Tagged: Mapua wharf

Full council meeting (3 December)

The full council meeting was held on 3 December 2015. Apologies were received from Cr Mirfin and Cr Inglis (with Cr Bouillir arriving late from her drive over the Takaka hill). All other councillors were present.

The agenda included: (1) September quarterly financial update, (2) Waimea community dam project update, (3) velodrome easement, (5) chief executive’s activity report, (6) mayor’s report, (6) action items, (7) machinery resolutions. Council also considered a confidential item (in-committee) in relation to the public release of the 10 September 2015 in-committee report.

Public forum had two speakers. My general observation for this meeting was that council moved rapidly through the agenda with very little debate. Perhaps a reflection that this was another meeting of information updates and simple machinery decisions.

Public forum

Maxwell Clarke complimented council on its quarterly financial report which he said was clear and precise. He also noted an improvement in communication from the engineering department over storm water work. However, Maxwell raised concerns over the limited time to speak (currently 3 minutes). He asked council to be more flexible. There was no reason why it could not be extended to 5 minutes. After all, Christchurch council provided 5 minutes. He also asked that council begin considering Plan B initiatives for water augmentation, given it was becoming very apparent that there was insufficient support for the Dam. He noted that 2700 ha (which was WCDL’s target) was 70% of all irrigators. He would be surprised if this was met at an $83 million funding level.

Martyn Barlow spoke about the concerns of the Mapua Boat Club and the restricted access to the boat ramp. He noted that TDC had now banned vehicles accessing the boat ramp between the hours of 10am and 7pm, due to “health and safety concerns”. This severely limits use for boat users who are dependent on the tide. Martyn noted that the commercialisation of the wharf precinct was done for businesses, tourists and visitors to Mapua – but not for the local community.

Martyn also stressed that boat use was on the increase and a boat ramp in the Mapua area was a necessity. One only had to see what was happening in Nelson. He noted that building the new Shed 4 had also compounded the parking and traffic management issues. In a circulated copy of his speech he stated that “… TDC has failed to meet their own objectives in the case of the local Mapua community’s use of coastal assets and we want to know why – and we expect our elected councillor’s to put it right! In the words of the late Alan Martin it’s the putting right that counts!”. I agree.

Unfortunately, council’s commercial aspirations in attempting to cover the entire site with the Shed 4 building (to maximise revenues), has meant access to the boat ramp is severely limited. In my opinion, a container development would have been less intrusive and met the aspirations of the council, businesses, and the community. The lack of vision and foresight by those councillors who supported this development has been exposed.

In my opinion, council may have to explore placing boat ramp access along the southern boundary of the reserve and allow boat users to share the carpark (which might have to be extended). If that can come in at around $80,000 then it would seem the most logical solution.

Waimea community dam project update

This was the fourth update report on the Waimea Community Dam Project. The report covers the period following the Council’s decision to transfer a joint interest in the resource consents for the dam to Waimea Community Dam Limited (WCDL) company.

Key points included:

  • Resource consents. The resource consents are now jointly held by council and WCDL. The Deed terms were satisfied by agreement.
  • Project Steering Group (PSG). The CEO has since withdrawn from direct involvement with the PSG in order to maintain independence and safeguard objectivity when providing advice to council. This leaves the PSG membership with: the Mayor, Cr King, Cr Edgar, and Cr Higgins.
  • Structure. WCDL undertook to begin seeking preliminary expressions of interest based on its proposed corporate structure and P50 pricing model. WCDL were advised that Council did not agree with WCDL’s proposed structure or pricing model. WCDL were advised that any consultation using the WCDL proposal was a risky assumption.
  • Procurement. An approach to procurement had been agreed. It was intended to issue a request for interest (ROI) in December. That time line has since slipped given the uncertainty on funding.
  • Land. Draft agreements were sent to the private land owners at the end of October 2015. All parties had confirmed receipt by 6 November 2015. Department of Conservation (DOC)/Crown acquisitions are to track alongside the private landowner agreements. The LINZ land comprises part of the dam footprint. The proposal is to resume the paper road under the dam and preferentially allocate it to Council under the Land Act. A meeting was held with Frank Hippolite (Ngati Koata) to discuss the purchase (or other treatment) of Ngati Koata land.
  • Plan change. A Plan change (two tier water allocation system) was notified on 19 September 2015, receiving 32 submissions.
  • Project costs. Total direct project costs (capital and operational costs) for 2014-15 year (up to 30 June 2015) was $1.582 million ($1.483 million plus $99,000). An additional $250,000 was spent up to October 2015, bringing the total direct project cost (as at October 2015) to $1.832 million (see page 31 of the agenda for detailed costings).

