Tagged: Long term plan

Long term plan meeting (full council) 28 May

The following is a speech I had prepared for the full council meeting (held on 28 May 2015) on long term plan (LTP), which Cr Bouillir had kindly undertaken to read out in my absence.

Long term Plan Speech

My sincere apologies for not being able to attend this meeting. However, if I did not attend my brothers wedding (in London), I’m not sure he would speak to me again.

Although I could not make today’s meeting, it does not remove the opportunity for the community to know where I stand on many of the big issues, and where I would have voted, having heard and read all the submissions.

There are many decisions being made today. I take some comfort from workshop discussions held two weeks ago, that some good first steps are being made. However, there are still a number of issues where I do not agree with the majority of councillors. I only hope that councilors have further reflected over the intervening weeks, and will come to the right decision today.

Today, I wish to briefly highlight four issues: (1) debt and rates, (2) storm water, (3) roading expenditure, and (4) the dam.

Debt and rates

While I congratulate the councillors for drawing a line in the sand on rates increases and debt, this should only been seen as a first step.

There are further opportunities to save money (and further reduce rates increases), and I take some comfort that some moves to save money have been progressed.

For example, last week we heard of the cost saving from reviewing one of our annual publications – reducing the cost of production from $40,000 to $5,000. Over 10 years, that is a $350,000 saving.

This should have been done years ago.

As you know I feel other council publications require the same degree of examination. There is room for more savings.

A number of submissions have called for greater savings in this area. I would ask, that while council has set budgets for publications, that these budgets are further reduced over the coming months.

And publishing, is not the only area, where we need to be challenging ourselves to work smarter.

Storm water

Storm water is by far the biggest area of concern for our community.

And rightly so.

However, I still do not believe, we have the right balance in funding, or adequately addressing, this critical infrastructure.

There is a great deal of angst in our community over flooding risk. This is a concern that is strides above any other concern with transport or community development initiatives.

If we truly acknowledge that concern, then we should be shifting more funds to known hotspots in the Richmond area while also addressing the storm water concerns of the central Richmond business district.

I do not support funding more traffic improvements while the community are asking there money to be spent on storm water. Given the growing risk of another event, it should be an over-riding duty to mitigate that risk and ensure the storm water solutions promoted by staff can be achieved earlier and faster.

If we are not prepared to do that then we need to ensure those known hotspots around Richmond are at least mitigated in the interim.

Its about priorities!

Roading expenditure

We need to stop over-capitalising on roading initiatives.

I would like to see budgets for traffic improvements on Salisbury road and a number of other road widening initiatives (that are not funded by development levies) removed from the plan.

In particular, I see no reason to spend $1.2M on the Salisbury Road\Queen Street intersection. The round-about works fine. There is no support for more traffic lights on this road, and there is no need to fund investigating alternatives here. Remove it, or shift those funds to storm water initiatives.

Furthermore, the $600,000 budget for the Salisbury Road\William Street intersection is more than adequate to fund any investigations of Salisbury Road and provide some pragmatic and cost effective solutions for the William Street intersection.

The Dam

The community have made it very clear that they do not support funding any private benefit.

I agree.

I do not believe that the district should be called on to subsidise private water consumers.

I also believe that this is a good guiding principle when considering issues associated with the dam, and is consistent with the “user-pays” ethos of the community.

It is also clear, that were it not for the extraction of water by irrigators and urban water consumers, the river would have a sufficient natural flow. On this basis, the only equitable basis to apportion the cost of funding the environmental benefit portion of the dam cost, is for it to be apportioned between irrigators and urban water consumers.

This means council should only contribute $14M towards any water solution (comprising $8M-$9M for future urban water needs, and $4M-$5M for restoring the natural environmental flow of the river that urban water consumers have extracted). In my mind, $14M is a fair figure and is probably the likely opportunity cost of an alternative water solution for urban water consumers. Council should not approve a $25M contribution.

In my opinion, council also has a duty to find a cost effective solution that protects future urban water needs. This might involve leveraging off a private dam venture, by funding some additional height in a an existing dam project, that provides sufficient water for urban water consumers – or it could mean funding an alternative solution.

