Tagged: Mapua

Corporate services committee meeting (5 May)

The corporate services committee meeting was held on 5 May 2016. Apologies were received from Cr Mirfin and Cr Dowler for absence, and Cr Ensor for lateness. All other councillors were present.

The agenda (requiring no decisions of council, other than to receive reports) included: (1) Treasury presentation from PWC, (2) Treasury report, and (3) Corporate services activity report. A confidential (in-committee) report in relation to the proposed sale of 11 Fittal Street in Richmond was discussed.

Treasury presentations

Brett Johanson and Jason Bligh from PricewaterhouseCoopers (PWC) gave a presentation on treasury matters. This included responding to questions presented by councillors.

Cr Bouillir and myself submitted several questions on behalf of some concerned residents of Golden Bay – much to the frustration of the chair (apparently this was not normal practice). In my opinion, one of the roles of a councillor is to ensure residents concerns are adequately addressed and answered – even if they may disagree with the outcome.

Unfortunately, Cr Norris took the opportunity throughout the rest of the day (as a bit of a running joke) to ask councillors if they were asking questions on behalf of someone else. While I could see the amusing side, some people might suggest this is a form of bullying or intimidation (ie, don’t ask questions on behalf of others, otherwise I will make fun of you all day).

My three questions on behalf of a Golden Bay resident were:

1. Why is our local authority paying an interest rate higher than I could obtain by walking into my local building society? At the time of the question was submitted, TDC was paying around 5.331% in interest.

2. Could the TDC provide factual examples of local authorities that have derived significant financial benefit from dealing in interest rate swaps?

3. If interest rates were to fall to say 1% for the remaining duration of existing swap contracts, what would the financial impact on TDC’s finances be at that time?

Background

Before jumping into PWC’s responses, its useful to understand how council borrows money and what “swaps” are.

At present, council continues to carry a large amount of debt. However, this total debt is actually made up of much smaller parcels of debt that have been entered into at different times, have different durations and end dates, and have different interest rate obligations. It’s also why council often talks in terms of “average” interest rates.

So what is a “swap”? A swap is a derivative contract whereby two parties exchange financial instruments (containing specified obligations). The swap agreement defines the dates when cash flows are to be paid and the way they are accrued and calculated. Swaps do not trade on exchanges.

Swaps can be used to: (1) hedge certain risks such as interest rate risk (which is what TDC is doing), or (2) speculate on changes in the expected direction of underlying prices or interest rates, in order to make money.

This later (revenue earning) type of swap is common in America, where local government might have their income (or total rates take) capped. In order to raise additional revenue above their cap (perhaps for an unexpected infrastructural expense), they use their capacity to service debt to raise income (by underwriting the interest rate risk of the other parties).

In the UK, the Hammersmith council entered into such an arrangement, and while making money at first (when interest rates were low), subsequently made substantial losses, when it had to underwrite the rising interest rate obligations of the other party. The TDC is “not” engaged in these type of swap arrangements. Rather, the TDC has entered into swaps to reduce exposure to interest rate risk, not make money.

The most common type of swap is an interest rate swap that has the effect of transforming a fixed rate loan into a floating rate loan (or vice versa). TDC has a number of floating rate loans. In order to obtain interest rate certainty and mitigate risk, TDC has entered into a number of swap contracts. Council also has the the opportunity to blend (and\or extend) SWAP agreements where they provide TDC financial advantage (ie as interest rates lower).

Is TDC paying to higher an interest rate?

PWC advised that TDC borrows at commercial rates, not domestic mortgage rates. TDC also borrows funds on longer terms than the average domestic mortgage. Most domestic mortgages will be on a short term 1-year floating rate, or fixed for short durations (perhaps 1-3 years, before they are reviewed). The approach of PWC is to borrow funds on the 5 year interest rate market. This is because most TDC assets will have a life expectancy of at least 5 years (or more). At present, TDC’s borrowing costs are tracking well below the 5-year mortgage rate.

2016-swaps-5yr-rates

Does TDC (or PWC) have evidence of swaps benefiting local authorities?

PWC advised that they did not have an immediate answer to this question (as they were not given these questions in advance of this meeting, but were open to providing this information from their global network of resources). At this point, the chair intervened, and suggested the question was not an invitation for PWC to charge TDC for making further investigations. The chair, then asked if I had any other questions.

In answer to the question, over the past 10 years, TDC has consistently achieved a lower interest rate than either budget or the 5-year mortgage rate (see above graph). Further, between 1999 and 2008, as interest rates were climbing, significant financial benefits accrued to TDC.

It is also widely acknowledged that some councils have benefited from swaps. Significantly, the following observation comes from a website (www.debtresistance.uk/the-ghosts-of-hammersmith-fulham-the-return-of-toxic-council-derivatives-debt/) that criticises some forms of swaps. It states:

… some councils had “guessed right” with their interest rate bets, and were profiting handsomely from the trades, whilst others, such as Hammersmith taxpayers faced a potential bill …

Importantly (and to avoid any confusion) the Hammersmith scenario was a different type of swap arrangement to the type TDC has entered into. Hammersmith was benefiting from rates going down (effectively covering others from rates going up), rather than hedging against rates going up.

TDC is not entering swaps to make money, nor is it covering other parties from interest rate increases. Rather it is using swaps to consolidate a mixture of different interest rates and debt parcels, as well as mitigate the risk of 5-year interest rates going up. Effectively, swaps are being used as a risk management tool.

In my opinion, the above information supports the proposition that some councils have benefited from swaps.

What happens if interest rates drop?

PWC advised that they are continually reviewing the swap market to take advantage of any downward movements. Unlike a domestic mortgage, TDC has a large number of loan arrangements that have different start and end dates. TDC does not have one single loan arrangement. Similarly there are a number of separate swap arrangements that cover those loans. As arrangements come up for renewal, there is an opportunity to take advantage of a lowering market. This is why TDC’s average interest rate has been falling over the last year or two.

In reality the Council acts within the overall strategy of keeping rates down, as interest rates move. When interest rates drop the Council uses tools such as “forward starts”, or “blends and extends”, to take advantage of the movement at the time and to capture the low rates, as swaps come due.

Council’s ability to manage the forward risk in interest rate movements is greater than the person who goes into their local building society and borrows say $100,000 for 2 years at a fixed interest rate of 4.99%. If interest rates fall to say 1% for the remaining duration of their loan agreement they are faced with a break fee or toughing it out until their mortgage matures. TDC has more options than that.

More information

These questions were again answered in more detail in the Golden Bay Community Board meeting (which I also attended), see the Agenda (from page 11) at: www.tasman.govt.nz/council/council-meetings/community-boards-meetings/golden-bay-community-board-meetings/?path=/EDMS/Public/Meetings/GoldenBayCommunityBoard/2016/2016-05-10. See also the Golden Bay Weekly (27 May 2016, page 6) at www.gbweekly.co.nz/uncategorized/27-may-2016/#27-may-16/page1. For NZ swap rates, see: www.interest.co.nz/charts/interest-rates/swap-rates.

Treasury report

Council’s debt at 31 March 2016 stood at $134.5 million, with an average interest rate of 5.417% (contrasted to June 2015 when it was 5.166%).

