|
Extraordinary Meeting of Council - 15 March 2019 - Attachments
|
Item 1 Attachments a |
Extraordinary Meeting of Council
Open Agenda
|
Meeting Date: |
Friday 15 March 2019 |
|
Time: |
1.00pm |
|
Venue: |
Council Chamber |
|
Council Members |
Mayor Dalton (In the Chair), Councillors Boag, Brosnan, Dallimore, Hague, Jeffery, McGrath, Price, Tapine, Taylor, White, Wise and Wright |
|
Officer Responsible |
Chief Executive |
|
Administrator |
Governance Team |
|
|
Next Council Meeting Tuesday 16 April 2019 |
Extraordinary Meeting of Council - 15 March 2019 - Open Agenda
ORDER OF BUSINESS
Apologies
Nil
Conflicts of interest
Public forum
Nil
Announcements by the Mayor
Announcements by the management
Agenda items
1 Proposal for Draft Annual Plan 2019/20 and consultation material.................................. 3
2 Amendments to Policies and Fees and Charges........................................................... 63
3 Mediation Settlement.................................................................................................... 95
Extraordinary Meeting of Council - 15 March 2019 - Open Agenda Item 1
1. Proposal for Draft Annual Plan 2019/20 and consultation material
|
Type of Report: |
Legal |
|
Legal Reference: |
Local Government Act 2002 |
|
Document ID: |
708130 |
|
Reporting Officer/s & Unit: |
Jane McLoughlin, Corporate Planner Caroline Thomson, Chief Financial Officer Adele Henderson, Director Corporate Services |
1.1 Purpose of Report
The purpose of the report is formally approve the underlying information and approve key decisions from Council for the development of the draft Annual Plan 2019/20.
|
That Council: a. Resolve that the draft 2019/20 Annual Plan be prepared on the basis of this report and supporting documentation including decisions made at this meeting. b. Note that the draft 2019/20 Annual Plan and consultation document will be reported back for Council adoption on 26 March 2019. c. Note the proposed rates increase for 2019/20 will be 5.9%. d. Note that the WMMP recycling consultation recommends smoothing the cost of the implementation over two years by utilising Council reserves in Year 1. e. Note that bringing forward water related capital projects of $7.8m will have an impact on the 2020/21 financial year of 0.7%. f. Note that the WMMP waste consultation will not impact services for 2019/20, however, it will confirm Council’s support for WMMP adopted 4 September 2018 for the agreed services will which have an impact on rates of approximately 1% for 2020/21 and will be tendered late 2019. g. Note that targeted engagement will occur with those residents impacted by the proposed targeted rate associated with the Whakarire Rock Revetment. h. Note the supporting documentation for the draft Annual Plan 2019/20 be received. i. Note that changes to the Revenue and Financing Policy will be consulted on concurrently with the Annual Plan consultation. j. Note that changes to the Rates Remission Policy will be consulted on concurrently with the Annual Plan consultation. k. That the documents and underlying information can be amended for minor refinements as for adoption of reports on 26th March 2019. |
|
That the Council resolve that the officer’s recommendation be adopted. |
1.2 Background Summary
The local authority must prepare and adopt an annual plan for each financial year (LGA Section 95).
The purpose of the annual plan is to:
a) Contain the proposed annual budget and funding impact statement for the year to which the annual plan relates and
b) Identify any variation from the financial statements and funding impact statement included in the local authority’s long-term plan in respect of the year and
c) Provide integrated decision making and coordination of the resources of the local authority and
d) Contribute to the accountability of the local authority to the community
The purpose of this report is to obtain decisions from the Council on the key matters and budget considerations for incorporation in the 2019/20 Annual Plan. Supplementary reports are provided as supporting financial information for the Annual Plan.
The 2019/20 draft Annual Plan process involves the further refinement of the annual budget contained for the year within the Councils Long Term Plan (year 2 of the LTP). It allows Council to review the projects and operations for that year, and make changes based on budget allocations and priorities for that year, and to consider new proposals, changes, increased costs, and other factors that may have emerged since the Long Term Plan was adopted.
Recent changes to the Local Government Act 2002 create more flexibility as to whether the Council needs to consult with its community on an Annual Plan and that is an option available to Council where there are no significant or material differences from the Long Term Plan.
