The engineering services committee meeting was held on 14 April 2016. Apologies were received from Cr Mirfin, and for lateness Cr Bouillir and Mayor Kempthorne. All other councillors were present.
The agenda (88 pages) included: (1) Richmond car parking survey 2015-2016, (2) Chairman’s report, (3) Water services – options for service provision – s 17A review, (4) Water and wastewater reticulation – Mapua, (5) Rivers works – options for service provision – s 17A review, (6) Rivers contract extension and procurement of new contract, (7) Severe rain event update, (8) Road safety update, and (9) Engineering services activity update.
Mr Maxwell Clark spoke about the new funding model for the Waimea Dam. He considered the revised model was good because it made it clear that the irrigators needed to pay their fair share. Something they were not currently doing.
Mr Graeme Dick (a property developer) spoke about the development of Mapua and the major restrictions relating to water supply. He urged the Council to create urgency (as it was not in the LTP) and to fast track the supply of new water to the Mapua area. He suggested a water pipe to Mapua would cost approximately $6 million and that 140 new sections would cover that cost. From development levies.
Cr Sangster spoke about the recent Takaka flooding and the issue with water ponding at the wastewater treatment plant. He urged the Council to include gravel removal from the Waingaro River (near Duncan’s bank) as a matter of urgency.
Richmond Car Parking Survey
A powerpoint presentation developed by Ben Norrish and Dylan Waghorn (engineering summer students) was presented to the committee by staff. This presentation was subsequently followed up with a council workshop on car parking strategies.
- Fluoridation. The mood of councillors was that the cost of fluoridation should fall on those who made the decision to fluoridate (ie the DHB) or central government, not TDC. Staff were asked to provide a report on the central government’s water fluoridation proposal including expected timeframes, costs, and the proposed legal framework.
- State highway liaison meetings. Councillors discussed the frequency and timing of these meetings. It was agreed the meetings should continue, but perhaps less often.
Water services review and procurement
Council resolved to: (1) receive the report, (2) not to undertake a s 17A review, and (3) proceed with tendering for procurement of water utilities operations and maintenance services. Council also instructed staff to develop a s 17A service delivery review programme in the relevant Activity Management Plan (AMP) for the Long Term Plan (LTP) 2018-28.
Generally, a local authority must review the cost-effectiveness of current arrangements for meeting the needs of communities within its district or region for good-quality local infrastructure, local public services and performance of regulatory functions (under s 17 of the LGA). However, a local authority is not required to undertake a review if they are satisfied that the potential benefits of undertaking a review do not justify the cost of undertaking the review.
In this case, the expiry of the water utilities service deliver contract has triggered a s 17A review. However, there are potential benefits and efficiencies from deferring a future service delivery review until the review aligns with the water utility contract renewal at Nelson council (NCC). In effect, a major shared services alignment on water services with Nelson council.
Water and wastewater reticulation – Mapua
Council resolved to: (1) receive the report, and (2) approve the use of up to $300,000 for a feasibility study for water and wastewater options in Mapua in 2016-17, funded from activity balances for water ($200,000), wastewater ($50,000), and transport ($50,000). Council also requested that staff report back to council on the process to be followed, including: potential stakeholder engagement, and a breakdown of the budget prior to commencing work on the feasibility study.
Private developers have been exploring alternative water supply proposals in Mapua to either boost the council’s system capacity or create new schemes. Recent investigations into interim water supply solutions for Mapua confirm that the Council’s water network is at capacity and cannot accommodate more growth above the water already allocated. The wastewater network is also at capacity and must be upgraded before it can accommodate growth beyond the developments already consented in Mapua.
Under the current Long Term Plan, water and wastewater works to renew the water main and provide substantial additional capacity for growth won’t be completed for approximately 12 years. Ongoing significant water pipe breaks are threatening the delivery of an acceptable Level of Service (LOS) to residents. These are not yet at a level that justifies early intervention.
However, staff are concerned that either growth demand or excessive pipe failure in the future could warrant action before upgrade works are currently programmed – or adequately planned. Hence, staff propose to advance a feasibility study in 2016-17 that will allow the selection of a preferred design option, sizing, and programming, for both water and wastewater. The study will consider whether works should be brought forward in the future (if needed).
Rivers work review
Council resolved to: (1) receive the report, (2) not to undertake a s 17A review, and (3) proceed with tendering for procurement of water utilities operations and maintenance services. Council also instructed staff to develop a s 17A service delivery review programme in the relevant Activity Management Plan (AMP) for the Long Term Plan (LTP) 2018-28.
Generally, a local authority must review the cost-effectiveness of current arrangements for meeting the needs of communities within its district or region for good-quality local infrastructure, local public services and performance of regulatory functions (under s 17 of the LGA). However, a local authority is not required to undertake a review if they are satisfied that the potential benefits of undertaking a review do not justify the cost of undertaking the review.
In this case, the expiry of the river works contract has triggered a s 17A review. However, there are potential benefits and efficiencies from deferring a future service delivery review until the review aligns with the water utility contract renewal at Nelson council (NCC). In effect, a major shared services alignment on river works with Nelson council.
Council resolved to: (1) receive the report, and (2) approves the extension of the rivers maintenance contract C840 with Taylors Contracting Ltd until 30 September 2016.
Council currently has a contract with Taylors Contracting Limited to provide physical works in “X” and “Y” classified rivers. This is a 5-year contract (3+1+1 years) which expires on 30 June 2016. Staff sought to extend the current contract by 3 months to enable a review and develop contract documents for the new tender process. If approved, the current rivers contract would expire on 30 September 2016.
Severe rain event
Council resolved to receive the report.
A severe storm event (across the whole district) occurred on 23-24 March 2016. Over 24 hours 250-350mm of rainfall fell across the northwest ranges and Kahurangi National Park area, and 150-200mm about the Richmond Ranges.
Total Rainfall (mm)
|Aorere at Collingwood||
|Anatoki at Paradise||
|Takaka at Harwoods||
|Takaka at Canaan||
|Riwaka at Takaka Hill||
|Waimea at Appleby||
|Brook at Third House||
|Lee at Trig F||
|Nelson at Founders Park||
The largest flood occurred in the Riwaka River. The flow in the South Branch tributary peaked at 96 cumecs and the flow in the North Branch tributary peaked at 94 cumecs, which was the second highest flow since records began in 1982.
The Takaka River catchment also experienced significant flooding. The upper catchment rivers reached flows corresponding to around 15-30-year flood events and the mid catchment 5-10-year floods events. The upper Takaka River at Harwoods flow site recorded the second highest level since records began in 1975.
|Location||Records Start||This Event (rainfall mm)||Previous Highest (rainfall mm)|
|Takaka at Harwoods||1988||267||265|
|Riwaka North at Littles||1995||227||186|
|Tui Close (Motueka)||1998||179||140|
Council resolved to receive the report.
Tasman District has always had a relatively low crash history. Generally, around 70 people annually are hurt when using the road network. In 2006 and 2007, numbers were higher than normal.
In 2006, there were 3 fatal and 7 serious crashes on our road network. A further 50 minor crashes and 97 damage only incidents also occurred. In 2007, there were 2 fatal, 24 serious and 91 minor injury crashes, and 119 damage only crashes. Since 2010, there has been a steady decrease in the number of people injured on our road network. In 2015, there were no fatal crashes.
The first graph shows the fatal and serious reported crashes from 2006 to 2015. A trend line has also been added to show the reduction over time.
The next graph shows all injury crashes from 2006 to 2015.
The last graph shows the above data as well as non-injury (damage only) crashes.
The graph below provides crash data from 2006 to 2015.
The graph below shows the traffic growth (vehicle kilometres travelled) across the District from 2006 to 2015.
Engineering services activity update
Council resolved to receive the report. Highlights from the managers report included:
- Finances. Overall operations income and expenditure is within or ahead of budget. A total year to date operating surplus of $5.8 million is recorded. The capital works programme is behind budget overall. We are still struggling to commit all the carry forward work from the last financial year and initiate all the new capital work in the current year.
- Health and safety. Water main excavation work vs power line (11kv power cable) incident resulted in an arc touching a digger bucket. No injuries were reported. Downer began an investigation on the morning of the incident. Immediate action has been to change their procedures.
- Planning. Staff have developed a 2016 activity planning business plan. The plan does not outline all of the team’s work, just priorities for 2016, and indicative priorities for 2017. Transport plans include: Tasman Speed Management Plan, and District Car Parking Strategy Review. Stormwater plans include: Richmond Catchment Management Plan (CMP), and Secondary Flowpath Management. Other projects include: Regional Water Supply and Demand model, Water related TRMP changes, Water Allocation Principles and Practice, and the Joint Land Development Manual.
- Asset database. Since the last update, 3,474 utilities asset features have been added, edited, or deleted, based on new subdivision works, repairs and council contracts are received. Progress has been made in reviewing and improving the drains data set with 138 new assets added, 34 amended and 10 features removed (added in error or superseded by piped systems).