Council’s actual weighted average cost of funds at 31 March 2016, including interest rate swaps, bank margins, and line fees at 5.464% against a budgeted rate of 5.7%. The gradual decrease is from more favourable terms resulting from the refinancing of the bank facilities and favourable 2 to 4-year term swap rates. The ‘spike’ in the weighted average cost of funds for September and December 2015 and March 2016 are due to a lower debt position. This has meant that the Council’s debt is currently over covered by interest rate swaps which are at a higher rate than current floating debt rates.

At 31 March 2016, the Council had $147.78 million of interest rate swaps in place, including some “forward start” swaps. After adjusting for the forward start swaps, $144.78 million is “live” which is equal to 108% cover over existing debt and 87% over forecast 31 March 2017 net debt (ie 12-month debt). I asked staff when the debt levels and swap coverage would realign. Staff advised that they anticipated alignment by the end of June 2016.

Existing committed bank facility expiry dates and term debt maturity dates are spread based on defined maturity band limits of 0-3 years, 3-5 years and 5 years plus. Minimum and maximum percentage limits within each time band ensure a spread of maturities and reduce the risk of maturity concentrations.

The Council currently has $30 million in private placements. The private placements allow the Council to place longer term debt in the years between the Local Government Funding Agency (LGFA) issues. The Council also has $90 million of debt placed with the LGFA.

Bank Cash/Cash Investments $Million Notional Swaps $Million Credit Exposure $Million Compliance
Westpac $1.21 $63.05 $13.67 Within Policy
ASB $2.37 $41.73 $13.28 Within Policy
ANZ Nil $43.00 $11.11 Within Policy

The objective is to have a mix of 80% debt capital markets (such as the LGFA, private placements and commercial paper) and 20% committed bank facilities. The current mix is as follows:

Funding Source

Amount $Million

Percentage

Bank Debt

$14.50

10.80%

Private Placement

$30.00

22.3%

LGFA Debt

$90.00

66.9%

Total

$134.50

100.00%

Corporate services activity report

Highlights from the manager’s report included:

  • Finances. The department will end the year with a surplus, mostly driven by the treasury function. Tight and active management of treasury combined with benign external factors have reduced loan costs and high cash balances have increased interest income above budgeted levels. It is intended that part of the surplus will be used to repay outstanding treasury loans in relation to the LGFA share purchase.
  • Commerce commission. Work on port charges (and valuation) by PricewaterhouseCoopers and Simpson Grierson is drawing to a conclusion and a response to the Commerce Commission from council should be made within the next 6 weeks (ie June 2016).
  • Property. The Property section continues to operate at reduced capacity. A replacement for the Property Officer has been appointed and started on 2 May.
  • Aerodromes. Aerodrome landing charges are set to increase by $1 from 1 July 2016. The Motueka road sealing (hangar access) is currently on hold and likely to be cancelled.
  • Campgrounds. Overall campground income is up and expenditure down slightly on budgeted levels. The overall profit is $156,000 which confirms a good season and tight financial management. Infrastructure failures at Collingwood campground have stabilised.
  • Mapua. The tail end of the works related to the Shed 4 build and improvements to the public areas is underway. A report on the budget over-run is being prepared and is subject of a separate report to this Committee. Council officers are arranging for an additional temporary resource to assist in developing a Strategic Plan for the wider Mapua area (including the wharf, waterfront park, Grossi Point and remediated land). This strategic plan will assist in managing the competing interests in the area and ensure that agreed outcomes are met. The prospective purchaser of the Mapua causeway has advised that they no longer wish to pursue the purchase option. They have a right of renewal for five years under the current license to occupy.
  • Forestry. The forestry management tender process has been completed with PF Olsen Ltd being the successful tenderer. Income in forestry is forecast to be up on budget for the year due to higher market prices and increased cutting volumes. The current underspend on maintenance will correct by year end due to roading work in the Sherry and Borlase forests as we prepare for upcoming harvesting at those sites.
  • Port Tarakohe. Volumes over the wharf are good. The marina occupancy is stable. The YTD profit (for February) is $20,000, against a budgeted loss of $78,000.
  • Port Nelson. Port Nelson Ltd has declared an interim 2016 dividend of $1.5 million, of which $750,000 comes to TDC. Cr King is currently a director on the Port Board and is due to retire at the AGM on Friday 23 September 2016. His appointment was extended until March 2017 to allow a newly formed council to make the next appointment. It should be noted that council policy prohibits the reappointment of a director for a fourth successive term, unless there are special circumstances. Given the experience of other directors already on the board (see http://www.portnelson.co.nz/about-the-port/directors/), I cannot see why a any re-appointment of Cr King would be required.
  • Legal. The Council sought legal advice around the ability to ban (wicked camper vans) from the Council’s campsites, the summary being: (1) Any ban needs to be around the offensive slogans or images, not around specific provider, (2) Leased sites are not able to be controlled by the Council, unless our leases specifically permit it (which they currently do not) or each lessee agrees to it. It would not be commercially prudent to exert this control over our lessees’ businesses. However, discussions with the lessees has indicated a willingness to work with the Council. Collingwood campground is the only current operated site that can be controlled via an immediate Council policy. All four Council-owned commercial campgrounds, regardless of being leased or operated, are insisting on those slogans being covered before entry into our campgrounds. Staff recommended that no formal action is required, as the matter is being dealt with effectively at each campground.
  • Information technology. Digital Strategy interviews and staff workshops have been completed and the findings and proposed strategic priorities will go to a Councillor workshop on 28 April 2016. The new Council file structure is being tested across all departments between April and July 2016. Once testing has been completed and signed off, the new structure will be installed into our document management system and the process of moving departmental documents and records across will begin. This will involve document process reviews and training of staff to ensure the transition is successful. It is planned for all departments to be working within the system by the end of 2016. The final upgrade of the Confirm Enterprise asset management system took place during the weekend of 16 April 2016. Additional security cameras are being added to the Customer Services area of the Main Office. Information Services are now managing the security camera infrastructure.
  • Nelson Airport. The airport half yearly report and draft 2016-17 Statement of intent were considered by the Joint Shareholders Committee (comprising the mayor, deputy mayor, committee chairs, and audit subcommittee chair) on 15 April 2016.
  • Action items. Mapua land (vacant corner site) – Mike Drummond to report back within 12 weeks on potential alternate uses of this land.

Agenda and minutes

The agenda and minutes are located at: www.tasman.govt.nz/council/council-meetings/standing-committees-meetings/corporate-services-committee-meetings/?path=/EDMS/Public/Meetings/CorporateServicesCommittee/2016/2016-05-05.

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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.

Corporate services meeting (26 November)

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.

Treasury

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).

Bank

Cash/Cash Investments
$ million

Notional Swaps
$ million

Credit Exposure
$ million

Compliance

Westpac

$1.21

$63.05

$14.74

Within Policy

ASB

$3.02

$41.73

$13.55

Within Policy

ANZ

$0.00

$43.00

$11.92

Within Policy

Funding Source

$ million

%

Bank Debt

$24.00

16.7%

Private Placement

$30.00

20.8%

LGFA Debt

$90.00

62.5%

Total

$144.00

100.00%

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.

Mapua Causeway

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.