In conclusion, I believe council should park any decision on contributing to a dam project, or any other solution, until such time as council knows if irrigators are able to advance such a dam project. It also provides council sufficient time to properly explore other solutions. To act otherwise, is in my opinion, not acting prudently. This might mean council defers any decision of contributing to an irrigator led dam project until later in the year – perhaps September this year?

Capitalisation of Dam Co Ltd

Council are also considering assisting with the capitalisation of the irrigator’s investment holding company – Dam Co Ltd.

In my opinion, council should not be providing any financial assistance to this company. This is a private company and council should now be conducting its dealings with Dam Co Ltd at arms length. Anything else, would suggest otherwise.

In my opinion, providing unsecured public funds to a privately owned company, is not consistent with the aforementioned guiding principles, or a council that should be acting prudently, to ensure public funds are adequately protected.

If the protagonists of the dam cannot raise approximately $300,000 to establish this company, there is clearly insufficient support for a dam, from irrigators. It’s only $300,000. That’s 10 irrigators contributing $30,000 each, or 30 irrigators contributing $10,000 each.

Many dam protagonists made mention of the economic benefits that the dam would provide. If they believe in such benefits, then I would have thought they would be falling over themselves to invest.

Its time for these people to put their money where their mouths are. It is not the role of council to be under-writing private ventures (or private benefits).

Closing remarks

Finally, I appreciate, that the long term plan is just that – a plan.

It is open to further improvements and direction. And that includes further operational savings.

I certainly welcome such an opportunity at the next annual plan.

Agenda and minutes

The agenda and minutes of this meeting are located at http://www.tasman.govt.nz/council/council-meetings/standing-committees-meetings/full-council-meetings/?path=/EDMS/Public/Meetings/FullCouncil/2015/2015-05-28.

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Consultation document

LTP-Cover

 

The consultation document (formerly known as the “Long Term Plan” or LTP) outlines where council intends to spend your money over the next 10 years (from 2015 to 2025).

The deadline for submissions is 20 April 2015.

The relevant documents and an online submission form are located from http://www.tasman.govt.nz/policy/public-consultation/2015-2025-long-term-plan/.

The 10 year plan includes some very important decisions, including whether the Waimea Community Dam should proceed, and equally importantly, how much of your money council should contribute to that project.

Overall, this is a good start for council, which has indicated a greater willingness to reduce expenditure and debt – which invariably translates to keeping rates increase down. However, this should only be the start of the journey.

In my opinion, there is still room to make further improvements on reducing expenditure and reducing the need to increase revenue (and increasing rates).

This might mean that some services would be reduced or cease. It might mean that some services are delivered through shared service arrangements with the private sector or other councils. It might also mean that their are some asset sales or fundamental questions are asked about whether council should be involved in commercial activities, and instead concentrate on its regulatory functions to achieve positive community outcomes.

Debt

Council debt is very much like shifting a container ship. The larger it is, the longer it takes to turn it around.

ContainerShip

The good news is our projected debt is planned to be reduced. But it will take time and requires discipline with future spending decisions. Choices will need to be made, not only within service areas, but between different services.

It’s a question of priorities.

So what will our debt and rates look like over the next 10 years. And what did it look like before 2013.

The debt position for the next 10 years has substantially improved. By 2025, projected debt will be around $109 million, with it peaking in 2018 to $193 million, if $25 million is invested in the Dam. How this is achieved is outlined on page 11 of the consultative document.

Essentially, its a $143.39 million reduction in expenditure over the 10 year period. However, a number of important infrastructural projects will still proceed. These are outlined on page 34 of the consultative document and include storm water initiatives (Borck creek and Richmond CBD improvements), water storage (the Dam), water supply initiatives to support growth, the Motueka library upgrade, and the second instalment of the Golden Bay recreational facility.

This is a marked improvement on where we have come from. From 2006, there was been a clear trend of escalating debt and expenditure. With debt beginning to increase from 2003.

DebtProjection2

So how did council accumulate this debt? The simple answer is that council spent more than it earned (as illustrated below). In my opinion it often borrowed money in anticipation of earning it, and often those projections were unrealistic or optimistic. In my opinion, council also appeared to over capitalise in anticipation of perceived problems. For example, widening roads. Or spent money on projects that were nice to haves – often within the community development budget. Again it is noticeable that spending began to markedly increase around 2003 and gained momentum after 2006.