An assessment of the significance or public interest in a matter drives discussions with elected members on the need for consultation. This is assessed annually as the Annual Plan is developed. The Annual Plan process will be used for the legally required consultation to set up a Council Controlled Organisation (for the establishment of a Regional Disaster Relief Fund).
The process to develop council’s annual budget for 2019/20 involved a series of workshops with Councillors to set direction on the budget. These seminars occurred on 18 December, 29 January, 31 January, 28 February, and 5 March. Councillors were provided with cost pressures and efficiencies that could be made, and set direction to stay within the financial caps as outlined in the Finance Strategy.
Budget context
The average rates increase approved in the Long Term Plan 2018-28 was 5.1%.
The review of the Annual Plan information involved a detailed review of baseline expenditure and financial forecast. Budget reductions were made as part of ongoing efficiency programmes. This review has offset other cost pressures across the organisation including unplanned expenditure associated with Councils responsibilities as last man standing in leaky building claims. Known cost pressures for upcoming contracts were also addressed in the expenditure review.
The Local Government Cost Index (LGCI) has been specifically prepared for the sector and provides an appropriate inflation index for the capital plan budgets for Year 2 of Long Term Plan. Operational expenditure has been based on known costs and LGCI only applied where appropriate.
The latest release of the LGCI index from BERL shows upward cost pressures on the Council’s cost base.
A review of fees and charges was undertaken to ensure that the appropriate cost recovery remains in place to ensure that the ratepayer is not unfairly burdened.
Budget changes and discussions for Annual Plan 2019/20
Kerbside recycling and rubbish collection
During December 2017 consultation with the community occurred around the joint Waste Minimisation and Management Plan (WMMP). Over 7,000 submissions were received by Napier and Hastings as part of this process and the preferred options were adopted by Council 4 September 2018. Council is currently working on a month by month contract for the provision of recycling services and will need to implement the WMMP recycling recommendations sooner than Hastings. For the purposes of the Annual Plan 2019/20, Napier will be including additional costs for weekly recycling with receptacles in line with the costs outlined to the community as part of consultation (Dec 17). These will be confirmed when the tender process is complete. The mobilisation of the contract expected by the end of the calendar year.
Ø For the purposes of the Annual Plan 2019/20 Council could increase average rates by 1.8% to account for the changes associated with WMMP, or look at Council reserves as a mechanism to reduce the impact to the ratepayer by spreading those costs over a two year period.
Ø Councillors have identified their preferred option is to spread the cost over two years and will consult on the change in use of the reserve and smoothing the impact on rates increase for 2019/20.
Ø In order to implement the rubbish collection services approved 4 September 2018 Council will need to tender by the end of the calendar year 2019 and in advance of the Annual Plan 2020/21.
Ø Rubbish collection changes as a result of WMMP will be implemented 1 July 2020. The anticipated impact from the adoption of the rubbish collection changes from WMMP will increase rates by approximately $21 or a 1% increase in rates for 2020/21. This will be consulted on further as part of the next Annual Plan 2020/21, however, the commitment will be occurring within next financial year.
Water Supply
Councils are facing increased compliance, environmental standards, and higher public interest on water matters. In response, Council is proposing an increased level of capital spend for the provision for water related services in the Annual Plan 2019/20. At the direction of Councillors a programme of work to improve the water supply includes bringing forward $7.8m (from years 10 onwards) over the next 3 years (total of $8.4m including the additional operational spend). This expenditure includes building an additional reservoir for increased capacity; extension to the Awatoto trunk main (connect to network); new rising main at Church Road; new access points to improve the comprehensive cleaning programme; improvements to inlets and outlets; district monitoring of water; and a new borefield. Councillors also discussed and have endorsed additional operational funding for water including extra mains cleaning, reactive flushing, increased level of service maintenance, and additional staff to run the water programme. Council have a choice of bringing this work forward or continuing with the programme as outlined in the Long Term Plan.
Ø For the purpose of the Annual Plan 2019/20 there is no impact on rates as the expenditure is loan funded. The cost associated with the loan is calculated at year end and charged against the following years rates calculation
Ø Councillors have recommended bringing the water projects forward and are aware of the impacts that this will have to rates in 2020/21 of 0.7%. Council will have the ability to review the entire Annual Plan 2020/21 where there may be opportunities to offset these known costs.
Ø Councillors have a choice of fully consulting on these new projects or informing the community of this proposal. Given the level of interest in water Councillors have set direction to inform the public of the water projects. The public will still have the ability to provide feedback during consultation.