Corporate services committee (3 September)

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.

Koha policy

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

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.

Property services

Highlights include:

  • 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.

Motueka airport

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.

Nelson airport

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).

Commercial activities

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).

Mapua development

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.

Campgrounds

Highlights include:

  • 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).

Forestry

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.

Port Tarakohe

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.

Information services

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.

Treasury update

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.

Engineering services committee meeting (13 August)

The engineering services committee meeting was held on 13 August 2015. It was followed by a 2 hour workshop on the proposed storm water infrastructure for central Richmond, and the opening of the new recycling centre (picture of recycled plastic bottles above). Apologies were received from Cr Canton, otherwise all councilors were in attendance.

The agenda was very brief and comprised: (1) the chair’s report, (2) the minor improvements plan for 2015-16, (3) the engineering activity report, and (4) a presentation from engineering form MWH. I will discuss the main items of interest.

Before addressing the agenda, the public forum received two presentations.

Public forum

The first issued concerned the shared use of footpaths in Brightwater. Garrick Batten raised concerns over the heightened risk of being hit by cyclists on the main street and wanted the “shared footpath” sign between the Domain and the shops removed. He suggested a new sign should read “cyclists shall walk”.

The second issue related to erosion of a road next to a river in Murchison that provided sole access to three residential homes (and forestry land). Cr Bryant, read out a letter from Rob Landau, that raised concerns over how council was responding (or not responding) to the problem. He felt the council should be proactive in resolving this problem and pointed out that part of the road was on reserve land. He felt council had a moral obligation (ie social justice) to do something, given council had authorised development along this road. The mayor indicated that a council delegation would investigate the issue further.

Minor improvements

The report sought council approval for 8 engineering projects that were discussed at an earlier workshop held on 2 July 2015. I was unable to attend that workshop, but did have the opportunity to read the supporting workshop documents.

The workshop documents outlined 21 potential minor improvement projects that were assessed against various criteria (eg, safety, risk, and community demand), so they could be ranked. Some of these projects were already on hold, pending further consultation (for example, Motueka’s signalised pedestrian crossing, Salisbury Road mid-block crossing, and four others). Of the 21 projects, the workshop documents provided additional detail of the 9 highest ranked projects (that were not already on hold).

By way of background, the NZTA had already approved council’s request for $2.97 million under minor improvements in the 2015-18 period under the Regional Land Transport Plan (RLTP). This comprised: $966,000 (for 2015-16), $991,000 (for 2016-17), and $1,017,000 (for 2017-18). This funding was NZTA’s contribution towards the total cost of proposed minor improvement projects. The NZTA contribution provided 52% of the total cost of a qualifying project, with the council funding the remaining 48%.

The 9 projects considered at the workshop are outlined below.

Project Description Total Cost TDC Cost
Wallace Street pedestrian crossing, Motueka The speed limit on the street was 50km and there had been 3 incidents at the intersection (one was a car vs pedestrian incident) in the last 10 years. The project involved relocating the crossing an additional 3m east from the intersection and constructing a new kurb layout that reduced the street width near the intersection. $40,000.00 $19,200.00
Whakarewa Street intersection This was was a cross road intersection with a speed limit of 50km. There had been 10 incidents (2 serious) in the last 10 years. The project proposed sought to widen the turning area (that would allow a round-about in the future), improve line of sight, and cut back the existing traffic island. $100,000.00 $48,000.00
Mapua Drive footpath The speed limit along this road was currently 60km. There were no reported incidents in the last 10 years. The area was being developed for residential use (previously apple orchards). The project proposed a new foot path from Higgs Road intersection to Aranui Road. $200,000.00 $96,000.00
Mapua Drive round-about The speed limit was 60km and there had been 1 incident in the last 10 years. The project proposed a round-about (with four entrance roads) at the intersection, that would be co-funded by the developer, whose development would enter the round-about from a new road (Mapua Rise). Council were contributing up to $250,000 (50% of the expected costs). $250,000.00 $120,000.00
Lower Queen Street widening The speed limit is 70km and 1 incident along this part of the road had been reported in the last 10 years. The project proposed piping the 120m open drain near McShane Road. This would allow future widening of the road along this part of Queen Street. $150,000.00 $72,000.00
Motupipi Street (Meihana Street) intersection (opp Fonterra factory) The speed limit is 50km and there have been no reported incidents in the last 10 years at the “T” intersection. The project proposes removing the existing traffic island, adding a new traffic island in Meihanna Street, providing a right turning bay into Factory Road, and realigning the roads. $120,000.00 $57,600.00
Whiteside bridge widening The speed limit is 100km and there has been 1 incident in the last 10 years. The project proposes widening the box culvert by 3m to improve visibility when approaching or leaving George Harvey Road. $65,000.00 $31,200.00
Upper Moutere footpath The speed limit is 50km and there had been no reported incidents for the last 10 years. The project proposed a new foot path (100m) along the Moutre highway between Supplejack Valley Road and Sunrise Valley Road. $175,000.00 $84,000.00
Flett Road intersection, Moutere The speed limit on this bending part of the road is 100km and there had been 2 incidents in the last 10 years. The intersection had two entrance points (a “Y” intersection) and the project involved changing them to a single “T” intersection. $250,000.00 $120,000.00 *

* less the developer’s contribution of $69,000, under a consent order (of which the developer had paid $60,375).

Given possible legal issues around whether the Fleet Road project should proceed (or not), council resolved to defer the Flett Road project until legal advice and other solutions were considered.

Of the remaining projects, I raised concerns about: (1) Upper Moutre footpathing, (2) Lower Queen St piping, and (3) the Mapua drive footpath. I will discuss my reasons for challenging these projects below.

I also raised a broader question around the need to widen and rework so many roads. At the heart of this question was whether council needed to be investing so much into “minor” improvements. Something I had also raised when we were setting the long term plan. In my mind, just because we get a subsidy should not mean we should be throwing money at projects. Especially if they are minor.

By way of analogy, its like going into a retail shop sale and spending money during the “sale” event, because you have been able to receive a discount. The reality is that you still have to spend money to get the (perceived) saving.

I accept that the contribution does add value to council’s asset base – but the reality is that we cannot dispose or leverage those assets like in a private business.

The real question that councillors should be asking is do we really need to do this work and spend ratepayers money in this space. Is the work really needed now. And do we need to be doing so much work. Why can’t we spread these projects over a longer period, so they are affordable for ratepayers (the ones having to fund these projects). Why the urgency?

So many in the community question why council has to widen so many roads. It is seen as an unnecessary expense, at a time when the community cannot afford such rate increases. While the average rates increase across the district might be capped at 3%, the reality is that residential ratepayers rates increases are 1-2% above that mark.

It’s just not affordable when incomes are not increasing as fast. Rather, council need to be pulling back on its expenditure, in order to reign in rates increases to a more sustainable level. Minor improvements are seen as a luxury, that provide very minor benefits to a small part of the community. Rather, the money should be spent on major improvements – stuff that really needs to be done.

