Agenda of Community Plan Committee

COMMUNITY PLAN COMMITTEE (Committee of Council as a whole)
Membership:	13
Quorum:	Half of the members
Meeting Cycle:	Meets as required during LTP and Annual Plan processes
Reports to:	Council

5 21 February 2017

Community Plan Committee

07 February 2017

File: (17/155)

Report no: CPC2017/1/61

Draft Budget 2017/18

Purpose of Report

1. This report provides a draft budget summary for the Committee’s consideration and adoption.

Recommendations

The Committee recommends that the Council:

(i) adopts the draft summary budget and capital project plan attached as appendices 1 and 2;

(ii) agrees to a draft increase in rates by an average of 2.3% in 2017/18;

(iii) agrees to the proposal to change the Financial Strategy, to;

(a) rates increases limited to the Local Government Cost Index;

(b) net Debt to be no more than;

(aa) 150% of Total Revenue in years 1-3 of the plan; (bb) 130% of Total Revenue in years 4-6 of the plan; (cc) 110% of Total Revenue in years 7-9 of the plan; (dd) 90% of Total Revenue in year 10 of the plan and beyond;

(c) net Debt can be increased to 170% of Total Revenue should the need arise following a significant natural disaster; and

(iv) considers the list of additional items not currently included in the draft budget.

Background

2. The Local Government Act 2002 requires the Council to prepare an Annual Plan in between updates to the Long Term Plan. The Long Term Plan 2015-25 (LTP) was approved in June 2015. The Annual Plan and associated budget for 2017/18 implements year 3 of the LTP.

3. The long term financial model has been updated and as in previous years, a spreadsheet will be displayed at the meeting showing the impact on rates and debt of any changes proposed by the Committee.

Financial Strategy

4. The current Financial Strategy was approved in June 2015 as part of the LTP process. This Financial Strategy places limits on future rates increases and the level of Net Debt. The current limits are;

· Rates revenue - any increase is limited to the Consumer Price Index (CPI) plus an additional 1% (for three years) to fund rejuvenation projects, and a further 1% to allow for growth in the rates base.

· Limits on Borrowing – Net Debt is limited to $125M in 2020, 2025 and 2025. In additional Net Interest must be below 10% of Total Revenue and Net Debt must be below 100% of Total Revenue.

5. The draft 2017/18 Budget has been prepared on the basis that recommended changes to the current Financial Strategy will be adopted by Council after consultation with the public. The recommended changes are;

· Rates revenue - any increase is limited to the Local Government Cost Index (LGCI), and a further 1% to allow for growth in the rates base.

· Limits on Borrowing – For planning purposes, Net Debt must be below 150% of Total Revenue in years 1-3 of the plan, below 130% in years 4-6, below 110% in years 7-9, and below 90% in year 10 and beyond. The $125M limits in 2020, 2025 and 2025 are removed. In addition, the requirement for Net Interest to be below 10% of Total Revenue will continue. Further, the Financial Strategy will allow for Net Debt to increase to 170% of Total Revenue should the need arise following a significant natural disaster.

Proposed Rates Increase

6. The draft budget assumes an average rates increase of 2.3% in 2017/18. This is based on actual LGCI of 1.3% for the year ending 30 June 2016, plus an additional 1% approved in the 2016/17 Annual Plan to fund additional rejuvenation projects. This was supported by the community via the 2016/17 Annual Plan consultation process.

7. By comparison, CPI for the 12 months ending 31 December 2016 was also 1.3%.

8. The average rates increase of 2.3% is less than the 2.6% increase included for 2017/18 in the 2016/17 Annual Plan approved in June 2016, and is likely to be one of the lowest if not the lowest rates increase in the Wellington Region.

9. In addition to the increase in general rates from existing properties, the draft budget assumes that rates revenue will increase by a further 1% per annum as a result of new builds and property investment. This will increase the rates revenue earned without impacting on existing ratepayers. This 1% growth target is currently on track to being achieved. The actual percentage will be reviewed and adjusted if necessary immediately prior to the final 2017/18 budget being approved in June 2017.

Differential Factor

10. Following a review in 2012 of Council’s Revenue and Financing Policy, Council commenced a 10 year transition to revised differential factors for each category of property used in the general rate calculation. The underlying objectives of the transition were to rebalance over time, the rates requirement from each category of property, to better reflect the benefits (and costs to service), received by each category.

11. The 3 yearly property revaluations in 2016 (on which the general rates for 2017/18 will be assessed), resulted in significantly higher increases across the city in rating valuations for residential properties compared to all other property categories.

12. The impact on residential ratepayers in 2017/18 from both the new rating valuations and a further year of transition in the differential factor is something that Council could consider. Officers will provide analysis for all property categories.

Budget Changes to Year 2 of 2016/17 Annual Plan

13. The draft Operating budget, as attached in appendices 1 and 2, contains a number of changes compared to the budget for year 2 (2017/18) approved in June 2016 as part of the 2016/17 Annual Plan process.

14. The following changes are included in the draft Operating budget;

· Rates Income

The difference is mainly due to the lower average rates increase. CPI of 1.6% was assumed for 2017/18 in the 2016/17 Annual Plan, whereas the draft budget uses 1.3% for LGCI.

· User Charges

Overall an increase of $329k comprising increases in Landfill and Regulatory, partially offset by pushing out to subsequent years (due to construction delays), Councils expected share of revenues from the Events Centre, and reductions in Libraries, Museums and Acquatics & Recreation to more likely budget levels.

· Operating Costs

The remaining Making Places budget of $2,550k previously included in the capital budget in 2017/18 has now been included in the operational budget due to the type of expenditure this programme incurs. The $2,550k transferred from capital has been re-phased over three years with $1,050k in 2017/18, and $750k in each of 2018/19 & 2019/20.

Legislative changes are pending to amend the Building Act to require owners of unreinforced masonry buildings (URM’s), in certain areas with a heightened risk of earthquakes, to secure within 12 months, their buildings street-facing URM parapets and facades. Under the proposed scheme, the Local Authorities in the areas specified (Hutt City being one), would be liable to reimburse owners of URM’s, up to one-sixth of the costs to secure their building. The claim on Council per URM building will be capped. Based on an early assessment, Officers estimate Council could be liable for claims totaling $375k which is included in the draft budget.

An additional $39k in 2017/18 (and in each of the next five years), has been included for HCC’s share of the funding requirements of the Wellington Region Waste Management and Minimisation Plan. There is a separate report on this for the Community Plan Committee to consider.

· Interest Expense

$790k lower due to lower average cost of funds from existing interest rate swaps and lower projected rates for new borrowings, plus a lower projected 2017/18 opening debt position due to carryovers within existing capital projects.

· Depreciation

This non-cash variance and is mainly due to more accurate forecasting this year through the use of new budgeting software, but also due to delays in the expected completion dates of specific capital projects.

Capital Budget

15. The draft capital budget, as attached in appendix 2, also contains a number of significant changes compared to the budget for year 2 (2017/18) approved in June 2016 as part of the 2016/17 Annual Plan process.

16. The following are the major changes included in the draft Capital budget;

· Making Places

$2,550k has been transferred out of capital in 2017/18 and included in operating budgets (refer previous).