Major Projects/Share Service/Internal Delivery of services
As part of Council’s ongoing review of the delivery of services, Council has considered its personnel requirements for the delivery of both its internal operations and capital works programme for 2019/20.
Key drivers for personnel cost increases
ü Increased level of capital projects
ü Increased compliance and environmental requirements eg water testing
ü Regional shared service provision (Web, LASS, building consents)
ü Central government minimum wage adjustments and Remuneration Authority
ü Statutory and legislative requirements (H&S).
Insurance
There are known pressures within the national and international insurance markets. Council are currently working on a regional loss modelling exercise to ensure that its insurance requirements would be met in an event of a large scale event. At the point in time of developing the plan, impacts are unknown and no increase to total insurance costs have been factored into the budgets.
Whakarire Revetment
Included in Councils Long Term Plan 2019/20 is the Whakarire Rock Revetment required to prevent inundation for 12 properties in Westshore, fully funded by general rates. Council undertook a LGA Section 101 (3) review to ascertain the public/private benefit resulting from the project. Officers provided recommendations to Councillors on 16 October 2018. On 11 December 2018, Council agreed to a 3% private benefit from the resulting project and targeted consultation will be undertaken as a result of the project being included in the Annual Plan 2019/20.
Ø Council have the choice of funding the entire project from internal loans or implement the public/private split (97%/3%) as agreed as part of the review of who would benefit from the project. Direct consultation will be undertaken with the affected property owners, with the wider community also being able to provide feedback through the Annual Plan 2019/20 consultation.
Ø Council acknowledges that this funding split would not form any basis for the work that is being undertaken by the Coast Hazards Working group in determining their future work and allocation of costs to the community.
Changes to policies
As referred to in a separate report, a review has been undertaken to ensure there is consistency between Council’s Revenue and Financing Policy that forms part of the 2018-28 Long Term Plan and the rating policy sections of the Funding Impact Statement that is included in the Annual Plan. In addition, Council has set direction a change to the funding split for Animal control and changes the Rating Policy sections of the Revenue and Financing Policy.
Additional clauses are being added to the Rate Remissions Policy to cover remission of water by meter charges, additional flexibility to remit rate penalties to encourage ratepayers to bring their accounts up to date and the ability to remit rates on Napier City Council properties and to smooth the impact of changes in rates where a significant change occurs to the value of rates payable.
Changes to the Revenue and Financing policy include:
· A change to the range for the level of general rates for Animal Control to reflect the actual funding split being applied.
· The inclusion of a new targeted rate for the proposed Whakarire Revetment targeted rate on residents of Whakarire Avenue.
· Changes to wording to explain Councils rate differentials and to more accurately describe the various targeted rates.
Other matters considered
The Historic Skating Rink will remain unfunded and included in future years Annual Plans.
A reallocation of funding set aside for the Taradale Plunket Rooms has been put towards the remedial seismic strengthening at Taradale Library. Council officers will review other property budgets for the Taradale Plunket Rooms based on priorities.
Council is currently undertaking its remaining detailed seismic assessments across the Property portfolio and currently underway are the Graeme Lowe Stand at McLean Park, Ocean Spa Buildings, Council Depot and Milliscreen Plant and BTF. Council has only included minor funding for strengthening projects in the Annual Plan 2019/20. In the event that the remaining buildings required work to be undertaken, funding would be considered in future Annual Plans and Long Term Plans as outlined in the LTP Financial Strategy.
Council has three vacant and earthquake prone buildings – Taradale Plunket Rooms, Civic Building and Library Building. Detailed remedial costs and building upgrade costs associated with the Library Building will be provided to Council in due course once the business case has been completed. Ongoing costs for the upgrade of the old Library building was included in the LTP. It is anticipated that this decision will be made in advance of the next Long Term Plan if a capital project is determined as the way forward. A detailed business case is currently underway.
A condition survey of the Inner Harbour was undertaken as part of the Long Term Plan, with a prioritised work programme for the Harbour. Officers are developing an Inner Harbour masterplan to guide this work. Council are also seeking additional funding through the Provincial Growth Fund to further enhance tourism and job opportunities associated with the upgrade.
Funding has been allocated to reincorporate the war memorial at the War Memorial Centre and garden.