Unfortunately, some councilors did not appreciate me re-litigating discussions that had been had during the earlier workshop (or long term plan) – with accusations of “grandstanding” being made. I reminded the councillor that decisions were not made in workshops – a point the mayor had vigorously made in the newspapers some months earlier. Nor was my absence at the workshop, a license to not enter into a debate. The whole point of this public meeting was to debate the issues. If that meant items were re-litigated (from a private meeting) in the public forum, so be it. This was hardly grandstanding.

Further, while I appreciated I had lost the debate about the funding of minor improvements in the long term plan, I felt it was appropriate to raise the issue again, given we were now being confronted with the detail and reasons for these minor improvement projects. In my mind, council needed to take stock of the reality, and really ask if this work needed to be done.

Given the mood around the table was hardly embracing an examination of the proposed projects, I focused on the three projects that I had the greatest difficulty supporting. Namely, Upper Moutre footpath, Lower Queen St piping, and the Mapua drive footpath.

In my mind, the staff report did not provide enough evidence for me to see the justification for the Moutere footpath project. While there was mention by a councillor of safety issues for school children walking to school (a sensible justification), no mention of this reason was made in the report for justifying the project. Nor was there any mention of how many children (or adults) used this part of the road, or how many vehicles used the road at the same time?

If speed was the issue, then had alternative measures been deployed first? Was this a safety issue, or was it just a request to have a footpath by some residents because one it would be nice to have? Interestingly, the speed limit was 50km and there had been no reported incidents on this part of the road. The lack of any evidence to support a safety justification for the work, made it look like a luxury project – and I was not going to support a nice to have project. More information was required.

Fortunately, this argument found favour with the mayor and Cr King, and with their nod of approval it found favour with other councilors. Cr King also suggested that a footpath was unlikely to prevent a speeding car hitting a pedestrian and he suggested a driver feedback sign be deployed while further information was being gathered.

In my mind, the lower Queen Street piping project was another road widening exercise. More road widening for the sake of widening roads in anticipation of more vehicle use. Having visited a number of residents, one complaint that came across from residents when talking about road works was the perception of the council undertaking quite unnecessary work, which they had to fund. It is a message that was also clearly conveyed in the recent residents survey. The message I tried to convey in the council chamber was that the community did not want any more roads widened.

Unlike the Moutere project (which had no road incidents), there had been one incident along this road, which had involved a vehicle going into the open ditch. Having driven down this road many times I was left wondering how someone could drive into the ditch? It was not clear in the report if it was the road or driver error that caused the incident. I suspect it was the later. Given it did not result in a fatality, was quite rare (one incident in ten years), and involved just 120 metres of the road, I could not see why we would want to pipe this part of the road, at this time. Put to the vote, I was the only one who did not support this project.

Mapua Drive was another footpath project. Those who have driven down this road (the old road to Motueka via Ruby bay), will be aware that the old apple orchard at the top of the hill has been replaced with a new residential development. A few houses have begun to appear already and a new round-about is about to be installed at the Higgs Road intersection.

The project proposed a footpath from the proposed roundabout down the hill towards the old Mapua Tavern on the corner. The justification was it would be used by new residents wanting to walk to Mapua, and in particular, the local school. In my opinion, the road in question was already very wide and provided sufficient distance from traveling vehicles to make walking on the edge of the road fairly safe (especially in comparison to the Moutere footpath project). In my opinion, people would probably want to walk down Higgs Road, rather than Mapua drive. Was council footpathing the wrong road? Further, the Motueka bypass had removed a number of vehicles (including heavy vehicles) off Mapua Drive.

In my mind, the project anticipated use, rather than responding to demand. If we are to reduce costs (and rates) “minor” projects needed to react to need, rather than anticipating need. So often council over invest in the wrong areas based on misinformed assumptions. Surely, the better approach was to defer this project to another year (or two), to see if there was such a need? What if all the residents were retirees? There was simply no evidence to justify this project. If it was a safety issue, then it should have been a “major” project, and more information around safety provided in the report – but, there was none.

In my opinion, we should be doing half of the minor projects we were proposing to do each year. And this was another nice to have, aesthetically pleasing, (minor) project, that could have waited.

Again, I was voted down.

Engineering activity

Engineering activity highlights include:

  • Gladstone Road traffic lights. These are to be monitored by new cameras and once installed (by July) will allow NZTA’s traffic operations centre in Wellington to manage the lights more effectively during peak hours. Effectively, automation over-ride by a central control room. Other minor adjustments will also be made around the same time to improve traffic flow.
  • New ice lights. These have been installed on Koere-Tophouse Road, Kerr Hill, Motueka Valley Highway, and Riwak-Sandy bay Road.
  • New LED lights. 100 LED lights have been installed during July.
  • School campaigns. A back to school print and radio promotion was run in term one to remind drivers to slow down and expect children around schools. Another campaign was held in June to “look out” for kids crossing roads.
  • Rubbish. Illegal rubbish dumping (fly tipping) has occurred in the Waimea. Electronic surveillance has been deployed on one site.
  • Rivers. River maintenance expenditure (2014-15) was $1,385,000 ($605,000 under budget). These funds will be carried forward into the next financial year. River classification “Z” funding is 50% subsidised by central government. There were only two applications for funding of River “Z” work (in Murchison). Waimea river hydraulic modeling will be undertaken to measure current performance of mitigation measures and aid future modeling.
  • Jackett Island. Sandbags remain in good condition, although there appears to be some erosion to the north.
  • Marahau boat launching ramp. The steel walkway to the timber jetty has been reinstalled.
  • Ruby bay revetment wall. The repair of steps from Tait Street to the foreshore have been deferred until storm water outlet repair work has been completed.
  • Solid waste. The new recycling service is now up and running. In my opinion, this has been a very well managed transition to a new service and staff should take some satisfaction in its implementation. Feedback from residents I have spoken to so far (I’m doing a mid-term walk about in Richmond), have nothing but praise for the new service. Of course, there will be glitches, but its the putting right that counts. And in case you were wondering, your recycling bin has an average life expectancy of 10-15 years.
  • York Valley. Work also continues on a regional landfill agreement (at York Valley) with NCC. In my opinion, this is a no brainer, and it surprises me that NCC councillors have not been more supportive of the initiative. No doubt NCC’s review of the proposal (by Deloitte) will show this is a good proposal for the region. And hopefully the start of a few more joint service initiatives that save ratepayers in both regions money (and rates).

MWH presentation

The presentation was intended to introduce key members of the MWH engineering team to councilors. The presentation outlined the international experience of the company and their areas of expertise (see http://www.mwhglobal.com).

MWH had been an established provider of engineering advice to council for 15 years. For example, MWH were currently engaged to provide storm water modeling advice to council.

Agenda and minutes

The agenda and minutes are located at http://www.tasman.govt.nz/council/council-meetings/standing-committees-meetings/engineering-services-committee-meetings/?path=/EDMS/Public/Meetings/EngineeringServicesCommittee/2015/2015-08-13.

Recycling centre – opening

Finally, after the meeting was closed, councillors were invited to attend the opening of the new recycling centre. Crs Mirfin, Norris, Dowler, Higgins, Sangster, and myself attended with the mayor.

It is an amazing operation and will be of real benefit to Tasman (and perhaps Nelson) region in reducing the amount of waste going to landfills (and the cost of operating landfills). And that has to be good for the environment (and the ratepayers pocket).

