The community development committee meeting was held on 17 September 2015. A number of councillors were absent, including: the mayor, Crs King, Ensor, Mirfin, and Dowler.
The agenda included: (1) reserve financial contributions capital carry-over, (2) hall’s report, (3) Manager’s report, (4) reserves manager’s report, (5) chair’s report, and (6) Rainbow sports club remission of loan repayments. The last item was confidential, but was subsequently made public at the conclusion of the debate. The public forum received two presentations.
Due to the chair having a major engagement at 12 pm (the PM’s speech at the Nelson Tasman Chamber of Commerce lunch at Siefrieds), a number of questions were taken off-line for staff to follow-up.
Outstanding Community Service Awards
Before I discuss the community development services meeting, I first want to take the opportunity to recognise the recipients of Tasman District Council’s Outstanding Community Service Awards. The awards event was held at the council chamber on 2 September 2015 with the mayor, Cr Edgar, and myself (and staff) in attendance.
The award winners for 2015 were:
- Hazel Bartlett (Richmond) was honoured for her work in guiding visitors and residents alike through her work with Richmond Information Centre, organising the Lions Club bus trips and raising money to open the Richmond kindergarten.
- Henk and Willa Visker (Golden Bay) for their work with Takaka Citizens Band, Golden Bay Orchestra, Kotinga Bowling Club, St John and the Wrinklies Bus.
- Crowther Reynish (Golden Bay) for his involvement with the Takaka Citizens Band, Golden Bay RSA and Takaka rugby.
- Dick Wenzel (Golden Bay) local veterinarian for his involvement with Golden Bay Orchestra, the Golden Bay High School Board, Wrinklies Express and numerous other clubs and committees.
- Graeme Miller (Golden Bay) volunteer firefighter for his 26 years with Collingwood Volunteer Fire Service as well as his work with the Collingwood Area School Board of Trustees, Collingwood Health Centre committee and rugby.
- Sue Netto (Golden Bay) for her long involvement as a volunteer for St John and fundraising for the rescue helicopter.
- Valerie Stuart (Motueka) former nurse, acknowledged for her work as volunteer supervisor with Playcentre, Soroptimists, Motueka Hospice Shop and the Motueka Hospital Trust.
- Mark Heine (Motueka) for his work with Motueka Idea Services and the Laura Ingram Kindergarten.
Two highly successful local businesspeople were also acknowledged for the contribution that they have made to their communities – not just in the business arena, but also through their leadership and philanthropy – Peter Goodman and Peter Talley.
I would like to congratulate all award recipients for their time, energy, and passion, in making the Tasman district a better place to work, play, and live. Thank you.
Penny Griffiths (Golden Bay\Takaka Museum) gave a brief update on Takaka museum activities. This included: (1) a long term tenant had been found providing much needed financial security, (2) the whale project was getting good exposure although funds were still needed to complete the project, and (3) retired IT equipment had been provided to the museum by council.
Penny also raised concerns about the need to use council accredited builders for work on the museum building and the impact this had on getting competitive quotes for work. Apparently there was only one accredited builder in Takaka at present. Staff advised that the museum could get quotes from as many builders as they wanted. Although they could only use an accredited builder (someone who has shown council they have health and safety certification).
Andrew Smith emphasised to council that the ski club operating at Rainbow ski field was “asset rich but cash poor” and that “working capital was tight”. Although he also acknowledged a reserve cash fund (roughly $40,000) had been built up.
Reserve financial contributions capital carry-over
This is the second capital carry-over request council has considered in the last week. The last one was in relation to engineering projects (discussed in an earlier post).
By way of background, reserve financial contributions (RFCs) are charges that are generally imposed on property developers when they create subdivisions. These charges are then used to purchase land for public reserves (usually within the development), capital improvements and maintenance of assets on public reserves, or any other growth related projects. For more detail see www.tasman.govt.nz/policy/plans/annual-plans/annual-plan-2013-2014/draft-annual-plan-2013-2014/part-3-accounting-information/reserve-financial-contributions/.
Similar to engineering, a number of planned projects did not occur in the 2014-15 year, were only partially completed, or were deferred until the 2015-16 year.
Council approved the proposed carrry-overs. The totals for the respective wards were: (1) $21,695 Moueka, (2) $580,466 Golden Bay, (3) $310,288 Moutere, (4) $100,124 Murchison, and (5) $349,513 Richmond.
I raised a number of questions (both during the meeting and afterwards) in relation to the reporting of the deferred projects for Richmond (listed in this report), as they appear to be different to what was agreed to be carried forward in an earlier May 2014 memo. These issues were raised with staff and they have since responded. I have enclosed my email, and their response (shown in italics) below:
I am just following up from my questioning of your report at the last community development meeting.
I restricted my questions for brevity, but thought I would also question some other changes from the 20 May 2014 memo.
In the May 2014 memo it was agreed what specified projects and amounts (see extract below), would be deferred and carried forward.
This only totalled $226,916, yet the September report asked to carry forward $349,513? This seems a large difference? The $226,916 was funding from 2013/2014 financial year to be carried forward to the 2014/2015 financial year. The $349,531 is the funding from 2014/2015 carried forward to this financial year. It does contain some funds from previous years.
The list contained in your September report had several differences from the May 2014 memo. These included: (1) reduced Dellside to $26,933, This was reduced as most of the work was carried out by volunteers so we didn’t require the full amount.
(2) added two new items (inlet walks $16,251 and General 16,251), These two amounts are for left over from the 2014/2015 walkway budgets original amounts of $25,000 each.
(3) inflated training lights to $87,000, this is a typo as you mentioned the original amount is $86,113 which we will round down to $86,000
(4) added waimea river park $15,885, this is a carried forward from the 2014/1015 financial year from a budget of $22,239
(5) reduced security camera’s to 30,000, this I rounded down to $30,000 to take off the inflation
and (6) increased Ben Cooper toilet to $111,193. This is the amount was in the 2014/2015 budget to be deferred to 2015/2016 we need to keep it on the books so it isn’t lost.
I mentioned training lights at the meeting. This was a typing error and we will make that change
I am happy to agree with any changes that have reduced carry forward amounts, but can you please explain the increases (and the new items).
I am also worried that other wards may have also carried forward more than they originally agreed too. I will check the other wards for similar issues.
I included this email in full (with staff comments in italics), because it not only answered my questions very succinctly (as well as making council more transparent), but it shows that while the odd mistake is made in reports to council (which is all very human), generally staff are quick to acknowledge any error and fix it. In my opinion, it’s the putting right that counts!
This draws me to another point. I consider that an important element of my role as a councillor is to help foster and develop the culture (and attitude) of this council. As a member of the public, you can also influence an organisations culture, by making sure that council actions that you like, are acknowledged (ideally to senior management or councillors). Only speaking up about the bad stuff, will only make an organisation fearful of making mistakes. If we want council to be innovative, we need to be prepared to experience the odd glitch. But at the same time, the organisation needs to have the confidence to acknowledge that it has made a mistake and will put it right.
My aspiration, is to have a council that is: transparent, honest, trustworthy, and open (its why I do this blog), provide enabling advice (rather than just restating the rules, and why you cannot do stuff), leading edge, innovative and embracing of change, acknowledge mistakes and put things right (or explain promptly why they cannot), and put the public (as a customer) at the centre of everything it does. A customer centric business is always a happy and successful one.
Various unbudgeted repairs and maintenance work has been identified by staff. These included: (1) Hall fire alarm upgrades (price between $1,500 and $6,000 per hall), (2) Motueka memorial hall stage repair and handrails ($15,000), (3) Collingwood roof repair ($10,000), Pakawau roof repair (no estimate yet), and Golden Bay community centre flood protection ($10,000).
Councillors were somewhat surprised that these issues were not identified for inclusion in the long term plan (LTP). Staff advised that there was a surplus of $54,000 in a special purpose capital account that was agreed to be carried forward at the 10 September full council meeting. Although use of these funds would mean that they could not be used for other purposes or retiring debt. Council agreed with the staff recommendation to fund the identified repairs from the special purpose fund.
Council agreed that a pragmatic approach should be taken with the roll out of upgraded fire alarms. The problem being that some alarms were not appropriate for the hall size and their maximum capacity. Staff suggested that an assessment of a hall’s historical usage should help direct whether upgrades were necessary (or not).
However, in my opinion, numbers using the affected halls should have been limited to the constraints of the fire alarms, until planned maintenance occurred. I saw no reason to accelerate upgrades from new sources of funding. If we are to get council finances back on track, we need to be prepared (at least in the short-term) to be a little more reactionary. I also raised questions of upgrading halls that might subsequently be disposed of. For example, council is considering disposal of some halls in the Golden Bay area, as part of funding the new community recreation facility building.
I consider Motueka hall stage should be repaired (as it was an unexpected discovery that would impact on immediate future use, as well as raising health and safety issues), but questioned the need for any new hand rails. Expenditure should only be for repairs or maintenance of existing assets.
- Rifle club. The small bore rifle club currently resides in Nelson and is proposing to move to Saxton field. They have made an application for funding assistance through the contestable community grants scheme after making a public forum request for funding assistance.
- Aquatic centre. The June period experienced a drop in casual swimming numbers. Total patronage visits in June (including the fitness centre) was 20,133 visits.
- Golden Bay museum. The 6 monthly report for the period ended June 2015 was submitted. The board are currently seeking a new treasurer who recently resigned. Casual staff (termed “volunteers” in the report) over the holiday season accounted for $7,670. The board are again seeking 20 casual staff for the forthcoming holiday season. The 5 year strategic plan was reviewed in May 2015. The annual accounts showed an operating surplus of $14,337 and a net surplus of $9,294 after depreciation. Total income was $75,137 that comprised: a TDC grant of $47,000, fundraising of $9,000, donations and rental income of $5,000. Staffing costs are $37,348 and power $5,081.
- Charges and fees. Moutere hills community centre (see www.mouterehills.org.nz) has increased some of their hire charges for the NBS sports hall by adding a “plus GST” component.
- Libraries. Richmond library has partnered with Nelson Bays Community laws service to present “law for lunch”. This has proved very popular with topics including: powers of attorney, wills, estates, and relationship property. Richmond library has also been running a “stepping up” computer course.
- Grants. 170 grant applications (totaling $423,610) were received by the grants committee, with $218,000 available in this round. Minor glitches with the online forma are being addressed.
- Publications. The summer events guide (“Hummin”) has been reviewed by staff and will now be published in a joint venture with Nelson council. This change sees a $21,000 saving (formerly cost council $30,000 per annum and will now cost $9,000).
- Health and safety. A number of recommendations have been made in relation to a recent incident at Richmond library. Recommendations included: reinforcing existing protocols, improved training (including customer vs customer conflict training), examining use of panic alarms and security camera systems.
Reserves manager’s report
Key project activity in the last 6 weeks included:
- Richmond. Velodrome construction has begun with completion of drainage work. Avery Oval (Saxton field) toilet construction has begun. Washbourn gardens roses have been replaced with old fashioned roses donated by the Rose Society. Recent planting locations include: Sanderman road reserve, Hope hall, and the Inlet walkway.
- Moutere. Richmond rotary club has constructed shelters over 2 BBQs on Rabbit Island reserve. Faulkner bush walkway was completed. Dovedale reserve has had new playground equipment ordered. Recent planting include: Dominion flats and Hoddy estuary park.
- Motueka. Keep Motueka beautiful has revamped the shrubs near the public toilets at Motueka beach reserve, completion of a concept plan for a reserve in Stephens bay, paths completed at Sportspark Motueka, and training lights installed at Goodman park. Recent planting include sanctuary ponds.
- Golden Bay. Lanscaping continues at Ligar bay, and new paths created at Takaka memorial reserve.
- Murchison. Recent plantings include Hotham St walkway.
Highlights from the chairs report include confirmation that the working party would complete the digital enablement plan (by the deadline of 18 September) that was bidding for government funding to extend broadband internet and mobil access across the Tasman district. The government has committed $210 million for the extension of the UFB programme.