Much of the discussion focused on procurement advice which was expected in 2016. This advice was preliminary in nature and low cost. The CEO stressed the need to ensure funding streams have been secured before any tenders started. He also stressed that any consultation would need to respond to issues raised by communities. I agree. I also asked that “write down” costs (which is the cost to council if it walked away from the project) are highlighted in any future update reports.

Project Expenditure

2014-15

YTD October 2015

Direct operational costs

$99,000

$1,000

Project capital costs

$1,483,000

$249,000

Indirect operational costs

$218,000

$16,000

Total

$1,800,000

$266,000

$2,066,000

Project Funding sources
Existing operational

$218,000

$16,000

Waimea levy

$71,000

Targeted rates

$20,000

WWAC opening balance

$470,000

Loan funded balance

$1,021,000

$250,000

Total

$1,800,000

$266,000

$2,066,000

September quarterly financial update

Council agreed to quarterly reporting to full council as part of a workshop held on 3 September 2015. The September 2015 quarterly financial report provides a snapshot of the financial highlights of the first quarter.

Year end Forecast

Annual budget

Variance

Accounting Surplus

-$10,187,000

-$6,811,000

$3,376,000,000

Favourable
Operating Surplus

$2,352,000

$5,303,000

$2,950,000,000

Favourable
Total Net Debt

$158,982,000

$173,267,000

$14,286,000

Favourable
Expenditure

$99,422,000

$101,634,000

-$2,212,000

Favourable
Income

$108,467,000

$107,303,000

$1,164,000

Favourable
Capital Expenditure

$50,107,000

$50,400,000

-$292,000

Favourable

Overall the financial position of Council remains extremely strong and in line with year end budget expectations. The notable exception being the debtors balance.

Total net debt

The forecast year end net debt position for 2015-16 is now $159 million ($14 million lower than forecast in the LTP).

Opening Net Debt 2015 July $140,318 million
Net Debt 2015 September $142,513 million
Forecast Net Debt 2016 June $158,982 million
Net Debt 2016 June (per LTP) $173,267 million

20151203-FC-p15

Income

Income is above budget by $734,000 with a forecast excess of $1.164 million at the end of the 2015-16 financial year.

Expenditure

Expenditure is below budget by $2.089 million with a forecast underspend of $2.126m at the end of the 2015-16 financial year.

Debtors balance

The total debt ledger is up $1,843,076, and 3-month overdue ledger up $1,221,463, from September 2014.

20151203-FC-p19

Chief executive’s activity report

Highlights from the CEO’s report include:

  • Finances. For the period ended October 2015 the Council had a surplus of $3.83 million above the budget. External debt is $144 million compared to a budget of $168 million. Capital expenditure is $18.47 million lower then budget on a year-to-date basis (subject to capital carryovers of $15.59 million).
  • Health and Safety. Council have been invited to participate in a Safety Star Rating Scheme (SSRS), a new WorkSafe pilot scheme which is expected to replace the current ACC Workplace Safety Management Practices scheme (WSMP).
  • Economic Development. The Economic Development Services Review Group met on 9 November 2015. The areas of focus for the new entity were agreed. And are aligned with council’s outcomes as prescribed in the funding agreement with Nelson council.
  • Landfill. The basis for asset valuations of a joint landfill proposal with Nelson council has been agreed. In my opinion, this is an important step towards more shared services between both councils, and will be a win-win for ratepayers.
  • Pre-election report. This is required to be produced prior to 1 July in the year that local elections are held. The purpose of a pre-election report is to provide information to promote public discussion about the issues facing the local authority. The financial information and the text will be prepared in April and May with the final version ready for sign off in mid- June.