DebtProjection4

Rates

The good news is rates increases will now be capped to no more than 3% (plus an allowance for growth). Growth is projected to be between 1.18% to 2.55%. This is a substantial improvement on the past (as illustrated below). However, I believe there is still room for improvement, but this will have to come from reducing or ceasing some activities that the council has performed in the past.

RatesOverview

Revenue

Council’s revenue is driven from three pools of income: (1) general rates, (2) targeted rates, and (3) other charges and revenue sources (eg, consent charges, forestry, and other commercial activities), as illustrated below.

OperatingRevenue

For more detail about the council’s finances read the Draft Finance Strategy report, located in the supporting information table (see http://www.tasman.govt.nz/policy/public-consultation/2015-2025-long-term-plan/supporting-information/).

The Dam decision

This is the big issue for this consultation. Do we proceed with a Dam, how much money should we be contributing, and how big should the dam be?

The majority (not all) of council has suggested a ratepayer contribution of $25 million. This comprises around $9 million to secure urban water supply for the the long term future, and a further $13 million for the environmental benefits of an improved river flow. The remaining amount (roughly $3 million) funds administration and planning.

Any plan B initiatives for urban water needs are likely to cost no more than the urban contribution for the Dam. However, it needs to be remembered that the urban water supply is statutorily protected – such that if there are severe water restrictions, maintaining water supply for people is a priority. Although this would come at a cost to those businesses dependent on water.

The environmental contribution ensures the river flow is maintained to around 1100 litres per second. It might be that a lower flow rate is acceptable. Alternatively you might question pif you are getting your money’s worth from any benefits from providing enough water to fill the river for trout or swimming. It might be that you are happy that there is enough water in the gravels, rather on top of the gravels. What do you think?

How much of the environmental flow is funded, and whether it is funded on a cascading tiered approach, or a flat levy, has yet to be decided. The contributor/exacerbator argument, that many submitters raised, has been accepted in principle. However, council continues to suggest that all ratepayers might be called upon to provide a contribution. What do you think?

To date ,the government has not made any noise on underwriting any cost blow outs for urban water users or assisting in the funding of the environmental flows. However, the government has made noise about providing financial assistance for irrigators. At the same time, Nelson council is consulting (in its consultation document) on any contribution to the Dam.

All the relevant Dam information is still located on the dedicated webpage (see http://www.waimeacommunitydam.co.nz) as well as the in the consultation documents.

Storm water

In a recent survey, storm water risk was, by far, the number one concern for Richmond residents. The question is, has the council done enough?

At present, the council has committed to ensuring the Richmond business centre receives immediate attention.

Council has not reduced the storm water budget from earlier years, whereas it has reduced expenditure in other areas. However, some may question if enough was done in the past.

Should council re-prioritise funding priorities so that known flood risks are mitigated before another heavy down poor happens. For example, shift funds from the transport budget (for new traffic lights on Salisbury Road), to fixing the 4 risk hotspots in Richmond. Or are residents happy to wait for work to be done over a longer period of time.

The edges of Richmond (in particular, Hart’s Road, Bateup Road, Wensely Road, the cemetery reservoir, and Selbourne Avenue), have not received any attention in the short term. Should they?

I mention the cemetery reservoir, because it nearly breached in the last big rainfall, had it not been for a resident clearing the overflow grill in the very early hours of the morning (we’re talking 1-2am). Given the new Olive Estate development has been given consent to discharge storm water water down its road and towards the cemetery, it very likely the cemetery reservoir will have even more water to hold, and is therefore more likely to breach. Some may question the council’s use of a cemetery as a flood plain.

Olive Estate has also been given consent to discharge 600 litres per second of water into Harts Creek (along Fairise Drive in Richmond South). With the reservoir above Fairise drive already expanded to hold storm water from the new Hill Street South development, its likely more water will be entering Harts creek.

In my opinion, council needs to urgently address improvements to Harts creek. This might only be digging it out deeper to allow it to hold more water, and replacing the narrowed pipe between Harts creek culvert and Bateup Road culvert. If this is not done, then I envisage even more water will spilling out of Harts creek, and making its way down Bateup Road in an uncontrolled fashion. Which is exactly what happened in the 2011 floods.