In my opinion, these future information highways (are like roads), and will be important to the future potential development of this region’s economy, if it is to become less dependent on agricultural commodities (and the low wages associated with agriculture).
Another highlight was Tasman council being selected as one of eight finalists short listed (from 44 entries) for its new look long term plan consultation document. A big achievement considering the resources of other councils.
Rainbow sports club remission of loan repayments
This item was held in confidence. However, at the conclusion of the debate it was resolved to make the matter open to the public. This was a great move and councillors should be congratulated. Perhaps council is slowly coming around to greater transparency in its decision making?
By way of background, the Rainbow ski field is located outside the Tasman district. Some years ago the club got into financial troubles and sought financial assistance from 3 councils (Nelson council, Marlborough council, and Tasman council). The 3 councils have each provided an interest free loan of $90,000 to the club (totaling $270,000) to be repaid over 7 years in annual installments of $12,857 per year from 1 February 2010. Each year the ski club asks the councils to forgive that years debt obligation. In some years councils have declined that request. The relevant financial position for each year is outlined in the table below.
|Year 1 (2010)||
|Year 2 (2011)||
|Year 3 (2012)||
|Year 4 (2013)||
|Year 5 (2014)||
|Year 6 (2015)||
|Year 7 (2016)||
To date, the ski club had received $25,714 of ratepayer funds by way of forgiven loan repayments and the council had received $38,571 of the $90,000 loan it had provided to the ski club. With $25,714 outstanding (for 2015 and 2016 years).
Earlier this year council had the opportunity to consider the Ski clubs financial position for the 2013 year and at the same time view the 2014 accounts (pre-audited). In light of the financial position in 2014, council declined the club’s request to forgive the repayment of the 2013 installment.
On 11 August 2015, the club submitted its audited 2014 accounts to council and asked for remission of its 2014 and 2013 installments. In justifying its request for remission of its 2014 installment, the club informed the council that it needed $100,000 in cash reserves to open for the following season, and considered that its “slightly improved financial position” in 2014 should not have impacted on council’s assessment of its 2013 position. I disagree.
Council had every right to examine the financial position of the club at the time it considered remitting loans. At that time (2014), it was evident that the club was in “more” than a slightly improved financial position. It had made a profit of $116,319 and had built up a cash reserve fund of $40,000. Interestingly the 2014 accounts had not included the remission of the TDC loan, which would have increased their profitability. It had also increased its net assets from $369,841 in 2013, to $486,241 in 2014. Major assets had already been acquired (ie Groomer, Quad bikes, Hilux) between 2006 and 2008 and had an estimated useful life of 12 years. Replacement of these assets could not be expected for some time. A Toyota Prada and Van had been acquired in 2012 and 2014.
Examining the assets register showed replacement rental equipment expenditure was in decline (roughly $25,000 in 2012, and $10,000 in 2013). This equipment was fully depreciated within a year of purchase. Rental equipment levels had been built up over time, and the decline in purchasing new rental equipment appeared to reflected replacement rather than expansion.
The reducing investment in capital assets could also be seen in the overall decline in depreciation costs, from $88,812 in 2013 to $69,116 in 2014. Remembering that depreciation is treated as an expense and so comes off income, their financial position looked quite healthy going forward. Including depreciation, net operating surplus was a $223,547 loss in 2013 and a $35,960 in 2014. Excluding depreciation, operating surplus was a $133,735 loss in 2013, and a $105,076 profit in 2014.
Given the $40,000 in cash reserves, the forgiveness of 2014 installments from Nelson and Marlborough councils, and the indications the club would only need a $100,000 for the next financial year, it appeared that it could afford the $25,714 council was asking for (of which $12,857 had already been recognised in the 2014 accounts).
Council was asked to consider four options, although it pretty much came down to two options. Option 1, declined a remission in the 2013 and 2014 year, but remitted the outstanding loans in 2015 and 2016 (totaling $25,714). Or Option 3, declined a remission in the 2013 and 2014 year, and consider the 2015 and 2016 loans in the future when they come due.
Effectively, the issue councillors were being asked to debate was whether council should forgive the 2015 and 2016 loan installments.
Staff recommended option 1. Their reasoning was based on the costs incurred in assessing the remission of the 2015 and 2016 installments. When pressed, staff considered that the total cost of preparing the report (that was before council) was $10,000. And that this was a good indicator for future report costs.
I found this an extraordinary estimate, and I noted that no such estimate was included in the report itself. In my opinion, the cost of assessing the 2015 and 2016 installments would be much lower, as much of the report had already been written, and merely required numbers to be updated. It was a simple process of reviewing the financials and indicating if the ski club could afford to pay $12,857 (or not). I would have thought that this would not take much time at all. And certainly not incurring the hours that had been spent on the report before us (which only raised other issues).
Cr Bouillir made a compelling argument for remitting the loans on the basis of the community benefit that the club provided. She was concerned that not remitting the loans would risk the club again getting into financial trouble, and the use of the ski field being lost forever. Emphasis was also placed on the fact that the loan was seen very much as a grant when it was first provided.
In my opinion, I did not see such a risk, having viewed the clubs financial statements and the financial trends in its accounts. The reality was that this was a loan (which had been interest free) and the club could now afford to make repayment. The dire circumstances it was in several years ago had passed, and it was steadily building up its asset base and cash reserves.
If option 1 was supported, the council would have gifted (remitted) over $50,000 of ratepayer funds to the ski club, that could not be used for the benefit of another organisation, that might also require community support. While I could see that remitting $25,714 to avoid the risk of an additional $20,000 of council report costs, was a sensible risk management decision, I could not agree with staff that the cost of preparing two reports (in 2015 and 2016) would cost $20,000. I suspect some other councillors did not agree either.
In my opinion, the club was well run and fiscally prudent. It had shown a willingness to dispose of assets to raise cash when needed. Something it could not do a number of years ago. The club now had a good asset base. Although I note, that it appeared the club was not willing to leverage its assets to raise debt. While the council had provided financial support to the club through a difficult time (which was the purpose of the investment), that was no longer the case.
A division was called. By majority (Cr Edgar, Bouillir, Canton, and Bryant), Option 1 was carried, with the casting vote of the chair. Councillors Norris, Higgins, Inglis, and myself, dissenting.
Agenda and minutes
The agenda and minutes are located at http://www.tasman.govt.nz/council/council-meetings/standing-committees-meetings/community-services-committee-meetings/?path=/EDMS/Public/Meetings/CommunityServicesCommittee/2015/2015-09-17.
2015 ski season a successful one (Nelson mail). http://www.stuff.co.nz/nelson-mail/news/72692451/sun-slush-and-snow-for-cup-competitors
The Corporate services committee meeting was held on 3 September 2015. Apologies were received from Crs King and Bryant. Crs Boullir, Sangster, Ensor, Canton and the mayor arrived later during the meeting. There were no public forum presentations.
The agenda included a number of information updates (or decisions to receive reports). The agenda included the following topics: (1) koha policy, (2) Motueka clock tower trust, (3) IS staff restructure, (4) property services, (5) Motueka aerodrome and UAVs, (6) Richmond unlimited, (7) commercial activities (Mapua shed 4 development, forestry, campgrounds, Port Tarakohe), (8) Nelson airport, (9) treasury update and swap rate policy change, and (10) information services strategy and work programme.
A financial report for the corporate services team was absent in this report due to activity pressures on the team.
This meeting was fairly straight forward and all the agenda resolutions were approved without amendment by council.
The council’s koha policy document (enclosed in the agenda at page 17) was reviewed by staff and no changes were recommended. The policy was adopted by council in June 2013 and was developed to clarify the circumstances in which donations and gifting of koha by council to third parties is appropriate.
Paragraph 7 of the policy document makes it clear that council will only give cash donations under “rare and exceptional circumstances”, which must receive the prior written approval of the chief executive. Payments are not koha if they have tax implications (for example, a payment for personal services).
Cr Dowler noted that the koha policy document (and all other policy documents) should have the name of the authorising officer who signed the policy (as the policy document only had a signature).
Motueka clock tower
The Motueka Clock Tower trust has provided a copy of its financial statements as required by the loan arrangement. The trust is required to make annual repayments of $12,000. This comprises $5,000 from the trust and $7,000 from council’s reserve financial contributions. The council loan to the trust has an outstanding balance of $74,724.
Richmond unlimited (representing local businesses) has submitted a copy if its annual report and financial statements to council. This organisation is funded by council through a targeted rate.
IS staff restructuring
The information services (IS) structure review is nearing completion with updated job descriptions and job mapping circulated to affected staff. The revised structure aims to improve internal customer service and prepare for future delivery and technology challenges. Three positions have changed. Minor cost savings have been achieves with no increase to overall staff numbers.
Operating expenditure for information services was 97% of budget, and capital expenditure was 55% of budget. This reflects a shift away from in house maintenance of software and hardware.
- lift and stairwell project for Motueka recreation centre completed
- seismic repairs to Motueka memorial hall competed
- new compressor for Richmond aquatic centre acquired ($21,000)
- sale of 95 wharf road under negotiation
- various licenses to occupy roads, road boundaries confirmations for land parcel surveys, and compensation agreements, made.
The civil aviation authority has released new rules relating to unmanned aerial vehicles (UAVs). This can be found on their website (see https://www.caa.govt.nz/rpas/index.html).
The Motueka aerodrome advisory committee will be meeting to consider the new rules. The Motueka aredrome operations and safety committee has already met to consider a request to operate a UAV within 4km of the airport. Any UAV operating within the 4km zone requires prior approval. The committee has drafted a set of rules to apply to the applicant (a land surveyor) and will consider future applications on a case by case basis.
The commercial subcommittee report (28 August 2015) also reported that the Nelson drag racing association has released its racing days. These are: 7 November 2015, 9 January 2016, 6 February 2016 (or 7 February if wet), 26 March 2016 (or 27 March if wet). See http://www.tasman.govt.nz/council/council-meetings/subcommittee-meetings/commercial-subcommittee/?path=/EDMS/Public/Meetings/CommercialSubcommittee/2015/2015-08-28.
The Nelson airport constitution was recently updated to include references to the appropriate legislation. The constitution now refers to the appropriate updated legislation (see http://www.nelsonairport.co.nz).
Great also to see some new operators in the region – with Jetstar, Origin, and Kiwi Regional Airlines now providing services for the Nelson region (see http://www.nelsonairport.co.nz/air/bacon-and-eggs-welcome-jetstar-to-region/, http://www.stuff.co.nz/nelson-mail/news/69661139/new-airline-originair-set-to-go, http://www.stuff.co.nz/business/industries/69662951/Kiwi-Regional-Airlines-names-start-date-and-routes, and http://www.nelsonairport.co.nz/air/air-rivalry-in-regions-welcome/). This is fantastic news for the region. Making the opportunity for travel to and from the region much easier (and cost effective).
The corporate services report touched on a number of topics covered in much more detail in the commercial sub-committee agenda (28 August 2015). I would recommend anyone with an interest in the councils commercial activities read that report (see http://www.tasman.govt.nz/council/council-meetings/subcommittee-meetings/commercial-subcommittee/?path=/EDMS/Public/Meetings/CommercialSubcommittee/2015/2015-08-28).
The shed 4 development has hit a few snags and is experiencing delays. Ground work is expected to be completed soon. Discussions are ongoing for the last three lease spaces in the new Shed 4 development. Hamish’s cafe has closed and moved out. The Golden Bear has developed draft plans for the former cafe space.
During questions, staff suggested that toilets would be developed in part of the former cafe space to separate the Golden Bear from the grass area.
Information about the development is located on the council page at http://www.tasman.govt.nz/tasman/projects/community-projects/shed-4/. For a time lapse update on the construction process (scroll mouse across the picture to see time lapse progress) see http://www.tasman.govt.nz/tasman/projects/community-projects/shed-4/#Progress.
- Fearon’s bush (Motueka Top 10 Holiday park). The repurchase of assets has been approved by the leasee. Legal documentation is being prepared and settlement is expected soon. The financial performance of the asset for the year ending June 2015 shows: net profit $194,000 (revenue $233,000 less expenses $39,000).