The detailed business case for the Aquarium is currently in progress and will be completed later this financial year. The revenue generation will be tendered and carried out as part of the Detailed Business case. Further decision gateways are included for this project.
A review of the District Plan is currently underway and will be completed 2020. Funding has been provided to complete the underlying work programme from Council reserves.
Council has a large capital programme and includes projects such as the Napier Aquatic Centre, Aquarium, new Library and water projects starting 2019/20 and peaking 2020/21. There has been some rephasing of the capital programme including the Kennedy Park ablution block. This programme will require additional internal resources to deliver.
1.3 Issues
The Central Governments Provincial Growth Fund (PGF) was created with a $3 billion fund to stimulate and provide jobs to the New Zealand regions. The Hawkes Bay councils have collectively being working together on applications to this fund to seek funding for key projects that meet the objectives of the PGF. Further information will be made available following advice from the PGF.
1.4 Significance and Engagement
An assessment of the significance of the changes from the Long Term Plan 2018-28 was undertaken as part of the development of the Annual Plan 2019/20. This included both operational and capital expenditure changes.
The following matters have been included in the Consultation Document 2019/20 for feedback from the community:
1. Water related projects
2. Waste minimisation
3. CCO Establishment – Regional Disaster Relief Trust
4. Whakarire Revetment – impacted properties
5. Amendment to Revenue and Financing policy
6. Amendment to Rates Remission policy
7. Capital plan
Regional Disaster Relief Trust – discussions have been held across the various regional agencies (including CEG and with the Regional Mayor/Chair) for the need for a vehicle to receive funds in the event of a regional disaster. This would enable the receipt of financial contributions from around the country including central government and a mechanism for those funds to be effectively distributed. Council approved at its Council meeting on 5th March 2019 to support the public consultation for the establishment of the Trust.
The consultation and submission period for the Annual Plan 2019/20 is 2 April 2019 to noon 7 May 2019. Submissions can be made online on the Council website. A flyer will be sent to all households outlining the process and how they can feedback.
Councillors will engage with the community via three community meetings on the Annual Plan 2019/20. There will be no formal hearings and deliberation process. Council will consider all feedback from the community both online and from the meetings when making its final decisions on the Annual Plan 2019/20.
1.5 Implications
Financial
Financial Caps
When considering the changes to the Annual Plan 2019/20 from the Long Term Plan 2018-28, Council officers reviewed its compliance against the Councils Financial Strategy and its Financial Prudence benchmarks.
As part of the Long Term Plan 2018-28 Council approved a LGCI + 5% as its cap for rates increases. The proposed Annual Plan rates increase is within this level at 5.9% (including the recycling level of service adopted as part of WMMP)
Another key benchmark for Council is the Rates limit Benchmark, which is a measure of the rates income limits. The Council budget complies with this requirements.
In addition, the Balanced Budget Benchmark has been met.
New Water Projects included in 2019/20
Although Council have identified additional water related projects, it does not require external debt to deliver this work programme. The Long Term Plan identified that Council would require external debt funding from year 3. However, bringing the projects forward will have an impact on the rates increase for 2020/2021 of approx. 0.7%.
WMMP Implementation costs
The decision to adopt the WMMP including new levels of service for both recycling and rubbish have been consulted on. Cost impacts were provided as part of the consultation, however these were not factored into both Napier and Hastings Long Term Plans at the time. These will only be confirmed once the tender is let and may differ to the original information depending on the market for these services. As the response to consultation on the WMMP was significant (over 7,000 people), Council are comfortable that they have considered all options when providing budget for this service.
For the purposes of consultation, costs included in the Plan are in line with the WMMP consultation for recycling. The implementation costs are estimated at 1.8% rates increase. To smooth the financial rating impact, implementation will be smoothed through the use of reserves over two years.
The WMMP costs of waste will be included in the Annual Plan 2020/21, however the contract will be awarded in 2019/20, and as a result, it is being signalled now that this will result in a rates increase of approx. 1% that was not included in the Long Term Plan for 2020/21.
Impacts of 2019/20 programme on 2020/21 rates increase
As noted above, there are financial implications from bringing forward projects without these having a direct impact on the current year rates. In the development of future Annual Plans there is the ability to further refine the annual budgets contained in that year within the Councils Long Term Plan (year 3 of the LTP). It allows Council to review the projects and operations for that year, and make changes based on budget allocations and priorities for that year, and to consider new proposals, changes, increased costs, and other factors that may have emerged since the Long Term Plan was adopted. When evaluating changes in levels of service – a material change requires consultation on an annual plan, and a significant change in a level of service is an LTP amendment.
