not feasible. If it does, there will still be a number of conditions attached to council investment in a private company model, including security of investment.
A number of problems (discussed above) also draw me to the conclusion that a CCO model probably won’t work, unless government directly tops up councils investment, so that it equals the irrigators contribution (which it is also supporting, through the CIL loan). Anything else will be seen as artificial, and constructed to get around the requirements of a CCO under the Local Government Act, or an improper use of the Public Works Act. The alternative, is the dam company, as a private company (not a CCO), would have to seek government appointed “requiring authority” status to utilise the Public Works Act.
Council resolved to further explore (and test) WCDL’s joint venture proposal and to report back to council.
As I had stated in earlier posts, in my opinion, council should only be committing $14 t0 $15 million, not $25 million. A $15 million investment would reflect: $9 million for current and future urban water needs, $3 million for urban water users portion of the environmental benefit (under an extractor pays principle), and $3 million for investigation and resource consents). Reducing councils investment to $15 million will also reduce any risks for council and the public. As well as place pressure on the government to properly fund this project if it is to be implemented.
In my opinion, much has been made of the economic benefits the dam will provide (see earlier posts). However, it is only the government who is likely to immediately benefit from the dam (through the tax system, that can clip the ticket on an expanding economy from construction and future growth). In contrast, councils main mechanism for revenue raising is limited to land charges (rates). Any improvement from irrigation is unlikely to change councils revenue in a significant way.
I also find it strange that with all the economic benefits being banded about, government has remained silent on any significant investment in the dam. It would appear from government’s silence that they are not convinced the project has merit. For if it did, they would have made a statement already. I did note with interest the comments of Nelson MP (Nick Smith) at the opening of the water treatment plant, that water was considered to an economic advantage over competitors (ie Australia) (see www.stuff.co.nz/nelson-mail/news/73504764/new-115m-water-treatment-plant-opens-at-richmond). If the government believe that, where is the financial investment?
In my opinion, it is not the duty of ratepayers to sustain broader economic growth objectives of business. That is the role of government. Its time for government to step up, if this dam project is going to get across the line!
The purpose of this report was to re-allocate the financial surplus that council had achieved for the 2014-15 financial year (ended June 2015). This surplus was the result of actual expenditure for the year being lower than forecast expenditure. Generally, the surplus has been redeployed to debt retirement or other activities. In a number of other instances, the surplus has been left in the original activity, pending further examination.
Overall the surplus was allocated as follows:
- external debt repayment ($9.243 million),
- emergency fund ($0.87 million),
- activity deficit retirement ($0.715 million),
- carry over projects ($0.539 million),
- remain with the original activity ($8.253 million, although $2 million requires further analysis).
From a departmental (or functional) perspective, the surplus funds were allocated as follows:
- Community development: (1) carryover of $100,000 for Saxton field, (2) community housing internal debt retirement of $74,000, (3) parks and reserves internal debt retirement of $13,000, (4) carryover of $150,000 for LED lights in parks, (5) special purpose committee internal debt retirement of $9,000, (6) transfer of $8,000 from community grants to reduce deficit in the community recreation activity account, (7) transfer $358,000 from library activity account to library radio frequency information data project account.
- Corporate services: (1) apply $117,000 to deficits in governance accounts, and (2) apply $142,000 to deferred maintenance of operational property activities.
- Environment and planning: (1) transfer $250,000 from compliance monitoring, $100,000 from environmental information, and $56,000 from environmental policy to building control to reduce deficit, (2) carryover $72,000 for environmental information operational projects, (3) debt retirement of $18,000 within environmental information account, (4) Mapua decontamination debt retirement of $500,00 (balance $1.18 million remains), and (5) carryover of $67,000 for the operational projects within the sustainable management acount.
- Engineering: (1) internal debt retirement of $139,000 in the coastal works account, (2) transfer $600,000 from subsidised roading activity account to general disaster fund, (3) debt retirement of $422,000 in subsidised roading account, (4) debt retirement of $378,000 in non-subsidised roading account, (5) transfer $270,000 from general river account to classified river protection fund, (6) carryover $150,000 from stormwater account to Seaton Valley detention pond, (7) debt retirement of $364,000 in stormwater account, (8) debt retirement of $3.896 million in wastewater account, (9) debt retirement of $2.212 million in urban water account, (10) debt retirement of $456,000 in Motueka water account, and (11) debt retirement of $105,000 in Takaka water account.
Interim remedial storm water measures
As part of this agenda item, I sought to have some of the surplus (roughly $400,000) applied to addressing 5 flooding hotspots in the wider Richmond area, identified during the 2011 flood event. These are spots that are prone to flooding in heavy rain events. The type of work I had contemplated would have been remedial in nature, aimed at mitigating flooding risk, before more substantial investment could be made. For example, joining storm water sink hole sumps (so a stand alone sump overflows into another sump rather than directly onto properties), or clearing and widening creeks (again to avoid overflows or blockages, that result in secondary flood paths).
Unfortunately, I received no support from any other Richmond ward councillors (or any other councillors, apart from Cr Bouillir). In my opinion, this is disappointing, given the communities very strong concerns over flooding risk in the wider Richmond area (as evidence by the community survey). Instead the majority of councillors preferred to wait until storm water modeling was completed in 6-9 months time.
Tourist signs application
Council were asked to consider an original 2014 application (and revised 2015 application) by Mr Reg Turner (owner and operator of a lodge called “Songs of the Tui”) for two MOSAT signs to be erected on the Collingwood Bainham Main Road. MOSAT stands for “Manual of traffic signs and markings” which is published by NZTA (see www.nzta.govt.nz/resources/motsam/). MOSAT signs are a legislatively prescribed sign and can only be used with the approval of an authorising body.
The signs sought to direct traffic along Mackay Pass Road in Golden Bay as an alternate scenic route to the Heaphy Track, and the Salisbury Falls (the Hobbit film site). That application sought to use the words “Song of the Tui – Alternative to the Heaphy Track”.
TDC staff initially declined this application on the basis they did not want to promote Mackay Pass Road as an alternate road to the Collingwood Bainham Main Road. This was because the Collingwood Bainham Main Road was sealed (and Mackay Pass Road was not), the additional risk of directing foreign travelers through a narrow unsealed road that had limited sight distance and some challenging road geometry, when a sealed road was available.