- Pohara beach (Pohara Top 10 Holiday park). Repurchase negotiations have started and are expected to be concluded in early 2016. The financial performance shows a net profit of $195,000 (revenue $318,000 less expenses of $123,000)
- Collingwood (motor camp). Infrastructure failures (electrical, gas and plumbing) were completed in June/July for $40,000. The financial performance shows a net loss of $5,000 (revenue $198,000 less expenses of $203,000).
- Riverview (Murchison). The new operators have delivered their development commitments and the debt write off of $49,000 has ocurred. The financial performance shows a net loss of $38,000 (revenue $38,000 less expenses of $76,000).
The annual report was presented in the 28 August commercial subcommittee report (see link above). The financial results were positive and were presented to the corporate services committee as the “best financial result to date”. Net revenue was $318,534 (126%) above budget.
At first glance, TDC’s forestry looks in good shape. However, a detailed read of the annual report shows that the result was if anything a very fortunate one, and could be better described as a result of good timing and very pro-active management, operating in a downward (bear) market.
According to the annual report, the “excellent revenue results were realised despite dramatic drops in export pricing alongside softening of the domestic pricing”. An average market price fall of 16% is certainly dramatic. And like dairy, the collapse of the export market price, was to a large extent driven by the china crisis (and their glut of timber).
Further, given we also cut more timber than we had planned to harvest, revenue should have been above budgeted forecasts (volumes were 104% of budgeted harvest volume). Added to the mix was the fall of the NZ dollar which increased wharf charges, although off-set by more competitive ocean freight charges.
Added to all of these factors was timing (ie the harvesting cycle). This year, Rabbit Island logs were due for harvesting. Fortunately, Rabbit Island logs (which was all of the harvested logs for the year) produced a high density (premium) log. Apparently its high density being attributable to the sandy soils and fertiliser (or bio waste) that it grows in. Supplying premium high grade logs meant the price drops were much softer than they would have been, had TDC harvested lower quality logs.
In addition, much of the fall in export markets was softened by selling into the domestic market. Roughly 86% of the 22,000 ton of logs harvested were sold domestically. While the domestic market price also fell, it did not fall as much as the export market. According to the annual report, the “strategy for growing domestic customer base and market access has been financially advantageous for the TDC. A comprehensive understanding of wood quality and matching supply to market demand resulted in domestic log sale growth, which also minimised the exposure to export log price volatility”.
TDC’s financial performance can also be attributed (in part) to other domestic timber suppliers backing off harvesting, as they wait for better prices. This allowed TDC to sell its timber in a domestic market that was not over-supplied (so domestic prices remained higher than they might have been).
Yet, there is still a risk of harvests (and revenue) being lost. The annual report observed that in “November 2014, 0.6 hectares of 21 year old radiata was burned. There was potential for significant losses”. This loss was on Rabbit Island. Fortunately, health and safety performance was excellent this year (although there were 8 minor incidents recorded).
When all of these additional factors are taken into consideration (other than just looking at the net revenue), the picture for TDC’s forestry (going forward) is not necessarily as good as it first appeared. The long term future remains very uncertain. I do wonder if council should continue in this space, or dispose of its forestry rights.
The new weigh bridge shows large volumes of trade entering the port that was not previously measured under the old system. The first seven months of operation (to June 2015) have been invoiced. All users have paid their charges, except Talleys, who continue to challenge the charging methodology.
A review of the methodology has been undertaken in light of the commerce commissions directions for the parties to reach a commercial resolution. Until the review by PWC is completed, no further action is being undertaken.
Occupancy has stabilised with: (1) moorings 100% (20 of 20), (2) marina 78% (31 of 40), and (3) pile berths 50% (10 of 20). The storage compound remains 30% full.
The financial performance of the asset shows a net loss of $106,000 (budget $154,000 profit vs 2014 $123,000 profit), with revenue $553,000 (budget $771,000 vs 2014 $486,000), less expenses $659,000 (budget $617,000 vs 2014 $610,000). The net loss is attributable to a drop in occupancy fees down $150,000 on budget, wharf income down $33,000 on budget, and boat ramp fees down $13,000.
The current plan strategic plan for information services is expected to be reset in 2016. The current plan has 4 strategic outcomes, with associated improvement projects to deliver those outcomes. Those outcomes are: (1) a customer focus that puts customers at the centre of processes, systems, and architecture, (2) active information management that provides easier access in a more transparent and useful way, (3) building better, more aligned processes, that reduce waste and improve efficiency, and (4) providing solid robust and resilient infrastructure that delivers that information.
Within these four aspirational pillars, a number of projects have been undertaken, including: implementation of an improved document management system (silentOne) and accounting software (MagiQ), digitisation of various manual paper based processes and forms (eg, resource consents, submission forms, etc) , and upgrading services (eg intranet, MS software, etc).
Setting the 2016-19 strategic plan is planned for the first quarter of 2016.
Councils debt (at 18 August 2015) was $151.5 million. The weighted average interest rate was 5.06%. Councils cost of funds (including interest and bank fees) was 5.15%.
As at 18 August 2015, council had $147.78 million of interest rate swaps in place (reflecting 86% cover of debt). In August, council undertook 4 swap extensions
A review of banking facilities resulted in $20 million of available credit facilities being cancelled. In light of the LTP’s forecasted debt levels, a further review of banking facilities will be undertaken and a reduction and consolidation of existing bank facilities is expected.
Standard and Poors credit rating review is expected on 8 September 2015.
The committee also resolved to extend the current swap policy requiring council authorisation from 10 years to 12 years. The reason for this change it to allow PWC to take up low interest swaps more easily (given the lowering of interest rates). In a fast moving financial environment, a delay of 6 weeks (being the length of time between council meetings) might prevent PWC taking up a good swap arrangement.
This resolution will come before full council for approval (as the corporate services committee does not have the necessary delegated authority). This is a good example, of the repetition of topics and issues that come before committees (and full council) and why I do not always feel the need to attend every meeting. A great deal of committee meetings either are dominated by information only updates, or require decisions to merely receive reports (hardly decisions at all).
My approach is to make sure that I do attend those meetings where I can actually make a meaningful contribution to policy outcomes, or where activities need to be challenged (or supported). This ensures my time is used efficiently – and I am not just attending meetings for the sake of attendance. In my mind its the quality of a councillors involvement (and the position they advocate), not just the fact they were at the meeting.
Agenda and minutes
The agenda and minutes are located at http://www.tasman.govt.nz/council/council-meetings/standing-committees-meetings/corporate-services-committee-meetings/?path=/EDMS/Public/Meetings/CorporateServicesCommittee/2015/2015-09-03.
The 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.
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.
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 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).
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).
The full council meeting was held on 30 July 2015. Apologies were received from Cr Canton (and Cr King and Bouillir for lateness). Cr Norris announced he had to leave for another meeting at 11am. All other councillors were present.
The agenda included the following items: (1) activity management plan approval, (2) special projects funding criteria for the Motueka community board, (3) economic development funding outputs, (4) parking at Mapua wharf, (5) joint development standards project for Nelson and Tasman, (6) reserve land re-classification for Takaka service centre, (7) Waimea community dam project updates, (8) the CEO’s activity report, (9) mayor’s report, and (10) machinery resolutions and action items update.
I will focus on the important topics.
There were three presentations at the public forum. My thanks to all three ratepayers (Ray, David, and Penny) who raised some good points.
The first raised concerns over the cost of water compliance reports that were posted to a ratepayer. They felt that if some unnecessary costs could be reduced (eg double sided paper, so two pages not 4 pages, and\or emailed instead of posted), water monitoring fees could be reduced. They felt council were not working very smartly to keep costs down.
I certainly welcomed this reminder that all aspects of council’s business needed to be operating smarter. Every time council do something, staff (and councilors) need to be asking, how can we do this smarter and more cost effectively. We have made some progress in some areas, but we still have room for improvement in others. Its a process of continual improvement.
The second item related to the Motueka community board and concerns that the criteria would unduly prohibit community driven projects. It was felt many community projects already undertaken would not have met the criteria. Accordingly, some wording changes were suggested. I will talk more about this issue below.
The third item related to council minutes. Concerns were raised that the minutes did not accurately record the opinions of councillors and that a degree of accountability of councillors decisions was lost.
I agree. Its why I write this blog, so that people know where I stand on particular issues, and why I often ask for divisions on controversial issues.
Waimea community dam
There were several items (including confidential items) on the the Waimea community dam (the Dam). The first item related to Dam costs to date, and importantly the write off cost for the council, should the Dam not proceed with any council funding (see item 8.5 at page 69). The second item provide an update on work streams (see item 8.6 at page 73).
By way of background, the Dam project is governed by a project steering group that includes the mayor, Cr King, Cr Higgins, and directors from Waimea Community Dam Ltd (WCDL), which is a private company representing irrigator interests. Any decisions requiring council involvement or funding have to come back to council for approval.
Information about WCDL and its constitution can be found on the companies office website (see https://www.business.govt.nz/companies/app/ui/pages/companies/3365573).
WCDL is responsible for raising capital from irrigators, crown irrigation (a government agency), and financial institutions (like banks). The Dam project is being co-ordinated within council, with council staff delivering many of the necessary work stream outputs.
The relationship of the parties is illustrated in the following updated diagram (page 79 of the agenda).
Work streams include:
- Financial reporting and funding. This work stream is ongoing (see financial discussion below). WCDL is seeking funds from the MPI’s irrigation acceleration fund.
- Project management. Work streams that are not critical have been put on hold pending a satisfactory response from WCDL on their business model and funding.
- Communication. A part-time resource is being recruited to provide communication support (including preparing funding proposals) for WCDL.
- Governance. The funding and support agreement with WCDL has expired. New agreements will need to be entered into for any more funding. The transfer of the resource consents from WCDL to council (as required under the funding and support agreement) is pending. This was discussed in-committee (in a confidential session). More work on the ultimate form of co-investment needs to be finalised. At present, WCDL has no proposition to take to potential investors.
- Land. Negotiations regarding an acceptable price for the sale of land are ongoing. An agreement on the negotiation process is ready to go to potential land owners.
- Procurement. Beca has completed preparing a fee proposal for the procurement strategy.
- Resource consents. The consent (with conditions) has been granted. A condition of the consent is the re-location of the “shovel mint” plant and preparation of a biodiversity management plan.
- Plan changes. Draft amendments to the TRMP to better reflect Dam funding arrangements is currently under consideration. Submissions closed 31 July 2015.
- Statutory processes. It is contemplated that there will be another special consultative process before council embarks on any joint investment in the Dam project.
The council has sought greater clarity over the council’s financial write down exposure, should the Dam not proceed. Basically, how much will TDC have spent by the time a decision is made on whether to start construction (or not). At this stage, it is estimated that the estimated write-off cost for council would be $2.449 million.
Mapua wharf parking
The expected parking shortfall from wharf redevelopment work (that includes the new $1.35 million Mapua development (shed 4), and the planned removal of parking within the wharf area) has provoked council to rethink its planned roll out of parking improvements for the Mapua wharf area.
The council had planned to spend $180,000 this financial year (2015-16), and another $350,000 in 2018-19 to complete construction of 100 parking spaces (at a total cost of $530,000).
The transportation manager (Gary Clarke) advised council that the project could be brought forward into the 2015-16 financial year at a total cost of $300,000, due to a revised parking design concept – providing an overall saving of $280,000.
The $300,000 would be funded from bringing forward $70,000 of the $350,000 intended to be spent in 2018-19, plus the $180,000 intended to be spent in 2015-16, plus a $50,000 contribution from the Mapua development. While the proposed costs are only estimates (and a degree of contingency needs to be built into the $300,000) there is an expectation tender pricing will be sharper.
This arrangement would also increase the total cost of the Mapua development to $1.4 million (ie $1.35 million + $50,000). As I have stated in earlier posts, I believe that if council felt compelled to become a landlord to ensure there was an ice cream vendor in the precinct (rather than regulator), it should have pursued a low cost container development (eg, $200,000), that would have allowed a good return on investment, while allowing lower (affordable) rents to be charged for tenants.