Media references

http://nelsonlive.co.nz/news/2015/08/new-state-art-recycling-plant/

http://nelsonlive.co.nz/news/2015/07/smooth-start-new-recycle-bins/

http://nelsonlive.co.nz/news/2015/08/video-new-recycling-plant-unveiled/

 

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.

 

 

Environment and planning committee (29 January 2015)

The environment and planning committee met on 29 January 2015. All councillors were present, except for Cr Ensor, with Crs Edgar, King, and the mayor arriving after the start of the meeting.

There was no public forum.

The meeting comprised the following information reports and items: (1) the proposed treatment of coastal occupation charges, (2) the proposed environmental policy programme and projects for 2015, (3) the state of the environment report, (4) 6-monthly environmental compliance report, (5) 6-monthly resource consents report, (5) dog control update report, (6) biodiversity report, (7) committee chairs report, and (8) the environment manager’s report (which included updating the committee on: a recent coroner’s report, approved plan change 22 for the Mapua-Ruby bay development, freedom camping, warmer healthier homes project, waimea rural fire authority, and TDC’s submission to the productivity commission).

Coastal occupation charge

This matter was discussed extensively at the environment and planning committee meeting of 13 November 2014, where it was agreed by participating councilors that TDC would not implement a coastal occupation charging regime. Staff were directed at that meeting to draft an appropriately worded plan change in accordance with that decision.

Accordingly, the committee unanimously resolved to approve the release of draft plan change 56 which stated that TDC would not impose a coastal occupation charging regime at present. This resolution will subsequently be presented to full council for approval, as all binding decisions of council must be made by the majority of the full council.

Coastal occupation charges are fees imposed on users of public spaces within the inshore marine coastal area and seabed. Effectively, the charges are a rent on the use of public marine spaces and replace the former Harbour Act lease and license regime. For example, the use of the sea bed for moorings, jetties, wharves, boat ramps, cables, pipes, or marine farms, could be charged by council if a coastal charging regime was established by council.

Why would council go through the hassle of making such a statement? Well, council is required by law (under ss 64A and 401 of the RMA) to consider whether it will implement coastal occupation charging regime and make a statement on such a regime. This requires the council to either state in its regional coastal plan that charges will not be imposed, or propose policies and rules for the implementation of such charges.

To date there have been few councils who have taken up the opportunity to charge for the use of the inshore seabed. No doubt this is a reflection of the complexity and cost of drafting, consulting, and implementing such a regime. From my perspective, there seems little net financial benefit for the community in implementing such a regime at this time. Given marine farming in this region is still in its infancy, the money that would be raised from such a regime, would probably only offset the cost of establishing and administering the regime. Such a money go round would benefit no one other than the council administrators. Further, it is far better to reduce (or avoid) any new red tape for businesses – especially when you want an industry to get a good foothold in Tasman, for the greater good of the regional economy.

A detailed evaluation report of the costs and benefits of adopting a coastal occupation charging regime is attached to the agenda (see pages 13 to 30). Interestingly, the evaluation report concluded that all coastal occupations (except jetty,wharves, and boat ramps) had greater private benefit than net public benefit and marine consent holders should compensate the public for the loss of use. No doubt when the marine farming industry become more established (and can afford to pay) costal occupation charges will be revisited by a future council.

2015 environmental policy programme

In the middle of 2014, a number of workshops were held so that councillors could review and prioritise the 34 proposed environmental programmes, that had been identified for consideration under the 10 year (2015-2025) Long-term Plan (LTP). These projects included: mooring and coastal occupation charges, significant landscapes, rural land use, storm water management, urban design, residential zoning, and water quality management. See the agenda (pages 31 to 50) for a full list of all projects and more detail.

The committee resolved to receive the planning manager’s report and directed staff to begin scoping the possible size, cost, and nature of prioritised projects for future council consideration, before any approved commencement of any project.

State of the environment for land and soil

The 2014 report on the environmental state of land and soil (see executive summary at pages 55 to 60 of the agenda) provides an update on the monitoring of soil in various locations of the region.

The report surveyed 6,005 locations for soil erosion and continued to monitor 25 locations (identified in 2000) for soil health, classification type, and mapping purposes. The mapping of soil types will help improve our knowledge of drainage and the required levels of irrigation.

The report has also monitored the changing use of land in the district. For example, between 1996 and 2008, there has been: a 10% increase (9,750 ha) in exotic forestry; 17% decrease (21,152 ha) in pasture; 95% increase (5,266 ha) in horticulture, viticulture, and cropping; 55% increase (1.073 ha) in urban use.

Interestingly, the dairy farming trend in the Tasman region is not following the national trend. Tasman dairy cow stock numbers have only increased by 1.2% (54,580 to 55,227 cows) compared to the national trend of 11% (or 2.56 cows per ha). In Tasman, total beef cattle numbers dropped 33% (56,155 to 42,268 cattle) from 2003 to 2013. For the same period, deer dropped 67% (33,537 to 14,259 deer).

The committee resolved to receive the report (ie, no decision, other than to receive the report, was required).

Compliance monitoring

The report provides a summary of the council’s compliance activities for the first half of the 2014-15 period (ie 1 July 2014 to 31 December 2014) in comparison to the prior 6-month period. For example, the volume and timing of complaints from ratepayers in relation to various activities.

Generally, complaints were slightly lower than the previous 6-month period, with complaints over air, water and land discharges from 2003 to 2013 still dominating staff time. Interestingly, only 5 freedom camping complaints were made. This would suggest that the new freedom camping rules are working well, although there appear to be still a few problems in Motueka (which I will discuss later).

One prosecution was successfully made against Awarua Farms Ltd and Mr Wooley in relation to dairy activities. Awarua Farms was fined $60,000 and Mr Wooley’s sentencing has been adjourned until 4 March in Blenheim. The only enforcement order activity for the 6-month period was made against CJ Industries Ltd (operating in Motueka) due to uncontrolled dust discharges from crushing activities. All requirements of the order have now been met and staff continue to monitor progress.

Stage 1 water rationing was implemented in the second week of December (ending 18 December). Compliance was very good and no infringement notices were issued. Despite the dry start (for the two months up to December 2014), metering shows water consumption figures of less than 50% across all zones. Recent rainfalls have also been appreciated.

All “1080” poisoning operations were extensively monitored by staff (especially given the level of public interest and potential effects). With the exception of one incident in the Lockett area (where some of the bait was applied outside of the designated control area, due to a combination of drop events and terrain), all operations were fully compliant.

Large scale earthworks have been occurring in the Richmond south area (Wensley Road, Fairise Drive, and Hart Road area). While work has been compliant with consent conditions, the work has resulted in a number of complaints from residents. From complaints, I have received, these have mainly been due to the frequency and noise of heavy trucks carrying soil from the development through a well established residential community.

Ideally, the consent conditions should have been consistent with the Olive estate development. Unfortunately, due to timing, the constraints placed on the Olive Estate development (to not use Fairise drive for heavy trucks) was not placed on the Wensley\Hart Road development. Ideally, council should have remedied the problem by enabling the developer to access Hill Street or Hart’s Road directly from when the inconsistency was identified.