· Civic Events Centre

At the concept design phase, it was estimated that the operational development of the Civic Events Centre would cost $5M. As detailed design has progressed and a more complete assessment of requirements has been compiled, it has become clear that the initial estimate is unlikely to be sufficient, particularly as regards the provision of food and beverage facilities. Council have a contractual obligation to provide a turn-key facility that will match USAR’s four star hotel operation. Officers have engaged Horwath International Ltd to assist reviewing the list of items that comprise the additional funding requirement, to ensure an optimal balance of capital outlay vs required levels of service provision.

At this stage, additional budget of $3.7M has been included in 2017/18. This is expected to be the ‘worse case’ estimate and cost reductions and savings continue to be explored. The possibility of additional funding being needed for this was alluded to in the 2016/17 draft budget report.

· Parks and Reserves

An additional $250k in 2019/20 for demolition and reinstatement works at Fraser Park.

An additional $300k in 2023/24 and $400k in 2026/27 for renewal of the sand based grass field and replacement of the artificial turf at Hutt Rec.

· Wastewater

The bulk ($250k) of the additional $402k funding request is in recognition of the growing complexity of the consenting requirements/processes and thereby costs, of the consent application for the Waiwhetu Bypass Options project about which Council was briefed on 14^th February. The balance is a one-off cost for improvements to Wellington Water’s SCADA system, which is essential for the monitoring and control of the city’s wastewater systems.

· Landfill Capital Expenditure

An additional $500k per annum for five years from 2020/21 is required for Silverstream landfill works. As reported to Council last year, H G Leach Ltd were successful in tendering for a 5 year contract, (2015-2020), for the ongoing development of space at the Silverstream Landfill, and that work is underway. Tonkin and Taylor Ltd, the consultants who we use for design and management of the landfill, have used the rates tendered by H G Leach for the current contract, to update their estimates of future capital development costs. The additional budget now proposed represents a prudent budget provision for those future works.

17. A complete list of capital budget changes from the 2016/17 Annual Plan, that have been included in the draft 2017/18 capital budget is attached in appendix 3.

Net Debt

18. In the 2016/17 Annual Plan, the Net Debt projection for 2019/20 was $124.9M, ie, just under the $125M limit in the current Financial Strategy.

19. The 2017/18 draft budget forecasts Net Debt in 2019/20 will be $132.2M, an increase of $7.3M. The main items contributing to the increase are;

· $3.7M more for Events Centre

· $1.0M less in rates revenue – 3 year effect of lower increase in 2017/18

· $0.9M less in expected operating & capital subsidies

· $0.4M additional for wastewater

· $0.2M for Fraser Park demolition and reinstatement works

· $0.4M for unreinforced masonry buildings fund.

Additional Projects not included in Draft Budget

20. Funding for the following projects is not included in the draft budget. The Committee can recommend to Council that these projects are included in the draft budget or are consulted on in the Consultation Document (making clear funding is not included in the draft budget), or are not progressed any further.

21. The unfunded projects are;

· Wharves - Refurbishment / Replacement / Demolition

As an option to just repairing the damage sustained by the Council owned wharves during the November 2016 earthquake (an additional unbudgeted $750k would be required), Officers recommend Council consider the longer term options for each wharf. Each of the wharves is nearing the end of its economic life, such that long term maintenance costs will exceed the cost of replacement. Funding in the current LTP is insufficient to maintain the wharves to the required standards.

A separate Community Plan Committee report considers this issue and the future options for the wharves. The following table is a summary of the estimated costs associated with the various options for each wharf. Where no value is shown against an option, that option is not considered appropriate for that wharf.

Wharf	Fully Refurbish	Demolish & don’t replace	Partially demolish & refurbish	Demolish & replace
Rona Bay	$1,370k	$200k	$580k	$1,500k
Days Bay	$2,076k	-	-	$2,000k
Pt Howard	$2,306k	$400k	-	-
Petone	$4,758k	-	$3,415k	$8,200k

· Riverlink (Promenade) Project

$39M, staged over various financial years to coincide with infrastructure work, is requested for Council’s Promenade Project which is the key project in the Making Places programme – Council’s approved long term development strategy for the CBD. The Promenade is enabled by and has critical dependencies upon the infrastructure projects of Greater Wellington Regional Council (CBD flood protection upgrades), and New Zealand Transport Agency (SH2 Improvements at Melling).

The Promenade is being progressed through ‘Riverlink’, which is the GWRC, NZTA, and Council joint project whereby the three agencies are closely working together to achieve their core objectives and to optimise many other benefits which cannot be achieved through the standalone actions of any individual agency. The Promenade is widely viewed as the catalyst for desired CBD growth and to connect the river and CBD together. This is in the interests of all three Riverlink partner agencies and consistently has received very strong support from the community.

A $39M funding allocation would send a clear signal that Council is committed to the Promenade, giving GWRC and NZTA some certainty for their project planning to proceed and to give some confidence to developers and the community.

Council could chose to fund all stages of the Promenade for $39M, or stage one only for $28M including the pedestrian bridge.

· Valley Floor Review 10 Year Plan

No additional money is required for this, but Officers are proposing that budget provision in the LTP be brought forward in order to implement the works programme earlier than currently planned. There is a separate Community Plan Committee report on this.

· District Plan Work Programme

A detailed report on the District Plan Work Programme is being considered by the District Plan Committee on 20 February 2017. The Work Programme is being driven by Council’s strategic goals including those of the Urban Growth Strategy and Environmental Sustainability Strategy, Council and community desires to achieve a fit for purpose planning regime, statutory obligations in the Resource Management Act and Regional Policy Statement and ongoing RMA reforms. A two-year allocation of an additional staff member plus $300,000 per year ends in June 2017. The District Plan Committee is being asked to recommend to the Community Plan Committee that an additional $200,000 for District Plan work is provided in the Long Term Plan for each of the next three years so that significant progress on the Work Programme can be achieved.

· Significant Eco-sites, Landscape Areas and Coastal Natural Character Areas

A detailed report on Council’s obligations towards significant eco-sites, landscape areas and coastal natural character areas is being considered by the District Plan Committee on 20 February 2017. The report recommends that the District Plan Committee and then Council adopt a comprehensive management approach complementing regulations in the District Plan with non-regulatory methods including:

· a new Parks and Gardens Division role to work on biodiversity and landscape matters on Council land and to work with private landowners on property management plans and access to funding and information;

· a fund for land management and enhancement works including planting, fencing, weed and pest management, and covenanting assistance;

· consent fee remission including where consent requirements are triggered solely by eco-site, landscape or coastal natural character District Plan provisions or activities are being carried out in accordance with an agreed management plan; and

· amendment (via Special Consultative Procedure) of the existing rates remission policy for protected culturally significant sites, historic buildings, structures and places, and archaeological sites to address significant eco-sites, landscapes areas and coastal natural character areas;

While the Parks and Gardens Division is able to provide for some of the new work from existing resources, the District Plan Committee will be asked to recommend to the Community Plan Committee that an additional $87k per year for Parks and Gardens work and consent fee remission is provided for in the Long Term Plan.

· Economic Development Stimulus Package

A report will be on the agenda for the next City Development Committee recommending the modification and an extension for 3 more years, of the rates remission and economic stimulus policies as part of Council’s Urban Growth Strategy and Economic Development Plan.