Special projects funding criteria
The Motueka community currently pay a $5 per annum charge in their rates that (contributes about $24,000) to the Motueka Community Board’s special projects fund. This amount is planned to increase to $10 in the 2015-16 year, resulting in a contribution of about $48,500.
Spending of the special projects fund is governed by a policy document that is administered by the Motueka Community Board. Before funding can be allocated to a special project by the Board, it must fulfill the policy criteria. Generally, the fund is for projects that are low priority for the district, but high priority for the ward.
To ensure funds are properly allocated the policy was revised. However, concerns were raised by board member Ogilvie that the revised policy was to restrictive. In his public forum presentation, he suggested that the general waivor (consideration number 15) from the 14 preceding criteria was overly restrictive as the circumstances had to an “extraordinary situation”. He suggested the word “extraordinary” should be deleted. To support his argument he suggested many projects undertaken by the board would probably not be considered “ extraordinary”. Applying the new criteria, he felt many of the projects already delivered by the board could not be considered “extraordinary”. For example, a road crossing was hardly extraordinary.
I raised board member Ogilvie’s argument as part of my questions – to put the matter on the table. I also raised questions over the priority given to health and safety issues within the criteria. My concern was the health and safety plan requirement (consideration number 10) appeared to overridden by the “extraordinary situation” waivor provided to the board.
Staff reassured council that this was not the intention. That the board would always have to keep in mind health and safety considerations when approving any project application – including the ability for the board “to consider and approve” application that did “not fully meet the criteria described in the policy”. Staff also reassured council that many of the examples provided by board member Olgilvie would meet the “extraordinary situation” threshold or would have met the other criteria without the need for the board to seek a waivor from the preceding criteria.
Cr Edgar also raised concerns over the wording of consideration number 8. Staff emphasised that projects had to be “bricks and mortar” type projects (eg maintenance of existing infrastructure). For clarification, staff reordered the wording.
Council resolved to approve the revised policy criteria with amendments that emphasised the underlying health and safety constraints on the boards exercise of any of the criteria.
CEO’s activity report
The chief executives activity report covered a number of items. These included: (1) the shared services memorandum with nelson council, (2) human resource (staff) update, and (3) financial update.
Provisions financial results for the 2014-15 year (June end) have been completed.
The accounting position provides a positive variance (surplus) against budget of $4.611 million ($13.916 million surplus compared with a budgeted surplus of $9.305 million). Council also achieved an operational surplus of $5.435 million (a $7.025 million reduction on budgeted expenditure against a reduced income of $1.59 million), and an adjusted operational surplus (including revaluations and dividends) of $7.318 million.
The reduction in budgeted expenditure ($7.05 million) was due to a number of factors including interest cost savings ($2.665 million), and maintenance cost savings ($4.4 million). It is noted that capital growth was higher than budgeted, with an additional $200,000 collected from rates, and an additional $260,000 from water meters.
Capital expenditure was $33.872 million. However, the overall capital expenditure budget was $48.682 million, which included $17.34 million of 2013-14 carry-overs, approved by council in October.
Closing debt is expected to be around $147 million for the 2014-15 year.
Overall a good result and certainly heading in the right direction.
Collective employment agreement bargaining with the New Zealand Public Service Association (PSA) has concluded and is expected to be within budget.
Council are currently at various stages of recruiting for a: (1) communications officer – new (0.6 FTE), (2) administration officer – resource consents – replacement (0.4 FTE); (3) administration officer – commercial – new (1 FTE); and (4) policy planner – urban and rural development – replacement (1 FTE).
All positions are within approved budgets for staffing and are either replacement positions, or new budgeted positions, or new positions funded from within available budgeted funds (what the report misguidedly terms “unbudgeted”, but probably better described as unplanned). For example, staff might not be replaced immediately due to an extended recruitment process and the delay in replacement provides funding room for a new unplanned position.
Current staffing levels are:
|Office of the CEO||
|Environment and planning||
Some good analysis on staff numbers and turn-over (over a number of years) are provided in the supplementary late agenda (pages 19 to 21). Generally, council has an average annual staff turn-over of around 8-9% with 15.3% of staff, 60 years or older.
For me, both statistics are quite informative. First, a large portion of staff will be entering retirement soon. This is an operational risk for the organisation and succession planning needs to be put in place for key roles. Secondly, staff turn-over is quite low. The national average is around 16.3% for 2014, and 13.5% for public sector entities with more than 100 staff (see http://www.lawsonwilliams.co.nz/userfiles/file/2014%20NZ%20Staff%20Turnover%20Survey%20-%20Summary%20Report.pdf). The low turn-over might indicate good organisational moral, or an unstable economy where people are unsure of changing jobs. Low turn-over also means that new thinking is not entering the organisation.
A memorandum of understanding (MoU) on shared services was signed entered into by Tasman, Nelson, and Marlborough councils in July 2012. The excutive teams of all three councils had agreed to recommend the agreement lapse and this was proposed in the original resolution before council.
However, the recent statements by the Minister of Local Government suggested that it might be appropriate to keep the agreement in place. The minister had stated at a recent local government conference (in Rotorua on 19-21 July 2015) that (my emphasis):
It is time for sustained, locked in change. So I reiterate, I will not legislate for large amalgamation. I am as tired as our communities are of having an argument over how many mayors there should be and over whom is bigger than whom and which area will dominate. Size doesn’t always matter, but long term sustainable growth in the best interests of all New Zealanders should. … This might mean a CCO on water or transport across a region. It could mean a different business structure or increased responsibilities and accountabilities for Regional Councils. It could even mean in areas that might put a number of CCOs in place for key growth and infrastructure that there is no longer a need for a Regional Council. Some councils may even choose to amalgamate. I fully understand and accept that one solution will not work across all of New Zealand. That is why the Local Government Commission will be working up various structure options for each region to look at and decide what works best for them, and then where necessary I will legislate to either set a new CCO up across a region – or even to take something away. I have zero interest in imposing unwanted change on you. But you know that our regions are not as cohesive as they need to be to support our challenges and our future growth. So I implore you to do something about it. Be brave – own the change and both the Commission and I will do everything we can to assist and support you. But let me be clear – there will be change.
I certainly welcomed this message. It’s what the Tasman community have being saying for sometime. We do not want to amalgamate, but we do want to work smarter so we reduce the costs of local government (and our rates).
In my opinion, the thrust of the message for neighbouring councils is become “cohesive” to support the challenges of growth. That means working together through shared service arrangements where it makes sense to share services. Whether through shared service agreements, or other delivery vehicles (eg, council controlled organisations (CCOs) , limited liability partnerships (LLPs), or other entities).
York valley landfill is the first major shared service arrangement between Nelson and Tasman for sometime. But it should not be the last. Both councils should be pro-active in identifying more opportunities to reduce costs and share services.
Agenda and minutes
The agenda (including supplementary late reports) and minutes are located at http://www.tasman.govt.nz/council/council-meetings/standing-committees-meetings/full-council-meetings/?path=/EDMS/Public/Meetings/FullCouncil/2015/2015-07-30.
The community development committee meeting was held on 26 March 2015. I provided my apologies for being unable to attend this meeting.
The agenda included: (1) recent activities presentation from the Murchison recreation centre, (2) dark sky designation at Wai-iti recreation reserve, (3) reallocation of funding for Motueka Goodman Park lights project from Motueka Sports field project, (4) Notice of motion regarding Tapu bach remaining on public esplanande, (5) chair’s report, (6) manager’s report, (7) reserves and facilities report, and (8) strategic policy report.
A confidential session excluding the public was also held in relation to the Murchison reserves and facilities contract, and Rainbow sports club’s remission of loan repayment application.
For the purposes of this post I will focus on the major items of interest for me.
Dark sky designation – Wai-iti reserve and Tunnicliff forrest
This is a great initiative and I would endorse a dark sky designation being added to the Moutre\Waimea management plan when it is next reviewed.
The aim of a dark sky designation is to protect the night sky from intensive artificial light, thereby preserving the ability to clearly view the night sky. Both the Wai-iti reserve and Tunnicliff forrest do not have any artificial lights and would probably qualify as a “silver” level dark sky location, using international dark sky criteria (see page 15 of the agenda for more details). On this basis both areas would be prime candidates for such a designation.
In my opinion, any ongoing light measurement work (and the associated costs) required to meet international qualification would have to be undertaken by private interest groups. Council would only be preserving the area in the management plan for the opportunity to qualify, nothing more.
While access to the Wai-iti reserve at night does not provide any major problems, accessing forestry land at night might provide a few compliance headaches under the Health and Safety Act. However, given forestry work does not occur at night, and provided forestry areas being worked on during the day are excluded from access at night, I cannot see to many problems. Nevertheless, in my opinion, should access to forestry land prove complex or expensive in terms of compliance with government regulations, then council should not pursue allowing access at night.
Re-allocation of funding
In my opinion, this is a pretty straight forward issue of the community re-setting spending priorities. At issue is the current allocation of funds towards the purchase of new sports fields in Motueka, and a request by the community board to re-allocate $65,000 of those funds to another purpose – namely, lights for for Goodman Park in the 2014-15 financial year.
As there are no overall financial impacts for council, other than shuffling funds around (from one project to another), I fully support the community board in doing its job of reflecting what the community values and setting the spending priorities of the community.
Tapu bach reconsidered
This issue was brought before the committee under a special motion by the mayor.
The motion asked the committee to revisit an earlier decision not to exercise a discretion in favour of the applicant (Mr Krammer). In that earlier decision, the committee declined Mr Krammer’s application for waiver from having to remove his holiday bach from esplanade land by 31 March 2014. Mr Krammer sought to keep his privately owned bach on public land until his death.
Importantly, before this motion was brought before the committee, several councillors had approached the mayor asking that the policy document be amended, so that life interests for license holders could be included, as an alternative period of time to vacate private buildings from the public esplanade land. The mayor declined this opportunity, instead favouring this motion and forcing councillors to revisit an earlier decision of council not to exercise a discretionary power.
In my opinion, refusing to amend the policy document, in favour of re-examining the exercise of a discretionary power, was a poor decision. First, it tried to re-litigate a decision already made by council, after lengthy consideration of all the facts. And in the face of a workable alternative solution (amending the policy document). Secondly, no new facts were presented in the special motion that invited reconsideration of the council’s decision to not exercise the discretionary power. Thirdly, the motion appeared to champion an outcome that the mayor had himself blocked by alternative means – namely amending the policy document to allow for a license holder life interest. Whether the decision to put forward the special motion was politically motivated, is for the reader to decide.
As this decision has received a lot of public interest in parts of the district, I think its important that the constraints on councillors exercising discretionary powers are discussed in some detail. One can then decide if the right process was followed to achieve the desired outcome.
By way of some brief background, the council has had a formal policy (since 2004, and updated in 2011) called the “Policy for Private Structures on Esplanade Reserves”. That policy permits privately owned buildings to remain on public esplanade reserves by way of a license to occupy. From 2004 to 2011, the license to occupy had no expiry date and was only provided (and withdrawn) at the grace of council. This codified a long standing practice.
Before 2004, there was no formal policy. Rather, permission to occupy esplanade reserve was recorded by way of council minutes. For example, in 1984, the Waimea County Council recorded in its minutes that the council had allowed two baches, one of which was the Krammer’s bach, to remain on the newly created Tapu Bay esplanade reserve at the pleasure of the Council.
In 2011, the council decided that greater certainty for license holders (and the public) was required, and replaced the open grace period with a sunset date, being “31 March 2014”. After 31 March 2014, all privately owned buildings had to be removed from the esplanade, unless the council exercised a discretion to extend that date.
The 2011 policy document states “the term of occupancy is to expire on 31 March 2014 unless otherwise approved by the council”. The words “unless otherwise approved by council” provides the council a discretion to extend the period of occupancy beyond 31 March 2014.