However, Mr Turner was still able to erect his own sign on private property if he did not agree with the decision of council. Such a sign would need to comply with resource consents (if any were required). In Golden Bay, there are many examples of private signs (located on private property) advertising local businesses. This was the advice council staff provided. He could also appeal to the council governance body, which is the reason for this report.
Mr Turner decided to take TDC staff advice, and subsequently approached the council’s roading contractor (Fulton Hogan) to construct a MOSAT sign – presumably with the intention of locating it on private property. Unfortunately, Mr Turner’s actions appear to show that he had not fully understood the staff advice. As that advice also made it clear that a private sign could not replicate the look of an official MOTSAT sign.
The contractor on receiving Mr Turners request, contacted the council (as the authorising body) to confirm approval had been provided – which was standard practice. Understandably, staff did not confirm this approval and the contractor advised Mr Turner that it could not construct a MOSAT sign for him. Mr Turner, considered that staff had interfered with private business activities and told his story to the papers. This was reported in the Nelson Mail on 17 April 2015 (see www.stuff.co.nz/nelson-mail/news/67669478/Golden-Bay-tourism-operator-accuses-TDC-of-blackmail-over-road-sign).
Mr Turner then submitted a revised application on 23 July 2015. In that application, he changed the words of the sign from “Song of the Tui – Alternative to the Heaphy Track” to “Scenic Route via Mackay Pass Road – Heaphy Track & Hobbit Film Site 300 meters”. The application notes that this is the first time a route refers to the Hobbit film site at Salisbury Falls. A copy of this application was sent to councillors on 15 October 2015, for consideration at the 22 October 2015 full council meeting.
Application to facts
Council unanimously declined this application. However, the decision does not prevent the applicant from pursuing a private sign (which is not a MOSAT sign), being located on private property near the locations he sought.
In my opinion, council could not endorse the use of Mackay Pass Road to reach several tourist destinations (the Heaphy Track or Salisbury Falls), when a better (safer) road was already available. This decision was not about promoting (or not promoting) business, this was about council endorsing the use of roads for getting to tourist destinations. As observed above, the applicant’s business was already promoted at the intersections sought under these applications.
While I agree that the roads after the Collingwood Bainham Main Road are unsealed, this does not mean that council should promote the use of unsealed roads over sealed roads. Quite the opposite. Council has invested substantial ratepayer funds in providing (and maintaining) a safe corridor to the Heaphy Track and Salisbury Falls via the Collingwood Bainham Main Road. That is the corridor that council has chosen to invest and support. To promote an alternative corridor (Mackay Pass Road), would only invite additional costs for council in the future, without any discernible advantage for council, ratepayers, or tourists.
Mr Turner raised a number of questions in his presentation that I would like to respond too. These observations and opinions are my own.
First, it would appear from the applicants submissions that the underlying reason for wanting the signs was to increase drive by traffic. In the applicants opinion, the tourist should have the right to choose the best path. I would note at this point that the tourist is still able to choose their best path – with (or without) a MOSAT sign. Generally, most tourists (if they are like me) use maps and draw on the presence of signage to confirm they are correctly reading their map. Although, clearly the applicant consider’s the presence of a MOSAT sign, would influence that decision. Which it might.
However, the applicant’s underlying reason for a MOTSAT sign, is not the only consideration council has to consider in approving or declining an application. Council also has to weigh up a number of other considerations (including road safety and cost).
In my opinion directing additional traffic down Mackay Pass Road (other than to find Mr Turner’s lodge) would also put additional pressure on council to make further improvements to this road – to meet any increased usage, especially if there was an accident. I cannot see why council would want to increase the usage of MacKay Pass Road, when it has already invested substantial amounts in sealing (and maintaining) the Collingwood Bainham Main Road. That is the preferred route for council to the Heaphy Track and Salisbury Falls.
While I appreciate, a sign might increase drive by traffic for the applicant, that has to be weighed against road safety concerns and future potential costs for council (and ratepayers). While I also appreciate, the applicant could achieve this end privately, council cannot endorse an outcome that is not in its (and ratepayers) best interests. In this regard, the interests of the applicant have to be weighed up against the interests of the ratepayers (and tourists).
Further, while I am not a marketing expert, I also wonder if increasing drive by traffic past the applicant’s lodge is a good marketing ploy. In my opinion, the applicant might be better off to market his lodge as a return destination (for refreshments or accommodation) at the tourist destinations he sought to promote, rather than promote alternative corridors to those destinations. I think its highly unlikely anyone motivated to get to the Heaphy Track or Salisbury Falls via an alternative route will be stopping on the way (unless they have an accident). I think its more likely that they might consider a stop over on their way back. Perhaps a sign located at the destination recommending the applicants business, is a far better marketing strategy?
Second, the applicant considers the report (at para 4.2) is incorrect in referring to the lodge as the applicant. In his words the “lodge name is not mentioned in [the] application”. I disagree, although I do not see it as material to the decision. In my opinion, it is reasonable to conclude that the lodge was the applicant. This is because: (1) Mr Turner is the owner operator of the lodge, (2) his name appears as the author of the 23 July 2015 application letter (“REJ Turner – Tourism operator”), (3) the 23 July 2015 application letter appears on lodge letter headed paper which contains the email and web address of the lodge.
Third, the applicant considers the report (at para 4.4) is incorrect in referring to “Lord of the Rings” as the film site, when the application refers to the “Hobbit”. I agree. However, councilors received a copy of the 23 July application letter (which correctly referred to “Hobbit Film Site”) on 15 October, several days before considering the report. Accordingly, the original error in the report is not material in the resulting decision.
Fourth, the applicant considers the report (at para 4.8) is incorrect. Mr Turner contends that there is no evidence of incorrect statements to the media. I disagree. Mr Turner is reported in the media article (dated 17 April 2015) as accusing “staff of acting illegally, blackmail and preventing a council contractor of doing business with him”. As discussed above, council have not prevented a contractor from doing business with him. Nor have they blackmailed the contractor as contended. However, they have stopped a contractor from supplying a MOTSAT sign to a person (or business) who was not authorised to use one.
Fifth, the applicant has also stated (page 3 of his submissions) that statements that try to compare sealed roads with gravel roads are not acceptable. He points out that there are a number of gravel roads that lead to tourist destinations and Mackay’s Pass Road is no different to those. I agree. However, unlike those other roads, there is a sealed alternative to Mackays Pass Road that provides a better (and safer) route to the aforementioned tourist destinations.