- Developments. Three subdivision engineering plans have been received and approved since the last update. Council’s legal advisers are preparing a deed for an area in Richmond West which has a deferred residential zoning and has the potential for an additional 500 new dwellings. It is proposed that the area will be serviced by a new wastewater pressure sewerage system draining to Headingly Lane. Residential developments (future 60 lots) off Pitfure road in Wakefield are extending into residential zoned land; discussion with the developer’s agent is continuing. Pre-application discussions on future developments in Richmond south are continuing. The Hart subdivision (33 lots) on the corner of Hill street and Hart road is nearing completion. The Mapua Joint Ventures development is continuing with the next stages (24 lots) which will see the upgrades of the Seaton Valley Road and Mapua Drive frontages to the subdivision. Stage three (36 lots) of the subdivision in Grey Street Motueka is nearing completion.
- Stormwater. Secondary flow paths protected by easements in new subdivisions continue to be blocked by fences/gardens and enforcement may be required to maintain these flow paths. Work is underway to remove a number of willow trees and place rock protection in Reservoir Creek, Richmond. A programme of hazard identification at water utilities sites has commenced, starting with an assessment of stormwater inlets. Staff will be using iAuditor software on site which will ensure that data is entered electronically directly into the system in a consistent manner.
- Tender Portal. TDC now have our own portal for Tenderlink (www.tenderlink.com/tasman) which is linked to the Council’s website.
- Waste. Recycling tonnages continue to track above 2015, with year to date tonnages 24% above last year. Resource recovery centres have been busy over summer and total waste volumes are tracking 6% above budget.
- Roads. March has seen the completion of a 300 metre aggregate overlay and associated drainage work on Korere–Tophouse Road. This has remediated a section of road that suffered severe stress due to the logging activity along this route. The gravel section of Old House Road at the intersection with Central Road has been sealed as a safety improvement. Focus was also put on replacing, extending or installing a number of culverts including at Herring Stream Road, Tadmor-Glenhope Road, Hursthouse Street and the Motueka Valley Highway. Pavement repairs to various roads in Richmond included: Bateup Road roundabout at Wensley Road, Churchill Avenue and Hill Street Rip and Remake.
- Lighting. The conversion of street lamps to LED is on track for completion by June. Also planning is underway to convert Parks and Reserves lights which will also be completed by late June.
- Other work. Members of the Richmond’s Men’s Shed have recently completed painting (stain) the seats and gate in Sundial Square. Site Services re-cut a new track in the road reserve extension at the end of Hill street that connects to Hill Street South. Members of the Men’s Shed have also been involved in some of this work with clearing and cutting grass and they will also be constructing a short section of shallow steps.
- Cycle trail. A funding application has been submitted to MBIE for $223,481 for: Pomona and Marriages Roads off-road trail, Coastal erosion protection (Fittal Street), and estuary boardwalk and signage. The next focus for development will be: Wai-iti Domain to Quail Valley Road via Tunnicliff Forest, Nelson Forests Limited and Ewing Poultry; and South of Spooners Tunnel to Norris Gulley Picnic area.
- Jackett Island. Jackett Island has experienced two medium storm events since the last inspection on 7 September 2015. There are no reports of any damage to the sandbag wall. The sand bag wall was inspected on 21 March 2016 and is generally in good condition. A further quarterly survey of the sandbag wall and beach profiles was undertaken in March.
- Rivers. Expenditure for the river maintenance related work year-to-date was $657,000. This is $622,000 or 50% under the even monthly proportional year-to-date expenditure budget.
- Storms. Total costs to date for road cleanup and reinstatement from the storm event on 17-18 February 2016 is $60,000, which has been funded from existing maintenance budgets. This excludes costs to repair Tasman’s Great Taste Trail.
Enclosed below are a series of you tube video’s showing the development of a number of engineering projects council have started during my first term on council:
- Queen Street Reinstatement: www.youtube.com/watch?v=eEOo5vppSeQ
- Richmond Water Treatment Plant: www.youtube.com/watch?v=gKrTuARajjI
- Takaka Water Treatment: www.youtube.com/watch?v=F9N8AsLWrLY
- Borck’s Creek (stormwater): www.youtube.com/watch?v=h5-JHlxEk8Q
- Mapua Shed 4: www.youtube.com/watch?v=dHA7eTAZtg4
Agenda and minutes
The agenda and minutes are located at www.tasman.govt.nz/council/council-meetings/standing-committees-meetings/engineering-services-committee-meetings/?path=/EDMS/Public/Meetings/EngineeringServicesCommittee/2016/14April2016.
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 corporate services committee meeting was held on 15 October 2015. Apologies were received from Cr Mirfin and myself (also apologies for lateness from Crs Dowler and Bryant). All other councillors were present.
The agenda included: (1) Local government funding agency (LGFA) appointments, (2) rates remission application, (3) corporate services activity report, (4) financial report, and (5) treasury report.
Local government funding agency
The annual general meeting (AGM) for the local government funding agency (LGFA) is set for November. Nominations for the appointment of new board members was received by the LGFA. There were two nominations for two positions. TDC will likely be supporting those two nominations (although, it could vote against them).
The LGFA shareholder council is recommending an increase in the number of directors (from 5 to 6 directors) and a 15% increase in directors fees (spread over two years), as a result of a recent remuneration review. Apparently the boards current remuneration is 23% below the market for similar directorships. This translates to total board remuneration in 2015-16 of $324,000, and $348,000 in 2016-17. The board meets (no less than) 6 times a year.
TDC’s representative on the LGFA shareholder council is corporate services manager, Mike Drummond.
Rates remission application
The committee was asked to consider a rates remission application.
The owners of a property applied for remission of rates arising from a council initiated zone change for the 2015-16 year. The application was submitted two weeks after the due date, due to a family bereavement. Council had already granted a 100% remission (of $4,409) for the 2014-15 year on 20 November 2014. And 100% remissions for the 2012-13 and 2013-14 years.
I was not involved in considering the original application (in August 2013), but the subsequent applications had for consistency, carried over the earlier decision to allow 100% remissions, as there had apparently been no material change to the original facts.
On 4 October 2013, a resource consent was issued to operate a holiday park and construct a kitchen\laundry ablution block. The amenity building received consent on 15 August 2014 and according to the holiday park’s website, construction has been completed. The holiday park’s website (see http://www.holidayparknelson.co.nz/index.php/about-us) states (emphasis added):
The idea for Queen Street Holiday Park came about in early 2013 when Rod & Linda applied for planning permission to start a holiday park. Things have moved quite quickly since then with the introduction of a one bedroom fully self contained holiday unit. Then came the insertion of a roading system throughout the park, along with power and water access to over 58 powered and unpowered sites. The ablution block has recently been finished which gives campers a communal laundry and kitchen along with toilets and showers which offer separate facilities for wheelchair access.
Although, in their application they have stated that the ablution block is “not quite finished”. Council staff have also made phone calls to the applicant seeking clarification. The owners have confirmed that the ablution block is unfinished. At present, the holiday park caters to the self contained type of motorhome/caravan, and later in the year it is expected that they will open for those who don’t have self-contained toilet facilities.
The holiday park also has a cottage and holds 58 powered and unpowered camp sites. The holiday park advertises its cottage on trade me (see www.holidayhouses.co.nz/properties/59617.asp). The web page states:
This very comfortable self contained cottage is nestled in a corner of our ongoing newly developed Holiday Park situated just over 1 km from the Richmond CBD. With its own hedged in area, parking for two cars or maybe car and boat, relaxing lounge/dining/kitchenette with two single beds, separate bedroom with Queen size bed, bathroom, laundry, veranda with outdoor furniture and BBQ looking out to the lovely Richmond Hills this all makes for a relaxing holiday home away from home with an added advantage of maybe a friend with a caravan or motorhome parking up close by.
Wonderful view of Richmond Hills and the lights at night looking over Stoke & Nelson. Situated on a newly developed Holiday Park (ongoing development), on the front of the property we operate a Caravan & Motorhome sales yard
The owners also operate a caravan and motorhome sales yard (0.2ha of the 2.8965 ha property) at the front of the property. This business was present before the zone change (from residential to commercial). The commercial services committee on hearing the original application (in August 2013) for the first time, determined that no reduction in remission would be made for commercial activities, where the area used for that activity and the extent of the activity was unchanged from the period prior to the zone change.
In my opinion, this was a very generous concession in not excluding the caravan sales yard from the remission (as it potentially locks this land up for remissions in perpetuity). Whether it should be considered to be a precedent for future remission determinations might well be up for reconsideration.
Finally, the holiday park’s facebook page (see www.facebook.com/Queen-Street-Holiday-Park-437063009778241/, on 24 January 2015) stated:
Stage one now open! Self contained motorhomes and Caravan sites available with power and water. Also “Cottage in the Park” sleeps 4, fully self contained including laundry, kitchenette, separate double bedroom tv lounge/dining area, bathroom shower and toilet.
The facebook page also presents photo’s of customers using the park. As well as glowing endorsements from happy customers.
The remission policy
The councils remission policy (located at http://www.tasman.govt.nz/policy/policies/property-rates-policies/remission-policies/policy-on-rates-remission-for-land-subject-to-council-initiated-zone-changes/) states:
This Policy is to allow Council, at its discretion, to remit rates charged on any rating unit used for residential purposes that is rezoned as a result of a Council initiated zone change. The aim of this Policy is to allow the Council to consider remitting rates for those ratepayers most adversely affected by an increase in rates when the land value of their rating unit increases as a result of a Council initiated zone change. The Council’s preference is to allow a transition period before affected ratepayers are required to pay the increased rates in full. It is accepted that the rates remitted will be paid by other ratepayers.