Interestingly, the proposed 2011 changes to the policy also considered other amendments, including providing a longer period of time to vacate the esplanade, based on the life of the license holder (ie a life interest). However, this option appears to have not been recommended, or accepted, in the final policy document.
Importantly, the 2011 policy document provides the council a discretion to approve a longer period of occupation. However, no guidance is provided within the policy about how that discretion is to be exercised and for what period of time. In the absence of any guidance, the council was left to exercise its discretionary powers according to normal practice.
Guidance for exercising a discretionary power
The Ombudsman’s Office provides some useful guidance for council’s exercising discretionary powers (see http://www.ombudsman.parliament.nz/search?q=Volume+10%2C+Issue+2.++June+2004). That guidance is reproduced below.
Importantly, a public body (like council) does not have unfettered discretionary power. This means, a council cannot do whatever it likes (or wants to do). A discretion must not be exercised in a manner that might generate uncertainty, or conveys a perception of bias, or appears arbitrary. It must consider, and be based on, relevant considerations, not irrelevant considerations. And it must be exercised consistently (from case to case), unless the merits of any particular case justify a different approach.
Where a public body (like council) ignores valid considerations, the exercise of a discretionary power can be challenged by the public, and potentially overturned on the basis that the decision is “ultra vires” (which means council has acted beyond or outside its powers of authority).
The Ombudsman’s office states (in Volume 10, Issue (2 June 2004)):
REVIEWING THE EXERCISE OF DISCRETIONARY POWERS
A significant number of the complaints investigated under the Ombudsmen Act 1975 relate to decisions or recommendations by public sector officials exercising discretionary powers. Complaints about the way in which discretionary powers are exercised can arise in many contexts within central government, local government, statutory boards, health, educational and other public sector organisations.
The starting point of a complaint is the complainant’s dissatisfaction with the outcome of a decision-making process. However, an Ombudsman’s investigation of whether the decision or recommendation is reasonable invariably focuses on the process by which the decision or recommendation was reached. In the context of public sector officials exercising discretionary powers, the process issues are not always clear to either the complainants or the public sector officials concerned.
The following summary incorporates in large part a very helpful fact sheet published by the NSW Ombudsman’s office, which has kindly consented to its reproduction in this article.
What are discretionary powers?
Discretionary powers are permissive, not mandatory. They are powers conferred either directly by enactment or by delegation which do not impose a duty on the decision-maker to exercise them or to exercise them in a particular way. Within certain constraints, decision-makers are able to choose whether and/or how to exercise discretionary powers.
How must they be exercised?
Public sector officials do not have unfettered discretionary power. They must exercise discretionary powers in accordance with any applicable legal requirements, reasonably, impartially and avoiding oppression, injustice or improper discrimination.
In general, public sector agencies should adopt policies and procedures which set out the general approach to be followed in at least each major area of activity for which they are responsible. Agencies should try to ensure that their powers are exercised consistently from case to case, unless the merits of any particular case justify a different approach.
Relevant administrative law principles
In exercising discretionary powers, various principles of administrative law require public officials to:
- use discretionary powers in good faith and for a proper purpose (i.e. honestly and only within the scope and purpose for which the powers are given);
- base their decision on logically probative material (i.e. logical reasons, information that proves the issues in question, relevant and reliable evidence);
- consider only relevant considerations and not consider irrelevant considerations;
- give adequate weight to a matter of great importance but not give excessive weight to a relevant factor of no great importance;
- exercise their discretion independently and not act under the dictation or at the behest of any third person or body;
- give proper, genuine and realistic consideration to the merits of the particular case, and not apply policy inflexibly; and
- observe the basic rules of procedural fairness (i.e. natural justice).
Other principles of administrative law preclude public officials from:
- making decisions in matters in which they have an actual or reasonably perceived conflict of interest;
- improperly fettering their own discretion (or that of future decision-makers) by, for example, adopting a policy that prescribes decision-making in certain circumstances;
- exercising a discretion in a way that is so unreasonable that no reasonable person would have exercised the power in that way;
- exercising a discretionary power in such a way that the result is uncertain;
- acting in a way that is biased or conveys a reasonable perception of bias;
- making decisions that are arbitrary, vague or fanciful;
- refusing to exercise a discretionary power in circumstances where the decision-maker is under a duty to do so; or
- unreasonably delaying the making of a decision that the decision-maker is under a duty to make.
It would be a serious matter for public officials to ignore valid advice or valid considerations, particularly for the purposes of avoiding discomfort or embarrassment on the part of the government, agency or decision-maker.
Policies and practices to guide the exercise of discretionary power
Not every situation demands a policy. Policies are not a panacea capable of properly addressing all circumstances. However, policies are an important means of guiding decision-makers in exercising discretionary powers appropriately, consistently and fairly. Policies should include an objective and the criteria to be used in decision-making to help ensure that:
- all relevant legal requirements are complied with;
- all relevant factors are considered;
- there is consistency in decision-making; and
- the decision-making process is transparent and accountable.
As a matter of principle, it would be unacceptable for an agency to adopt and implement a policy that adversely affects, or could adversely affect, the rights or interests of any member of the public where the existence or content of the policy is kept secret or the policy document is not available on request.
Policies adopted by agencies should be freely available to relevant staff and members of the public. In this regard, s.22 of the OIA (s.21 LGOIMA) provides that every person has a right to request and be given access to any document (including a manual) held by Ministers or departments or organisations or local authorities, which contains policies, principles, rules or guidelines under which decisions or recommendations affecting any person or group of persons (in their personal capacity) are made.
Government circulars, memoranda and codes of practice
There is usually no legally enforceable obligation to comply with government circulars, memoranda and relevant industry or generally accepted codes of practice. However, in the interests of fairness, equity and consistency, decision-makers should have regard to them and comply with their terms unless there are justifiable, and preferably documented, reasons for taking another course of action.
Implementing policies and procedures consistently
Policies should not be applied rigidly without proper consideration of the particular circumstances and merits of each individual case. There will be occasions where there are justifiable grounds for not following policies. Where an agency, with good and preferably documented reasons, departs from a consistent application of policy, this does not create a precedent which binds the agency. Such decisions are relevant and important considerations, but are not binding. Conversely, where an agency frequently departs from or ignores a policy, the policy would seem to have little weight or relevance and would need review.
Unless there is provision for both:
- adequate ongoing training for staff in how to apply policies, and
- regular review of policies to update and remedy any deficiencies which are identified through specific cases, then implementation of policies and procedures may not be as consistent and effective as hoped for.
The Australian Ombudsman’s Office (see http://www.ombudsman.wa.gov.au/Publications/Documents/guidelines/Exercise-of-discretion-in-admin-decision-making.pdf) states:
How should decision-makers exercise discretionary powers?
Decision-makers must use discretionary powers in good faith and for a proper, intended and authorised purpose. Decision-makers must not act outside of their powers. No decision-maker has an unfettered discretionary decision-making power.
It is not sufficient to exercise discretion and approve an application simply because it seems the right thing to do. When exercising discretion, decision-makers need to act reasonably and impartially. They must not handle matters in which they have an actual or reasonably perceived conflict of interest.
It is important to apply the values that the legislation promotes, professional values and the values of the agency, not personal values.
In exercising discretionary powers, decision-makers should have regard to any specific requirements as well as satisfy general administrative law requirements. Some of the general principles relevant to the exercise of discretion are:
- Acting in good faith and for a proper purpose;
- Complying with legislative procedures;
- Considering only relevant considerations and ignoring irrelevant ones;
- Acting reasonably and on reasonable grounds;
- Making decisions based on supporting evidence;
- Giving adequate weight to a matter of great importance but not giving excessive weight to a matter of no great importance;
- Giving proper consideration to the merits of the case;
- Providing the person affected by the decision with procedural fairness; and
- Exercising the discretion independently and not under the dictation of a third person or body.
A failure to act within the power provided or to comply with general administrative law principles can result in a review and overturning of a decision.
Application to the facts
In my opinion, (and again applying the guidance of the Ombudsman’s Office to the facts before council), it would appear that the committee could not validly exercise the discretion, provided for in the policy. Basically, the applicant (Mr Krammer) had not provided enough relevant evidence to get council across the line in exercising its discretionary powers validly.
The evidence to date had been that:
- the applicant was a former councillor and well known person in the community.
- the applicant had been granted permission to occupy the esplanade since 1984, when the land was made into a public esplanade reserve.
- the applicant had known the removal of the bach could be required. This knowledge had been held for some time (including notice of a sunset date of “31 March 2014”, in 2011), so that he had had ample time to prepare for this eventuality.
- the applicant had not donated the esplanade land to the council as a public esplanade or reserve. In the past, council had permitted donor’s of esplanade land to keep privately owned buildings on the land until their death.
- the bach was built in 1894 and had occupied the land since the 1930’s, but did not have any heritage protection and was unlikely to receive any. Nor was there any historic value in keeping the bach in its current location.
- the bach was not his home. The applicant’s home (where he typically lived) was located in another part of the district.
- there were no medical conditions that required the holiday bach’s continued use by him. And none were raised by the applicant.
- other bach’s (including one at Tapu Bay) had already been removed under similar circumstances to the applicant’s.
There appeared to have been no other evidence of hardship or any other facts that might have shown compassionate grounds to exercise the discretion. The only other factor was public opinion.
Public opinion had developed after the original decision to not exercise the discretion was made. Several letters of support for Mr Krammer had been received by council (together with letters supporting the council’s decision). A website petitioning the council to reverse its decision had also received many comments of support (see https://www.change.org/p/the-tasman-district-council-save-john-krammer-s-bach).
Councillors needed to consider whether public opinion was a relevant consideration, or not, in re-exercising the discretion. And whether it outweighed all the other relevant considerations. Keeping in mind the Ombudsman’s advice, that ignoring valid considerations, in order to avoid political discomfort or embarrassment, was not a valid exercise of a discretionary power.
Leaving aside whether public opinion was a valid consideration (which I do not think it could be, based on the Ombudsman’s observations above), in my opinion public opinion appeared to be mixed on the issue. Letters to council on the topic were divided in opinion, and comments left on the website petition appeared to mistakenly suggest that the bach was Mr Krammer’s home.
Quite rightly there was an outcry from supporters on the website (many from outside the Tasman community, and even NZ), denouncing the council’s decision to push Mr Krammer out of his home. Had it been his home, I would probably have joined the outcry. But it was not his home. Unfortunately these mistaken comments from some supporters on the website suggesting it was his home, appeared to flavour many other subsequent comments of support. This confusion made it unclear if there would have still been public support for the applicant, had it been known that it was not his home.
Clearly, if it had been his home, council probably would have found compassionate grounds to exercise the discretion. If not on the basis of consistency. This is because there had been an earlier decision of council to allow a person to keep their “home” on esplanade land until their death. But alas, this was not such a case, as the bach was not the applicant’s home.
I should add at this point, that in my opinion, the age of Mr Krammer (who was elderly) could not be a relevant consideration. This is because the Bill of Rights Act prohibits discrimination on the basis of age. Therefore, the applicants age alone, could not be something that could sway council’s consideration of exercising its discretionary power. There had to be something more. For example, a relevant consideration might have been a terminal disease or health concern (that might arise from age) that would provide compassionate grounds for the exercise of the discretion.
In my opinion, if the council exercised its discretion, based on an absence of any relevant considerations (other than public opinion), then it was not only setting a bad precedent in exercising its discretionary powers, but was probably exercising them invalidly and contrary to the principles outlined above from the Ombudsman’s office.
I suggest above that it would be a bad precedent for exercising discretionary powers, because it would effectively be setting the bar very low (ie, all you need is public opinion and not much else), and could potentially open up a whole can of worms for the exercising of discretionary powers in other policy documents (and there enforcement).
As I had stated in the original summary of my decision:
In my opinion, the policy was known to the community for some time and had already been widely applied. In some instances, people had already removed homes (where they had lived) from esplanade reserves.
In this case, the owner had not donated the reserve land on which their bach was located, and did not live in the bach. Rather, the bach was a family holiday home. While the owner may have donated their time and energy to community service, or was elderly, these facts were insufficient to award an exception on “compassionate” grounds. To do so would have set a very low bar (if any).