$1M for the Development Incentives Fund, $100k for wages and $30k for marketing, for three years is being requested.

· Living Wage

A report will be on the agenda for the next Finance & Performance Committee in relation to the Living Wage. This is in response to a request made at the Community Plan Committee meeting on 17 May 2016.

The report will seek a recommendation from the Committee to Council regarding the possible implementation of the Living Wage at Hutt City Council.

The cost of implementing the Living Wage to all Council employees, and excluding contractors, is estimated to be $600k. This assumes and includes about $100k per annum of flow on costs to employees paid only marginally above the Living Wage at present, but who would need reasonable recognition for the greater responsibility and qualifications needed for their roles in relation to those currently paid below the Living Wage.

Pending input from the Finance & Performance Committee, this Community Plan Committee may wish to include questions in relation to possible adoption of a Living Wage policy in the Annual Plan consultation process. The results of that consultation, together with recommendations from the Finance & Performance Committee, could then be considered by Council in June this year, prior to finalising the Annual Plan including budgets for wages and salaries.

· Petone 2040 Spatial Plan

At the recent Councillors briefing, 15 significant projects were identified. Four were recommended for immediate development as these start to address pertinent issues such as delivery of the Urban Growth Strategy (appropriate new housing), community’s appetite to enhance heritage/character, pressures to plan work on Jackson Street, and leveraging large NZTA and GWRC infrastructure projects, eg., Petone to Grenada, Cross Valley Link, and public transport planning. NZTA especially are seeking a Petone ‘story’ or spatial plan to inform their strategies and assist them in prioritising investment within and between regions. $50k in 2017/18 and in 2018/19 is requested for these four projects.

· War Memorial Library Major Upgrade

$2M in 2018/19. The War Memorial Library (WML) was refurbished and earthquake strengthened in 2003. Overall the building is looking tired and no longer supports the increased programming demands, services and other products todays’ libraries offer: spaces and power to operate customer devices, programme space, 3D printing and makerspaces, display spaces, quiet study spaces, and interactive learning spaces. The Children’s floor in particular limits flexible multiple modes of learning and activities including interactive learning.

The WML, particularly for its 700,000 plus annual visitors, requires a revamp to reflect 21st century libraries and to maximise the public spaces. The WML will continue to be the central city library and is significantly smaller than comparable other city libraries. A significant opportunity exists to open up the third floor (currently office space), to add to the usable public space.

· Petone Library Upgrade

$2M in 2021/22. This represents a provisional amount only to complete important works on the existing building - mechanical services, fire protection, structure and internal refit etc. Limited investment has been put into this building since 1985. Note: this will fund important works only as opposed to significant improvements.

· Dowse Museum Major Upgrade

$2M in 2018/19. It has been 10 years since the last significant investment was made to The Dowse. This provisional budget amount would be utilised to fund important capital maintenance on the roof, internal gallery spaces and mechanical services. It would also be used to fund further enhancements to the public foyer space, venue hire spaces as well as create public access to the currently off-limits collection storage.

· Naenae Community Hub

Additional $4M in 2020/21. Council’s existing approved LTP includes $4M for a new Community Hub in Naenae. This amount would be more than enough to fund a major upgrade and refurbishment to the existing library building, but not enough to develop a new community hub offering broader community, social and other services.

Based on experiences with the Walter Nash Centre ($12M) and Stokes Valley Hub ($6.5M), Officers estimate another $4M would be required to develop a multi-functional community hub that is able to serve the local community for the next 50 plus years.

· Wainuiomata Community Hub

$7M in 2020/21. There is currently no budget provision for a Community Hub development in Wainuiomata. The existing community hub facilities are adequate, albeit disjointed and dated. Officers believe at this stage a budget provision of $7M alongside the future funding identified for Wainuiomata Pool redevelopment would provide for this. Ultimately plans, budgets and locations for community facilities in Wainuiomata should be subject to significantly more strategic thinking, broader spatial planning and community consultation. Wainuiomata presents a significant and exciting opportunity for community facility rejuvenation to contribute to broader economic and social benefits.

· Naenae Pool Refurbishment

Additional $2M in 2021/22. Based on recent work and projects, Officers believe an additional $2M is required to complete the important upgrade and refurbishment work currently planned for 2020/21 (existing budget of $7M). Naenae pool turned 60 in 2016. It has served the community well, firstly as an outdoor pool and then as a major indoor pool since 1987. A learners pool was added in 1997 and a fitness Suite in 2008. Current visits total in excess of 470,000 per annum.

The main part of the building and the Olympic size pool is original. The facility is currently the aquatic hub for the swimming and water polo community and doesn’t meet modern requirements. Major areas of work include:

· Complete refurbishment of the main pool tank, water treatment plant and pipes. With an enlargement to add accessible ramps and extra land to the current main pool.

· Earthquake strengthening of the current building – including major work to the roof.

· Realignment of building to allow more pool space, levelling of pool deck, seating and extension of the Fitness Suite.

· Better connectedness with Walter Mildenhall Park.

· New Hydro slide.

· Sportsvilles

$4.8M for Wainuiomata over 2017/18 to 2019/20 and $7.4M for Petone over 2017/18 to 2019/20.

Sportsvilles are a partnership initiative to bring sports clubs together in different locations, creating a number of sports ‘villages’ or communities, making it easier for sports clubs to attract new members, offer new programmes and control operational costs by pooling resources. Utlimately they are about promoting and driving participation in sport, recreation and physical activity.

Three Sportsvilles have been formally established; in Petone, Fraser Park and Wainuiomata. The focus is on collaboration, not amalgamation. Clubs retain their own history and identity, but now within a strong and supportive network.

The cost of running clubs and managing buildings is constantly increasing. Clubs throughout New Zealand are struggling with a lack of funding, decreasing membership and fewer volunteers. Sportsville provides us with a strong concept to help us protect and foster our clubs through partnerships.

Council strategy identifies Fraser Park as Hutt City’s major city sport and recreation hub – not only supporting local clubs but also offering a venue for significant regional, national and international events. Wainui and Petone Sportsvilles are more aimed at supporting local community needs.

Following submissions made to the 2016/17 Annual Plan by respective Sportsville Boards, Council approved funding for Officers to lead on-going feasibility work for both Petone and Wainuiomata. This work is coming to completion and indicative cost estimates prepared by consultants have been presented.

Based on the general principle of Council meeting 70% of the upfront capital costs, Officers believe that a budget provision of $4.8M and $7M for Wainuomata and Petone respectively would be required to support these initiatives. The remaining 30% would need to be funded and fundraised by clubs, local community and the CFT.

The CFT would provide an excellent vehicle to lead these projects once endorsed by Council. While they would lead fundraising, in both cases the CFT can only be successful with significant support, fundraising efforts and or ‘skin in the game’ from Sportsville Boards, clubs and local communities.

The Petone Sportsville development is proposed for North Park. The Wainui proposal remains on Fredrick Wide Park.

As has been consistently communicated to Sporstville Boards, key stakeholders and the community, any Council funding will essentially be subject to key council conditions including and not limited to: community support, robust business cases that demonstrate on-going operational sustainability (without reliance on rate-payer funding), and the majority if not all of the necessary funding being in place.