Sixth, the applicant considers the report (at para 5.3) is not sustained by the facts. The report at para 5.3 contends that a sign endorsing the use of Mackays Pass Road “has the potential to encourage motorists to use a road that has lower standard of maintenance, delineation and safety. Some of these motorists are likely to be international drivers and encouraging these road users to use Mackay Pass Road may lead to crashes involving themselves or with other vehicles. There could also be an increase in maintenance, complaints and requests for more work to be done to improve the low volume road.” The applicant points out that there have been no road incidents on McKays Pass Road, but there have been a total of 7 serious crashes (including one fatal) on the Collingwood Bainham Main Road (4 incidents), Collingwood Puponga Road (2 incidents) and Cowin Road (1 incident), between 2005 and 2014.
First, while I might agree the report does not appear to present all the evidence (that it probably could have), I cannot agree with the applicant’s statement that the report’s conclusion (and recommendation) is not sustained by the facts. A quick survey across the internet will generate a number of articles of road accidents involving tourists on gravel roads. For example www.stuff.co.nz/motoring/66769245/road-kill–must-something-be-done-about-foreign-drivers, and www.scoop.co.nz/stories/PO1504/S00093/most-tourist-accidents-are-preventable-says-report.htm.
In analysis of foreign drivers published last year, it was revealed that loss of control and unfamiliarity with local conditions were the leading causes of accidents (see www.transport.govt.nz/assets/Uploads/Research/Documents/Overseas-drivers-2014-web.pdf). Otago Regional Council has also specifically identified gravel roads and tourists as a cause of serious road trauma in the region and has suggested that “teaching tourist drivers how to drive on gravel roads: targeting drivers aged 25 to 34 years, in particular, and/or sealing roads commonly used by tourists” are means to mitigate this concern (see www.orc.govt.nz/PageFiles/1404/April%202015/Report%203a3%20-%20road%20safety-%20tourist%20drivers%20-%20with%20cover-%20%20%20LATEST%20PDF.pdf).
These reports alone, support the conclusion that the reports observations (at para 5.3) are sustained by facts. Albeit, not presented in the report.
Second, the applicant fails to appreciate that the current statistics for Mackay Pass Road are based on existing usage. In my opinion the applicant’s comparisons are misleading, as it suggests that a low crash rate would continue on Mackay Pass Road after road usage increased – which is the underlying purpose of the application. In fact, it might be suggested that the crash rates on the other three roads are in part due to higher road usage, and could well be worse, if road improvements (like sealing and geometrical changes to the road) had not been made. Unlike the applicant, I find it difficult to take any meaningful conclusions from the crash rate data, in terms of justifying increased usage of Mackay Pass Road.
Seventh, the applicant considers the report (at para 6.2) which stated “there are, however, risks in installing a tourist sign directing motorists along a route that has some geometric deficiencies. The local community is aware of these issues and drive accordingly whereas unfamiliar drivers may not” – is silly. I disagree. In my opinion there are risks (see preceding observations).
Eighth, the applicant considers the report (at para 7.1) ignores other operators who have placed signs up. In my opinion, the actions of other operators is not material to the decision, which must weigh a number of considerations. The actions of other operators is not one of them (especially if they are illegal). Nor is the failure of council to ensure compliance. However, if other operators are acting illegally, then council should be making proper investigations to correct this situation, now that it has been brought to its attention.
Ninth, the applicant considers the report (at paras 8.1 and 8.2) to be untrue and disputes the estimated costs of making and installing a sign ($1,700) or the cost of road improvements (above $40,000) over the 19km road. Unfortunately, these are the costs that council often face and why it is important to ensure council costs are contained if we want to keep rates costs down. To put the estimates into perspective, the average cost of road sealing is roughly $5,000 per km. Although this is figure is itself dependent on a number of other considerations.
As an aside, an interesting report on the cost of roading infrastructure in NZ is located at www.transport.govt.nz/assets/Uploads/Research/Documents/NZIER-report-2013-construction-industry-performance.pdf.
Tenth, the applicant considered the statement in the report (at para 9.1), that the issue had low significance “because it is a local issue being promoted by one landowner”, was not true, because tourism benefits the whole community. While the applicant’s statement has some general truth behind it (and the reason why council has decided to promote destination tourism on behalf of the region), I cannot agree that there is any evidence of measurable financial benefit from the applicant’s efforts in promoting the road as a scenic route in the manner contended. The burden of proof is on the applicant, and no evidence is provided in his submissions (or application) to support his conclusion.
Finally, the applicant considered the report’s conclusion (at paras 10.1 and 10.2) is speculative and not sustained by facts. In my opinion, these are concluding remarks from points made out in earlier parts of the report, and have been addressed above in this opinion.
In conclusion, while I have every sympathy for the applicant’s position, having considered the evidence and surrounding facts, I could not support the application. However, as stated above, this does not prevent the applicant from undertaking construction of different signage on private property, or exploring the promotion of his business from the destinations themselves.
Rabbit Island (Motorua), Rough Island, and Birds Island are Crown owned reserves. Under the Reserves Act 1977, all reserves must be classified. Classification of reserves needs to completed before doing a reserve management plan. Before 2013, the minister of conservation was responsible for classification. In 2013, the minister delegated this task to local authorities. Local authorities are also tasked with preparation of management plans for reserves as the administering body.
It appears that formal classification of Rabbit Island (Motorua), Rough Island, and Birds Island under the Reserves Act 1977 has never been undertaken or completed. Although the existing management plan (first drafted by council in 1989 and updated in 1997 and 2001) has repeatedly stated (at para 2.3) that “classification is being undertaken as required by the Reserves Act 1977 … part of the land is to be classified as “recreation” and the reminder is to be classified “local purpose (plantation)”. A full history of the management of the islands is contained in the agenda report.
The administering body (council) can prepare an advance draft of a plan covering unclassified reserves for which it is the administering body, provided this does not pre-empt the classification process. However, the administering body cannot, invite public submissions on the draft plan until all the reserves which it covers are classified and the draft plan is consistent with those classifications (see www.doc.govt.nz/about-us/our-role/legislation/guides-and-bylaws/a-guide-for-reserve-administering-bodies/chapter-11-management-planning-for-reserves/questions-about-management-plans/).