On the basis of fairness and consistency, and in the absence of justifiable compassionate grounds, the council had to apply the policy without bias or favour. The council had to be seen to be objective and neutral in its decision making. The rule of law had to be applied. To do otherwise could set a dangerous precedent for the application of other policies and rules.
On the day, three councillors (Crs Edgar, Bryant and Canton) did not support the council re-exercising the discretion. They believed the discretion could not be validly exercised based on the facts before them. I stand with them on that decision.
I also believe that councillors should have supported a change to the policy document, that would have brought about the same outcome, rather than supporting the special motion.
Its about following the right process, and not fudging it.
Interestingly, there may well be a question over whether the committee was delegated the power to exercise the discretionary power of council provided for in the policy document. In the opinion of staff, the delegated authority (contained in the delegations register) to “implement” the policy, imports the ability to exercise the councils discretionary power.
A contrary argument is that the council’s discretionary power is something outside the normal implementation of a policy and was expressly reserved for council in the policy. Had this discretionary power been delegated to the committee, then arguably the delegations register would have used the words “all of council’s powers”, rather than a more contained selection of powers, such as “implementation” or “review”.
It might be suggested that this issue is rather academic, given all councillors sit on both the committee and the full council. However, this ignores the fact that the committee is a separate legal entity with the ability to only make recommendations to council, unless given powers by council to do otherwise. As with all questions of public law and administration, proper process is critical.
An alternative solution
I believe the better approach was for council to address the wording of the policy. And I suggested this, at the end of my original summary of the decision. Unfortunately, the mayor did not see it this way, and forced the motion to re-examine the exercising of the discretion on the committee.
In my mind, the policy was overly restrictive and could have easily grand-parented the use of buildings and their removal on the basis of the license holders life-time, or a fixed period (ie 31 March 2014), whatever was longer. In fact, grand-parenting was considered an option when the policy was reviewed in 2011. Why council opted for only a fixed time (ie, 31 March 2014) to vacate the esplanade is unclear, but I could not see why there was a need for such urgency or a lack of flexibility by allowing grandparenting?
In my opinion, given the discretion could not be validly exercised without undermining the credible and valid exercising of the discretionary powers of council, the better approach of council was to fix the policy by expressly allowing a license holder a life interest. Changing the policy was not only more transparent and fairer for everyone (benefiting everyone, not just Mr Krammer), but it also prevented the council from having to invalidly exercise a discretionary power to bring about the same result.
Unfortunately, the mayor declined to unify the council by amending the policy, and instead pursued a divisive approach of trying to fudge the exercising of a discretionary power. Given the mayor has on a number of earlier occasions reinforced his desire for the council to act collaboratively and speak as one voice, I was rather surprised that he would not only revisit the exercising of the discretion (surely the council had already spoken on the issue), but refused to amend the policy, when he had the opportunity, and the unanimous support of all councillors, in getting to the same result.
The manager’s report touched on a number of issues including
- Golden Bay recreation facility: A project manager will be appointed and architects have already indicated the project will need to be re-scoped to fit to budget, before they can proceed to detailed designs.
- Recent events that council staff participated in included: (1) choice children’s day (400 people participated) held at Rabbit island, (2) Moturoa Mission (164 students from 18 Tasman and Nelson enviro-schools held at Rabbit Island), (3) waste minimisation education campaign, (4) enviro-schools regional coordinator hui, (5) bikewise campaign held during world cricket.
- Publications: The first of the revised Boredom Busters holiday listing guide has been developed and published, providing households with essential Easter holiday period information (see http://www.tasman.govt.nz/recreation/events/boredom-busters-holiday-programmes).
- Online developments: Development of the new internal intranet is advancing steadily towards completion within the next 6 weeks. This should improve staff access to information.
- Libraries: The range and number of e-books and e-audio titles continue to increase. In partnership with Marlborough District Libraries, a new range of e-books from Bolinda Digital was added. Libraries Manager, Glennis Coote, has been appointed to the board of the Kōtui library consortium (comprising 24 councils).
- Acquatic centre: Patronage was 19,650 for January 2015 (23,872 in January 2014). The fitness centre members for the month were 5,081.
Reserves and facilities
Staff provided an update on projects. The Richmond projects are outlined below. Projects for Moutre, Motueka, and Takaka wards are outlined in the agenda (at pages 54 and 55).
- Saxton field: (1) Velodrome. Opus has completed the design work and the tender has now been put out to selected contractors. (2) Land development, Champion Green. The design work is completed for tendering.
- Avery Oval (Saxton field): Toilets/changing rooms. Tenders have gone out for the construction of the toilets, and if the budget allows, changing rooms as well.
- Meadow Lane/Forget Me Not Lane walkway: Staff are investigating options for the bridge.
- Washbourn Gardens: The Currie Pavilion. Keep Richmond Beautiful is going to repaint the pavilion.
- Chelsea Ave Reserve: Playground upgrade. Work in progress. I really question whether any upgrade is required for this park. In my opinion, its upgrade work for the sake of upgrading.
I wonder whether council should be looking to consolidate a number of pocket parks that are located within close proximity to larger parks. Maintenance (and frequent upgrading of equipment) of so many pocket parks is expensive. Consolidating pocket playgrounds would reduce maintenance costs and allow better infrastructural investment in larger parks. For example, rather than have two pocket parks surrounding Ben Cooper park (eg Norm Large park and Chelsea avenue park), perhaps Ben Cooper could have a large children’s playground facility located at one of its ends?
Many of the pocket parks were provided by developers to offset development levies and were created when the larger parks were not as accessible to residents as they are now. For example, Norm large park was created when access to Ben Cooper park could only be made from Wensley Road. The subsequent residential development around Ben Cooper has now made that park more accessible and a very short bike ride (2 min) from Norm Large park.
The planned work programme for the strategic policy team through to the end of December 2015 includes: (1) the long term plan, (2) activity management plans, (3) annual plan, (4) residents survey, (5) reserves and parks planning, (6) bylaw and policies review, (7) risk management issues, and (8) other strategic challenges (including: partnerships, treaty settlements, growth, natural hazards, document management systems, ideas exchanges, and water augmentation).
Agenda and minutes
The agenda, special motion, and minutes for the meeting are located at: http://www.tasman.govt.nz/council/council-meetings/standing-committees-meetings/community-services-committee-meetings/?path=/EDMS/Public/Meetings/CommunityServicesCommittee/2015/2015-03-26.
The corporate services committee met on 12 February 2015. All councillors were present.
Earlier in the day, the public forum received a very comprehensive presentation from Michael Rea on the Motueka harbour and coastal works account, which I will discuss below.
The agenda comprised the following items: (1) the Motueka harbour and coastal works account, (2) corporate manager’s report, (3) financial report, and (4) treasury report.
Motueka harbour and coastal works account
The Motueka harbour and coastal works account (the “Motueka works account”) was established in 2012. This followed the dis-establishment of the Motueka harbour endowment fund, following a December 2009 High Court decision, which resulted in the funds and assets (originally held under a closed account), becoming general funds of the council.
In 2012, the council resolved that the Motueka works account would be managed on a commercial basis and the 2012 policy document covering the fund’s management policy would be reviewed in 2013.
The revised 2013 policy proposed to reformat the former policy document so it was consistent in layout with other council policy documents, revise the title of the policy by adding the word “reserve”, include a definitions section (to clarify the fund is not a restricted reserve fund), and clarify any other points of confusion. In all other respects, the revisions were not intended to make any other changes to the meaning, scope, and application of the 2012 policy.
The 2012 policy provided that the assets or funds of the Motueka works account were to be utilised for a prioritised list of activities within the designated area of benefit, including other uses approved by council.
Use of the funds by council is subject to two conditions. First, the capital assets in the account must be considered surplus to the ability to meet the other three priorities, and secondly the Motueka Community Board has to be consulted on any such proposal from council.
In addition, the capital assets will be managed with the intention of increasing the value of the assets held in the reserve fund. For example, the funds might be held in a bank account or invested, until such time as they are required to be applied to the priority activities. Use of the funds, other than for maintaining the assets held in the Motueka works account will be subject to a separate business case that outlines the advantage of the investment. Again, the Motueka Community Board has to be consulted on any such business case.
The 2013 policy continues this approach.
The council resolved to accept the 2013 policy (as amended, during the meeting). The amendments sought to clarify: (1) the area of benefit (by including a map), (2) making consultation a standard paragraph to add greater weight for the need to consult with the Motueka Community Board (rather than a “note”), and (3) removing any confusion around the words “any use of the funds … other than for the costs of maintaining the assets” which could be interpreted very narrowly – and appeared contrary to the stated ability for council to apply the funds for other uses (eg investing the funds in a bank, or other investment).
I also raised questions about the ability for council staff to charge the fund for their time, give staff wages were already a sunk cost of council. In my mind “asset stripping” of this nature was outside the intended use (and restrictions) of the fund as outlined in the policy.
It is worth noting that funds from the Motueka works account are already earmarked for “investment” in the Mapua development. Had the Mapua development been less expensive (eg a container development), the commercial insurance payout would have met all its costs and the need for funds from the Motueka works account would not have been required.
The financial results for the half year period ending 31 December 2014 is a favourable variance of $157,000. Key contributors to this were an additional contribution from the treasury function, which was partly offset by higher staff costs and the timing of maintenance payments. The variance in maintenance costs is primarily a timing issue from the IT area. Staff costs are influenced by full staffing levels, additional unbudgeted costs in relation to the Waimea Community Dam project and managed exit costs.
Year to date, TDC have processed 1,241 Department of Internal Affairs (DIA) rates rebate applications worth $719,000 for the 2014-15 year. This compares with 1,733 applications worth $985,000 for the 2013-14 year.
The LIM process review project is progressing well and the new digital process is currently proposed to “go live” at the end of April 2015.
A major upgrade TDC’s internal webpage for staff only (also known as an “intranet”) will be launched over February-March 2015. This will bring together new applications such as the LIM processing tool as well as improved options for internal staff communications, initiatives and project planning.
As part of the 2014 telecommunications tender renegotiation, the Council network is adding diverse connections at the Main Office, Motueka and Takaka Services as well as the District Library. The main Richmond office second fibre connection is expected to be completed by the end of March 2015.
Maintenance work at the Motueka Library (to the value of $72,000, as budgeted in the annual plan) is expected to be completed by 30 June 2015.
The Local government fund (LGF) provided its quarterly financial report ended 31 December 2014 (see agenda pages 33 to 57). The fund is used by council for borrowing. Details about how council debt is managed can be found in the treasury report below.
Audit NZ has started their initial 3 week work programme.
At 31 December 2014, the net financial position of council is an accounting surplus of $1.085 million, against a budgeted surplus of $2.898 million. Income was $3.977 million below budget, and expenditure was $2.164 million below budget.
This variance has three key drivers: (1) the write down of interest rate swaps (-$5,001,000), (2) lower than budgeted income from subsidies and grants (-$677,000), and (3) lower than budgeted maintenance expenditure ($1,975,000).
The underlying operational result was a favourable variance of $2.649 million, once the impact of development contributions, vested assets and interest rate swap movements have been removed from the accounting result.
Capital expenditure for the year is $14.636 million against an overall budget of $48.435 million. A re-forecast of the capital expenditure programme is planned for February 2015.
Total debt is $149.1 million. This is in line with the projected year-end balance of $171.9 million provided the capital programme is completed.
Council’s working capital position at 31 December 2014 was ($3.737) million compared to the year-end projection of ($9.616) million. The major reason for this is a lower current debt balance at the end of December 2014.
At 31 December 2014, council’s debt stands at $149 million, with an average interest rate of 5.228% (June 2014 5.4%). Council’s actual weighted average cost of funds at 31 December 2014, including interest rate swaps, bank margins, and line fees at 5.337% against a budgeted rate of 6.10%. TDC’s cost of funds is illustrated below.