Unfortunately, I have got little support from the other Richmond councillors to invest money in fixing well known hotspots. In my opinion, council should be protecting homes from flooding, before spending money on other projects (like new traffic lights on Salisbury Road or road widening in Lower Queen Street). Its about priorities.

Council is also addressing Borcks creek which much of the Richmond storm water systems were designed to connect into. In fact, Richmond South was at one point in time, prevented from further residential development until Borck’s creek connection work was complete. How this condition was ever removed from the District Plan is beyond me, especially when the revised plan sought to intensify development in the Richmond South area.

For more detail around what is (or is not planned) see the document entitled “Stormwater Activity Management Plan” located at http://www.tasman.govt.nz/policy/public-consultation/2015-2025-long-term-plan/supporting-information/#amps.

Water (supply and quality)

The council has already undertaken to improve water quality in Richmond. In my opinion, infrastructural investment which was well overdue, and should have been done sometime ago before spending money on community development initiatives (like recreation centres). Its about priorities! Fortunately this has now been done, with the new water treatment station coming online this year.

At present council is trying to supply water more water to the Richmond South development area (south of Hart’s Road). To do this council is shifting water around during low consumption periods (mainly over night). Should council be investing in better water supply infrastructure, rather than putting together infrastructure in an ad hoc fashion?

Water charges and expenditure

Water charges are increasing to service expenditure.

Operating expenditure increases from $11.2 to $16.1 million over the 10 year period. This is due to inflation, increased loan servicing costs and network growth.

WaterExpend

To address increasing expenditure, the daily charge is proposed to rise from $0.82 to $1.25 over the 10 year period. The volume per cube is proposed to rise from $2.09 to $3.15 over the 10 year period.

WaterCharges

This roughly translates into the following revenue forecast.

WaterRevenue

Capital expenditure fluctuates over the 10 year period. The notable peak in year 2017-18, in addition to the dam, is due to the Wakefield Treatment Plant ($4,000,000) project.

WaterCosts

For more detail around what is (or is not planned) see the document entitled “Water Supply Activity Management Plan” located at http://www.tasman.govt.nz/policy/public-consultation/2015-2025-long-term-plan/supporting-information/#amps.

Roads

The roading budget has been reduced. This has been achieved by sweating the assets more than in the past. Effectively, roading assets were being replaced (maintained) at very high levels, often being replaced in anticipation of deterioration based on industry best practice, rather than evaluating if the road actually needed to be replaced.

Service levels

In my opinion, the council has a very high level of service in roading compared to the past. You only have to look around to see a high level of capital investment. For example: a pedestrian island on Hill Street with Steel protection barriers, that only has room for one person; traffic lights on Salisbury road when a cheaper round-about would have done the trick; roads being unnecessarily widened in anticipation of increasing use, rather than responding to increasing use; sealing roads that perhaps should not have been sealed, and then having to maintain them.

The roading work that is projected to be done is outlined in the councils activity management plans. These can be viewed in the document entitled “Transportation Activity Management Plan” located at http://www.tasman.govt.nz/policy/public-consultation/2015-2025-long-term-plan/supporting-information/#amps.

If you think some projects are unnecessary – then let council know in your submission.

More traffic lights?

In my opinion, the roading budget needs to be reduced further. For example, the long term plan is proposing two more sets of traffic lights on Salisbury Road. One at the T-junction of William Street, and another replacing the old round-about at the Queen Street\Salisbury Road intersection.

At $1 million a pop, this type of proposed expenditure is unnecessary. Its complete over-kill. My own assessment of the William Street intersection shows that there is only a 20 min period where the road becomes congested and this is primarily to do with the location of the pedestrian crossing next to the intermediate school and the prior traffic lights which send through large blocks of traffic – long enough to block William Street when people are crossing.

Replacing the old around-about, which has probably been the best roading investment council made, with more traffic lights, is in my opinion just bonkers. I’ve continually advised staff that traffic lights are not wanted by the community (in fact people go out of their way to avoid them). In the UK they are ripping out traffic lights and replacing them with round-abouts. At very busy intersections. See my earlier post on the case against traffic lights (https://greeningtasman.wordpress.com/2013/11/04/the-case-against-traffic-lights-removing-the-roads-to-nowhere/).

If you agree or disagree with the proposal to install more traffic lights, put in a submission.