For any unclassified reserves, the management plan will only have the status of an advance draft. This means that any policies or rules for managing unclassified land cannot be enforced, as they will only have a draft status. In addition, the Reserves Act (s 16(6) and(7)) appears to suggest that unclassified reserves are to be treated as recreation reserves until classified. This suggests that the forest plantation on the island should be administered as a recreation reserve, not a “local purpose (plantation)” reserve.
The net effect is that the current management plan cannot impose “local purpose” rules on the island’s forestry plantation. At best it appears it can only impose recreation reserve rules on land used for forestry. To correct this administrative oversight, formal classification of the forestry plantation was required.
Given this oversight, council resolved to complete the classification process, so that a valid (enforceable) management plan could be implemented. To avoid unnecessary consultation costs, a non-notified process would be undertaken (subject to consultation with iwi, given its crown land).
As discussed above, Max Clarke questioned the purpose of classifying the reserve at this time. I imagine part of the reason for his position is because a similar reclassification process occurred in the Queenstown region with the stated purpose of enabling land swaps (see www.qldc.govt.nz/assets/Uploads/Your-Views/LLS/Lakeview-Land-Swap-Summary-of-Proposal.pdf). In that situation, the Queenstown regional council (QRC), undertook to reclassify reserve land so that it could be swapped with other land of a similar classification. A similar land swap arrangement was also proposed for the Ruataniwha-dam (see www.stuff.co.nz/dominion-post/news/72700495/doc-approves-land-swap-paves-way-for-ruataniwha-dam.html).
[Update! The Ruataniwha-dam land swap arrangement is now subject to an appeal (www.stuff.co.nz/business/farming/74863647/land-swap-for-ruataniwha-dam-illegal-forest-and-bird).]
According to the QRC report:
The Department of Conservation guidelines for administering bodies suggests it is mandatory to classify a reserve under the Reserves Act before public notification of a draft management plan, but desirable before exchange of land or granting a major lease.
The requirements of the Reserves Act state that land becoming reserve land must be held for the same “purposes” as the land being exchanged. The purposes of a recreation reserve are:
“providing areas for the recreation and sporting activities and the physical welfare and enjoyment of the public, and for the protection of the natural environment and beauty of the countryside, with emphasis on the retention of open spaces and on outdoor recreational activities, including recreational tracks in the countryside”.
There is no requirement that on exchange the particular use must remain the same, as long as any change in use remains within the general purpose of the reserve classification.
To address Mr Clarke’s concerns the mayor declared that he had not been involved in any discussions concerning the swapping Rabbit Island forestry land for land in the Lee Valley.
While I took comfort from the mayor’s statement, and the underlying administrative purpose of reclassification (discussed above and with council staff before the meeting), I thought the timing for completion of the reclassification (September 2016) was an interesting coincidence. In my opinion, it would also be political suicide for a mayor or MP (given its crown land), to contemplate a land swap with Rabbit Island. There would be a public revolt.
Queen street reinstatement
As part of council’s strategy to address central business district (CBD) flooding risk, council propose to make improvements to Queen Street. This involves extensive excavation of the road and footpaths (from shop front to shop front) between Salisbury Road and Gladstone Road. The aim is to enable Queen Street to be a secondary flow path for storm water by reducing the level of the road. The project also provides an opportunity to evaluate whether changes should be made to this stretch of road. For example, wider footpaths, cycleways, bus lanes, etc.
Council resolved to receive the report and approve staff to engage with the community on amenity aspects of the project and report back following consultation.
I took the opportunity to reinforce to staff that the cost of the reinstatement should not be more than what it would cost to replace what is already there. If new things could be done within this financial cap, then council were open to the opportunity, subject to community feedback on such ideas. What I did not want to see is some councilors seeing this as a legacy opportunity and go on another spending spree (which is what has happened in the past).
I do not normally discuss the mayors report as there is not usually much in it. However, I do want to mention two items.
Climate change declaration
The first is in relation to the local government leaders climate change declaration. The declaration letter acknowledged the importance and urgent need to address climate change for the benefit of current and future generations. The letter also set out a number of commitments councils would support, as well as councils expectations of government (see www.lgnz.co.nz/assets/Mayors-Climate-Change-Declaration.pdf).
The mayor had written to councillors before the full council meeting advising them that he had decided to not affix his signature to this letter because of the potential cost to council in supporting some of commitments councils were signing up to. For example, supporting the use of electric cars.
I responded to the mayors email suggesting that it should be for council to decide, rather than the mayor. This was because the letter referred to the mayor’s signature as “signatories from councils”. As a signatory for council (which is what the letter suggested), council should consider the opportunity of supporting the declaration (or not).
I also noted that the tenure of the letter was to “support”, not undertake. The letter says “support” not “commit to buy”. “Support” can be passive or active. I’d be surprised if council could not “support the use of renewable energy and uptake of electric cars”. In fact, we already support renewable energy (through purchase of solar panels on the aquatic centre). And I’m sure if there was an application to install a recharge station (for electric cars) in Tasman, council would support such a venture. Its only a matter of time before petrol stations begin rolling them out.
I invited the mayor to reconsider his position and at least invite council to vote on councils representative (being the mayor) signing the declaration on councils behalf. To his credit, he did this. A show of hands was called and the majority of councillors supported the mayor’s position. Cr Ensor, Bouillir, and myself, did not. The essence of our argument (articulated very well by Cr Ensor) was council needed to show some leadership on the challenges of climate change for local government. My argument (as stated above), was that support did not have to translate to any cost for council (unless it chose to do so). In my mind, any financial support had to make commercial sense and be fiscally prudent.
The second is an issue raised by a Richmond resident. The mayor’s report offers the opportunity for councillors to raise any issues not on the agenda. It was mentioned by a resident that the aniseed toilets were in a poor state. There was often no toilet papers or running water to wash hands. And the toilet was not pleasant to use. The resident had stated that they had raised the issue with the mayor and Cr Edgar sometime ago, but had not heard back.
I asked the mayor (and Cr Edgar) if they were aware of any progress. Neither recalled this issue. I have since followed up the issue with staff who have undertaken to contact the Department of Conservation (DoC) who are responsible for this toilet. Staff have also undertaken to audit other council toilets in the Aniseed valley. I hope to report back to the residents soon.
Nelson council has considered the funding agreement adopted by TDC on 10 September and have proposed some minor wording changes. The agreement has been referred to the transition group (who are reviewing the proposed merger of the EDA and NTT).