At 31 December 2014, Council had $147.78 million of interest rate swaps in place, equal to 99.2% cover over existing debt and 85% over forecast 30 June 2015 net debt. The recommendation from Council’s treasury advisors has been to increase the fixed rate percentage of the 12 month forecast debt to 85%.
Council’s funding maturity profile indicates how council has spread the risk of refinancing its facilities and loans. TDC’s funding and liquidity risk position is illustrated below.
Agenda and minutes
The agenda and minutes for this meeting can be found at http://www.tasman.govt.nz/council/council-meetings/standing-committees-meetings/corporate-services-committee-meetings/?path=/EDMS/Public/Meetings/CorporateServicesCommittee/2015/2015-02-12.
The corporate services committee meeting was held on 24 July 2014.
The meeting agenda received several reports including: (1) Port Golden Bay Ltd, (2) Nelson and Motueka airports, (3) Mayoral relief fund, and (4) various financial updates.
Port Golden Bay Ltd
Port Golden Bay Ltd was incorporated on 10 April 2008. It currently has one Director being the Chief Executive Officer, Lindsay McKenzie. It does not trade, and was set up for name protection purposes only. Accordingly, council resolved to exempt this effective paper company from any reporting obligations under the Local Government Act 2002 for the next three years.
Nelson and Motueka airports
The final 2014-15 statement of intent (SOI) from Nelson Airport Ltd was received by council as required under the Local Government Act 2002. The draft SOI from Nelson Airport Ltd was considered by the Joint Shareholders Committee on 4 April 2014. The Committee recommended that the SOI be approved subject to changes to the accounting policy on asset valuations being revised (ie, the depreciation treatment of assets). Council agreed to receive the SOI and authorised the mayor to approve it.
Ian Orange was elected Chair of the Takaka Aerodrome Management Committee at the 6 May 2014 triennial meeting. Richard Molloy from Golden Bay Air was elected to the committee, along with existing members. At the request of the Ombudsman a meeting was held with aerodrome operators and some residents of Upper Moutere to review the Memorandum of Understanding (MOU) between the aerodrome operators and Council. Some amendments have been agreed and are being incorporated into the MOU. An additional section on “neighbourly flying” is also being added to the MOU. The Motueka Aerodrome Operations and Safety Committee and the Motueka Aerodrome Advisory Committee have both met.
Mayoral relief fund
Similar to Port Golden Bay Ltd, the Mayoral Relief Fund (Tasman/Nelson) is a council controlled organisation (CCO) and therefore has reporting and disclosure requirements under the Local Government Act 2002. The current trustees are Chris Clenshaw, Judene Edgar, John Hurley, and Richard Kempthorne.
The Mayoral Relief Fund Tasman/Nelson was formerly the Richmond Pool Charitable Trust. This Trust was dormant for a number of years while council considered whether to wind up the Trust, or change the purposes of the trust. Following the flooding and rain event in December 2011 the former Richmond Pool Charitable Trust’s name and purpose were changed, as this was the most expedient way to setup a Mayoral Relief Fund. The Mayoral Relief Fund was set up to cover the Tasman District and Nelson City regions.
The financial implication of not exempting the Mayoral Relief Fund from the Local Government Act 2002 would required an audit that is likely to cost at least $1,500 per annum. Given the cost of the audit outweighed the financial holdings of the trust, council resolved to exempt the trust from any reporting obligations under the Local Government Act 2002 for the next three years.
At 31 May 2014, the YTD accounting income was $2.75 million ahead of budget, and expenditure was $0.29 million below budget. The net YTD position is an accounting surplus of $8.21 million, against a YTD budgeted surplus of $5.17 million. The underlying operational result was a surplus of $2.224 million once vested assets, development contributions, and the fair value gain on interest rates swaps, have been removed.
Capital expenditure for the year is $18.7 million which is considerably under the budget. The majority of the under spend will be carried over into the 2014/2015 year. Total Debt is expected to be $148.0 million. This is in line with the projected year-end balance of $148.0 million.
Council’s working capital position at 31 May 2014 was $3.99 million compared to the year- end projection of $4.4 million. The major reason for this is a lower trade payable balance at the end of May 2014.
This is a pleasing result. Although, one could also suggest that budgets for the 2013-14 year were overly inflated. However, expenditure incurred in earlier years, that will crystallise at the end of the 2014-15 year, will take councils debt from $148 million to $177 million. The Golden Bay Community sports facility will also see an additional $2 million crystalise in the 2015-16 year. With $1.2 million committed in the 2014-15 year. This type of expenditure will place increasing pressure on rates during the 2015-16 year, unless further cuts can be found before that year begins.
In my opinion, the pressure on finding operational savings must continue. And it must be more vigerous. This will inevitably mean that many of the nice to have services (many of them community publications) will need to be shaved back or retired. These types of savings are the low lying fruit of council expenditure. The harder work will involve a good long look at some of our larger budgets – including staffing. For example, community development initiatives and infrastructural maintenance.
It also means investment in commercial activities will need to be curbed back dramatically, or disposed of, if we are to make any headway in turning this substantial debt ship around. Unfortunately the reality is that past councils have spent the family silver. We currently service over $8 million in interest alone per year. That is equivalent to three community facility buildings a year. At present, the debt continues to grow (albeit slower). This is a good first step. However, the aspiration of this council must be to reduce debt, not just slow it down. I think some councilors are finding such a journey a hard one to come to grips with given their history of increasing revenue (ie rates) rather than making cuts – but one we have to take.
The Department of Internal Affairs (DIA) Rates Rebate scheme continues to provide a strong level of financial assistance to Tasman ratepayers, with 1,622 applications processed for the 2013/2014 year, resulting in $920,200 in rebates.
ASB Aquatic centre
Sponsorship is due for renewal in August 2014. Informal interest has been received from some parties. The opportunity to obtain naming rights will also be considered as part of any sponsorship.
Agenda and minutes
The agenda and minutes for this meeting are located at http://www.tasman.govt.nz/council/council-meetings/standing-committees-meetings/corporate-services-committee-meetings/?path=/EDMS/Public/Meetings/CorporateServicesCommittee/2014/2014-07-24.
A full council meeting was held on 30 May 2014 and subsequently carried over to 5 June 2014. There were no apologies for the 30 May meeting. However, apologies from Cr Canton were received for the 5 June meeting. The annual plan was then finalised by full council at the 30 June 2014 meeting.
The 30 May full council meeting was the official meeting to discuss the final cut of the 2014-15 annual plan and any expenditure that would be undertaken (or not) during that year. And an opportunity to take on board feedback on the draft annual plan circulated earlier in the year to the community. The agenda was to consider the following big items: Motueka library, Golden Bay service centres, Golden Bay recreation centre, Tourism funding, and Cycle trail extension – as separate resolutions, with a single resolution for all the other items.
However, before this meeting, several workshops had already been held in the preceding weeks to consider submissions, debate the issues, reconsider positions, and provide the opportunity for like minded councillors (or blocks of councilors) to strike any deals. Therefore, this meeting was to a large extent a formality, but for some councilors like myself, it was also the last opportunity to convince others around the table to change their minds.
Day One – the debt grenade
The full council meeting on Friday (30 May) was to be the big day when we would confirm council’s expenditure program for the forthcoming financial year. Things began, as outlined in the meeting agenda, with the Motueka library proposal leading the discussion.
All councillors were in support of removing the $1 million refurbishment of the Motueka library from the draft annual plan. Why it was ever included in the draft annual plan remains a mystery to me – given the lack of support it had around the council table before the draft annual plan was released. Yet the majority of councilors still voted for it to be included in the draft annual plan. Yet here we were, listening to the same arguments and now agreeing to remove it. Was it’s inclusion in the draft annual plan (and eventual removal in the final plan) just a straw-man for something else?
I for one, thought it should have been removed form the draft annual plan (and deferred for consideration in the long term plan), in the same manner the Golden Bay recreation centre was. This would provide the community a transparent and clear direction from council about what projects were to be deferred, and importantly, why.
Generally, the argument around the table during pre-draft annual plan workshops was that a redeveloped hub in Motueka (that included a service centre, library, and other council services) in one location on Decks reserve, was the way to go. I certainly agree with that direction, as it consolidates overhead costs for a number of council services. But the archilles heel for the hub project was its cost. It was just too expensive, at a time when council needed to be taking stock of its debt position. In my mind, the time was not right to undertake such a project and the prudent step was to consider this project (and others, like the Golden Bay recreation facility) as part of a longer term strategy.
The alternative to the hub concept was to invest $1 million in a refurbishment of the existing Motueka library – that included minor expansion of space and earthquake strengthening. This was the proposal that eventually made its way into the draft annual plan. However, on the day, councilors agreed that this work was also not a good idea. It was felt that the earthquake work would not be required given the governments announcements that it was reducing the earthquake strengthening standard from 66% to 34%. Furthermore, some councilors around the table felt that investing any more funds into a building that was on leased land, was not desirable.
Rather it was better to invest any funds in a hub concept on land owned by council. Finally, it had been noted in earlier reports to council that book useage at the Motueka library was in decline and the use of web based services (eg ebooks) was trending upwards. In light of this trend it was unclear whether the pressure on space within the library was also in decline – and perhaps more time was required to see how this trend would impact on future spacial needs. Accordingly, it was decided to reduce funding from $1 million to $76,000 to allow for any earthquake strengthening work required.
In my opinion the inclusion of the $1 million refurbishment of the Motueka library in the draft annual plan (and its eventual removal in the final annual plan) was a $1 million straw-man for other items to be kept or included in the final annual plan (eg the Golden Bay recreation centre). This is because some around the council table considered that the removal of the library (and deferment of the service centre) gave them room to do other projects within the existing budgeted program of expenditure. And as observed above, the inclusion in the draft annual plan of a refurbished Motueka library had little support during earlier workshops.
If I had been forced to chose between a $3 million Motueka hub concept and $3.5 million Golden Bay recreation centre, I probably would have chosen the hub concept. Why? Because the Golden Bay recreation centre still had a number of years of good service left within it. If we could sweat our roads (eg, defer maintenance of roads in the annual plan), we could easily sweat a recreation centre for a few more years. Furthermore, during an inspection of the recreation centre we were told that the main concerns with the centre were access to showers from the visitor changing sheds (which currently involved a toweled walk to the showers) and the closure of the grandstand (on the roof of the centre) due to earthquake risk. Both minor inconveniences and costs. Finally, some in the Golden Bay community also did not support another recreation facility if it added more debt. In contrast, the Motueka hub concept provided service improvements and potential operational cost savings.
A debt grenade
After consideration of the Motueka library refurbishment, the finance manager was invited to make a presentation on our financial (and debt) position in light of council’s intended expenditure program. This was to be a later item in the agenda.
During this presentation, the finance manager informed council that due to the 2014-15 annual plan being the last year of the previous long term plan, all outstanding capital projects (eg work that had yet to start or had not been completed) would have to be recognised in the 2014-15 financial accounts. This would also provide a clear financial position when considering the next long term plan.
Basically, council had committed to $20 million of capital expenditure in earlier years that would be catching up with the council’s balance sheet in the 2014-15 year. In effect, around $9 million dollars of debt funded capital works that had yet to completed would be added to the 2014-15 financial accounts.
Some councillors were quite shell shocked by this apparent increase in the council’s debt position. Although others recognised that this was actually debt funded expenditure that council had already undertaken to spend in earlier years. At this point the mayor asked that the meeting be suspended until the financial implications of the debt could be analysed. Subsequently, the revised (and very real) debt position was reported in the media (see Waimea Weekly. see “Shock as $18M blow-out found” (4 June 2014) http://issuu.com/waimea-weekly/docs/040614/1?e=1913941/8122090).
The reality was that the council’s closing debt position, based on forecasted opening debt (of $167 million) would be higher than forecast in the draft annual plan. However, due to the forecast of $167 million being higher than actual debt of $148 million, the increase in recognised debt meant that the forecasted closing debt position would remain close to what was forecasted (around $173 million).