· Avalon Park

$1M in 2017/18 for phase 4. This would cover replacement of the main electrical switchboard, extending the existing toilet block, adding trackside features for model train passengers, and extending the skate facility so that it includes a hard court.

· Riddiford Gardens

$1M in 2017/18 for phase 4. Phase 4 work scope includes quality paving in front of the Little Theatre, a new path beside the Shapeshifter Lawn, site wide signage (directional and interpretational), a replacement bridge, and additional streamside planting.

· Science & Technology

One of 4 areas of focus in Councils Economic Development Plan 2015-2020, $80k per annum for three years from 2017/18 is required to continue initiatives Council has already established in this area including STEMM Festival, Primary Science scholarships, Hutt Valley Primary Science network, Weltec engineering scholarships, and Technology Valley support. Continued funding will also enable planned new initiatives, eg., Fresh Thinkers 3, to encourage young people into STEMM careers and other research, with secondary schools to assist in increasing the number of students studying science and technology subjects; plus investigate city wide technology requirements; and development of a Makerspace.

· 1^st Assembly

1^st Assembly is a collaboration between Creative HQ and Hutt City Council based on proven international start up development and incubation processes focused on the rapid development of hardware and technology start-up businesses in Lower Hutt. Following a successful pilot it is proposed to continue 1^st Assembly as a mechanism and space to support and locate STEM businesses in the city and also continue the programme of startup meet-ups, manufacturing meet-ups and hardware themed workshops. 1^st Assembly also runs monthly "hardware sessions" that link into Creative HQ's 1400 member "Startup Garage" meet-up group.

The space at 125 High Street now accommodates six ventures and its first graduate business is now established in Petone. Awareness within the business community has grown significantly as a result of the strong links that Lightning Lab Manufacturing has now formed with other stakeholders, eg, the Hutt Valley Chamber of Commerce, Technology Valley Group, and Callaghan Innovation.

Funding for 2017/18 is from existing budgets but new funding is required for 2018/19 ($300k) and 2019/20 ($200k) on a reducing scale as it is intended that 1^st Assembly increasingly source funding from external sources, eg, tenant rentals, corporate sponsorship and Government funding for incubation/accelerator programmes. This is typical of mature incubator/accelerator programmes/space.

Consultation

22. Consultation is a statutory requirement of the annual planning process and has been included in the planning timetable.

23. As well as consulting on the which projects to include in the budget the following policies will also be consulted on;

· Financial Strategy

· Rates Remission for Economic Development

· Hutt City Development Charges Remissions

· Central Business District Development Charges and Rates Remission

Legal Considerations

24. The Local Government Act states in section 10 that the purpose of local government, among other things, is to meet the current and future needs of communities for good-quality local infrastructure, local public services, and performance of regulatory functions in a way that is most cost-effective for households and businesses. Good-quality is defined as infrastructure, services and performance that are efficient, and effective, and appropriate to present and anticipated future circumstances.

25. The draft budget developed for 2017/18 takes cognisance of this purpose statement.

Financial Considerations

26. Should the recommended changes to the Financial Strategy not be adopted, the draft budget will be in breach of the Net Debt limits in the current Financial Strategy.

27. Carry-overs of current year budgets into 2017/18 have not been considered at this stage. These will be reviewed and considered by the Community Plan Committee and Council during the final 2017/18 budget approval process in June 2017.

Other Considerations

28. In making this recommendation, officers have given careful consideration to the purpose of local government in section 10 of the Local Government Act 2002. Officers believe that this recommendation falls within the purpose of local government in that producing a draft budget each year provides the opportunity for members of the public to comment on the manner in which Council proposes to meet the current and future needs of the community.

Water Issues

29. A number of water related issues are looming:

· Resilience projects, which may attract partial Government funding;

· Security of water supply quality, prompted by the Havelock contamination scare;

· Increasing environmental standards, and in particular the forthcoming Whaitua process and potential impacts on stormwater quality standards; and

· The GW bulk water levy which could potentially significantly increase as a result of some large capital projects – mostly targeted at regional resilience.

30. Officers believe it prudent to make budget provision for these items even though specific costs are not known yet.

Appendices

No.	Title	Page
1 ⇩	2017/18 Draft Budgets - Activity Statements	19
2 ⇩	2017/18 Draft Budgets - Project List	41
3 ⇩	2017/18 Draft Budgets - Capital Project Differences	47

Author: Brent Kibblewhite

Chief Financial Officer

Approved By: Tony Stallinger

Chief Executive

50 21 February 2017

Community Plan Committee

05 January 2017

File: (17/1)

Report no: CPC2017/1/42

HCC Owned Wharves - Options for the Future.

Purpose of Report

1. This report proposes options on the future of each of the Council owned wharves, following a comprehensive survey of their condition, and proposes that community engagement be undertaken as part of the Community Plan consultation on these options.

Recommendations

It is recommended that the Committee:

(i) notes that a comprehensive survey of the City’s wharves reveals continued deterioration of these ageing structures, such that the level of funding currently provided in the Long Term Plan will be insufficient to maintain the wharves to the required standard;

(ii) notes that the wharf structures, being between 88 and 122 years old, are near the end of their expected useful lives, such that full replacement or rationalisation should be considered;

(iii) notes that the Petone Wharf is temporarily closed due to damage sustained in the November 2016 earthquake and will not reopen until such time as a decision is made on its future and agreed works undertaken;

(iv) notes that the $400,000 capital renewal budget in this year’s annual plan is being spent mostly on Days Bay Wharf with only essential works to prevent further cost to Council on the three other wharves;

(v) notes that this effectively means that there will be deferred maintenance of approximately $750,000 on the other three wharves, which will remain deferred until such time as the long term future of each wharf is decided; and

(vi) agrees to engage with the public on the options for the wharves presented in this report as part of the Community Plan consultation.

Background

2. Hutt City Council owns and manages four wharves and two small jetties. The wharves situated at Rona Bay, Days Bay, Point Howard and Petone were vested in Hutt City Council in 1989 at the time of local government reorganisation. They are traditional hardwood structures, ranging in age from 88 to 122 years. The two jetties are at Whiorau Reserve, Lowry Bay. As the jetties are more modern structures requiring a minimal cost to upkeep they have been excluded from consideration in this report.

3. Wharf repairs and maintenance have been carried out regularly since 1992, following periodic surveys. The latest survey, Hutt City Wharf Condition Report and Options Study (the Study), undertaken by Calibre Consulting and attached as Appendix 1 to the report, reveals significant deterioration at each of the wharves as well as damage sustained during the November 2016 earthquakes, principally to the Petone Wharf. The Petone Wharf has since been closed and will not re-open until Council has made a decision on its future and agreed works have been undertaken.

4. The Study finds that an estimated $1.15M of remedial works needs to be undertaken now in order to restore the wharves to the appropriate standards previously adopted by Council. The Study further states that it expects that future maintenance costs will increase as the structures get older. Immediate and future budget provisions in the current Long Term Plan are insufficient to meet these costs.

5. The $400k for wharf maintenance in the 2016/17 budget will be spent mostly on the Days Bay Wharf with only essential works undertaken on the other three wharves to prevent further cost to Council or resolve safety issues. This means that $750k of remedial works will be deferred.