Application to facts
First, in my opinion, council should allow the application to be considered even though it was late by two weeks. This is because of the following reasons. The lateness provides no advantage to the applicant. In fact, quite the opposite. It allows the council to consider other facts that might have appeared after the application was suppose to have been submitted. Further, given this is a remission application, the financial advantage is with the council, as without the remission being approved, the owner would have to pay the increased rates. I consider a bereavement to be a valid reason to waive any lateness. Finally, as noted earlier, the application is only two weeks late, which is not substantial.
In my opinion, the council has made a generous concession in not taking into account the caravan sales yard business in earlier remission applications. This is an activity that is consistent with the rezoning (ie commercial use). In my opinion, the concession should not have been made, as the logical conclusion of that concession is to provide a remission for that part of the land in perpetuity. That in my mind is not the purpose of the remission policy. In my opinion, the 0.2 ha should have been excluded, so that the original remissions were 94%, not 100%. I reach a figure of 94% by apportioning the excluded land (ie 0.2/2.9 ha = 6% used for business activity – 100% = 94% remission).
As I understand it, the purpose of the remission policy is to provide owners a transitional period to either undertake an activity consistent with the new zoning (so they can afford the rates increase from the zone change), or provide the owners enough time to dispose of the land, without being forced off their land or to sell at a lower than fair market price.
In my opinion, council should acknowledge that they made a mistake, but not seek to retrospectively claw back the concession. This would remove this treatment as a precedent for future remission applications.
The question then becomes whether the owner of the land has made the transition from a residential or rural activity (consistent with the original zone) to a business activity (consistent with the new zone). Where land has not been applied to a business use, some apportionment might be necessary, thus allowing for some remission.
In my opinion, no single fact should be determinative. Rather all the facts must be weighed together to determine if there is a business activity being operated on the land. While the holiday park webpage shows the owners are marketing a business, it is not absolutely clear if the webpage is still in development. It might be the business is still being established. For example, the webpage states the ablution block is finished, yet the owner states it is not.
However, the presence of other marketing initiatives on facebook and trade me would suggest that the there is now a business activity being operated from the land (consistent with the new commercial zoning). Subsequent enquiries have also confirmed that they are operating a business, although not at this stage for people requiring toilet facilities. The single ablution block, not being “quite” finished, should also not be determinative of whether a business exists (or not). All business operations will have ongoing development issues. This is one of them. The question to answer is whether there is a business activity now operating on the land consistent with the zone.
The residential home is described on the webpage as the manager’s onsite residence and should now be considered part of the overall business activity. Only a small portion of land at the end of the property appears to be unused. However, it is obvious, that this land is also earmarked for commercial development at a later stage and could be considered to be part of the overall holiday park activity.
Taking into consideration all of the evidence, I would decline the application. In my opinion, all of the land is being applied for a business activity consistent with the zone change. The owner is now using the commercial zone to operate both a caravan sales yard and holiday park. I suspect that the owners will be claiming their rates bill as a business expense and claiming tax deductions.
The committee unanimously resolved to decline the application.
Corporate services activity report
Highlights from the manager’s information update report are outlined below.
Overall, financial performance is good, with a strong positive variance on all budgeted activities. This has been driven in part by timing issues for information services expenditure, together with lower than budgeted interest costs (from good treasury management).
This was a significant milestone for the finance team. Improvements in the audit process ensured a smoother audit this year. Departmental overheads were under budget (due to cost containment and deferred work). Overhead surpluses were allocated across departments as a reduced charge.
The team is also revising reporting templates and input processes for budget managers, to ensure more accurate and timely data for the 2016-17 year.
A project to enable digital invoicing is progressing well. The project has provided an additional benefit of moving away from pre-printed invoices, which will provide the council greater flexibility.
In my opinion, a culture of continuous improvement appears to be establishing itself – and this is very welcome. Long may it continue.
Council has begun rolling out a new document management system (SilentOne), as well as upgrades to microsoft office (which is expected to be completed in early December 2015).
Out-of-region weekly data back ups (stored in Auckland) has begun. Nightly backups within Richmond continue.
IT has also tightened up user configurations in response to recent ransomware (where IT systems are locked up) and whaling attacks (where senior staff are targeted to approve financial transfers).
Mapua development (Shed 4) is now fully let (7 leases), with construction expected to be completed in mid-October and handover to council in November.
Shed 5 (Golden Bear building) will also undergoing re-development with the previous corner tenant (Hamish’s cafe) having departed and the Golden Bear taking over the lease from November.
Forestry management tenders have begun. A panel has been established to review the tenders. Recommendations will come back to council for approval. Co-sharing of recreational and forestry activities continues to create tensions for health and safety. Key areas for improvements involve greater separation, security, enforcement, and better communication.
The Motueka campgrounds repurchase of assets by council is planned for 9 October 2015. Work on building cabins started in August and will be completed by November 2015. Repurchase negotiations are continuing in Pohara. The urgent maintenance work in the Collingwood campground continues to take priority, with urgent works having been completed. One of the older cabins (at 3 William Street) is for sale to enable reinvestment in the campgrounds.
Port Tarakohe cargo volumes were up by 12% in September. Weigh bridge users are receiving weekly reports and are billed monthly. Talley’s have now accepted the councils methodology for weigh bridge billing, but disputed the treatment of TARE weights. A meeting was held to discuss a way forward. Their bills remain unpaid. A health and safety work plan has been developed. No serious incidences were reported for the past quarter. Recreational boating occupancy has remained stable at 77% and the storage compound at 30%.
A commerce commission complaint was made by the mussel farmers. The commission advised no action was being undertaken and advised the parties to reach a commercial resolution. Council has engaged PWC to review the charging methodology (including asset valuation and depreciation). This work is expected to be completed in January 2016.
Port Nelson will be updating its company constitution to enable the appointment of new directors without falling below its minimum number of directors.
The LGFA has declared a dividend of 6.43% for 2014-15. This amounts to $119,982 for TDC’s shareholding.
This was an information update report (no decision required).
For the 2 month period, ended August 2015, the councils financial performance has been good, with an operational surplus of $137,000 (against a budgeted deficit of $3.395 million) for this period. This represents a positive variance against budget of $3.532 million (excluding: development contributions, vested assets, interest rate swap movements).
The net accounting position shows income was down ($1.632 million below budget) and expenses also down ($2.208 million below budget). The net result shows the budgeted deficit of $631,000 for this period, is actually $56,000 – a positive variance (or saving) of $575,000 (I note that the spreadsheet refers to $576,000, which I suspect is due to rounding up within the spreadsheet). Key drivers were: write downs on interest rate swaps (-$2.823 million), reduced operating expenditure (+$1.718 million), and lower finance costs (+$0.377 million).
Capital expenditure for the year is $2.093 million (against an annual budget of $34.301 million). This figure excludes the capital carry forward of $14.853 million from the 2014-15 year into the 2015-16 year.
Total debt is $145 million. Projected (budgeted) debt for year end (June 2016) is expected to be $168 million. A revised forecast will be undertaken in October 2015.
The total amount owing from debtors reduced from $6.439 million in July to $5.456 million in August. However, this is higher than the $4.652 million owing at the same time last year. In my opinion, better management of debtors needs to be an area of focus for council. I would like to see some aspirational targets set. Why can’t we get this down to $3 million over the next year or two?
This was an information update report (no decision required). The report confirms council is complying with its treasury management policy.
As at 30 September 2015, total borrowings were $140 million (as excess cashflow from the first rates instalment was used to repay debt). The total cost of funds is 5.385% (compared to the budgeted cost of funds rate of 5.7%). The weighted average interest rate (cost of funds) on borrowings is 5.294% (compared to 5.166% in June 2015).
As at 30 September 2015, council had $147.78 million of interest rate swaps in place (including some forward swaps). Adjusting for forward swaps, council has 103% coverage for existing debt, and 87% coverage over forecasted (June 2016) debt. Remembering that council forecasts debt to be $168 million by June 2016.
Councils current debt mix is roughly: (1) bank debt, $21 million (15%), (2) private funds, $30 million (21%), and (3) LGFA debt, $90 million (64%).
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/2015/2015-10-15.
The Corporate services committee meeting was held on 3 September 2015. Apologies were received from Crs King and Bryant. Crs Boullir, Sangster, Ensor, Canton and the mayor arrived later during the meeting. There were no public forum presentations.
The agenda included a number of information updates (or decisions to receive reports). The agenda included the following topics: (1) koha policy, (2) Motueka clock tower trust, (3) IS staff restructure, (4) property services, (5) Motueka aerodrome and UAVs, (6) Richmond unlimited, (7) commercial activities (Mapua shed 4 development, forestry, campgrounds, Port Tarakohe), (8) Nelson airport, (9) treasury update and swap rate policy change, and (10) information services strategy and work programme.
A financial report for the corporate services team was absent in this report due to activity pressures on the team.
This meeting was fairly straight forward and all the agenda resolutions were approved without amendment by council.
The council’s koha policy document (enclosed in the agenda at page 17) was reviewed by staff and no changes were recommended. The policy was adopted by council in June 2013 and was developed to clarify the circumstances in which donations and gifting of koha by council to third parties is appropriate.