Fortunately, my conversations with the developer’s trucking contractor were largely constructive, with the truck contractor agreeing to shift truck movements away from the densely populated Fairise Drive to Hill Street (albeit after 31 December 2014). Thus reducing the impact on the number of residents. I would like to take the opportunity to thank the contractor (and developer) for accommodating the wishes of residents outside of any legal requirement to do so.

Resource consents

There are three different types of resource consent: (1) notified (where all the public are made aware of the resource consent application), (2) limited notification (where only neighbours or those directly affected are made aware), and (3) non-notified (where generally only the applicant and council staff are aware of the application).

The graph below provides a comparative analysis of non-notified resource consents between 2014 and 2012. The graph also highlights how long it took for staff to process the 484 resource consent applications made in 2014. In 2014, only 4 non-notified resource consent applications required a hearing.

E&P20150129-Graph1

The following graph compares notified and non-notified consents for the same periods. It is quite marked that the volume of publicly notified and limited notification consents are very low. The data would appear to indicate that the notification process (ie public or limited) does not appear to have a material impact on the volume of resource consents that council process. Although it is noticeable that the time taken to process these applications is longer than most other non-notified applications (except coastal applications). No doubt this reflects the higher level of public participation in the consent process.

E&P20150129-Graph2

Another interesting piece of data is the outcome of resource decisions from various decision makers. The graph below illustrates the decisions made by those bodies. The majority of consent decisions are approved under delegated authority (by staff).

E&P20150129-Graph3

Interestingly, only independent commissioners appear to decline applications. In my opinion, the dramatic absence of applications being declined by a committee or panel (of councillors), or by staff, would appear to suggest that there might be some bias in the outcomes – either that, or independent commissioners have more difficult decisions to consider. I suspect independent commissioners are probably less prone to relying on reports provided by council staff when declining or approving consent applications.

There have been few objections to decisions made under delegation. Two from the previous year are yet to be resolved – one for a subdivision consent in Ruby Bay and the effect of Plan Change 22 (inundation prone land), and the second relating to conditions imposed on the proposed Mapua Drive development and the upgrade of road frontage. Three made in the last 6 months relate to coastal permits for marine farms at Wainui Bay, and a fourth concerns a Mapua subdivision development seeking a change to its consent application.

Plan change 22 (Maua-Ruby Bay development) has been the subject of 4 appeals in 2012. Three have been resolved by mutual consent. The fourth concerned a 3 ha site that flood modeling identified as prone to flooding. In December 2014, the court dismissed the developers appeal for 12 additional residential sites to be added to the development and confirmed that the district plan provisions for managing the hazard risks were appropriate, and that the additional sites increased the level of flooding risk.

Several court appeals heard over the last 6 months are summarised in the agenda (page 75). They included appeals against: coastal protection work conditions in Pakawau, subdivision intensification in Appleby Hills, subdivision reconfiguration within Pangatotara rural residential zone, and intensification of a rural residential zone in Seaton Valley Mapua.

The resource consent application for the Waimea Community Dam is expected to be released in February 2015.

Storm water

Interestingly staff have acknowledged (page 79) that “co-ordinating the management of stormwater flows from the eight development areas within the Wensley Block [Richmond South area] is an ongoing challenge”. I could not agree more, and its why council needs to ensure this area’s storm water issues are addressed in the short-term to mitigate any risk of flooding. I am already aware that some residents in the area are on their final insurance warning (ie, there will be no further insurance cover if buildings are flooded again). Council must ensure residential storm water issues are addressed before any other significant capital investment.

Muddy Buddy

Notably, an application to formalise use of the seabed in Moutre inlet for the “muddy buddy” event (held in March each year) has been granted on a non-notified track. The new track is now in an area well away from most sensitive shoreline habitat, and will alternate each year to reduce any impact on the surrounding estuary. Te Tau Ihu iwi have been very supportive of the consent.

This is a very positive outcome and reinforces the fact that the RMA does work. The surrounding estuary is a very important eco-system for the whole bay area and its use needs to be protected from unsustainable activities. Balancing the needs of the community while ensuring the environment is protected is a very positive outcome and staff should be congratulated in working though the legal issues in the RMA to get to the right outcome. Well done to everyone involved.

I would also like to congratulate TDC’s approach to the “monster slide” debacle that was happening over in Nelson during January 2015. I think the message that was taken home was that TDC is open for business. We now need to apply (and reinforce) that pro-active customer focused culture to the rest of the council’s operations on an ongoing basis.

Dog control

Generally (and comparatively), dog control is not very controversial for this council. By way of background, the number of dog owners in the district is 6,617 with the number of registered dogs being 10,227 (5,601 rural and 4,626 urban).

Most infringement notices relate to registration failure (159). Between July 2013 and June 2014, 8 dogs were classified as dangerous, and 45 dogs as having a menancing behaviour. However, there is still the odd prosecution for more serious incidents. For example, in May 2013, a dog was destroyed for attacking stock and another for attacking a horse on Rabbit island. In October 2013, a dog was destroyed for attacking a pet lamb.

Overall, the statistics suggest dogs are well controlled in the district and the bylaws are working effectively.

Biodiversity

The committee received the 2014 biodiversity report. A copy is available from the council’s webpage. The current programme costs $56,500 per year ($26,500 per year funded by council, and the remainder from the government’s Biofund). The biodiversity programme is designed to assist council meet its legal (RMA) responsibilities for protecting significant natural areas and maintaining indigenous biodiversity. With current resourcing it is estimated to take 15 years to complete assessment of all 16 ecological districts.

The biodiversity programme involves a number of separate projects undertaken on behalf of various stakeholders including council. For example, the native habitats Tasman (NHT) project started in 2007, is a district wide survey of natural areas, mainly on private land, to assess the ecological significance of these areas and provide owners with ecological reports to assist with the land’s management. Participation by landowners is voluntary. As at 30 September 2014, 420 sites had been assessed and 353 reports delivered to owners.

Due to recent changes to government funding criteria (meaning the organisation no longer qualifies for funding) the biodiversity project may need council to increase its funding from $26,000 to $56,000. A submission on the LTP to this effect is anticipated by council.

In my opinion, given the lack of government financial support for biodiversity, and no National Policy Statement on Indigenous Biodiversity (the 2010 draft remains on hold), that might have provided clarity for council’s in understanding the scope of their legal obligations, perhaps its timely to pause and take stock. This might mean no further funding is provided, so that the current programmes are undertaken at a slower pace than they are currently (if at all).

Manager’s report

The manager’s report contained a number of topics. I intend to only summarise the more significant items that drew councilor interest. In particular; the coroner’s report, freedom camping, and the warmer healthier homes project.

I would have also liked to have commented on the department’s financial position, but this information was not provided in the agenda. An action item to respond to questions raised about last month’s financial’s (which highlighted several cost over-runs) was also over-looked. Hopefully these will be answered in due course.

Coroner’s report

During the week of 15-16 June 2013, the home of Ms Hude Hivon was struck by a landslide. The home was located on Seperation Point granite soils and the dwelling was authorised for construction in 1961 as worker’s accomodation. The coroner investigated the incident and has made two recommendations directed at TDC. First, that side castings are not deposited along the outer edge of tracks above steep slopes. Secondly, that TDC give consideration to at risk sites prior to any consent being awarded. These recommendations will form part of a review of the land disturbance rules which will occur in 2015.