6. The following table provides basic information on each of the wharves.

	Rona Bay	Days Bay	Pt Howard	Petone
Year built	1906	1895	1929/33	1907
Length	119m	129m	220m	393m
Area	955m²	910m²	1,100m²	2,500m²
No. of piles	84	83	103	230
Construction material	Timber structure with concrete deck	Timber structure with concrete deck	Timber structure with asphalt deck	Timber structure with concrete deck
Status	Light recreational wharf	Recreational wharf	Light recreational wharf	Light recreational wharf
Main Uses	Viewing Walking Fishing	Ferry Fishing Swimming Viewing	Fishing Yachting Small business	Fishing Walking Viewing Ferry (occasional)
Heritage	Heritage 1	Heritage 1	No status	Heritage 2

7. Each of the wharves is nearing the end of its economic life, such that long term maintenance costs will exceed the cost of replacement. Funding in the current long term plan is insufficient to maintain the wharves to the required standards.

Discussion

8. Council could consider the future of the wharves from two perspectives. The first and preferred approach is to consider the wharves as a collection of like assets and make decisions on a collective basis, taking into account future needs of the community. The second approach is to consider the future of the wharves on an individual stand-alone basis. With either approach heritage considerations need to be factored in.

9. Using the first approach it would be hard for Council to justify the need for the number of wharves it currently owns, particularly given their relative cost to maintain, versus a limited recreational use.

10. Originally, the wharves were constructed for reasons associated with commerce and transport (not recreation), with only Days Bay Wharf continuing to function on a daily basis as a working wharf, being an integral part of the region’s commuter transport network. If starting from scratch today it is highly unlikely that Council would be able to justify investing significant resources in commercial wharves, predominantly for recreational purposes, noting that it might consider lighter purpose-built structures more appropriate for recreational uses.

11. Heritage values and the ability to provide local resilience in a natural disaster are other factors requiring consideration. For instance retaining Days Bay Wharf as a working wharf, is important in providing resilience to the Eastern Bays should the road be impassable for a period of time.

Options

12. The various options proposed for consideration for each of the wharves is shown in the following table. A do nothing option is not proposed, as the health and safety issues arising from such an approach would be a considerable risk for Council to manage.

Wharf	Fully Refurbish	Demolish and don’t replace	Partially demolish and refurbish	Demolish and replace
Rona Bay	√	√	√	√
Days Bay	√			√
Pt Howard	√	√
Petone	√		√	√

Consultation

13. Officers propose that these options be the subject of public engagement through the Community Plan consultation process, prior to making a decision on their future. A draft consultation plan is attached as Appendix 2 to the report.

Legal Considerations

14. The heritage value of the wharves needs to be considered. Both Days Bay and Rona Bay wharves are listed in the District Plan as Heritage One structures, both are Category Two Structures in the Heritage New Zealand (HNZ) List, while Petone Wharf is in the District Plan as Heritage Two but not listed by HNZ.

15. Demolition of part or all of these structures is a discretionary activity in the District Plan and one of the assessment matters are those contained in Part II of the Resource Management Act (RMA). This part of the Act outlines that the protection of historic heritage from inappropriate development is a matter of national importance. Further, policy (b) under 14F 1.1 of the District Plan seeks to ensure that where the demolition or relocation of listed heritage buildings and structures is proposed, a thorough assessment and determination is made of the need for that demolition or relocation and of the alternatives available.

Financial Considerations

16. The following table summarises the estimated costs associated with the various options proposed for consideration for each wharf. Where no value is shown against an option, that option is not considered appropriate for that wharf.

Wharf	Fully Refurbish	Demolish and don’t replace	Partially demolish and refurbish	Demolish and replace
Rona Bay	$1,370,000	$200,000	$580,000	$1,500,000
Days Bay	$2,076,000	-	-	$2,000,000
Pt Howard	$2,306,000	$400,000	-	-
Petone	$4,758,000	-	$3,415,000	$8,200,000

Other Considerations

17. In making this recommendation, officers have given careful consideration to the purpose of local government in section 10 of the Local Government Act 2002. Officers believe that this recommendation falls within the purpose of the local government in that it reviews ageing community infrastructure owned and managed by Council.

Appendices

No.	Title	Page
1 ⇩	2016 Wharf Inspection Report by Calibre Consulting	54
2 ⇩	Draft Consultation Plan - Wharves	97

Author: Bruce Hodgins

Divisional Manager, Parks and Gardens

Author: Craig Cottrill

Reserves Assets Manager, Parks and Gardens

Approved By: Bruce Sherlock

General Manager, City Infrastructure

Attachment 2

Draft Consultation Plan - Wharves

Consultation Plan –HCC owned Wharves, March – May 2017

Introduction

HCC commissioned Calibre Consulting to undertake a comprehensive survey of the Council’s wharves at Rona Bay, Days Bay, Point Howard and Petone and then to produce a report on the wharves’ condition and options for their future.

The wharves are between 87 and 120 years old and being near the end of their useful economic lives, Council needs to consider their long-term future.

Consultation will focus on a number of options for each of the wharves and the estimated cost of each option.

Council will be encouraged to consider the options on the wharves as a group of like assets rather than on an individual basis.

Timing

Consultation will commence in March 2017 and go through to the end of April 2017. While consultation on the wharves will be part of the wider Community Plan consultation, additional specific engagement will be made with identified stakeholders and public meetings arranged in Eastbourne and Petone, to inform and canvass public views on the proposed options.

Stakeholder Groups

The following groups have been identified as likely to have an interest and wanting to participate in the process leading up to a decision by Council. There may be other groups who will come to light during the course of the consultation with whom we will engage.

Port Nicholson Block Settlement Trust Taranaki Whanui

Petone Community Board Eastbourne Community Board

Greater Wellington Regional Council Department of Conservation

Historic Places Trust Lower Hutt Historical Society

Petone Historical Society Historical Society of Eastbourne

East by West Ferries Rona Bay Wharf Trust

Days Bay Wharf Steering Group Petone Action Group

Lowry Bay Yacht Club Muritai Yacht Club

Heretaunga Boating Club Eastbourne Dunes Group

Friends of Petone Beach Wellington Surfcasting and Angling Club

Pt Howard Residents’ Association Lowry Bay Residents’ Association

Days Bay Residents’ Association York Bay Residents’ Association

Fishing Wellington Group - Facebook page Local MPs

Eastbourne Community Notice Board Public Group - Facebook Page

Pacific Services Network Hutt Multi-Cultural Ethnic Council

Consultation Material

The following documents will be publicly available as part of the consultation process.

1. The Future of HCC Wharves - Summary of options and issues.

2. Report to the Community Plan Committee on the future of the HCC Wharves.

3. Hutt City Wharf Condition Report and Options prepared by Calibre Consulting.

4. Power point presentation on summary of options and issues.

5. Set of FAQ responses prepared.

6. Posters of options located on or near wharves.

7. Questionnaire (either separate or as part of CP consultation on all projects)

8. Options included in generic consultation material.

Consultation material would be available on-line and at all libraries/ service centres.

Consultation Activity

The following table outlines the proposed consultation programme.