You might also want to mention in your submission how the Gladstone Road\Queen Street traffic lights do not allow you to turn left into Queen Street when coming from Nelson (via the deviation). Apparently the left turn was removed as part of council’s ring road system.

I’m not sure how allowing the left turn again, compromises this ring road system (if at all), but its no surprise that businesses in lower Queen Street are having a hard time, when traffic can not enter lower Queen Street. Council need to allow the left turn.

Again, your submission will hopefully persuade others around the council table that residents want further change and more cost reduction. Because the more money saved, the less money council needs from you in the form of rates and charges.

Submissions

Submissions can be made in hard copy or online. The online submission form has the advantage of letting you make multiple submissions. So if you remember something after making your first submission, you can make another.

The online submission form is located at http://www.tasman.govt.nz/policy/public-consultation/make-a-submission/#form.

Corporate services committee meeting (19 March)

The corporate services committee meeting was held on 19 March 2015. Crs King, Mirfin, and Ensor gave their apologies for their absence, and Cr Dowler for appearing late.

The agenda for the meeting included the following items: (1) corporate services departmental financial performance update, (2) information services update, (3) commercial activities update (forestry, campgrounds, property disposals, Port Tarakoe), and (4) finance and treasury updates.

Council also considered under confidence: (1) the local government funding agency (LGFA) performance report update, and (2) the economic development work plan.

The report on the economic development plan was subsequently made public, although the frank discussion held with a senior Nelson Council staff member remained confidential. The economic development plan effectively consolidated earlier plans for both tourism and economic development outcomes into a single document that would form the basis of contracting such services from Nelson council.

Department performance

The financial results for the 7 month period ended 31 January 2015 show a saving (or positive variance) of $220,000 below the $4,132,203 budget. This was mainly driven by the lower than expected external interest costs and reduced borrowing (a saving of $323,992) and reduced maintenance costs (a saving of $25,850).

However, the positive variance could have been larger had it not been for larger than expected staff costs ($13,880 above the $1,711,780 budget) and larger general operating costs ($85,923 above the $840,816 budget). The increase in staff costs was mainly due to extra un-budgeted work on the Dam and less than expected staff movement (this is when there is a gap between staff leaving and roles being filled).

Capital expenditure is also lower than the forecast budget. This is mainly a timing issue due to delays in earthquake strengthening work, but is expected to translate to a firmer saving as budgeted expenditure of $500,000 is now expected to cost only $100,000. The IT capital spend is down both in software and hardware and the full budget is not expected to be spent.

Information technology

It is worth noting that IT expenditure in the long term plan (LTP) has not been inflation adjusted over the 10 years of planned expenditure as software and hardware costs reduce over time.

The new digital LIM process will go live in April 2015. The process will provide greater integration between LIMs and GIS, document management, and local government systems, and should result in improved processing times. A new electronic submissions process has also gone live as part of the long term plan process, now underway. The system is expected to substantially reduce staff time in manually processing submissions.

Quotable value has advised that just over 400 objections have been received to the recent property revaluations and hope to resolve all of them by 30 June 2015.

Commercial activities

Initial seismic testing has been received for a number of council buildings. These include: (1) Golden Bay museum (old part, 60% compliant, extension, 100% compliant), (2) Collingwood museum (60%), Ngatimoti hall (55%), Murchison service centre (60%), Brightwater hall (60%), Spring grove hall (50%), and Hope hall (35%). A more detailed report has been sought for Hope hall.

The 6-monthly reports for Port Nelson, Tasman Bays Heritage Trust (the museum), and Nelson Airport were presented at the Joint Nelson-Tasman Councils meeting on 3 March 2015 (which I attended). Generally, the Port and Airport are performing well. The airport has some challenges in terms of the accounting treatment of depreciating assets (such as the runway on reserve land). However, I would expect the main area of focus for both councils will be the future performance and strategic direction of the Nelson museum.

Concerns have been raised about mountain bikes accessing forestry areas and how this will be managed. The new Health and Safety Act places greater risks (both financial and criminal penalties) on council and other organisations. Accordingly, a policy review has begun.

Port Tarakoe cargo volume is expected to grow by 30%, with 13,189 tonne already landed. Billing in December 2014 and January 2015 has been delayed due to data issues from weigh bridge system misuse. This is expected to be resolved by the end of March. The port is now fully secure. No health and safety issues have been reported. And external health and safety audit of port activities has been contracted.