Paragraph 7 of the policy document makes it clear that council will only give cash donations under “rare and exceptional circumstances”, which must receive the prior written approval of the chief executive. Payments are not koha if they have tax implications (for example, a payment for personal services).
Cr Dowler noted that the koha policy document (and all other policy documents) should have the name of the authorising officer who signed the policy (as the policy document only had a signature).
Motueka clock tower
The Motueka Clock Tower trust has provided a copy of its financial statements as required by the loan arrangement. The trust is required to make annual repayments of $12,000. This comprises $5,000 from the trust and $7,000 from council’s reserve financial contributions. The council loan to the trust has an outstanding balance of $74,724.
Richmond unlimited (representing local businesses) has submitted a copy if its annual report and financial statements to council. This organisation is funded by council through a targeted rate.
IS staff restructuring
The information services (IS) structure review is nearing completion with updated job descriptions and job mapping circulated to affected staff. The revised structure aims to improve internal customer service and prepare for future delivery and technology challenges. Three positions have changed. Minor cost savings have been achieves with no increase to overall staff numbers.
Operating expenditure for information services was 97% of budget, and capital expenditure was 55% of budget. This reflects a shift away from in house maintenance of software and hardware.
- lift and stairwell project for Motueka recreation centre completed
- seismic repairs to Motueka memorial hall competed
- new compressor for Richmond aquatic centre acquired ($21,000)
- sale of 95 wharf road under negotiation
- various licenses to occupy roads, road boundaries confirmations for land parcel surveys, and compensation agreements, made.
The civil aviation authority has released new rules relating to unmanned aerial vehicles (UAVs). This can be found on their website (see https://www.caa.govt.nz/rpas/index.html).
The Motueka aerodrome advisory committee will be meeting to consider the new rules. The Motueka aredrome operations and safety committee has already met to consider a request to operate a UAV within 4km of the airport. Any UAV operating within the 4km zone requires prior approval. The committee has drafted a set of rules to apply to the applicant (a land surveyor) and will consider future applications on a case by case basis.
The commercial subcommittee report (28 August 2015) also reported that the Nelson drag racing association has released its racing days. These are: 7 November 2015, 9 January 2016, 6 February 2016 (or 7 February if wet), 26 March 2016 (or 27 March if wet). See http://www.tasman.govt.nz/council/council-meetings/subcommittee-meetings/commercial-subcommittee/?path=/EDMS/Public/Meetings/CommercialSubcommittee/2015/2015-08-28.
The Nelson airport constitution was recently updated to include references to the appropriate legislation. The constitution now refers to the appropriate updated legislation (see http://www.nelsonairport.co.nz).
Great also to see some new operators in the region – with Jetstar, Origin, and Kiwi Regional Airlines now providing services for the Nelson region (see http://www.nelsonairport.co.nz/air/bacon-and-eggs-welcome-jetstar-to-region/, http://www.stuff.co.nz/nelson-mail/news/69661139/new-airline-originair-set-to-go, http://www.stuff.co.nz/business/industries/69662951/Kiwi-Regional-Airlines-names-start-date-and-routes, and http://www.nelsonairport.co.nz/air/air-rivalry-in-regions-welcome/). This is fantastic news for the region. Making the opportunity for travel to and from the region much easier (and cost effective).
The corporate services report touched on a number of topics covered in much more detail in the commercial sub-committee agenda (28 August 2015). I would recommend anyone with an interest in the councils commercial activities read that report (see http://www.tasman.govt.nz/council/council-meetings/subcommittee-meetings/commercial-subcommittee/?path=/EDMS/Public/Meetings/CommercialSubcommittee/2015/2015-08-28).
The shed 4 development has hit a few snags and is experiencing delays. Ground work is expected to be completed soon. Discussions are ongoing for the last three lease spaces in the new Shed 4 development. Hamish’s cafe has closed and moved out. The Golden Bear has developed draft plans for the former cafe space.
During questions, staff suggested that toilets would be developed in part of the former cafe space to separate the Golden Bear from the grass area.
Information about the development is located on the council page at http://www.tasman.govt.nz/tasman/projects/community-projects/shed-4/. For a time lapse update on the construction process (scroll mouse across the picture to see time lapse progress) see http://www.tasman.govt.nz/tasman/projects/community-projects/shed-4/#Progress.
- Fearon’s bush (Motueka Top 10 Holiday park). The repurchase of assets has been approved by the leasee. Legal documentation is being prepared and settlement is expected soon. The financial performance of the asset for the year ending June 2015 shows: net profit $194,000 (revenue $233,000 less expenses $39,000).
- Pohara beach (Pohara Top 10 Holiday park). Repurchase negotiations have started and are expected to be concluded in early 2016. The financial performance shows a net profit of $195,000 (revenue $318,000 less expenses of $123,000)
- Collingwood (motor camp). Infrastructure failures (electrical, gas and plumbing) were completed in June/July for $40,000. The financial performance shows a net loss of $5,000 (revenue $198,000 less expenses of $203,000).
- Riverview (Murchison). The new operators have delivered their development commitments and the debt write off of $49,000 has ocurred. The financial performance shows a net loss of $38,000 (revenue $38,000 less expenses of $76,000).
The annual report was presented in the 28 August commercial subcommittee report (see link above). The financial results were positive and were presented to the corporate services committee as the “best financial result to date”. Net revenue was $318,534 (126%) above budget.
At first glance, TDC’s forestry looks in good shape. However, a detailed read of the annual report shows that the result was if anything a very fortunate one, and could be better described as a result of good timing and very pro-active management, operating in a downward (bear) market.
According to the annual report, the “excellent revenue results were realised despite dramatic drops in export pricing alongside softening of the domestic pricing”. An average market price fall of 16% is certainly dramatic. And like dairy, the collapse of the export market price, was to a large extent driven by the china crisis (and their glut of timber).
Further, given we also cut more timber than we had planned to harvest, revenue should have been above budgeted forecasts (volumes were 104% of budgeted harvest volume). Added to the mix was the fall of the NZ dollar which increased wharf charges, although off-set by more competitive ocean freight charges.
Added to all of these factors was timing (ie the harvesting cycle). This year, Rabbit Island logs were due for harvesting. Fortunately, Rabbit Island logs (which was all of the harvested logs for the year) produced a high density (premium) log. Apparently its high density being attributable to the sandy soils and fertiliser (or bio waste) that it grows in. Supplying premium high grade logs meant the price drops were much softer than they would have been, had TDC harvested lower quality logs.
In addition, much of the fall in export markets was softened by selling into the domestic market. Roughly 86% of the 22,000 ton of logs harvested were sold domestically. While the domestic market price also fell, it did not fall as much as the export market. According to the annual report, the “strategy for growing domestic customer base and market access has been financially advantageous for the TDC. A comprehensive understanding of wood quality and matching supply to market demand resulted in domestic log sale growth, which also minimised the exposure to export log price volatility”.
TDC’s financial performance can also be attributed (in part) to other domestic timber suppliers backing off harvesting, as they wait for better prices. This allowed TDC to sell its timber in a domestic market that was not over-supplied (so domestic prices remained higher than they might have been).
Yet, there is still a risk of harvests (and revenue) being lost. The annual report observed that in “November 2014, 0.6 hectares of 21 year old radiata was burned. There was potential for significant losses”. This loss was on Rabbit Island. Fortunately, health and safety performance was excellent this year (although there were 8 minor incidents recorded).
When all of these additional factors are taken into consideration (other than just looking at the net revenue), the picture for TDC’s forestry (going forward) is not necessarily as good as it first appeared. The long term future remains very uncertain. I do wonder if council should continue in this space, or dispose of its forestry rights.
The new weigh bridge shows large volumes of trade entering the port that was not previously measured under the old system. The first seven months of operation (to June 2015) have been invoiced. All users have paid their charges, except Talleys, who continue to challenge the charging methodology.
A review of the methodology has been undertaken in light of the commerce commissions directions for the parties to reach a commercial resolution. Until the review by PWC is completed, no further action is being undertaken.
Occupancy has stabilised with: (1) moorings 100% (20 of 20), (2) marina 78% (31 of 40), and (3) pile berths 50% (10 of 20). The storage compound remains 30% full.
The financial performance of the asset shows a net loss of $106,000 (budget $154,000 profit vs 2014 $123,000 profit), with revenue $553,000 (budget $771,000 vs 2014 $486,000), less expenses $659,000 (budget $617,000 vs 2014 $610,000). The net loss is attributable to a drop in occupancy fees down $150,000 on budget, wharf income down $33,000 on budget, and boat ramp fees down $13,000.
The current plan strategic plan for information services is expected to be reset in 2016. The current plan has 4 strategic outcomes, with associated improvement projects to deliver those outcomes. Those outcomes are: (1) a customer focus that puts customers at the centre of processes, systems, and architecture, (2) active information management that provides easier access in a more transparent and useful way, (3) building better, more aligned processes, that reduce waste and improve efficiency, and (4) providing solid robust and resilient infrastructure that delivers that information.
Within these four aspirational pillars, a number of projects have been undertaken, including: implementation of an improved document management system (silentOne) and accounting software (MagiQ), digitisation of various manual paper based processes and forms (eg, resource consents, submission forms, etc) , and upgrading services (eg intranet, MS software, etc).
Setting the 2016-19 strategic plan is planned for the first quarter of 2016.