Mode	Detail	Timeframe	Responsibility
Newspaper	Hutt News feature Public notice of meetings	March	Bruce/Sue
Council website	All consultation material posted to HCC website	March and April	Sonja
Social Media	Information linked to HCC social media sites. Specifically engage with facebook page for Fishing community. Post on Neighbourly Monitor and respond as appropriate to posts.	March and April	Sue
Correspondence	Letters and information sent to all stakeholders.	March	Bruce/Craig
Public Meetings	Meetings held in Petone and Eastbourne to be hosted by the respective Community Boards.	21 March, Petone 28 March, Eastbourne	Bruce/Craig/Tom
One on one meetings	Individual meetings with iwi organisations and others as required.	March/April	Bruce/Craig
On site publicity	Posters at entrance to each wharf.	March and April	Craig
Libraries/ Service centres	Hard copies of consultation material will be made available at all Council libraries/service centres	March and April	Craig/Bruce

Submissions

The preference is for written submissions but notes from meetings or conversations could also be used as a submission if that is the preference of the group or individual submitting.

Written submissions can be posted or E-mailed to HCC.

E-mail address: submissions@huttcity.govt.nz

Postal submissions: Wharves

Hutt City Council

Private Bag 31912

LOWER HUTT 5040

Submissions will be stored in TRIM under xxxxx

Submitters will be advised when their submission has been received.

Submitters will be provided with information about the hearings and the meeting.

Submission Period

Monday 6 March to Friday 28 April 2017

Hearing of Submissions

Community Plan Committee meets on 16 & 17 May 2017 to hear submitters who have indicated a desire to speak to their submission.

Meeting where decision is made

Officers will report to the Community Plan Committee meeting on 1 June 2017. A copy of the report will be made available to submitters before the meeting.

Roles

Document preparation: Bruce and Craig

Technical Adviser: Tom Arthur, Calibre Consulting

Communications Advisor: Sue Lytollis

Website Material: Sonja Cabrera

Record Management: Nathan Surridge

Decision Makers: Community Plan Committee and Council

108 21 February 2017

Community Plan Committee

31 January 2017

File: (17/108)

Report no: CPC2017/1/44

Councils of the Wellington Region Draft Waste Management and Minimisation Plan 2017 to 2023

Purpose of Report

1. The purpose of this report is to present the Councils of the Wellington Region Draft Waste Management and Minimisation Plan 2017 to 2023 document for consideration, and adoption for consultation.

Recommendations

It is recommended that the Committee:

(i) notes that under the Waste Minimisation Act 2008 Council is required to undertake a waste assessment for its district and develop and adopt a Waste Management and Minimisation Plan to encourage and promote effective and efficient waste management and minimisation within its district by
30 June 2017;

(ii) receives the Wellington Region Waste Assessment 2016, attached as Appendix 1 to the report, and the Councils of the Wellington Region Draft Waste Management and Minimisation Plan 2017 – 2023 (draft WMMP), attached as Appendix 2 to the report, developed by a regional Governance Group and a senior officer working group, both of which have representatives from the regions territorial authorities;

(iii) notes that in its current form these documents represent a consensus of analysis and advice from consultants and Council officers across the Wellington Region;

(iv) notes that the Wellington Region Waste Assessment 2016 and the Councils of the Wellington Region Draft Waste Management and Minimisation Plan 2017-2023 will be considered by each of the Councils in the region for adoption for consultation as part of those Councils Annual Plan process;

(v) notes that the Wellington Region Waste Assessment 2016 and the Councils of the Wellington Region Draft Waste Management and Minimisation Plan 2017-2023 were the subject of a briefing to Council held in December 2016; and

(vi) recommends that Council:

(a) participates in a regional Waste Management and Minimisation Plan with other territorial authorities in the Wellington Region for the period 2017 to 2023;

(b) adopts the Councils of the Wellington Region Draft Waste Management and Minimisation Plan 2017-2023 document for special consultation along with the 2017 Annual Plan as presented subject to any final minor changes made to the draft Waste Management and Minimisation Plan by the Waste Management and Minimisation Plan Joint Governance Committee at its meeting to be held on 27 February 2017;

(d) notes additional funding of $39,500 per annum for six years will be required from Hutt City Council for the regional initiatives outlined in the draft Wellington Management and Minimisation Plan that Council will cost share on.

Background

2. The Waste Minimisation Act 2008 (the Act) came into force in September 2008. Under the Act territorial authorities are required to develop a WMMP to encourage and promote effective and efficient waste management and minimisation within its district.

3. The Act sets out specific requirements for councils as they develop a Wellington Management and Minimisation Plan (WMMP), including that they:

· undertake public consultation using the special consultative procedure in the Local Government Act 2002;

· undertake, notify and have regard to a Waste Assessment that meets the requirements specified in the Act;

· have regard to the New Zealand Waste Strategy (published in October 2010);

· consider (in descending order of importance) the following methods of waste management and minimisation: reduction, reuse, recycling, recovery, treatment, and disposal.

4. The Act also requires that any levy funds collected under the Act and allocated to a council only be used on waste minimisation matters and in accordance with the council’s waste management and minimisation plan.

5. The purpose of regional collaboration on the draft Waste Management Minimisation Plan (draft WMMP) is to:

· describe the councils’ collective vision and how they will meet their long- term goals for waste management and minimisation;

· set strategies, objectives, policies and activities to achieve these goals and establish how to measure progress;

· establish a process for identifying possible economies of scale and efficiency gains in delivering waste-related services;

· agree to specific actions where a regional approach is expected to immediately provide benefits (for example a regional education strategy);

· improve the effectiveness and influence of the councils as they work with third parties, including industry and the Government;

· improve regulatory effectiveness and efficiency through working toward consistent regulatory approaches;

· provide general information on how the councils intend to fund the activities of this WMMP over the next six years to 2017; and

· help meet all legal requirements on councils in respect of waste management.

· demonstrate a commitment to work collaboratively across the region on issues that have regional implications.

7. This report presents the Councils of the Wellington Region Draft Waste Management and Minimisation Plan 2017-2023 for the Committee’s consideration and recommendation to Council to adopt it for public consultation.

The Wellington Region Waste Assessment 2016 is attached as Appendix 1 to the report. A copy of the draft WMMP is attached to this report as Appendix 2.

Discussion

8. The draft WMMP sets out what the regional territorial authorities intend to do over the next six years to manage and minimise their waste for the benefit of local communities, economies, and the environment.

9. The draft WMMP proposes a regional vision of: “Waste Free, Together”, with the tagline: “for people, environment, and economy”.

10. In preparing the draft WMMP a range of data and information, and legislation has been considered. Some of the key information that has shaped the draft WMMP includes:

· The statutory duty to ensure waste is managed effectively and efficiently, and also minimised.

· Waste to landfills is not reducing.

· Kerb-side recycling rates have been going down over time.

· Food and green waste represent the largest proportion of material going to landfill and potentially the biggest opportunity for reduction.

· There is potential opportunity for TA’s to work together more and jointly deliver best practice waste and recycling services.

11. The Wellington Region WMMP Joint Governance Committee has guided the process of developing the draft WMMP. The Committee consists of elected members appointed from each of the Councils in the region.

12. The Committee determined a regional target for waste minimisation. The primary regional target is: a reduction in the total quantity of waste sent to class 1 landfills from 600kg per person per annum to 400kg per person by 2026.