Financial report

The underlying operational result for the period ended 31 January 2015, has provided a saving (positive variance) of $3.112 million against forecast budget. This figure removes the impact of development contributions and swap movements which cloud a proper assessment of council performance.

The net position is an accounting deficit of $1.227 million against a surplus of $4 million. Income was $8.7 million below budget and expenditure was also $3.476 million below budget. Key drivers included reduced roading subsidies from NZ Transport ($1 million), and accounting market write downs from swaps ($8.9 million). Offset by increased development contributions ($941,000), reduced road maintenance costs ($2.6 million), and reduced finance costs ($1.2 million).

Capital expenditure is $17.989 million. The forecast end of financial year budget is $48.435 million.

Total debt is $149.1 million (as expected) and is still projected to be $174.3 million by the end of the financial year, provided the capital programme is completed (and not carried over).

Council’s working capital position at 31 January 2015 was $8.8 million compared to year-end projection of $9.616 million.

Treasury

As at 28 February 2015, council borrowing was $142 million. The weighted average interest rate was 5.236%. Council’s cost of funds was 5.345% when interest rate swaps, bank margins, and line fees are included.

As at 28 February 2015, council had $147.78 million of interest rate swaps in place to cover current and future debt. Swap rates are currently below 5%. Swap rates have remained lower than expected and are not expected to move upwards for sometime.

It is noted that the swaps council acquire are paid off (interest and principal) during the swap term, so that there is no outstanding liability at the end of the swap term. For a discussion on swaps, see my earlier post.

Agenda and minutes

The agenda and minutes for the meeting are located at http://www.tasman.govt.nz/council/council-meetings/standing-committees-meetings/corporate-services-committee-meetings/?path=/EDMS/Public/Meetings/CorporateServicesCommittee/2015/2015-03-19.

Full council meeting (5 March)

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.

BestIsland

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.

Consultation

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.

Media

National business review http://www.nbr.co.nz/article/nz-councils-good-financial-health-debt-costs-dropping-future-funding-still-concern-bd-168450

The Herald http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11399768

The Nelson Mail http://www.stuff.co.nz/nelson-mail/news/67414134/Council-seeks-island-road-solution

 

Engineering committee meeting (26 February)

The engineering committee met on 26 February 2015.

Minutes for the meeting have yet to be released. I submitted my apologies for this meeting.

The agenda for this meeting included reports on the following items: (1) funding for the cycle trail between Wakefield and Spooner’s Tunnel, (2) changes to the minor roading improvement programme, (3) an update on planned infrastructure improvements to the Richmond town centre , (4) receipt of the Nelson regional sewerage business unit’s business plan for 2015-16, and (5) an update on the engineering services activities.

Tasman Great Cycle Trail

The council agreed to provide $300,000 in the 2014-15 annual plan for the cycle trail from Wakefield to Spooner’s tunnel, where equivalent funding from the government or other third party was provided.

I always had concerns with the addition of the words “other third parties”, as there was always the possibility, third parties would themselves be funded from council grants. Thus council would effectively be funding more than $300,000, at a time when council needed to apply the brakes to its culture of unbridled spending, and re-prioritise spending to higher priority issues – like protecting peoples homes from storm water flooding, first.

The issue before the council was whether a third party could match the $300,000 with in-kind payments. Staff suggested that they could assess the value of any “in-kind” contribution against market rates to determine a fair value.

In my mind this raised two issues. First, work that would have been volunteered for free would now be valued to extract council funding. There is also the risk that other funding arrangements might adopt a similar strategy. However, the reality is that if businesses raised the money in cash form, they would get it back from doing the work anyway. On that basis I did not see a problem in accepting a fairly determined “in-kind” contribution.

However, in my opinion, the time involvement of staff time (and cost) in determining a fair value was troubling. Troubling in the sense that it was played down in this report, but is often highlighted in other reports (eg the remission of rates for rezoned land) to justify a shorter remission period.

Minor roading improvements

The council’s programme of minor road improvements is estimated to cost $3.2 million.