The reality was that our debt was still going up. It’s just the forecasted increase from $167 million to $173 million (a $6 million increase) would instead go up from $148 million to $171 million (a $23 million increase).
In both scenarios, new debt increases by approximately $6 million. That’s the real figure to watch. As is the closing debt position – which will translate into increasing interest payments.
A figure we cannot afford. At a time when we should be trying to minimise debt funding so we can begin to turn the debt funding of council activities around. We already spend $8 million a year in interest payments. Thats three community recreation centres a year!! Thats why I could not at this time support any debt funding of assets that are not critical.
Sorry Golden Bay, but getting our debt under control has to come first, and saving $3.5 million is an easy first win that would have made a sizeable dent in a very large debt ship that we have to begin turning around. Adding $3.5 million of fuel to an “interest repayment” fire just makes no sense to me especially when we not under any real pressure to replace the recreation centre. Finally, in my opinion, more pressing issues (like storm water) required council funds before we could spend money on recreational facilities.
If anyone tells you we do not have a debt problem they are deluded. We have got to stop spending on the nice to have items to ensure we have the head room to turn around our dependence on debt funding, preserve our credit rating, and ensure we spend our money on the more pressing priorities (like storm water). That should have started now. Alas, its been kicked for touch till next year.
Day two – a fait compli
Council reconevened on Tuesday (5 June 2014) to move through the remaining items on the agenda. Apologies were received from Cr Inglis and Cr Canton. All other councillors were present. By this time, the shock of the debt had lulled and many councillors felt that it was just funds moving around on paper. But as I alluded to above, the reality is that council debt was increasing by a further $6 million.
Golden Bay service centre
The draft annual plan proposed adding just under $1 million dollars to the 2013-14 annual plan for a rebuild of the council service centre.
This building was a council services building used by council staff and for the public to make enquiries, pay rates, and obtain resource consent information. The building is located on crown granted land. If the land is not used for council purposes, it will revert back to the crown. Staff were removed from the building when it was identified as earthquake prone (eg, below the approved 66% earthquake compliance requirement). Accordingly, staff were shifted to a temporary building, opposite the back of the Motueka public library.
This left the council with several options: (1) refurbish the service centre so its 66% earthquake compliant costing $380k, (2) rebuild a new centre for no more than $1 million, or (3) relocate the service centre to another location – either the library or information centre. Added to the decision mix were several additional considerations. First, the council could receive additional insurance funds if it included a commercial space in any rebuild. Second, any relocation would require additional expenditure of expensive fibre for sending data to the service centre. This effectively ruled out relocation.
In terms of a rebuild it was argued that there was little financial difference in cost for a new build and any refurbishment that met the 66% earthquake standard. Especially if the new build would enable a commercial space to be added that would be partially funded by the additional insurance and future rental income.
However, there was a larger financial difference if the refurbishment was only required to meet a 34% earthquake standard. The expected cost would probably be something less than $380k. Given the government had announced a forthcoming change in the earthquake standard (from 66% to 34%), it was felt that the financial argument for a rebuild did not stack up, and earthquake strengthening to a 34% standard was the more cost effective option. Accordingly, the project was deferred to the long term plan for further consideration and no budget for a rebuild was required in the 2014-15 annual plan.
I think this was a very sensible financial decision. And one that perhaps preserves the heritage value of the building. And due credit also to the Golden Bay councilors (Cr Sangster and Cr Bouillir) moving the change to the draft annual plan. Although I also appreciate this was a tactical concession to get the Golden Bay recreation centre across the line.
Yes, it would mean that staff would have to continue to operate from a very small temporary space – but only for another year or two. In my opinion, there is also still scope for some functions (not all) to be moved to the library, so that only planning functions operate from the temporary building. This might alleviate in the short term some of the spacial pressure. However, that is for a future discussion.
Moving forward, the council will be investigating how much refurbishment work is required to meet a 34% compliance requirement so staff can return quickly to their former building.
Golden Bay community centre (or recreation centre)
This proposal sought the replacement (and upgrade) of the existing rugby clubrooms and squash courts. The upgrade also proposed the addition of net ball courts. The co ncept and plans can be viewed on the councils website (see http://www.tasman.govt.nz/policy/public-consultation/recently-closed-consultations/feedback-form-golden-bay-community-recreation-facility-concept-plan/).
I attribute its demise in the draft plan on the finance manager’s presentation to councilors on our debt position just before it was considered. And Cr Higgins vigerous support of that message. That presentation emphasised the cost of adding any more debt funded programs to the council books.
We also heard that there was no legal obligation on council to provide a recreation centre in Golden Bay. In effect, the inclusion of a new recreation centre was a luxury that we did not have to commit to in the next financial year. We could take a “tea break” and consolidate our financial position. Rather than rush in, we could take the time to improve our financial position before embarking on any more projects.
Shifting the recreation centre to the long term plan would also give the Golden Bay community more time to raise the necessary finance while signaling the project had not been forgotten. We just needed time to sort out the councils finances first. All very rational and prudent.
However, in my opinion, the reality was that the inclusion of the Golden Bay recreation centre (together with other items) in substitution of the Motueka library was a missed opportunity to reduce debt at a time when interest rates are going up. The time to spend on nice to have items (like recreation centres), is when interest rates are low or trending downward. Not when they are trending up or when the demand (and price) for builders and contractors will be high as the Christchurch rebuild gathers stream.
While I appreciate that the councils commitment was changed from $3.5 million to $3.2 million (a $300k reduction). It still commits council to debt that in my opinion was unnecessary to commit to, when were are also starring down the barrel of a Dam proposal, as well as a strain on our storm water infrastructure, as rainfalls are projected to increase due to climate change.
At this point I note a recent article in the Nelson mail on stormwater (see http://www.stuff.co.nz/national/10236222/Flooding-battle-to-cost-millions). In that article it was stated that storm water and flood protection would mean more borrowing and more debt. In my opinion, this misrepresents the debate. The tension is not between addressing storm water issues and debt, it is between addressing storm water issues and spending money on other nice to have projects. Its a question of prioritising spending. Surely protecting peoples homes, comes before building recreation facilities?
As a community we band together to protect one another during a crisis. Mitigating the potential cost to the community of a major flood (not to mention the risk of potential insurance fee hikes or non-insurance, as well as litigation risk for council) surely warrants the investment. Not to mention removing the unnecessary worry ratepayers have whenever there is a major rainfall event. This is a political decision and the community need to speak up.
If Champion Rd can have Q100 storm water solution why can’t the other three or four hotspots in Richmond. For example, the Hart Rd\Bateup Rd intersection which receives rainfall from the higher Richmond south developments and was under water during the last three heavy rainfall events since 2011. Or the cemetery dam overflow (at the back of the Richmond cemetery), that nearly overflowed were it not for the valiant mid-night efforts or nearby residents removing flood debris from storm water grills – averting what could have been a major disaster for homes below the cemertery.
Finally, while the Golden Bay recreation centre will only add another $1 million of debt to the 2014-15 plan, the proposal is funded across two years. This means that council has already committed to the remaining $2 million of debt in the 2016-17 year. This places another road block in prioritising available funds on storm water in future years. And the overall increase in debt remains the same $3.2 million.
For the record, Cr Murfin and I opposed this expenditure. Cr Norris also voted against the amended resolution, although he voted against it on the basis it should have remained at $3.5 million.
This issue has generated a lot of confusion – and it has not been helped by poor communication of what council (or at least some councilors) set out to do – which was to review the return on investment from tourism funding. I’ve discussed this issue in earlier posts so I will not revisit the debate. However, the outcome of the annual plan puts in place funding for destination tourism for the 2014-15 year, with some incentive for the relevant stakeholders to resolve future funding before the end of this year.
Great Taste Trail (or cycle trail extension)
This proposal sought to build the next planned segment of the trail beyond Wakefield. During workshops leading up to the draft annual plan being finalised, many councillors were opposed to this proposal on the basis of the ongoing operational costs council would be exposed too against the limited financial return it might offer Wakefield businesses. However, the Mayor suggested that if he could secure 50% government funding would councilors support the cycle trail being added to the draft annual plan. On that basis it got support during the workshops. However, between the workshop and the proposed resolution, the funding source got widened to include other third parties (potentially including institutions that might received council grants).
To reinforce councils commitment that funding the cycle trail extension was only on the basis of government funding, and not from another entity that might be indirectly funded by council grants, I moved that the last three words of the resolution be removed – namely “or another third party”. Unfortunately, I received no support for this amendment and it was defeated.
Everything else (including the Mapua development)
Surprisingly (or perhaps not), the $1.2 million Mapua development was lumped into the fill-a-buster resolution – together with 70 other items for consideration.
As it was part of a single resolution, you had to either support the resolution or not. This meant that disagreement with one of the 70+ items meant you had to vote the whole resolution down, or note your dissent on any of the 70+ items being considered. For example, the $1.2 million Mapua development proposal.
I had thought given a number of residents raised concerns about this item, the level of general public interest, the size of the investment, and the fact the cycle trail (involving only $300k) had received a separate resolution, that the Mpaua development proposal would also have been separated out from the rest of the items, that were less controversial. However, the Mayor (who is responsible for setting the agenda) preferred to leave it in amongst the rest. However, as concession the Mayor allowed councillors to note their disapproval of any single item – which I chose to do – rather than seek to separate the item from the main resolution.
By way of a brief background, the Mapua development initiative proposes to build on the former acquarium site. Two build options were outlined by a WHK report. The first was a container option (similar to the one used in Christchurch) for around $100k. The second was a standard build for $1.2 million. This would be partially debt funded. A third option was to just lease the land and let a developer build and lease any new building.
In my opinion, its not for council to seek more equity from ratepayers in order to embark on new commercial activities. If ratepayers want to invest their money in new commercial activities they should not be compelled to do it through increases in rates. And lets be frank, thats what is being proposed.
I also do not believe it is for council to attempt to control what businesses operate in the Mapua precinct other than by regulations. That is for the market to decide. If there are undesirable businesses, they can be controlled through regulations, not buying up all the buildings so the council becomes the sole lease holder of the entire precinct. However, if councilors want to employ a strategy of ownership, then they should be doing it for the least cost.
In my mind the container option would achieve the desired outcomes in a more cost effective manner, as well as bringing back a buzz to the Mapua precinct, in the same way it has happened in Christchurch (see http://www.thefifthestate.com.au/archives/49798/ and http://www.china.org.cn/photos/2011-12/04/content_24070673_3.htm). The added benefit of a container development is that it would reduce the lease costs for tenants while providing a very efficient space to operate their businesses from.
Arguments have been made around small space a container would offer, but the type of family businesses some councillors seek to retain in the precinct could easily operate from smaller spaces – as is the case in Wellington. Although I should add containers can be made into larger spaces (as the pictures of the ChCh precinct show). A container development would also allow more space for public seating which is at a premium in this area. After staff costs, lease costs are a major hurdle for start-up businesses, especially craft businesses. A container development would provide opportunities for new businesses to establish themselves. Surely this is a good thing.
An argument was advanced by staff that the $1.2 million should remain in the budget so that full council could at least consider whether the proposal had merit. If it was removed, council could not consider whether the proposal had any merit. In my mind, council should have nipped the project in the bud then rather than waste any further effort by staff. However, that argument found favour and the majority of councillors (but not all).
In my mind, expenditure of $1.2 million (or for that matter anything above $200k) that would require more debt funding, did not have any merit. Accordingly, I voted against it and noted my dissent on the item.
Agenda and minutes
The agenda and minutes for the annual plan are found at: http://www.tasman.govt.nz/council/council-meetings/standing-committees-meetings/full-council-meetings/?path=/EDMS/Public/Meetings/FullCouncil/2014/2014-05-30 and http://www.tasman.govt.nz/council/council-meetings/standing-committees-meetings/full-council-meetings/?path=/EDMS/Public/Meetings/FullCouncil/2014/2014-06-30.
“Shock as $18M blow-out found” (4 June 2014) http://issuu.com/waimea-weekly/docs/040614/1?e=1913941/8122090
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).
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.
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).
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.
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.