Velodrome easement

Council resolved to grant an easement to Network Tasman to convey electricity to the new velodrome on Saxton field. The new power supply is expected to be substantially less intrusive than the old supply. The new power supply requires only one power pole and associated stays in a location where there is already an existing power pole. The rest of the supply is by way of underground cabling.

Mayors report

During the mayor’s report I asked mayor about what progress had been made over a request by residents for TDC to do a road swap with DoC on the Takaka Hill. According to reports, Doc had threatened to stop the public and property owners from using a reserve road on the top of Takaka Hill which was used to access private properties. The mayor advised that he would be facilitating a solution between residents, DoC, and TDC. I will be watching this space with interest.

I also advised councillors that I spoke on behalf of the council at the Inaugral Trans-Tasman Golf-Croquet Test series, which New Zealand had won. I have reported my speech in an earlier post.

Machinery resolutions

These resolutions confirms documents signed under delegated authority and council seal. They included: a partial surrender of easement and alteration of easement in gross; and a forest management agreement with PF Olsen to manage the council’s forest estates for a term of 12 months (from 1 July 2015 to 30 June 2016).

In-committee report

This item arose from my request to release a confidential report to council on the Waimea Community Dam (dated September 2015). The mayor anticipating my request put a motion to council (recorded below) outlining his reasons why the report should not be released. While I am unable to summarise the discussion, I am able to report the voting. Although I am unable to report who supported making the voting public (and who did not).

Unfortunately, I did not secure support from the majority of council to make this report publicly available. Nor am I able to explain the arguments I made or the argument’s the mayor (and others) made. All I can say is that in my opinion the mayor’s argument made no sense and was quite ridiculous given some material would have been redacted. Clearly old habits are hard to break. The official minutes record the following resolution and outcome:

1. Receives the Request to Release 10 September In Committee Report report RCN15-12-08; and

2. Declines to publicly release RCN15-09-13 (Supplementary Report – Waimea Water Augmentation Project).

Cr Greening called for a division.

Bouillir Against

Bryant For

Canton Against

Dowler For

Edgar For

Ensor For

Greening Against

Higgins Against

Kempthorne For

King For

Norriss For

Sangster For

CARRIED

Agenda and minutes

The agenda and minutes are located at http://www.tasman.govt.nz/council/council-meetings/standing-committees-meetings/full-council-meetings/?path=/EDMS/Public/Meetings/FullCouncil/2015/2015-12-03.

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Full council meeting (30 July)

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.

Public forum

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).

Background

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).

GovDam20150730

Workstreams

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.

Financials

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.

Financials

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.

Human resources

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:

Full-time Part-time Casual Fixed-term
Office of the CEO

5

1 1
Community development

47

31 2

0

Corporate services

38

1 0

3

Engineering

40

2 0

1

Environment and planning

81

11 0

5

Total 211 46 2

10

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.

Shared services

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 Annual Plan – Full Council meetings (30 May, 5 June, and 30 June)

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.

Motueka library

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.

Tourism

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.

Newspapers

http://www.tasman.govt.nz/council/media-centre/news/minimising-the-impact-on-ratepayers-remains-a-major-focus/

http://www.stuff.co.nz/nelson-mail/news/10227950/Final-decision-on-rates-plan

http://nelsonweekly.co.nz/funding-cut-to-cycle-trail/

http://www.stuff.co.nz/nelson-mail/news/10018498/Tasman-to-tackle-debt-crisis

“Shock as $18M blow-out found” (4 June 2014) http://issuu.com/waimea-weekly/docs/040614/1?e=1913941/8122090

http://www.stuff.co.nz/nelson-mail/news/9828399/Tasman-rates-to-rise-up-to-3-5pc

http://www.stuff.co.nz/national/10236222/Flooding-battle-to-cost-millions

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

An extraordinary meeting

Disappointment.