Councils debt (at 18 August 2015) was $151.5 million. The weighted average interest rate was 5.06%. Councils cost of funds (including interest and bank fees) was 5.15%.
As at 18 August 2015, council had $147.78 million of interest rate swaps in place (reflecting 86% cover of debt). In August, council undertook 4 swap extensions
A review of banking facilities resulted in $20 million of available credit facilities being cancelled. In light of the LTP’s forecasted debt levels, a further review of banking facilities will be undertaken and a reduction and consolidation of existing bank facilities is expected.
Standard and Poors credit rating review is expected on 8 September 2015.
The committee also resolved to extend the current swap policy requiring council authorisation from 10 years to 12 years. The reason for this change it to allow PWC to take up low interest swaps more easily (given the lowering of interest rates). In a fast moving financial environment, a delay of 6 weeks (being the length of time between council meetings) might prevent PWC taking up a good swap arrangement.
This resolution will come before full council for approval (as the corporate services committee does not have the necessary delegated authority). This is a good example, of the repetition of topics and issues that come before committees (and full council) and why I do not always feel the need to attend every meeting. A great deal of committee meetings either are dominated by information only updates, or require decisions to merely receive reports (hardly decisions at all).
My approach is to make sure that I do attend those meetings where I can actually make a meaningful contribution to policy outcomes, or where activities need to be challenged (or supported). This ensures my time is used efficiently – and I am not just attending meetings for the sake of attendance. In my mind its the quality of a councillors involvement (and the position they advocate), not just the fact they were at the meeting.
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/2015/2015-09-03.
The full council meeting was held on 30 July 2015. Apologies were received from Cr Canton (and Cr King and Bouillir for lateness). Cr Norris announced he had to leave for another meeting at 11am. All other councillors were present.
The agenda included the following items: (1) activity management plan approval, (2) special projects funding criteria for the Motueka community board, (3) economic development funding outputs, (4) parking at Mapua wharf, (5) joint development standards project for Nelson and Tasman, (6) reserve land re-classification for Takaka service centre, (7) Waimea community dam project updates, (8) the CEO’s activity report, (9) mayor’s report, and (10) machinery resolutions and action items update.
I will focus on the important topics.
There were three presentations at the public forum. My thanks to all three ratepayers (Ray, David, and Penny) who raised some good points.
The first raised concerns over the cost of water compliance reports that were posted to a ratepayer. They felt that if some unnecessary costs could be reduced (eg double sided paper, so two pages not 4 pages, and\or emailed instead of posted), water monitoring fees could be reduced. They felt council were not working very smartly to keep costs down.
I certainly welcomed this reminder that all aspects of council’s business needed to be operating smarter. Every time council do something, staff (and councilors) need to be asking, how can we do this smarter and more cost effectively. We have made some progress in some areas, but we still have room for improvement in others. Its a process of continual improvement.
The second item related to the Motueka community board and concerns that the criteria would unduly prohibit community driven projects. It was felt many community projects already undertaken would not have met the criteria. Accordingly, some wording changes were suggested. I will talk more about this issue below.
The third item related to council minutes. Concerns were raised that the minutes did not accurately record the opinions of councillors and that a degree of accountability of councillors decisions was lost.
I agree. Its why I write this blog, so that people know where I stand on particular issues, and why I often ask for divisions on controversial issues.
Waimea community dam
There were several items (including confidential items) on the the Waimea community dam (the Dam). The first item related to Dam costs to date, and importantly the write off cost for the council, should the Dam not proceed with any council funding (see item 8.5 at page 69). The second item provide an update on work streams (see item 8.6 at page 73).
By way of background, the Dam project is governed by a project steering group that includes the mayor, Cr King, Cr Higgins, and directors from Waimea Community Dam Ltd (WCDL), which is a private company representing irrigator interests. Any decisions requiring council involvement or funding have to come back to council for approval.
Information about WCDL and its constitution can be found on the companies office website (see https://www.business.govt.nz/companies/app/ui/pages/companies/3365573).
WCDL is responsible for raising capital from irrigators, crown irrigation (a government agency), and financial institutions (like banks). The Dam project is being co-ordinated within council, with council staff delivering many of the necessary work stream outputs.
The relationship of the parties is illustrated in the following updated diagram (page 79 of the agenda).
Work streams include:
- Financial reporting and funding. This work stream is ongoing (see financial discussion below). WCDL is seeking funds from the MPI’s irrigation acceleration fund.
- Project management. Work streams that are not critical have been put on hold pending a satisfactory response from WCDL on their business model and funding.
- Communication. A part-time resource is being recruited to provide communication support (including preparing funding proposals) for WCDL.
- Governance. The funding and support agreement with WCDL has expired. New agreements will need to be entered into for any more funding. The transfer of the resource consents from WCDL to council (as required under the funding and support agreement) is pending. This was discussed in-committee (in a confidential session). More work on the ultimate form of co-investment needs to be finalised. At present, WCDL has no proposition to take to potential investors.
- Land. Negotiations regarding an acceptable price for the sale of land are ongoing. An agreement on the negotiation process is ready to go to potential land owners.
- Procurement. Beca has completed preparing a fee proposal for the procurement strategy.
- Resource consents. The consent (with conditions) has been granted. A condition of the consent is the re-location of the “shovel mint” plant and preparation of a biodiversity management plan.
- Plan changes. Draft amendments to the TRMP to better reflect Dam funding arrangements is currently under consideration. Submissions closed 31 July 2015.
- Statutory processes. It is contemplated that there will be another special consultative process before council embarks on any joint investment in the Dam project.
The council has sought greater clarity over the council’s financial write down exposure, should the Dam not proceed. Basically, how much will TDC have spent by the time a decision is made on whether to start construction (or not). At this stage, it is estimated that the estimated write-off cost for council would be $2.449 million.
Mapua wharf parking
The expected parking shortfall from wharf redevelopment work (that includes the new $1.35 million Mapua development (shed 4), and the planned removal of parking within the wharf area) has provoked council to rethink its planned roll out of parking improvements for the Mapua wharf area.
The council had planned to spend $180,000 this financial year (2015-16), and another $350,000 in 2018-19 to complete construction of 100 parking spaces (at a total cost of $530,000).
The transportation manager (Gary Clarke) advised council that the project could be brought forward into the 2015-16 financial year at a total cost of $300,000, due to a revised parking design concept – providing an overall saving of $280,000.
The $300,000 would be funded from bringing forward $70,000 of the $350,000 intended to be spent in 2018-19, plus the $180,000 intended to be spent in 2015-16, plus a $50,000 contribution from the Mapua development. While the proposed costs are only estimates (and a degree of contingency needs to be built into the $300,000) there is an expectation tender pricing will be sharper.
This arrangement would also increase the total cost of the Mapua development to $1.4 million (ie $1.35 million + $50,000). As I have stated in earlier posts, I believe that if council felt compelled to become a landlord to ensure there was an ice cream vendor in the precinct (rather than regulator), it should have pursued a low cost container development (eg, $200,000), that would have allowed a good return on investment, while allowing lower (affordable) rents to be charged for tenants.
Special projects funding criteria
The Motueka community currently pay a $5 per annum charge in their rates that (contributes about $24,000) to the Motueka Community Board’s special projects fund. This amount is planned to increase to $10 in the 2015-16 year, resulting in a contribution of about $48,500.
Spending of the special projects fund is governed by a policy document that is administered by the Motueka Community Board. Before funding can be allocated to a special project by the Board, it must fulfill the policy criteria. Generally, the fund is for projects that are low priority for the district, but high priority for the ward.
To ensure funds are properly allocated the policy was revised. However, concerns were raised by board member Ogilvie that the revised policy was to restrictive. In his public forum presentation, he suggested that the general waivor (consideration number 15) from the 14 preceding criteria was overly restrictive as the circumstances had to an “extraordinary situation”. He suggested the word “extraordinary” should be deleted. To support his argument he suggested many projects undertaken by the board would probably not be considered “ extraordinary”. Applying the new criteria, he felt many of the projects already delivered by the board could not be considered “extraordinary”. For example, a road crossing was hardly extraordinary.
I raised board member Ogilvie’s argument as part of my questions – to put the matter on the table. I also raised questions over the priority given to health and safety issues within the criteria. My concern was the health and safety plan requirement (consideration number 10) appeared to overridden by the “extraordinary situation” waivor provided to the board.
Staff reassured council that this was not the intention. That the board would always have to keep in mind health and safety considerations when approving any project application – including the ability for the board “to consider and approve” application that did “not fully meet the criteria described in the policy”. Staff also reassured council that many of the examples provided by board member Olgilvie would meet the “extraordinary situation” threshold or would have met the other criteria without the need for the board to seek a waivor from the preceding criteria.
Cr Edgar also raised concerns over the wording of consideration number 8. Staff emphasised that projects had to be “bricks and mortar” type projects (eg maintenance of existing infrastructure). For clarification, staff reordered the wording.
Council resolved to approve the revised policy criteria with amendments that emphasised the underlying health and safety constraints on the boards exercise of any of the criteria.
CEO’s activity report
The chief executives activity report covered a number of items. These included: (1) the shared services memorandum with nelson council, (2) human resource (staff) update, and (3) financial update.
Provisions financial results for the 2014-15 year (June end) have been completed.