13. The primary regional target is supported by a number of other regional targets for different sources and types of waste that, if achieved, add up to deliver the overall regional target. The Committee also identified a set of regional actions that we intend to take. These actions include:

· Developing and implementing consistent solid waste bylaws – this will help councils set standards and gather data so they can plan and manage waste better.

· Working together to deliver more consistent and effective forms of regional communications and education around waste services and waste minimisation, so households and communities are inspired and supported to play their part.

· Facilitating local councils to determine, and, where feasible, to optimise collection services so that they maximise diversion and are cost effective to communities.

· Investigating and, if feasible, developing a region‐wide resource recovery network – including facilities for construction and demolition waste, food and/or biosolids, and other organic waste.

· Collaborating with other local government organisations, NGOs and other key stakeholders on undertaking research, lobbying and actions on various waste management issues such as (but not limited to) product stewardship, electronic waste, tyres and plastic bags.

14. To support these regional actions each individual council has also set out their Local Action Plans to deliver on the vision, goals and objectives of the draft WMMP, while at the same time ensuring that they meet the needs and concerns of their own communities.

15. The majority of actions from within Council’s Local Action Plan are taken directly from the Council’s Environmental Sustainability Strategy 2015-2045 adopted by Council in 2015.

Options

16. Under the Act councils are required to develop and adopt a WMMP by 1 July 2017. A draft WMMP is presented in this report for the Committee’s consideration.

17. The Committee can choose to recommend to Council that:

(i) Council participates in the regional WMMP, or not; and if participating then;

(ii) Council adopts the “Councils of the Wellington Region Draft Waste Management and Minimisation Plan 2017-2023 document for special consultation as presented subject to any final minor changes made to the Draft WMMP by the WMMP Joint Governance Committee at its meeting to be held on 27 February 2017; and

(iii) Council notifies the Wellington Region Waste Assessment 2016 as part of the consultation process.

18. The Committee should note that the draft WMMP will be considered by all councils in the region over the coming weeks and that the draft WMMP in its current form represents a consensus on analysis and advice from officers across the region. This means that anything more than superficial changes to the regional components of the document will be difficult (but not impossible) and could delay the adoption for consultation of the draft WMMP.

19. The actions referring specifically to Hutt City Local Actions are more easily amended. Note that the majority of these actions have already been approved as part of Council’s Environmental Sustainability Strategy 2015 - 2045.

Consultation

20. Senior officers and staff at Council have been involved in the development and review of the draft WMMP.

21. A Council briefing was held in December 2016, the draft WMMP presented by the Committee Chair of the WMMP Officers Steering Group, the Regional WMMP Officer and Council’s Environmental Sustainability Manager.

22. Meetings have been held with two local Iwi Groups, Port Nicholson Block Settlement Trust and Ngati Toa. No significant issues were raised at these meetings.

23. A special consultative procedure as outlined in the Local Government Act 2002 is required to consult on the draft WMMP. The Waste Assessment must also be notified as part of this process.

24. The development of this draft WMMP is timed so that each council can undertake the special consultation procedure alongside their draft Annual Plan 2017 – 2018 consultation.

25. Following adoption of the draft WMMP by all councils, each individual council will provide a summary document to residents and provide publicly available copies of the draft WMMP and Waste Assessment. In Council’s case the draft WMMP will be integrated into the Annual Plan summary document.

26. Each territorial authority’s WMMP Joint Governance Committee representative would need to be present when an oral submission on a regional WMMP matter was heard by their TA, and when the WMMP Joint Governance Committee meet to make decisions on regional matters following the hearings.

27. Following the consultation process the committee may recommend amendments to the final WMMP. A subsequent consultation summary and final WMMP report will then proceed to each Council for adoption.

Legal Considerations

28. The Waste Minimisation Act 2008 came into force in September 2008. Under the Act territorial authorities are required to undertake a Waste Assessment of the waste in the district and develop a WMMP by 1 July 2017. There are minimum statutory requirements for both these documents.

29. Section 45 of the Act specifies that one or more territorial authorities may jointly prepare and adopt a WMMP for the whole or parts of their districts.

Financial Considerations

30. The cost of implementing Council’s Local Action Plan as set out in section 10.1 of the draft WMMP will be met from the existing budgets and is funded by the MfE Waste Levy received by Council.

31. In 2016 Council approved funding a Regional WMMP Officer for one year. In order to effectively implement the WMMP over the next six year period it is proposed that the Regional WMMP Officer position is retained. Council’s share of this cost will be approximately $31,200 per annum for the six year period of the WMMP. A total of $187,200.

32. Investigations and actions proposed in section 5.2 of the draft WMMP for the region will cost approximately $250,000 to implement over six years. Council’s share of this cost will be $8,300 per annum for the six year period of the WMMP. A total of $49,800.

33. A grand total of $39,500 per annum for the six year period of the WMMP. A total of $237,000.

Other Considerations

34. In making this recommendation, officers have given careful consideration to the purpose of local government in section 10 of the Local Government Act 2002. Officers consider that this recommendation falls within the purpose of the local government in that it seeks to efficiently manage and minimise waste.

Appendices

No.	Title	Page
1 ⇨	Wellington Region Waste Assessment 2016 (Under Separate Cover)
2 ⇨	Waste management and minimisation plan 2017-2023 (Under Separate Cover)

Author: Jeremy Partridge

Environmental Sustainability Manager

Reviewed By: Gary Craig

Divisional Manager City Development

Approved By: Kim Kelly

General Manager, Strategic Services

116 21 February 2017

Community Plan Committee

23 January 2017

File: (17/36)

Report no: CPC2017/1/45

Environmental Health Fee Review for 2017/18 Financial Year

Purpose of Report

1. To advise Council on the options for the establishment of new fees for environmental health services (food premises) as a consequence of the Food Act 2014 that came into force on 1 March 2016.

Recommendations

That the Committee recommends that Council:

(i) adopts the statement of proposal to fix fees to recover the costs of the Council’s functions under the Food Act 2014;

(ii) notes that the special consultative procedure will be used and directs officers to begin this process without delay; and

(iii) appoints a subcommittee to hear submissions on the proposal, consider all the information and issues and then make recommendations to Council.

Background

1. The Food Act 2014 (The Act) was passed into law in June 2014, replacing the Food Act 1981. A three year transition started on 1 March 2016.

2. The Act introduced a risk based regulatory regime that places a primary duty on the persons trading in food to ensure that the food sold is safe and suitable.

3. Purpose of the Act is to:

a. Restate and reform the law relating to how persons trade in food;

b. Achieve the safety and suitability of food for sale;

c. Maintain confidence in New Zealand’s food safety regime;

d. Provide for risk-based measures that:

i. Minimise and manage risks to public health;

ii. Protect and promote public health;

iii. Provide certainty for food businesses in relation to how the requirements of this Act will affect their activities;

iv. Require persons who trade in food to take responsibility for safety and suitability of that food.

Discussion

4. The Revenue and Financing Policy has been reviewed as part of the preparations for the Long Term Plan 2015-2025. This review has identified that the Environmental Health activities is not achieving 40% recovery from actual operating costs (36% recovered in the 2015/16 financial year). The fees and charges remain the same for the 2016/17 Financial Year.