I note that this value reflects the removal of the proposed $1 million William Street Traffic lights from the minor improvements programme to the long term plan. Something I believe is unnecessary and wrongly prioritises road works over flooding risk.

However, the budget for minor improvements is $2.1 million for the 2014-15 year. This effectively means that some minor improvements will not be done in the 2014-15 year. A prioritised list of minor improvements can be found at page 21 of the agenda.

Changes to the NZTA funding in December 2014 mean that footpaths and cycleway maintenance or improvements could receive subsidies from 2015-16 onwards.

Changes also mean that the under-grounding of power-lines in Motueka (costing council $210,000 and Network Tasman $1.5 million) would also be subject to subsidised funding on the basis of the additional safety benefits. On this basis, staff sought to reclassify the Motueka under-grounding work so it could be funded from the minor improvement budget.

NZTA’s changes to subsidising road safety improvements (like under-grounding power poles) could mean other areas (like Brightwater) might also benefit from under-grounding work. Staff will be recommending changes to the LTP to take advantage of the NZTA changes without increasing councils overall planned expenditure (and thereby not placing pressure on rates).

Staff also sought to defer expenditure on the Motueka high street signalised crossing until 2015-16 due to the need for further consultation with NZTA, who raised concerns over the timing and staging of planned work.

Richmond town centre

Staff reported on progress with the storm water options for the town centre project. The report contains some very useful hydrology modelling and diagrams.

However, the modelling does not include the Richmond south area (eg, Richmond cemetery, Wensley Road, Bateup Road, and Hart Road) which was under water in 2011. Two years on, Richmond south has lost much of the rural grass land to development, that has increased the hard surface area for water run off into the storm water system. And no doubt has contributed to increasing flood risk in the central business district and wider urban areas.

If there is one submission Richmond residents can make to the long term plan (LTP), it is a call for the council to start storm water work now, not later, and ahead of other spending (for example, road or traffic flow improvements). Mitigating flooding risk now, rather than later, just makes sense. Unfortunately, not all councillors see it this way?

Information and submissions on the LTP can be made from http://www.tasman.govt.nz/policy/public-consultation/2015-2025-long-term-plan/.

Sewerage business

Tasman sewerage is managed by a jointly owned entity (called the Nelson Regional Sewerage Business Unit or “NRSBU”) with Nelson council. Overall, the operation is running well.

The treatment plant is considered to have adequate capacity for disposal of treated waste and biosolids up to 2025, without further investment. Total operation costs are around $5.8 million, trending up to $6.4 million by 2019-20, and projected to trend towards $6.1 million by 2026-27.

Engineering services activities

It is always reassuring when there is not much to comment on.

The overall financial picture for the engineering department for the year ended January 2015 appears healthy. Operating income and expenditure is better than budgeted forecasts, with a positive variance of $3.5 million at this time.

Generally, there have been no significant issues in the areas of transportation, water, or waste. And any breakages or failures have been fixed promptly and within budgets.

Most projected work is on track with only a few projects experiencing issues (mainly around land ownership issues) that might risk delays. These include:

  • Murchison water treatment plant upgrade to bring drinking water up to standard (to be completed in March 2015),
  • Champion Road storm water culvert upgrade to Q100 specifications, and
  • Richmond water catchment modeling and town centre master plan (behind schedule).

A few items of interest include:

  • It is projected that $5.2 million may need to be carried forward into the next financial year to complete outstanding planned capital works.
  • New kerbing, storm water improvements, footpaths, and construction of new grass berms have been completed in Angelus Avenue (Richmond). This is a new development off Hill Street. I’ve noticed on walking around the development how some parts (rocks stock to part of the concrete flooring) of the storm water system had already come loose. I understand the storm water system is warranted by the developer for the next three years.
  • $1.7 million of LED street lighting will be rolled out in early 2015.
  • The narrow bridge replacement contract has been awarded and work is expected to be completed by April 2015.

Agenda and minutes

The agenda and minutes are located at http://www.tasman.govt.nz/council/council-meetings/standing-committees-meetings/engineering-services-committee-meetings/?path=/EDMS/Public/Meetings/EngineeringServicesCommittee/2015/2015-02-26.

Media

Waimea Weekly “Spooner’s cycle tunnel all go” (4 March 2015). See http://issuu.com/waimea-weekly/docs/040315/1?e=1913941/11709681.