The accounting position provides a positive variance (surplus) against budget of $4.611 million ($13.916 million surplus compared with a budgeted surplus of $9.305 million). Council also achieved an operational surplus of $5.435 million (a $7.025 million reduction on budgeted expenditure against a reduced income of $1.59 million), and an adjusted operational surplus (including revaluations and dividends) of $7.318 million.
The reduction in budgeted expenditure ($7.05 million) was due to a number of factors including interest cost savings ($2.665 million), and maintenance cost savings ($4.4 million). It is noted that capital growth was higher than budgeted, with an additional $200,000 collected from rates, and an additional $260,000 from water meters.
Capital expenditure was $33.872 million. However, the overall capital expenditure budget was $48.682 million, which included $17.34 million of 2013-14 carry-overs, approved by council in October.
Closing debt is expected to be around $147 million for the 2014-15 year.
Overall a good result and certainly heading in the right direction.
Collective employment agreement bargaining with the New Zealand Public Service Association (PSA) has concluded and is expected to be within budget.
Council are currently at various stages of recruiting for a: (1) communications officer – new (0.6 FTE), (2) administration officer – resource consents – replacement (0.4 FTE); (3) administration officer – commercial – new (1 FTE); and (4) policy planner – urban and rural development – replacement (1 FTE).
All positions are within approved budgets for staffing and are either replacement positions, or new budgeted positions, or new positions funded from within available budgeted funds (what the report misguidedly terms “unbudgeted”, but probably better described as unplanned). For example, staff might not be replaced immediately due to an extended recruitment process and the delay in replacement provides funding room for a new unplanned position.
Current staffing levels are:
|Office of the CEO||
|Environment and planning||
Some good analysis on staff numbers and turn-over (over a number of years) are provided in the supplementary late agenda (pages 19 to 21). Generally, council has an average annual staff turn-over of around 8-9% with 15.3% of staff, 60 years or older.
For me, both statistics are quite informative. First, a large portion of staff will be entering retirement soon. This is an operational risk for the organisation and succession planning needs to be put in place for key roles. Secondly, staff turn-over is quite low. The national average is around 16.3% for 2014, and 13.5% for public sector entities with more than 100 staff (see http://www.lawsonwilliams.co.nz/userfiles/file/2014%20NZ%20Staff%20Turnover%20Survey%20-%20Summary%20Report.pdf). The low turn-over might indicate good organisational moral, or an unstable economy where people are unsure of changing jobs. Low turn-over also means that new thinking is not entering the organisation.
A memorandum of understanding (MoU) on shared services was signed entered into by Tasman, Nelson, and Marlborough councils in July 2012. The excutive teams of all three councils had agreed to recommend the agreement lapse and this was proposed in the original resolution before council.
However, the recent statements by the Minister of Local Government suggested that it might be appropriate to keep the agreement in place. The minister had stated at a recent local government conference (in Rotorua on 19-21 July 2015) that (my emphasis):
It is time for sustained, locked in change. So I reiterate, I will not legislate for large amalgamation. I am as tired as our communities are of having an argument over how many mayors there should be and over whom is bigger than whom and which area will dominate. Size doesn’t always matter, but long term sustainable growth in the best interests of all New Zealanders should. … This might mean a CCO on water or transport across a region. It could mean a different business structure or increased responsibilities and accountabilities for Regional Councils. It could even mean in areas that might put a number of CCOs in place for key growth and infrastructure that there is no longer a need for a Regional Council. Some councils may even choose to amalgamate. I fully understand and accept that one solution will not work across all of New Zealand. That is why the Local Government Commission will be working up various structure options for each region to look at and decide what works best for them, and then where necessary I will legislate to either set a new CCO up across a region – or even to take something away. I have zero interest in imposing unwanted change on you. But you know that our regions are not as cohesive as they need to be to support our challenges and our future growth. So I implore you to do something about it. Be brave – own the change and both the Commission and I will do everything we can to assist and support you. But let me be clear – there will be change.
I certainly welcomed this message. It’s what the Tasman community have being saying for sometime. We do not want to amalgamate, but we do want to work smarter so we reduce the costs of local government (and our rates).
In my opinion, the thrust of the message for neighbouring councils is become “cohesive” to support the challenges of growth. That means working together through shared service arrangements where it makes sense to share services. Whether through shared service agreements, or other delivery vehicles (eg, council controlled organisations (CCOs) , limited liability partnerships (LLPs), or other entities).
York valley landfill is the first major shared service arrangement between Nelson and Tasman for sometime. But it should not be the last. Both councils should be pro-active in identifying more opportunities to reduce costs and share services.
Agenda and minutes
The agenda (including supplementary late reports) and minutes are located at http://www.tasman.govt.nz/council/council-meetings/standing-committees-meetings/full-council-meetings/?path=/EDMS/Public/Meetings/FullCouncil/2015/2015-07-30.
The corporate services committee meeting was held on 23 July 2015. Apologies were received from Crs Mirfin, Bouillir and Ensor. All other councillors were present.
The agenda included: (1) treasury report, (2) finance report, and (3) managers report. An informative presentation was also received from council’s treasury advisor Brett Johanson of PricewaterhouseCoopers, Wellington.
Council debt at 30 June 2015 totalled $145 million. The weighted average interest rate on borrowings is 5.166%. Council’s cost of funds including interest rate swaps, bank margins and line fees being taken into account is 5.257%, compared to a budget of 6.10%.
At current levels, the market is now pricing in one 25 basis point (bps) cut in the OCR in July, and one 25 bps cut in the OCR in September.
Prior to the end of the financial year a high level review of council’s bank facilities was undertaken. This review resulted in $20m of bank facilities being cancelled. Now that the long term plan (LTP) has been concluded a more comprehensive review of council’s bank facilities will be undertaken.
The underlying operational result was a favourable variance of $7.159m once the impact of development contributions, vested assets and interest rate swap movements were removed from the accounting result.
The net accounting position is a surplus of $10.365 million, against a budgeted surplus of $5.512 million. The income was $0.438 million below budget, and expenditure was $5.291 million below budget. The key drivers of this were: (1) mark-to-market write-downs on interest rate swaps (-$7.190 million); (2) higher than expected Development Contributions and Financial Reserve Contributions (+$2.893 million); (3) lower than budgeted maintenance expenditure (+$4.4 million); (4) lower than budgeted finance costs (+$0.991 million).
Capital expenditure for the year is $29.401 million against an annual budget of $48.682 million. Total debt is $146.0 million. The projected year-end balance of $168.3 million was not reached, as a result of the effect of the operational surplus, and a request for a number of projects to be carried over to the 2015-16 year.
Council’s working capital position at 31 May 2015 was ($5.178 million) compared to the year-end projection of ($9.616 million). The major reason for this is the lower current debt balance at the end of May 2015.
- Departments financial results. These are showing a strong positive variance against budget (basically expenses are down). The largest area of favourable variance is operating costs. The drivers were: (1) property (cleaning $51,000, main office $17,000, Golden Bay service centre $10,000 and district libraries $12,000); and (2) information services site support ($87,000) down across all it areas.
- Quarterly reporting. With the LTP now adopted the Management Accounting team moves straight to the review of the production of monthly financial reports. The work plan is to move to a more comprehensive format of reports on a quarterly basis. This will enable a higher degree of forecasting.
- Water charge invoicing. The transfer of the daily water charge to the general rates invoices requires ongoing clear communication with customers. This is being done via Newsline.
- Information services. IS staff worked with Community Development to complete the Government Broadband Extension Funding, Registration of Interest (ROI) document by 10 July 2015.
- Electronic document management system. Team workshops are being held in July and August as part of implementing the new document and records structure in our document management system. Work has also begun on upgrading the network connection to Port Tarakohe. GIS and development staff have also been working on the Land, Air and Water Aotearoa (LAWA) national initiative (see http://www.lawa.org.nz/explore-data).
- Property services. The Motueka Recreation Centre lift and stairwell project is on schedule. Wakatu Incorporation has given their approval, as joint land owners, for a minor extension to the Motueka Library (which is awaiting building consent) and the seismic repairs to the Motueka Memorial Hall. The boat shed leases at Kina have been received back from the lessees and executed by the Council. A notice of requirement has been served on members of the Ashton family at Best Island. The notice is to acquire land for road to service the residents at Best Island. The Fittal Street lease has been re-marketed.
- Mapua development. All leases are current, with no arrears. Leases have been signed for 4 of the 7 spaces in the new Shed 4 rebuild. The last 3 are in final discussions/documentation and we expect these to be concluded before month’s end. Hamish’s Cafe announced its closure as at 26 July 2015. The tender price accepted was $1.095 million. The total development cost is now expected to be $1.35 million.
- Forestry. Co-sharing of recreational and commercial activities within council forests has caused some health and safety and operational risk issues this year. A review is currently underway to identify policy and other responses needed to manage these risks.
- Camp grounds. The repurchase of assets at the Motueka park was approved and has been accepted by the lessee. Legal documentation is being prepared and a settlement date of 16 July 2015 was planned. The repurchase negotiations at Pohara have been delayed due to urgent work caused by infrastructure failures at Collingwood.
- Port Tarakohe. Reporting shows large volumes of trade entering and exiting the Port. Weighbridge user error continues with TNL in particular, with new parties not being trained well. They have now been advised that penalty charges will be incurred for incorrect behaviour. No serious health and safety incidences were reported in the past quarter. Moorings remain fully occupied (20 of 20 filled). There are 8 vacancies in the marina berths (32 of 40 filled). The less popular pile berths remain half full (11 of 20 filled). The storage compound is 30% full.