At the recent Joint Council meeting (held on 3 November 2015), I spoke to a few Nelson councilors and reiterated that this was the funding level Tasman council currently supported. However, the real issue was not the level of funding, but agreeing on measurable performance targets for this organisation. Council needed to be able to see that their investment was returning something financially tangible that was sufficiently connected (and traceable) to the funding. If council could see that the investment did directly result in improved financial outcomes, then it might be more willing to invest more.
For example, current indicators, like increased spend in town centres, does not necessarily mean it is coming from tourists or marketing initiatives. It could be coming from residents visiting those centres. The same criticism could be made of the EDA. Better measures and analysis is required.
Elections for 2016
Planning for local body elections has begun.
I would like to offer the opportunity for people considering standing for council in 2016 to contact me to talk confidentially about what council involves and what can be expected. I am hopeful that a number of people will put their hand up in 2016. In my opinion, a healthy council is one that continues to bring in new ideas and thinking, rather than returning the same people, with the same ideas. This can only happen with significant change around the council table. Change also avoids organisational capture.
For the quarter ended September 2015 (for the 2015-16 financial year), an accounting surplus of $2.394 million (compared to a budgeted surplus of $1.378 million) has been achieved. A positive accounting variance of $1.016 million.
On a year to date basis, expenditure is $2.866 million below forecast budget (mainly due to less than expected expenditure for emergency works, general maintenance, and finance costs). In addition, income is $705 million above forecast budget (mainly due to library insurance proceeds being received (and used for the Mapua development), timing of dog registration fees, external lotteries funds for Motueka recreation centre, and civil defence funds for Rameka creek claim). The net result is a $3.57 million operational surplus.
Year to date capital expenditure is $3.838 million. Overall, capital expenditure is budgeted at $34.315 million (plus carry overs from last year) for year end.
Debt is currently $146 million (lower than the forecast $173 million disclosed in the LTP).
Since the last report 5 appointments (internal transfer or replacement) have been made. Three resignations and 2 retirements have been received. TDC is currently recruiting for a strategi policy manager. For the quarter ending 30 September 2015, staff turnover was 1.12%, staff numbers were 242 FTEs (made up from 267 full-time and part-time people).
TDC has also been selected (after applying) to be part of the high performance work initiative programme offered by Callaghan Innovation (see www.callaghaninnovation.govt.nz). In my opinion, this is an exciting opportunity for the organisation.
Health and safety
Cosman Parkes have been engaged to complete a health and safety review of the council’s activities. A workshop (on 12 November) will be developed to report back to council on their findings and recommendations.
Best Island update
Two land valuations have been received – one based on the subdivision value (Ashford’s). Negotiations will begin soon.
Council resolved to receive the reports on historic wharves and small wharves in the Tasman region (mainly in Golden Bay) and agreed to consider at no cost to council (for historic wharves), or from reserve financial contribution (RFC) funds (which compete with other reserve projects) for small wharves, the establishment of local trusts to acquire and manage such wharves.
Agenda and minutes
The agenda and minutes are located at www.tasman.govt.nz/council/council-meetings/standing-committees-meetings/full-council-meetings/?path=/EDMS/Public/Meetings/FullCouncil/2015/2015-10-22.
The regular full council meeting was held on 5 March 2015. All councillors were in attendance with apologies from Cr Mirfin.
The agenda included the following items: (1) Gowan river east bank access, (2) Best island public road access, (3) rates remission policy for rezoned land, (4) LTP and consultation document approval for public release, (5) chief executive’s report, (6) mayor’s report, and (7) machinery resolutions.
In this post I will focus on the main issues.
Gowan river access
Access to the Gowan river has been a long standing issue. Essentially it concerns the padlocking of a dirt road that is considered on paper to be a public road (ie, the legal road).
By way of background, a public road leads up to the locked gate. Nothing prevents people driving up to the locked gate. Beyond the gate is a dirt road. On either side of this dirt road is farm land. The dirt road is not fenced off from the surrounding farm land.
The dirt road does not always follow the path of the legal road and in some parts it crosses private land (to avoid going into the river). This means that at several “pinch” points, public road access temporarily ceases, either because the legal road enters the river, or the actual dirt road crosses private land. The first pinch point is only 1.7km from the locked gate.
In 2007, an application was made to place a gate across the road. That application did not seek to lock the gate. The lock appears sometime after that application.
In 2009, the council entered an agreement with the owner of the farm land. This agreement allowed the gate to be locked to protect the owners stock, while allowing people to continue to walk or cycle along the dirt road.
The owner also undertook to provide a key to the gate for vehicles requiring access. This was to allow the owner to know who might be in close proximity to stock. Unfortunately there are people about who steal stock.
A sign was also installed explaining the restrictions and process for vehicle access.
In my opinion, this is a very pragmatic solution, that is open to review when the 2009 agreement comes up for renewal or expires.
At all times, the public have access to the legal road. Either from walking, cycling, or (upon request) with a vehicle. The public also have the benefit of using parts of the dirt road that are on private land, rather than having to use the river. The use of private land is clearly a benefit that the public could not otherwise expect.
Council unanimously supported the CEO’s recommendation that the current arrangement remain and not to issue a notice to remove the lock on the gate.
I imagine, that when the agreement comes up for renewal the locked gate could be moved 1.7km further up the dirt road to where the first pinch point is located. This would probably also require the owner to correspondingly fence off the dirt road from their land.
Best island public road
When I first stood for election, I visited all the residents of Best Island (as well as many other ratepayers). At that time, it was apparent to me that a solution to a long standing road access dispute was required, so that everyone could move forward.
Council has since made some headway that involves an initiative to purchase land off residents and formally develop an unsealed public road for the benefit of all ratepayers (as illustrated below). This solution may not necessarily provide restitution for all the complex web of wrongs or mistakes of the past, but it is a positive decision to move forward.
Unfortunately, progress has stalled over land valuations and it is now felt that council may need to use the Public Works Act. Ideally, the landowners will re-engage with Council to reach a private negotiated settlement. However, if the matter is dealt with through the Environment Court, it is likely to take up to 2 years to reach a conclusion.
The estimated project cost is $335,000. This includes: survey costs, valuation expenses, land purchase, Reserves Act processes (if required), registration of easements, road improvements, and legal expenses for the Council, and the respective Ashton and Irvine families.