Social & Policy
N/A
Risk
The following risks were noted as part of the development of the Annual Plan 2019/20:
- Strong Construction market demand – pressure on capital programme
- Climate change – Central Government requirements
- Government Healthy Home requirements
- Living wage/Min Wage changes
- Wellbeing legislation
- Insurance market (costs escalating as market making a loss)
- Outstanding detailed seismic assessments on Council owned buildings
- Provincial Growth Funding – impact to current programme of work, pressure to get work completed before Central government elections
- Timing of sections sold for Parklands development
- Elections and new Council requirements
- Limited general reserves
- Year end provisions for leaky claims
- Rates increase in 2020/21 as a result of bringing forward water projects is 0.7%. Council would consider this increase during the preparation of the Annual Plan 2020/21.
- Implementing WMMP waste recommendations will result in an average rates increase of 1% for 2020/21.
- Implementing WMMP recycling recommendations will result in an average rates increase of 1.8%.
- Provincial Growth Fund projects and ongoing costs
- Provincial Growth Fund projects and cap on Government support.
It is noted that the capital expenditure programme is significantly higher than previous years. To deliver the programme will require additional internal resources as well as the ability of the construction market to deliver these projects during a period of relatively high demand. This demand may impact on number of tenders received, project cost and timing of delivery.
1.6 Options
The options available to Council are as follows:
a. Approve the underlying information as the basis for the development of the Annual Plan consultation document 2019/20.
b. Not approve the underlying information as the basis for the development of the Annual Plan consultation document 2019/20.
c. Approve in part the underlying information as the basis for the development of the Annual Plan consultation document 2019/20.
1.7 Development of Preferred Option
Option A – approve the underlying information as the basis for the development of the Annual Plan consultation document 2019/20.
a Financial Information ⇩
b Capital Programme changes ⇩
2. Amendments to Policies and Fees and Charges
|
Type of Report: |
Procedural |
|
Legal Reference: |
Local Government Act 2002 |
|
Document ID: |
711623 |
|
Reporting Officer/s & Unit: |
Adele Henderson, Director Corporate Services Ross Franklin, Consultant Caroline Thomson, Chief Financial Officer |
2.1 Purpose of Report
To recommend minor changes to rating policy and regulatory fees for consultation as part of the Annual Budget 2019/20. To also recommend consequential amendments to the Rates Remission Policy and Revenue and Financing Policy for consultation concurrently to the Annual Plan 2019/20.
|
That Council: a. Agree to consult as part of the draft Annual Plan Budget 2019/20 on: i. Introducing a targeted rate of approximately $380 per annum for residents of Whakarire Avenue in Westshore. ii. Increases to fees as specified in the document titled 2019/20 Fees & Charges – Full List of Updated Fees and Charges. iii. Rates Remission Policy changes as outlined in the report titled Amendments to Policies and Fees and Charges. iv. Revenue and Financing Policy changes as outlined in the report titled Amendments to Policies and Fees and Charges. |
|
That the Council resolve that the officer’s recommendation be adopted. |
2.2 Background Summary
A number of minor changes are proposed to rating policy for 2019/20 to implement Council decisions or ensure fair treatment of similar properties. None of the proposed changes to policies will impact on the average general rates increase. Implementation of some of these changes requires consequential amendments to the council’s Revenue and Financing Policy and Rates Remission and Postponement Policy. Officers recommend that the proposed changes set out in this report be consulted on as part of and/or concurrently to the Annual Budget 2019/20.
Increase to some fees to maintain cost recovery
Increases are proposed to some of the council’s fees (animal control and service connection fees) to maintain cost recovery. The cost of providing these services has risen and fees need to rise to ensure the services are funded by the users and not subsidised by ratepayers. Other fees and charges have been reviewed and most have gone up by the appropriate cost inflator to maintain cost recovery.
Introduce targeted rate to residents of Whakarire Avenue, Westshore
Council agreed to introduce a targeted rate to residents of Whakarire Avenue, Westshore, to pay for 3% of the costs of the Whakarire Revetment project. The targeted rate is in recognition that there is some benefit for the private properties. This targeted rate would be effective from 1 July 2019 and last for 25 years. Each year, there would be an amount of approximately $380 payable by those residents based on the current project estimates.