- Commerce commission. The Commission has responded to the marine farmers complaint over the basis for setting port charges. However, they have made no statement on whether charges are appropriate (or not). Rather, the Commission has requested that the parties reach a commercial resolution on this matter. A legal opinion has confirmed that council has set fees correctly under s 12 of the LGA 2002.
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/2015/2015-07-23.
A full council meeting was held on 30 May 2014 and subsequently carried over to 5 June 2014. There were no apologies for the 30 May meeting. However, apologies from Cr Canton were received for the 5 June meeting. The annual plan was then finalised by full council at the 30 June 2014 meeting.
The 30 May full council meeting was the official meeting to discuss the final cut of the 2014-15 annual plan and any expenditure that would be undertaken (or not) during that year. And an opportunity to take on board feedback on the draft annual plan circulated earlier in the year to the community. The agenda was to consider the following big items: Motueka library, Golden Bay service centres, Golden Bay recreation centre, Tourism funding, and Cycle trail extension – as separate resolutions, with a single resolution for all the other items.
However, before this meeting, several workshops had already been held in the preceding weeks to consider submissions, debate the issues, reconsider positions, and provide the opportunity for like minded councillors (or blocks of councilors) to strike any deals. Therefore, this meeting was to a large extent a formality, but for some councilors like myself, it was also the last opportunity to convince others around the table to change their minds.
Day One – the debt grenade
The full council meeting on Friday (30 May) was to be the big day when we would confirm council’s expenditure program for the forthcoming financial year. Things began, as outlined in the meeting agenda, with the Motueka library proposal leading the discussion.
All councillors were in support of removing the $1 million refurbishment of the Motueka library from the draft annual plan. Why it was ever included in the draft annual plan remains a mystery to me – given the lack of support it had around the council table before the draft annual plan was released. Yet the majority of councilors still voted for it to be included in the draft annual plan. Yet here we were, listening to the same arguments and now agreeing to remove it. Was it’s inclusion in the draft annual plan (and eventual removal in the final plan) just a straw-man for something else?
I for one, thought it should have been removed form the draft annual plan (and deferred for consideration in the long term plan), in the same manner the Golden Bay recreation centre was. This would provide the community a transparent and clear direction from council about what projects were to be deferred, and importantly, why.
Generally, the argument around the table during pre-draft annual plan workshops was that a redeveloped hub in Motueka (that included a service centre, library, and other council services) in one location on Decks reserve, was the way to go. I certainly agree with that direction, as it consolidates overhead costs for a number of council services. But the archilles heel for the hub project was its cost. It was just too expensive, at a time when council needed to be taking stock of its debt position. In my mind, the time was not right to undertake such a project and the prudent step was to consider this project (and others, like the Golden Bay recreation facility) as part of a longer term strategy.
The alternative to the hub concept was to invest $1 million in a refurbishment of the existing Motueka library – that included minor expansion of space and earthquake strengthening. This was the proposal that eventually made its way into the draft annual plan. However, on the day, councilors agreed that this work was also not a good idea. It was felt that the earthquake work would not be required given the governments announcements that it was reducing the earthquake strengthening standard from 66% to 34%. Furthermore, some councilors around the table felt that investing any more funds into a building that was on leased land, was not desirable.
Rather it was better to invest any funds in a hub concept on land owned by council. Finally, it had been noted in earlier reports to council that book useage at the Motueka library was in decline and the use of web based services (eg ebooks) was trending upwards. In light of this trend it was unclear whether the pressure on space within the library was also in decline – and perhaps more time was required to see how this trend would impact on future spacial needs. Accordingly, it was decided to reduce funding from $1 million to $76,000 to allow for any earthquake strengthening work required.
In my opinion the inclusion of the $1 million refurbishment of the Motueka library in the draft annual plan (and its eventual removal in the final annual plan) was a $1 million straw-man for other items to be kept or included in the final annual plan (eg the Golden Bay recreation centre). This is because some around the council table considered that the removal of the library (and deferment of the service centre) gave them room to do other projects within the existing budgeted program of expenditure. And as observed above, the inclusion in the draft annual plan of a refurbished Motueka library had little support during earlier workshops.
If I had been forced to chose between a $3 million Motueka hub concept and $3.5 million Golden Bay recreation centre, I probably would have chosen the hub concept. Why? Because the Golden Bay recreation centre still had a number of years of good service left within it. If we could sweat our roads (eg, defer maintenance of roads in the annual plan), we could easily sweat a recreation centre for a few more years. Furthermore, during an inspection of the recreation centre we were told that the main concerns with the centre were access to showers from the visitor changing sheds (which currently involved a toweled walk to the showers) and the closure of the grandstand (on the roof of the centre) due to earthquake risk. Both minor inconveniences and costs. Finally, some in the Golden Bay community also did not support another recreation facility if it added more debt. In contrast, the Motueka hub concept provided service improvements and potential operational cost savings.
A debt grenade
After consideration of the Motueka library refurbishment, the finance manager was invited to make a presentation on our financial (and debt) position in light of council’s intended expenditure program. This was to be a later item in the agenda.
During this presentation, the finance manager informed council that due to the 2014-15 annual plan being the last year of the previous long term plan, all outstanding capital projects (eg work that had yet to start or had not been completed) would have to be recognised in the 2014-15 financial accounts. This would also provide a clear financial position when considering the next long term plan.
Basically, council had committed to $20 million of capital expenditure in earlier years that would be catching up with the council’s balance sheet in the 2014-15 year. In effect, around $9 million dollars of debt funded capital works that had yet to completed would be added to the 2014-15 financial accounts.
Some councillors were quite shell shocked by this apparent increase in the council’s debt position. Although others recognised that this was actually debt funded expenditure that council had already undertaken to spend in earlier years. At this point the mayor asked that the meeting be suspended until the financial implications of the debt could be analysed. Subsequently, the revised (and very real) debt position was reported in the media (see Waimea Weekly. see “Shock as $18M blow-out found” (4 June 2014) http://issuu.com/waimea-weekly/docs/040614/1?e=1913941/8122090).
The reality was that the council’s closing debt position, based on forecasted opening debt (of $167 million) would be higher than forecast in the draft annual plan. However, due to the forecast of $167 million being higher than actual debt of $148 million, the increase in recognised debt meant that the forecasted closing debt position would remain close to what was forecasted (around $173 million).
The reality was that our debt was still going up. It’s just the forecasted increase from $167 million to $173 million (a $6 million increase) would instead go up from $148 million to $171 million (a $23 million increase).
In both scenarios, new debt increases by approximately $6 million. That’s the real figure to watch. As is the closing debt position – which will translate into increasing interest payments.
A figure we cannot afford. At a time when we should be trying to minimise debt funding so we can begin to turn the debt funding of council activities around. We already spend $8 million a year in interest payments. Thats three community recreation centres a year!! Thats why I could not at this time support any debt funding of assets that are not critical.
Sorry Golden Bay, but getting our debt under control has to come first, and saving $3.5 million is an easy first win that would have made a sizeable dent in a very large debt ship that we have to begin turning around. Adding $3.5 million of fuel to an “interest repayment” fire just makes no sense to me especially when we not under any real pressure to replace the recreation centre. Finally, in my opinion, more pressing issues (like storm water) required council funds before we could spend money on recreational facilities.
If anyone tells you we do not have a debt problem they are deluded. We have got to stop spending on the nice to have items to ensure we have the head room to turn around our dependence on debt funding, preserve our credit rating, and ensure we spend our money on the more pressing priorities (like storm water). That should have started now. Alas, its been kicked for touch till next year.
Day two – a fait compli
Council reconevened on Tuesday (5 June 2014) to move through the remaining items on the agenda. Apologies were received from Cr Inglis and Cr Canton. All other councillors were present. By this time, the shock of the debt had lulled and many councillors felt that it was just funds moving around on paper. But as I alluded to above, the reality is that council debt was increasing by a further $6 million.
Golden Bay service centre
The draft annual plan proposed adding just under $1 million dollars to the 2013-14 annual plan for a rebuild of the council service centre.
This building was a council services building used by council staff and for the public to make enquiries, pay rates, and obtain resource consent information. The building is located on crown granted land. If the land is not used for council purposes, it will revert back to the crown. Staff were removed from the building when it was identified as earthquake prone (eg, below the approved 66% earthquake compliance requirement). Accordingly, staff were shifted to a temporary building, opposite the back of the Motueka public library.
This left the council with several options: (1) refurbish the service centre so its 66% earthquake compliant costing $380k, (2) rebuild a new centre for no more than $1 million, or (3) relocate the service centre to another location – either the library or information centre. Added to the decision mix were several additional considerations. First, the council could receive additional insurance funds if it included a commercial space in any rebuild. Second, any relocation would require additional expenditure of expensive fibre for sending data to the service centre. This effectively ruled out relocation.
In terms of a rebuild it was argued that there was little financial difference in cost for a new build and any refurbishment that met the 66% earthquake standard. Especially if the new build would enable a commercial space to be added that would be partially funded by the additional insurance and future rental income.