Staff expect $35,000 to be spent before 30 June 2015, and the balance, of $300,000 to be funded from existing Long Term Plan roading budgets. In addition, a land owner contribution of around $5,000 per property will be levied to offset the costs and recognise any private benefit from the road.
Council resolved to authorise the chief executive to issue a “notice of desire to acquire land” at Best Island for road and walkways under the Public Works Act. The proposed road will require both the Irvine and Ashton land, but does not provide road frontage to all properties.
Public access to a boat ramp and various beach front walkways will provide benefits for the wider community. While the boat ramp has not had major use in the past and is dependent on the tide, improved road access will enable greater public use. And that must be a good thing.
In my mind the parties need to work on the best solution going forward and not dwell on trying to address the past. It happened and nothing can now change that. I am hopeful that all parties will reach a fair agreement and avoids any future problems, without incurring the additional expense of lawyers. Because the only winners (financially), will be the lawyers.
Rates remission for rezoned land
As discussed in an earlier post, the community development committee considered whether the council’s policy on “rates remission for rezoned land” should include a sunset clause.
The current policy recognises a tension between enabling land to be developed (for residential or commercial property purposes) versus not forcing people off their land. These tensions came to ahead during the Headingly Lane saga, where rural land was rezoned as residential, resulting in an unaffordable 400% rates increase for several ratepayers.
A trade-off between these two tensions was the development of a council discretion to award remissions on these rates increases on an annual basis.
The problem with an annual discretion, is that there is no guarantee or certainty that the discretion will be provided each year. Therefore the ratepayer could never plan ahead and always had hanging over their heads the threat of a dramatic rates increase.
A sunset clause would provide certainty for ratepayers, developers, and council, about how long the remissions would be extended and when the land could be expected to begin development.
A 10 year sunset period was considered a sufficiently long enough time period for the ratepayer to get their affairs in order and develop, or dispose of their land (or part of it) at a fair price, and with dignity.
I supported a 10 year period, comprising a 100% remission of the increase in rates for the first 6 years, and a stepped down remission (of 20%) for each of the next 4 years (eg, 6+4 year remission policy). I moved this motion as an amendment to the current policy, supported by Cr Bouillir.
No other councillors supported this motion, as they favoured a shorter period – either: 4+2 years (with the last 2 years remitted at 33%), or 1+3 years (with the last 3 years remitted at 25%).
The two alternative 6 and 4 year sunset periods were expected to be considered at this meeting. However, Mayor Kempthorne proposed a compromise, 5 year (3+2) sunset period. This was moved by Cr Higgins and seconded by Cr Ensor.
To mitigate the damage of such a short remission period, I proposed an amendment (seconded by Cr Bouillir) – removing the 2 year step down period, so that the 100% remission period would be for the full 5 years. However, I also indicated that I would not support any sunset period less than 10 years.
Without my amendment, the 100% remission period would only be for 2 years. In my opinion, 2 years was far too short and was not in keeping with the spirit of the compromise reached with residents on the current remission policy.
Using the Headingly Lane example, this would mean that the rates would double from year 2 to year 3 (a 100% increase), as they headed towards a 400% increase by year 6 (when there would be no remission allowed).
Cr King then questioned whether this was the time to be curbing the scope of the remission policy when the council had a great message in the LTP to convey to the public. His concern was that this message would be lost in the negativity that would arise from the proposed change to the remission policy.
On this basis he asked Cr Higgins whether he would withdraw his motion to change the remission policy – which he then did. Effectively, the resolution was lost unless someone else moved the same motion.
At this point in the meeting the mayor called for a short adjournment as various councillors discussed what they should do next. Fortunately, none sought to move the motion. Thus, the status quo was held.
The chief executive then proposed an alternative resolution, which sought to place the current remission policy (rather than the proposed policy) before the public, for public consultation. This was unanimously supported by councillors.
Chief executives report
The chief executive issued a report, as a late item, under a separate cover to the agenda. The report covered a number of items including: (1) a review of several strategy and planning issues, (2) a drive to use technology to reduce staff costs (and where feasible increase public participation), (3) an update from the regional sector group and CEO forum, in particular reforms to the RMA and importance of risk management, (4) a financial update, (5) a health and safety update and new initiatives, and (6) the Murchison visitor information centre function being delivered by the local museum.
As well as a reminder that private emails and texts sent by councillors (in that capacity) are official information.
The finance update for the period ended January 2015 showed an accounting deficit of $1.227 million compared with the budgeted surplus of $4 million. A negative variance of $5.232 million. A significant portion due to a book entry loss on interest swap revaluations.
When the loss on interest rate swaps is removed, the council has a positive variance of $3.112 million. With expenditure currently tracking below budget by $3.476 million.
Savings mainly came from: reduced interest costs ($1.2 million), reduced emergency works ($0.144 million), and reduced maintenance costs ($2.582 million).
The balance sheet remains in a strong position. External debt is $149.1 million (forecast to be $174.3 million at the end of the fiancial year in June). The capital expenditure budget is $48.4 million (including carryovers of $17.4 million from previous financial years). Capital expenditure is currently around $18 million compared to the forecast expenditure of $36 million.
The long term plan (LTP) and consultation documents will have been released to the public (see http://www.tasman.govt.nz/policy/public-consultation/2015-2025-long-term-plan/). Submissions close on 20 April 2015.
I hope to provide a summary of the key messages (and my opinions) on the LTP in a subsequent post. Generally, its a good document and our efforts in meeting the new format requirements has received very positive comment from the auditor general.
However, there were items that were added by staff late in the process and which could not be removed before the draft plan was released to the public, due to the finance team being stretched to recalibrate the finances if removed. Such was the pressure to get the plan out on time.
For example, the late addition of two new sets of traffic lights on Salisbury Road (one at the Queen Street intersection and one at the William Street T-junction). In my opinion, these additions are not required, and the money could be better spent minimising storm water risk in Richmond South, Bateup Road, Wensely Road, and other spots in Richmond where homes flooded.
I would advise the public to read the activity management plans. These are the extra documents. These plans outline what work will be done (or not done) and when.
Agenda and minutes
The agenda and minutes can be found at http://www.tasman.govt.nz/council/council-meetings/standing-committees-meetings/full-council-meetings/?path=/EDMS/Public/Meetings/FullCouncil/2015/2015-03-05.