Its not a word I like to use. But its one I feel compelled to use.

It was recently reported that the Council has decided to purchase the Golden Bear Brewery building near the Mapua wharf (see http://www.stuff.co.nz/nelson-mail/news/9547920/TDC-in-talks-to-buy-Mapua-property and http://www.stuff.co.nz/nelson-mail/news/9480445/Council-aims-to-buy-Mapua-Wharf-building). This building also is home to two other smaller businesses.

This was a decision that came from a recently held “extraordinary” full council meeting held on 19 December 2013. For those unfamiliar with council meeting processes, “extraordinary” meetings are meetings that fall outside the normal diary of planned meetings. In effect, its an extra meeting called with limited notice.

For those with busy diaries (or other pre-arranged commitments), extraordinary meetings will sometime mean one cannot attend such meetings. For me (and Cr Sangster, Cr Inglis and Cr King) , this was such an occasion. However, with new found confidence  in the council’s ability to say no to old spending habits (albeit in hindsight misguided), I felt confident that the staff recommendation to purchase the building would be rejected. But alas, I was wrong. Hence my disappointment.

I might add, that my disappointment is also shared by others that have commented on the first report (above). One commentator (Atrout), called it “Truly a foolish move by TDC. Who is driving this acquisition?”. Another, (Joeblogg), added “I thought the council was meant to be getting back to core business and reducing rates, not being a commercial property developer”.

So why am I against the purchase of the Golden Bear building?

First, the role of council (in my opinion) is to set clear plans, guidance, and regulations that enable desired community outcomes. For that reason there should be no need for council to actively participate in business activities if one is adequately regulating those activities. Such that the market should be deciding what is a successful business venture, not the council.

Secondly, the council owns the land. At some point the lease will expire and at that point the owner of the building will either have to remove the building or sell it (probably at a discounted rate) to the council – subject to the terms of the lease. So why buy the building now, at what will undoubtedly be a much higher value? Why the urgency?

Thirdly, the former aquarium land (not 20 meters from the Golden Bear building) is ripe for development. If any of the existing businesses were to be forced out of their current leases due to the success of the Golden Bear Brewery, they (or other similar businesses) could (and would) establish themselves in this new location, without any loss of perceived amenity value provided by those businesses.

I add “perceived” amenity value, as I really do question what amenity value is offered by some of the other businesses that appear to have been protected by the purchase of the building. For example, I recently observed a UK tourist being turned away at one of the businesses because they did not accepted credit cards. What foreign tourist has a NZ cheque account that enables them to pay by eftpos? The tourist left the shop grumbling in dismay and clearly disappointed in the level (or absence) of service.

Finally, I feel the council needs to be consistent with its message. That message has to be, we are keeping debt down by focusing on core services. If it can’t find $100,000 for Port Tarakohe, how can it find more money for a building in Mapua? A building that may well have ongoing maintenance costs for council. I feel the money would have been better spent developing the aquarium site in Mapua (which is currently vacant and ugly) or paying off debt.

Other stuff

The extraordinary full council meeting also discussed other issues including: (1) the granting of a lease of 5 years to the Wanderers Sports Club and the Tasman Volleyball Association over part of the Brightwater Recreation Reserve for the purposes of operating a Gymnasium and undertaking Volleyball administration, and (2) the appointment of Cr Norriss (as Chair) and Cr Dowler (as Deputy Chair) to the Tasman Regional Transport Committee.

For the agenda and minutes of the extraordinary full council meeting, see http://www.tasman.govt.nz/council/council-meetings/standing-committees-meetings/full-council-meetings/?path=/EDMS/Public/Meetings/FullCouncil/2013/2013-12-19.