Freedom camping

Generally the rules have worked very well in the Tasman region. By way of brief background, freedom camping is a permitted activity for legal vehicles. However, it remains an illegal activity for non-compliant vehicles (eg, those offending vehicles that are not fully self contained).

Unfortunately, the Motueka beach reserve area continues to be an area of concern for many residents. The complaints are concerned with the occupants of illegal, non-self-contained camping vehicles (eg, vans without toilets, showers or washing facilities) using community facilities improperly and causing a general nuisance.

The main problem with the freedom camping by-law is enforcement. A major problem with the rules is proving someone camped illegally. At present this is established by visiting the site in the early evening and morning. Any offending vehicles present on both occasions are deemed to have been camping overnight illegally. To avoid being caught, offending vehicles either turn up late in the evening or leave early in the morning (or both). Council staff suggested increasing the time spent policing (at a cost of $15,000) to address the problem. Effectively asking for more resources.

The increase in enforcement costs did not get much support around the council table. Accordingly staff undertook to investigate other options and to report back to the committee.

Some councilors had argued for the area to be closed off completely, or for existing toilet facilities to be removed, and water to be switched off. However, it was pointed out that this would be an expensive exercise (more costs for council), and illegal campers would just move to another location and annoy other people.

In my opinion, council staff needed a mechanism to establish illegal camping more efficiently (ie involving less staff time – and therefore cost). This could be done by prohibiting specified vehicles (non-self contained camping vehicles) from being parked in the area between specific times (eg 9pm to 7am). The presence of a non-self-contained camping vehicle during this time might show sufficient intent to camp (and place the burden on the offender to prove otherwise). Officers could then appear an hour or so after the specified time and immediately issue tickets for both illegally parking and\or illegally camping. I also wondered if a pre-registration process (text your registration to council) would aid the process of identifying illegal freedom camping.

I look forward to the staff report that comes back with some more thought out (and less expensive) options.

Warmer healthier homes

Council has been involved in promoting better insulation and upgrading home heating through its Warm Tasman programme. However, with the expiration of government funding it is unlikely it will remain appealing to ratepayers and no doubt council will retire the programme.

An alternative programme established in 2004 is the “Warmer Healthier Homes” programme funded by the Canterbury Community Trust, Nelson Marlborough District Health Board, Absolute Energy, and Nelson Tasman Housing Trust. However, this initiative is much more narrowly focused and only targets low income households with respiratory health concerns. NCC has recently joined the project through committing $40,000 over two years.

This council has decided to watch how the project unfolds, before making any financial commitment at this time. Especially when it remains unclear to what degree Tasman ratepayers would benefit. Staff will report back before the conclusion of the LTP.

Agenda and minutes

A copy of the agenda report and minutes are located at http://www.tasman.govt.nz/council/council-meetings/standing-committees-meetings/environment-and-planning-committee-meetings/?path=/EDMS/Public/Meetings/EnvironmentPlanningCommittee/2015/2015-01-29.

Related newspaper items

http://www.stuff.co.nz/nelson-mail/communities/9770056/Muddy-Buddy-given-reprieve

http://www.stuff.co.nz/nelson-mail/news/8651887/Muddy-Buddy-a-foolish-idea

http://www.stuff.co.nz/nelson-mail/news/10336976/Scheme-to-insulate-homes-of-poor

http://www.stuff.co.nz/nelson-mail/news/65669601/Frustration-as-consents-take-longer-than-builds

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.

Engineering Services Committee (21 November)

This was a busy week. And hence the lateness of these posts.

Busy because on 15 November I attended two public hearings relating to Freedom Camping and Psychoactive Substances, followed by a further hearing from 18-20 November in relation to the Olive Estate lifestyle development, followed by the Engineering Services committee and Urban Design Forum meetings on 21 November.

I won’t dwell on any of the hearings apart from making one observation in respect of the Freedom Camping debate. It became apparent very early on in the hearing that there was a great deal of confusion surrounding the council’s proposal to change the Freedom Camping rules. Confusion because there appeared to be a feeling from those attending the hearing that the council was removing the freedom camping rules, when in fact it was replacing them with new rules that provided for a far higher level of enforcement.

Engineering Services Committee

The Engineering Services Committee meeting was held on 21 November. Apologies for not attending this meeting were received from Cr Higgins and Cr Edgar.

Similar to the Community development meeting held the previous week, there were a number of reports submitted to council requiring no decision. These reports are interesting in that they show the wide level of activity that the council is involved in.

A public forum was also held. Maxwell Clarke raised concerns over council’s debt level and suggested some projects including the proposed water storage project (known as the lee valley dam) should be delayed beyond the long term plan. Concerns over the closure of the Richmond reuse shop were also raised.

The agenda for this meeting comprised a number of reports and issues including: (1) the designation of Whitwell’s car park in Motueka (which is owned by Wakatu Incorporation and leased to Whitwell Holdings Ltd), (2) the Motueka flood control project (which I will discuss below), (3) the engineering departments procurement strategy and process (eg, for tendering out roading work), (4) appointment of councillors to water supply committees and working parties, (5) the recent past and future planned activities of the engineering department, (6) Jackett Island’s erosion problem and the proposed long term solution, (7) Mapua wharf’s maintenance issues, (8) the Riwaka flood  bank, (9) LED street lighting trial (occurring in Norman Andrews Place in Richmond), and (10) a confidential session in relation to the potential purchase of land (or not) in relation to Warring car park.

Motueka Flood Control Project

The Motueka flood control project has been and continues to be a big issue for Motueka. As Cr Canton pointed out at the meeting, many councillors during the election had voiced their support for the project and the flooding concerns of residents. As I have stated in earlier posts on this blog, council  need to seriously start reviewing spending decisions.

The financial cost of the project can best be summarised as follows. The Long Term Plan (the 2012-22, 10 year LTP) estimated the Motueka flood protection project would cost $5million (which was a reduction of the original $10.5 million that was originally estimated), with $700,00 budgeted for 2013-14 to progress consent and design works. To date, $632,000 had been raised from loans and spent on feasibility and investigation costs.

While $632,000 had already been spent, those funds had contributed to more accurate modelling that had indicated that flooding from breaches in the stop bank caused by saturation in a 1-in-100 year rain event, would not be as extensive as previously assumed. New modelling suggested that there would be less area flooded and the height of potential flooding in the township would not be high (at best 10cm high). The revised modelling also indicated that the river flooding risk of Motueka township was small for a stop bank breach scenario. Further, those areas that would be most hit by flooding, were more likely to have been flooded because of coastal inundation, than stop bank failure. Thus, investment in preventing stop bank failure to prevent flooding in a severe weather event might be a waste of money, as coastal inundation would still occur, resulting in those areas still being flooded.

There was also the risk that $5 million of stop bank strengthening work might not have fully prevented stop bank failure over the whole of the stop bank. In effect, a breach might have occurred in an area of the stop bank that was not subject to any strengthening work, thus making any strengthening work useless. This is not a strong argument in itself (as council had enabled this argument to be made by not fully funding the project to the tune of $10.5 million, so that all of the stop bank could be strengthened), but it is one to be taken into the mix, when considering if it is worthwhile to continue with a $5 million project.