The full council met on 19 February 2015. This meeting was not part of the normal cycle of full council meetings as it was dedicated to the long term plan (LTP) for 2015-25 and associated consultation document. Cr Mirfin submitted his apologies, otherwise all councillors were present.
The agenda considered the following items: (1) CEO briefing, (2) Waimea community dam, (3) rates remissions policy review, (4) commercial subcommittee terms of reference, (5) maori consultation processes, (6) other supporting documents for the LTP.
This meeting was then followed by a workshop on the content and layout of the consultation document.
In relation to the full council meeting the main areas of interest for me were the first three items and I intend to concentrate on these items.
The maori consultation process was confirmed, as was the publication of supporting documents for the LTP. Although I continue to have issues with a number of spending proposals in these documents (eg, William Street traffic lights proposal costing $1 million, and the timing of storm water work in the Richmond South area – more urgency is required).
Council were given a brief update on the following items:
- Finance: For the 6 month period, ended 31 December 2014, council produced an accounting adjusted surplus of $2.6 million (after adjusting for capital income, vested assets, development contributions and interest rate swap revaluations) against budget. Interestingly, revaluation of interest rate swaps (which total $147.78 million) provided an accounting loss of $1.8 million. By way of background, interest rate swaps are a hedge against higher interest rates (a bit like fixing your mortgage). This month our swap rate was higher than the market. Which is surprising given our average interest rate for swaps is 5.288%. So, if we had sold our interest rate swaps back to the bank at the current market rate this month, we would have made a loss. Conversely, if our swap rate is lower than the market then we would make a theoretical gain, although we would have to refinance our debt at higher rate. This fluctuation does not cost council any cash, as we are not selling them (although it might be a good time to buy more swaps, if we were in the market) – rather its done for accounting purposes, which we are required to report on. It’s likely that as current interest rates hold up (above our swap rate) council will continue to build up an accounting loss, until such time as the market interest rate trends back up.
- Jackett Island: the claim for future costs has been settled by agreement ending the environment court proceedings – the insurers are managing any civil claim.
- Building control: last year the IANZ accreditation audit identified an issue with TDC’s tracking system for responding to building consents approaching the 20 day limit. In the last month, no building consent application exceeded the 20 day limit, the backlog had been reduced, and compliance was now over 90%.
- Restructure: A new building control manager (tier three) position had been created which has taken over management of the building compliance function and will operate within the regulatory section of TDC.
- Port Tarakohe: The mussel industry has made a pricing compliant to the commerce commission alleging TDC is making super profits from its new commercial charges regime. In my opinion, the new weigh bridge and more timely and accurate billing is clearly having an impact on some operations bottom line.
- Best island access: Several meetings have been held with affected residents on a proposal for council to acquire land for a public road in order to address access issues for those residents.
- Nelson tourism and economic development agency: Meetings have been held to discuss work plans for both organisations. In my opinion, strategic activities (including more actively supporting the international education sector) and measurable performance outcomes need to be agreed.
The council wage bill
Council staff were also asked to provide information on council’s wage budget (currently round 18% of total expenditure) and how it compares to other authorities. Cr Inglis, Higgins, and myself have been pursuing this issue for sometime.
While there are few unitary councils to make comparisons with, and unitary council functions are broader than district or regional councils, the councils wage bill is still a percentage (or ratio) of its overall cost of performing its functions. If a council has more functions it will have more income and more expenditure, but wage expenditure should still be comparable.
In my opinion, benchmarking the councils operational activities and costs is important. Given unitary councils comprise both district and regional council functions, some detailed analysis separating out those separate functions, could be undertaken with a little effort (with shared services apportioned), to provide direct comparison with district or regional councils.
I understand the local government association (LGA), have on its agenda, the provision of benchmarking tools for council governance. If the government want to see local government costs come down, I would have thought they would have been a keen supporter (and potential funder) of such tools.
Note! As pointed out by one reader, Local authorities must disclose their performance in relation to identified statutory benchmarks (see section 9 of the Local Government (Financial Reporting and Prudence) Regulations 2014). I agree. However, these statutory benchmarks are very different to the type of benchmarking I am suggesting. I am talking about benchmarking “between” councils on information not currently required by statute to be benchmarked. The statutory benchmarks listed in section 10 of the Local Government (Financial Reporting and Prudence) Regulations 2014 are: rates affordability (reg 17), debt affordability (reg 18), balanced budget (reg 19), essential services (reg 20), debt servicing (reg 21), debt control (reg 22), and operations control (reg 23). These benchmarks are generally a high level comparison against quantified limits set by council or statute. For example, comparing the council’s planned rates increase with a quantified limit on rates increases contained in the council’s financial strategy.
I also believe its about time council was subject to an independent organisational review. As a governance body, council should regularly review if the council is operating efficiently. An independent review will either confirm the organisation is right sized and operating efficiently, or make suggestions for improvements.
Either way ratepayers would have greater confidence in the organisation of council and that their money is being spent wisely. Unfortunately, there appears to very little support around the council table (including the mayor) for such a review. Hopefully a wage comparison, might push them towards a much needed review.
Waimea community dam
There were two issues to be considered: (1) a revised structure of the arrangement, and (2) funding of a new private entity.
The suggested re-structure was not a surprise as we had been briefed at an earlier workshop. These days I tend to find the workshops more informative (and useful) than the actual committee meetings (that formally present the staff paper and recommendations).
This is because, much of the debate and councillors positions on the issue, have been worked through at the workshop. This means much of the debate around the table is often making a last argument for not supporting (or supporting) the staff recommendation.
A revised structure
In essence, the proposed arrangements confirmed at the earlier council meeting of 9 December 2014 has changed. At the December meeting it was proposed (and supported by the majority of council) that a CCO would be formed and it would co-ordinate external funding (amongst other tasks). That structure is outlined below.
Ironically, my opposition to forming a CCO and allowing the irrigators to form their own investment holding company (Waimea Community Dam Ltd, or “WCDL”) has now been taken up by the irrigators. They now proposed a revised structure whereby WCDL secures funding from the Crown and irrigators. This new structure is illustrated below.
This new structure reflects the fact that irrigators will now be the major financial contributors to the dam, as they look to secure funding from the Crown and irrigators.