Council’s Revenue and Financing Policy
Audit NZ recommended that Council undertake a full review of its Rates processes and its Funding Impact Statement (FIS). A review has been undertaken and this also included a review of the Revenue and Financing Policy to ensure the rating information in that policy is consistent with the FIS. This review identified that changes were needed to the Revenue and Financing policy to more accurately describe the rating differentials and targeted rates.
In addition further changes are required to include the new Whakarire Revetment targeted rate, as outlined in the paragraph above, in the Revenue and Financing Policy. Council also needs to amend the funding split for animal control to align it with the agreed level of rate funding for that activity.
A full review of the policy is recommended however this will take between 12 and 18 months to complete. In the interim, changes are recommended to the current policy, as outlined above.
An update of the policy has been prepared and this is being reviewed prior to submission to Council on 26 March.
Council’s Rates Remission Policy
In conjunction with the review of the funding Impact Statement and Revenue and Financing Policy council’s Rate Remission Policy was reviewed to ensure it is fit for purpose and will enable Council to manage any changes to rates as a result of improvements to processes around the setting and collection of rates.
Additional clauses are being added to the Rate Remissions Policy to cover remission of water by meter charges; additional flexibility to remit rate penalties to encourage ratepayers to bring their accounts up to date; provide the ability to remit rates on NCC properties; and to also smooth the impact of changes in rates where a significant change occurs to the value of rates payable.
As is the case with the Revenue and Financing Policy a draft update of the policy has been prepared and this is being reviewed prior to being submitted to Council on 26 March.
2.3 Issues
Changes to the Revenue and Financing Policy and to the Rate Remission Policy require Council to consult with the community. This consultation is able to be completed in conjunction with consultation undertaken on the 2019/20 Annual Plan.
2.4 Significance and Engagement
The introduction of a targeted rate to residents of Whakarire Avenue has been assessed as triggering high significance as this group is particularly affected. As such, targeted engagement with residents of Whakarire Avenue will occur to ensure those residents are encouraged and have opportunity to provide feedback. Engagement will be through a meeting between Councillors/Officers and residents, and residents will also individually receive a letter and be asked to provide direct feedback to Council.
The changes to fees and charges has been assessed as low significance because they have a small impact on a large population.
The other policy changes are not considered to be significant.
Consultation on these policies is a legal requirement under the Local Government Act 2002.
2.5 Implications
Financial
Income as a result of changes to the Fees and Charges Schedule has been included in the financial information for 2019/20.
Social & Policy
n/a
Risk
n/a
2.6 Options
The options available to Council are as follows:
a. Approve the recommendations in this report.
b. Not approve the changes proposed in this report.
2.7 Development of Preferred Option
Option A – approve the recommendations in this report. Officers will then amend the relevant policies accordingly and present them for Council adoption on 26 March 2019. The documents will then be consulted on with the public at the same time as the consultation for the Annual Plan 2019/20.
a Draft Fees and Charges 2019/20 ⇩
|
Type of Report: |
Legal |
|
Legal Reference: |
Building Act 2004 |
|
Document ID: |
707742 |
|
Reporting Officer/s & Unit: |
Adele Henderson, Director Corporate Services |
3.1 Purpose of Report
To present an alternative option for funding the confidential mediation settlement of 7 Humber Street (Waterfront Apartments).
|
That Council: a. Note that the claim for 7 Humber Street (Waterfront apartments) was successfully settled through mediation within the delegation provided to the Chief Executive at the Extraordinary Council meeting held 8th February 2019. b. Note that the details of the settlement are confidential. c. Revoke resolution (b), (c), (d) and (e) of item 1 made by the Council on 8 February 2019 as the Council wants to change how the settlement is to be funded. d. Resolve the following funding for the mediation settlement: i. Resolve that funding of the mediation settlement be comprised of a split between Parklands Residential Development reserve fund and a reduction in costs and increased revenues within Council activities. ii. Utilise the provision made within the annual accounts 2018/19 in relation to the claim. iii. Note that any successful claim against Riskpool will result in funding being returned to the Parklands reserve and that otherwise the reserve will not be specifically replenished for the funds taken out. iv. Note compliance with section 80 of the Local Government Act 2002 has been met in relation to the deviation from the Liability Management Policy (by setting out in the report the departure, the reasons for it, and noting that there is no intention to amend the policy). v. Note that the proposed funding will not impact rates for 2019/20. |
|
That the Council resolve that the officer’s recommendation be adopted. |
3.2 Background Summary
Settlement of the claim in relation to the Waterfront Apartments at 7 Humber Street has been achieved. Council had resolved how the settlement would be funded (in public excluded) on 8 February 2019. Further analysis since that resolution has identified an option which does not have any rates impact and this is now being put to Council for consideration.