However, there was a larger financial difference if the refurbishment was only required to meet a 34% earthquake standard. The expected cost would probably be something less than $380k. Given the government had announced a forthcoming change in the earthquake standard (from 66% to 34%), it was felt that the financial argument for a rebuild did not stack up, and earthquake strengthening to a 34% standard was the more cost effective option. Accordingly, the project was deferred to the long term plan for further consideration and no budget for a rebuild was required in the 2014-15 annual plan.
I think this was a very sensible financial decision. And one that perhaps preserves the heritage value of the building. And due credit also to the Golden Bay councilors (Cr Sangster and Cr Bouillir) moving the change to the draft annual plan. Although I also appreciate this was a tactical concession to get the Golden Bay recreation centre across the line.
Yes, it would mean that staff would have to continue to operate from a very small temporary space – but only for another year or two. In my opinion, there is also still scope for some functions (not all) to be moved to the library, so that only planning functions operate from the temporary building. This might alleviate in the short term some of the spacial pressure. However, that is for a future discussion.
Moving forward, the council will be investigating how much refurbishment work is required to meet a 34% compliance requirement so staff can return quickly to their former building.
Golden Bay community centre (or recreation centre)
This proposal sought the replacement (and upgrade) of the existing rugby clubrooms and squash courts. The upgrade also proposed the addition of net ball courts. The co ncept and plans can be viewed on the councils website (see http://www.tasman.govt.nz/policy/public-consultation/recently-closed-consultations/feedback-form-golden-bay-community-recreation-facility-concept-plan/).
I attribute its demise in the draft plan on the finance manager’s presentation to councilors on our debt position just before it was considered. And Cr Higgins vigerous support of that message. That presentation emphasised the cost of adding any more debt funded programs to the council books.
We also heard that there was no legal obligation on council to provide a recreation centre in Golden Bay. In effect, the inclusion of a new recreation centre was a luxury that we did not have to commit to in the next financial year. We could take a “tea break” and consolidate our financial position. Rather than rush in, we could take the time to improve our financial position before embarking on any more projects.
Shifting the recreation centre to the long term plan would also give the Golden Bay community more time to raise the necessary finance while signaling the project had not been forgotten. We just needed time to sort out the councils finances first. All very rational and prudent.
However, in my opinion, the reality was that the inclusion of the Golden Bay recreation centre (together with other items) in substitution of the Motueka library was a missed opportunity to reduce debt at a time when interest rates are going up. The time to spend on nice to have items (like recreation centres), is when interest rates are low or trending downward. Not when they are trending up or when the demand (and price) for builders and contractors will be high as the Christchurch rebuild gathers stream.
While I appreciate that the councils commitment was changed from $3.5 million to $3.2 million (a $300k reduction). It still commits council to debt that in my opinion was unnecessary to commit to, when were are also starring down the barrel of a Dam proposal, as well as a strain on our storm water infrastructure, as rainfalls are projected to increase due to climate change.
At this point I note a recent article in the Nelson mail on stormwater (see http://www.stuff.co.nz/national/10236222/Flooding-battle-to-cost-millions). In that article it was stated that storm water and flood protection would mean more borrowing and more debt. In my opinion, this misrepresents the debate. The tension is not between addressing storm water issues and debt, it is between addressing storm water issues and spending money on other nice to have projects. Its a question of prioritising spending. Surely protecting peoples homes, comes before building recreation facilities?
As a community we band together to protect one another during a crisis. Mitigating the potential cost to the community of a major flood (not to mention the risk of potential insurance fee hikes or non-insurance, as well as litigation risk for council) surely warrants the investment. Not to mention removing the unnecessary worry ratepayers have whenever there is a major rainfall event. This is a political decision and the community need to speak up.
If Champion Rd can have Q100 storm water solution why can’t the other three or four hotspots in Richmond. For example, the Hart Rd\Bateup Rd intersection which receives rainfall from the higher Richmond south developments and was under water during the last three heavy rainfall events since 2011. Or the cemetery dam overflow (at the back of the Richmond cemetery), that nearly overflowed were it not for the valiant mid-night efforts or nearby residents removing flood debris from storm water grills – averting what could have been a major disaster for homes below the cemertery.
Finally, while the Golden Bay recreation centre will only add another $1 million of debt to the 2014-15 plan, the proposal is funded across two years. This means that council has already committed to the remaining $2 million of debt in the 2016-17 year. This places another road block in prioritising available funds on storm water in future years. And the overall increase in debt remains the same $3.2 million.
For the record, Cr Murfin and I opposed this expenditure. Cr Norris also voted against the amended resolution, although he voted against it on the basis it should have remained at $3.5 million.
This issue has generated a lot of confusion – and it has not been helped by poor communication of what council (or at least some councilors) set out to do – which was to review the return on investment from tourism funding. I’ve discussed this issue in earlier posts so I will not revisit the debate. However, the outcome of the annual plan puts in place funding for destination tourism for the 2014-15 year, with some incentive for the relevant stakeholders to resolve future funding before the end of this year.
Great Taste Trail (or cycle trail extension)
This proposal sought to build the next planned segment of the trail beyond Wakefield. During workshops leading up to the draft annual plan being finalised, many councillors were opposed to this proposal on the basis of the ongoing operational costs council would be exposed too against the limited financial return it might offer Wakefield businesses. However, the Mayor suggested that if he could secure 50% government funding would councilors support the cycle trail being added to the draft annual plan. On that basis it got support during the workshops. However, between the workshop and the proposed resolution, the funding source got widened to include other third parties (potentially including institutions that might received council grants).
To reinforce councils commitment that funding the cycle trail extension was only on the basis of government funding, and not from another entity that might be indirectly funded by council grants, I moved that the last three words of the resolution be removed – namely “or another third party”. Unfortunately, I received no support for this amendment and it was defeated.
Everything else (including the Mapua development)
Surprisingly (or perhaps not), the $1.2 million Mapua development was lumped into the fill-a-buster resolution – together with 70 other items for consideration.
As it was part of a single resolution, you had to either support the resolution or not. This meant that disagreement with one of the 70+ items meant you had to vote the whole resolution down, or note your dissent on any of the 70+ items being considered. For example, the $1.2 million Mapua development proposal.
I had thought given a number of residents raised concerns about this item, the level of general public interest, the size of the investment, and the fact the cycle trail (involving only $300k) had received a separate resolution, that the Mpaua development proposal would also have been separated out from the rest of the items, that were less controversial. However, the Mayor (who is responsible for setting the agenda) preferred to leave it in amongst the rest. However, as concession the Mayor allowed councillors to note their disapproval of any single item – which I chose to do – rather than seek to separate the item from the main resolution.
By way of a brief background, the Mapua development initiative proposes to build on the former acquarium site. Two build options were outlined by a WHK report. The first was a container option (similar to the one used in Christchurch) for around $100k. The second was a standard build for $1.2 million. This would be partially debt funded. A third option was to just lease the land and let a developer build and lease any new building.
In my opinion, its not for council to seek more equity from ratepayers in order to embark on new commercial activities. If ratepayers want to invest their money in new commercial activities they should not be compelled to do it through increases in rates. And lets be frank, thats what is being proposed.
I also do not believe it is for council to attempt to control what businesses operate in the Mapua precinct other than by regulations. That is for the market to decide. If there are undesirable businesses, they can be controlled through regulations, not buying up all the buildings so the council becomes the sole lease holder of the entire precinct. However, if councilors want to employ a strategy of ownership, then they should be doing it for the least cost.
In my mind the container option would achieve the desired outcomes in a more cost effective manner, as well as bringing back a buzz to the Mapua precinct, in the same way it has happened in Christchurch (see http://www.thefifthestate.com.au/archives/49798/ and http://www.china.org.cn/photos/2011-12/04/content_24070673_3.htm). The added benefit of a container development is that it would reduce the lease costs for tenants while providing a very efficient space to operate their businesses from.
Arguments have been made around small space a container would offer, but the type of family businesses some councillors seek to retain in the precinct could easily operate from smaller spaces – as is the case in Wellington. Although I should add containers can be made into larger spaces (as the pictures of the ChCh precinct show). A container development would also allow more space for public seating which is at a premium in this area. After staff costs, lease costs are a major hurdle for start-up businesses, especially craft businesses. A container development would provide opportunities for new businesses to establish themselves. Surely this is a good thing.
An argument was advanced by staff that the $1.2 million should remain in the budget so that full council could at least consider whether the proposal had merit. If it was removed, council could not consider whether the proposal had any merit. In my mind, council should have nipped the project in the bud then rather than waste any further effort by staff. However, that argument found favour and the majority of councillors (but not all).
In my mind, expenditure of $1.2 million (or for that matter anything above $200k) that would require more debt funding, did not have any merit. Accordingly, I voted against it and noted my dissent on the item.
Agenda and minutes
The agenda and minutes for the annual plan are found at: http://www.tasman.govt.nz/council/council-meetings/standing-committees-meetings/full-council-meetings/?path=/EDMS/Public/Meetings/FullCouncil/2014/2014-05-30 and http://www.tasman.govt.nz/council/council-meetings/standing-committees-meetings/full-council-meetings/?path=/EDMS/Public/Meetings/FullCouncil/2014/2014-06-30.
“Shock as $18M blow-out found” (4 June 2014) http://issuu.com/waimea-weekly/docs/040614/1?e=1913941/8122090