By way of background, the council’s contribution to a dam is limited to $25 million – made up of urban water ($8 million) and environmental ($14 million), with the remaining $3 million for administration costs. This would suggest that WCDL has to secure the remainder ($50 million) from irrigators and the Crown.
I agree with this structure. Its very similar to what I suggested in my dissenting opinion in December. However, I maintain that a CCO does not yet need to be established, until a decision on whether we proceed with a dam (or not), is decided. If a dam is agreed, then the reasons for forming a CCO need to be considered at that time.
In my opinion, the cost of establishing and maintaining a CCO does not warrant its formation at this time. During the consultation phase on governance formation of a CCO was estimated to cost about $100,000 (plus ongoing costs, like directors fees). Establishing a company also invites tax, accounting, and company compliance costs that a “council” does not need to bother itself with. Council could quite easily enter into contractual negotiations with WCDL directly for the supply of water augmentation services. As it has done with NCC over the delivery of tourism services.
A reason to form a CCO is the benefit of skills and knowledge that directors could provide. However, in this instance, the CCO would not be managing the dam, unlike governance struture 1. Rather, it is a holding company for council investment. Furthermore, management and technical skills would be provided by TDC under contract. So there do not appear to be any benefits at this time in forming a CCO?
Given no government funding for urban or environmental contributions has been forthcoming, there seems little reason to form a CCO at this time. It might be that such funding is not contingent on a CCO being formed? Why jump the gun?
To date, the mayor has made no noise about securing government funding for the environmental contribution, or seeking government to underwrite any cost blow outs for the council’s contribution.
Having looked at a guide on when councils should form a CCO (see http://wellington.govt.nz/~/media/your-council/council-controlled-organisations/files/whatworks.pdf), I could find no compelling case for forming a CCO.
Given assurances during the consultation phase that cost blow outs were unlikely, I would have thought it would have been easy for the government to underwrite any cost blow outs above the $8 million urban water supply contribution. And given the broad public benefit of protecting the environment, the government should have come to the party on the environmental cost. Perhaps its time to write to Nick myself?
The other issue before council was the provision of “ongoing funding” for WCDL to engage with irrigators and the Crown. The source of this funding was proposed to come from the Waimea Water Augmentation Project surcharge which generates about $81,000 per year. This amount would be given to WCDL in the 2015-16 year.
I proposed loaning these funds (as an amendment to the resolution), rather than just handing them over to WCDL. Cr Canton seconded my motion, but no other councillors supported this change. In my mind, this was a private investment holding vehicle, not a council owned or controlled entity, and council had a duty to protect public funds.
Giving the money as a loan would provide security as a creditor should WCDL prove unsuccessful. Giving WCDL the money, provide no security at all. Further, when questioned, the CEO could see no reason why the funds could not be provided as a loan. Either way, WCDL would obtain funding. Although some councillors raised there own reasons for why it should not be a loaned during the debate.
Rates remissions policy review
At present, the council has a policy that remits rates on properties that have been subject to re-zoning. The policy provides the council a discretion in terms of how long the remission period will last.
To provide certainty (and transparent fairness) to the process it was raised during a workshop whether council should prescribe the length of the remission period. At that workshop it was suggested that a 10 year period be provided, with the last 3 years stepping down the remission towards the payment of the full rates bill. At that meeting other lengths of time were discussed, including 6 and 4 years. Some on council felt there should be no grace period, effectively rescinding the remission policy.
In my mind, a reasonable period of time should be provided. Through no fault of their own, but rather due to council’s actions of rezoning, they are placed in the very awkward financial position they find themselves in. Providing a reasonable period of time enables people to leave their land with dignity and without being pressured to sell for a low price. Alternatively, ratepayers should be given the opportunity to re-engineer their incomes so they can afford to stay or redevelop the land themselves. In my opinion, to do otherwise, only benefits the next purchaser.
The fundamental issue for me, is that council should not be in the business of forcing people off their land and out of their homes. This principle has strong support in the community – as evidenced by the submissions made on the governance and funding options for the proposed Waimea community dam.
This principle also had some support around the council table. Although there are a few councillors who adopt a more extreme utilitarian approach to the issue. That approach reared its head again during this debate.
Essentially the question before council was whether there should be a sunset clause added to the remission of rates on land that has increased in value due to re-zoning.
In such cases, re-zoning can exponentially increase the value of a property based on its new potential value. The Headingly Lane incident was apparently the driver for this remission policy. The increase in rates can be unsustainable for the property owner, and often they are forced to dispose of the land to a property developer or someone who can obtain more income from the land to afford the new rates bill.
Against this, is the need to ensure land is available for development. A key part of the housing shortage (and high values) is the supply of land. Although, whether this is a driver in the Tasman region, is a moot point.
I supported a 10 year period, comprising a 100% remission of the increase in rates for the first 6 years, and a stepped down remission (of 20%) for each of the next 4 years (eg, 6+4 year remission policy). I moved this motion as an amendment to the current policy, supported by Cr Bouillir.
No other councillors supported this motion, as they favoured a shorter period – either: 4+2 years (with the last 2 years remitted at 33%), or 1+3 years.
Cr Ensor questioned why I would support such a long time given the cost to council and given my drive to reduce costs for council. I explained, that my support of a longer remission period (the 6+4 year period) reflected the tension between saving costs and ensuring people were not force out of their homes. I also did not perceive there was any “real” cost to council. The increase in value did not affect the councils costs. In fact, remitting the rate just meant that council did not get an increase in income. Councils costs remained unchanged, whether the land increased in value or not.
On losing this amendment, I made it clear I could not support any shorter period as I considered it unfair and mean spirited, and would prefer council discretion (the current policy) to anything else.
Especially when placed in the context of the Tapu bay issue, where some councillors supported giving a life interest in a holiday bach (or crib if you are from the deep south) to the owner of the bach (that was not that person’s home), rather than enforce the councils policy of removing private bachs from public land, and yet were willing to force people out of their homes within a much shorter period.
On that basis I informed council I would be voting against both shorter remission periods.
Other councillors realising that a no vote on a 4+2 remission period, might force an even shorter period, asked to defer this item to the next full council meeting.
The full council meeting on 5 March will be deciding on the final state of this policy.
Agenda and minutes
The agenda and minutes for this meeting are located at http://www.tasman.govt.nz/council/council-meetings/standing-committees-meetings/full-council-meetings/?path=/EDMS/Public/Meetings/FullCouncil/2015/2015-02-19.