3.3 Issues
N/A
3.4 Significance and Engagement
The Council’s Liability Management Policy has been considered, and it is recognised that the application of the Parklands Development Fund Reserve may be considered internal borrowing, in which case its use would be inconsistent with the Policy as it stands.
However, it is noted that section 80 of the Local Government Act 2002 (‘LGA’) allows for an inconsistency with a Plan or Policy if the departure and reasons for it are clearly outlined prior to the decision being made.
The Liability Management Policy states that Council has the option to internally fund Capital expenditure as approved by Council resolution; however provision for a mediation settlement is not capital expenditure.
Under section 80 of the LGA, it is recognised that this proposal outlines a different use of the Reserve Funds than was originally proposed within the Long Term Plan. However, in the circumstances there it is recommend that the Council take no action to amend the Liability Management Policy.
The Significance and Engagement Policy (‘SEP’) has also been considered. By applying the reserve funds, the issue appears to have low significance in terms of the significance criteria and factors in the SEP, and the SEP does explicitly state that there may be situations in which it is impractical to engage, including because of time constraints.
Funds put aside for a particular purpose can be used for a different purpose by a decision of the relevant Council. We are proposing the use of the Parklands Residential Development Fund reserve, which was identified in the Long Term Plan to be utilised for future revenue generating opportunities ($30m). Funds set aside for this purpose will not be impacted. Any successful claim against Riskpool will be used to replenish the fund. Otherwise, there is no plan to replenish the fund.
In any event, the decision to change the purpose/ activity needs to be made in accordance with Council’s decision-making obligations (as per section 76 of the Local Government Act 2002 (‘LGA’), which essentially requires that decisions be made in accordance with sections 77, 78, 80, 81 and 82 as applicable). This includes the obligation to give consideration to the views and preferences of persons likely to be affected by or have an interest in the matter, but does not by itself require a Council to undertake consultation (section 78 LGA). The usual risks of proceeding without consultation are that if the community feels that the Council has made a decision without engagement with them there is the possibility of public backlash against the Council and or challenge in the courts.
We do not believe the public, if given an opportunity to provide input into this decision would prefer the alternative, which would give them a significantly higher rates increase to offset the cost.
3.5 Implications
Financial
The resolution provides for no increase to rates as a result of the mediation settlement.
Social & Policy
N/A
Risk
The previous consideration of this matter was in a public excluded meeting due to confidentiality obligations arising from the settlement and concerns about the detriment to the Council’s position in future mediations. Those continue to be relevant matters. However, in addressing the current issues in the open agenda, it has been possible to strike a balance between the maintenance of confidentiality around settlement details (in the public interest) and appropriate public disclosures about the implication of the settlement and the means by which the Council can meet its legal obligations to contribution to the settlement.
3.6 Options
The options available to Council are as follows:
a. To find cost reductions in the Annual Plan 2019/20 to offset the cost of the loan required for settlement. To acknowledge that the interest from the Parklands reserve would not be sought as an increase to rates. In addition, release the provision made in the Annual Report 2018/19 in relation to this claim.
There would be no impact on rates
b. To increase rates as a result of the loan required for mediation settlement. In addition, release the provision made in the Annual Report 2018/19 in relation to this claim.
This would increase rates by 1.7%
c. To increase rates as a result of the loan required for mediation settlement and loss of income from interest received from Parklands funds. In addition, release the provision made in the Annual Report 2018/19 in relation to this claim.
This would increase rates by 0.61%
3.7 Development of Preferred Option
Option A – To find cost reductions in the Annual Plan 2019/20 to offset the cost of the loan required for settlement. To acknowledge that the interest from the Parklands reserve would not be sought as an increase to rates. In addition, release the provision made in the Annual Report 2018/19 in relation to this claim
Officers recognise that many of our ratepayers are on a fixed income, and escalations will put pressures on our financial prudence benchmarks set by Council in the Long Term Plan 2018-28.