On the basis of the revised modelling which showed less overall impact, the impact of costal inundation (which was outside of the projects control), and the fact a half baked strengthening project might not prevent a stop bank breach, I agreed with the council staff’s recommendation not to proceed with the project as proposed in the LTP. The benefit (flood protection) just was not there, for the costs involved.

I imagine on principle, Cr Canton objected to the recommendation on the basis of his campaign position. All other councillors present supported the removal of the projects future cost to the ratepayer. I felt that this was a good outcome and perhaps the tide was beginning to turn. Was the message of debt reduction and keeping rates down getting through. If there was any hesitation about the tide of decision making on council, it was the fact that councillors had not actually taken the initiative themselves, but instead had relied on council staff to promote the obvious cost saving measure to them. My impression to date is that council tend to support staff recommendations and are hesitant to challenge the information and recommended decision placed in front of them.

On this decision I give council 6/10. Improving, but someway to go yet. Especially given council’s reluctance to defer investigative spending on the Golden Bay community centre (see earlier post) until after we have decided owe want to commit to such a project, and future decisions on investment on entertainment events (Council should be enabling and facilitating these events, not bank rolling them).

Procurement processes

In regard to the procurement processes of the engineering department, my only observation is that council need to be benchmarking their processes against other councils to ensure we are not outside normal practices. Its also an opportunity to take onboard best practices that might appear from looking at how others conduct procurement. It appeared that council staff thought this was possibly a good idea and undertook to further investigate such an opportunity.

Water Supply Committee and Working Party Appointments

The following appointments (recommended by council staff on the basis of locality) were made:

  • Dovedale rural water supply committee: Cr Norriss
  • Eighty-Eight Valley rural water supply committee: Cr King
  • Redwoods rural water supply committee: Cr Bouillir and Cr Sangster
  • Hamama rural water supply committee: Cr Bouillir and Cr Sangster
  • Wa-iti Valley community dam users group: Cr King and Cr Higgins
  • Wakefield water and Eighty-Eight Valley rural water working group: Cr King and Cr Bryant
  • Takaka wastewater treatment plant upgrade working group: Cr Norriss, Cr Bouillir, Cr Sangster, and Golden Bay Community Board members.
  • Motueka wastewater treatment plant upgrade working group: Cr Norriss, Cr Dowler, Cr Canton, Cr Inglis, and Motueka Community Board members.
  • Joint waste minimisation and management plan working group: Cr Bryant, Cr Edgar, and Cr Dowler.

Engineering activities

The engineering department reported on a number of interesting activities. These included:

  • Staff restructure: A recent restructuring that increased full-time staff levels from 21 to 39 staff (increasing staff by 18 with a corresponding increase in wages by just over $1 million). This was the result of bringing in staff to undertake work that had in the past been contracted out in order to make substantial planned savings and service level improvements.
  • Refuse waste: The operation of the Richmond refuse shop is under review after the Kahurangi Employment Trust advised the Council that it did not wish to continue after the council proposed increasing the lease costs of the refuse shop from a peppercorn rental to a more commercial rate. Recent increases in refuse (31% increase in commercial refuse and 19% increase in residential refuse since last year) and a shortage of waste transport bins has led to difficulty in processing and transporting waste. There have been increases in construction and demolition waste from outside of Richmond.
  • Roading: Slip repairs from June 2013 are ongoing. An innovative bush layer wall system is being trailed at the Riwaka-Sandy Bay Road. Bridge pier protection at Hoult Valley Road West is progressing. Fonterra has been given “temporary” approval by NZTA to increase their standard tanker loading. Some intersections may require seal widening to accommodate these larger vehicles. This work is being added to the minor improvements work list. Brooklyn Valley road work is ongoing. Drainage and culvert repair and maintenance work is ongoing on Dry Road and Cowin Road. Road widening (via bank cutting and binding) is to be completed during November to ensure vehicles are kept away from an under slip. A bridge approach sealing program is being devised which will include a number of golden bay bridges and will be added to the Pohara Road widening work project to improve cost efficiencies. Matiiri Valley Road (Murchison) has had 6 culverts replaced with another 4 culverts yet to be replaced.
  • Cleaning: Richmond town centre’s sundial square’s pavers are to be cleaned before Christmas. I had to question this work as the square looked tidy to me and seemed an unnecessary non-urgent expense. Especially if the area might be affected by future Queen Street road works. It seemed to me that, that was the time to clean up the square.
  • Rivers: The Riwaka River required emergency repairs arising from erosion threatening the stop banks during the June floods (being a 1-in-17 year flood event). The Shaggery River (or Old West Bank channel) leo required emergency work. The June flood also affected the Dove River widening the river channel in places as well as depositing large amounts of gravel above some of the bridges. A greater focus on stop bank maintenance is continuing with further work planned. Council staff are working with landowners to remove gravel. However, to progress gravel extraction future consent hearings may have to be held.
  • Road safety: From 1 November 2013, the law regarding child restraints changed. Children up to 7 years (formerly 5 years) must be restrained in an approved child restraint (see http://www.nzta.govt.nz/about/media/releases/2669/news.html).
  • Richmond town centre: A draft richmond town centre framework (December 2012, revised January 2013) has been prepared outlining possible future development of the Richmond town centre. A Project Board will be established to bring together various storm water, wastewater and water improvements, land use and parking rules to ensure an integrated approach. The project will aim to up upgrade underground utilities and improve traffic and parking management.
  • Work still to be completed for 2013-14 (ie, up to June 2014): Reservoir creek dam – new spillway ($431,201), Rewika-Kaiterteri road realignment ($1,170,329), champion road culvert upgrade ($500,000), remediation of slips along Abel Tasman drive ($2,078,278), Richmond reservoir work ($2,613,737), Water meter replacements ($641,196), Talbot Street and Valhalla Drive water pipe upgrades ($371,900), and Clifton sewer upgrade ($1,020,737).

Jackett Island

A groyne was installed on the Motueka Spit by the Council in 1996. The Environment Court held that erosion on Jackett Island was caused by the groyne. The Motueka groyne was removed in October 2012. The parties subsequently agreed to a cut through the Motueka spit. While the location of the spit has been agreed, the design (and cost) of the Spit remains outstanding. A decision from the Environment Court for a long term solution is expected soon. The aim of the cut is to reduce water flows and hence erosion forces together with sand replenishment on the Jackett Island foreshore. Damage (caused by September 2013 storms) to the sand bag wall has meant remedial work (of $80,000) was required to be undertaken by the Council.

Mapua Wharf

A fire on 1 August 2013 caused fire damage to the Mapua Wharf. A structural inspection identified a number of joists and piles underneath the wharf required urgent remedial work. The work is expected to cost $13,000 (plus GST) and will come from existing council funds. The inspection highlighted several medium-rem structural issues that require future attention. Approximately $15,000 every two years is required for this work.

Links to agenda and minutes

A copy of the engineering services committee agenda and minutes can be found at http://www.tasman.govt.nz/council/council-meetings/standing-committees-meetings/engineering-services-committee-meetings/?path=/EDMS/Public/Meetings/EngineeringServicesCommittee/2013/2013-11-21.