5. Due to the changes in two key pieces of legislation (Food Act 2014 and Sale and Supply of Alcohol Act 2013), successful implementation of these Acts and the ongoing work that is to be carried out by councils across the country has increased dramatically.

6. This in turn has caused local authorities to review its resourcing to ensure the teams responsible for the implementation of these Acts are adequately resourced.

7. The proposed fee review will allow the Environmental Health team to recover actual costs and provide the required level of resourcing for the team to successfully implement the changes in legislation. Extra resourcing is expected to be brought on board to provide the team with adequate level of cover (subject to SLT approval).

8. The urgency in requesting this proposed fee increase now as opposed to during the Long Term Plan process later in the 2017 calendar year is due to the fact that all licenses (apart from alcohol) expire on 30 June. In order for licenses to take effect on 1 July, the Council is required to invoice commercial operators with the increased fee a month in advance.

Businesses Affected

9. As of January 2017, there are 638 registered food related businesses in Lower Hutt City that will be subject to either a Food Control Plan or National Programme risk bases measures (refer to Appendix 1 – ‘Explanatory Notes’ for reference). An estimated breakdown of the risk based measure that businesses fall into is as follows:

Risk Based Measure	Number of Businesses
Food Control Plan	474
National Programme level 3	113
National Programme level 2	10
National Programme level 1	22
Exempt (businesses that do not fall under any of the risk-based measure categories and do not require registration i.e. accommodation providers, home based early childhood centres, club premises)	19
Total number of businesses	638

10. An additional number of premises may be required to register with the Council that were not previously required to register. The most significant sector of this market is the early childhood education centres (ECE’s). There are approximately 99 ECEs in Lower Hutt City (these are subject to National Programme Level 2).

Council to set fees under the Act

11. Territorial Authorities may, by resolution, fix fees to recover the direct and indirect costs of any of the following functions under the Act:

Registration:

This includes administrative work such as recording food premises details into multiple databases (at the Council and Ministry for Primary Industries), vetting applications to assess the scope of the business and all other supplementary information is accurate, requesting more information from applicants if required and issuing licenses and certificates (notices). There is a need to make this charge variable for some registrations as the Act allows for registration of a number of sites (multiple food businesses) under one application (and one food control plan); for example, a franchised company may to choose to register one plan with one application for 5 sites which may require more than two hours completing the necessary registration tasks for all sites.

Verification:

This includes verification of food premises, including preparation (booking appointments, preparing the report/checklist for the verification, checking resource and building consents as well as prior history), travel time, actual on site time to carry out the verification, completion of the verification report and updating of two recording systems. Travel time has been averaged across all premises and will be set at 30 minutes per verification. There will be the need to increase the charge for some verifications as some make take significantly longer than 3.5 hours to complete due to the size and scale of a premises. It is also estimated that up to 50% of businesses will require extra time on site to begin with. The time spent above the standard fixed verification charge will be charged on an hourly rate basis. As businesses become more familiar with the requirements of the Act, it is likely that the proportion of business requiring extra time will reduce.

Compliance and monitoring activity:

This will be charged on a per hour basis; however no charge will apply for investigation of complaints that do not result in an improvement notice being issued. This recognizes that the investigation of complaints is a public good, and unless justified by the issuing of an improvement notice, should not penalise the food operator. As part of compliance and monitoring activity, a site visit will be required for every new business to ensure the details provided by the applicant are confirmed, to ensure that the design, construction, and location of the food business would enable the business to produce food that is safe and suitable for human consumption.

Proposal to set fees

12. The Council is required under the LGA to adopt a Revenue and Financing Policy that provides details on the funding of operational and capital expenditure. During its development, analysis was undertaken with regards to the parts the community contributes towards paying of activities. Food businesses will transition over to the Act over a three year period as of 1 March 2016. During this transitional period, a portion of the businesses will be charged under the Act and the remaining that have not been transitioned will continue to be charged under the existing fees set pursuant to the Health Act 1956 and the Food Hygiene Regulations 1974.

13. The Council proposes the following fee structure to ensure the recovery of direct and indirect costs incurred by the Council in performing its functions. The proposed fees will come into effect on 1 July 2017 and will only apply to premises that register under the Act. Existing premises that have not transitioned will continue to pay the existing Council fees set pursuant to the Health Act 1956 and the Food Hygiene Regulations 1974

14. In setting the proposed fees in the fee structure contained in this paper, Council has taken into consideration the four principles under the Food Act (section 198(2)): equity, efficiency, justifiability and transparency:

Equity

‘Funding should come from the persons using or benefiting from the functions, power or service’

• It is considered equitable to recover the full costs of the Council’s functions under the Act from the direct beneficiaries. The beneficiaries are perceived to be the owners of food premises to which these functions apply. Users of food premises receive an indirect benefit from the functions performed by the Council under the Act. The proposed fee structure does not seek to charge operators for complaint investigations that do not result in the issuing of an improvement notice.

• This approach recognises that general complaint investigation has public benefits and should not be directly recovered from the food operator where a complaint is not justified.

Efficiency

‘Costs should be allocated and recovered so that maximum benefits are delivered at minimum cost.’

• The Council seeks to deliver its functions in the most efficient manner possible and to ensure this efficiency is reflected in the costs to users.

Justifiability

‘Costs should be collected only to meet actual and reasonable costs (including indirect costs).’

• The proposed fees have been determined based on the estimated time to process registration, verification, compliance and monitoring functions relating to food premises operating under the voluntary implementation programme introduced as part of the Food Act 1981. The hourly rate has been determined after analysis of direct costs; such as salary and operational associated costs.

Transparency

‘Costs should be identified and allocated to the tangible service provision for the recovery period in which the service is provided.’

Proposed fee structure (refer to Appendix 2 – ‘Current Fees and Charges 2016/17’)

15. Cost recovery under the Act is different than under previous legislation. All businesses will be required to pay an annual registration fee payable on the anniversary date of their initial registration. Set fees for both registration and verification will be set separately. An additional fee, calculated at an hourly rate will be charged for all additional visits for verification, or compliance and monitoring activities.

16. The Council has estimated the volumes of registration, verification, compliance and monitoring visits it currently carries out and what has been as of 1 March 2016 by reviewing its performance data from previous years in line with its current and proposed fee schedules.

17. The proposed hourly rate fee is in align with Ministry of Primary Industries, Auckland City Council and Wellington City Council, all of which are providing the same service and implementation of the Act. The hourly rate charge reflects the Council’s direct and indirect costs.

Table 1: Proposed fee schedule for administering the Food Act 2014

REGISTRATION ACTIVITIES

FUNCTION	FEE (INCLUSIVE OF GST)	TIMING OF PAYMENT
	REGISTRATION
Application for registration of Food Control Plan (FCP) based on a template or model issued by MPI	$310 (includes two hours of processing of application) $155 per hour for every extra hour of registration activities	$310 payable on application Remainder payable on invoice
Application for registration of a business subject to a national programme template	$155 (includes one hour of processing of application) $155 per hour for every extra hour of registration activities	$155 payable on application Remainder payable on invoice
Application for renewal of registration	$155 (includes one hour of processing of application) $155 per hour for every extra hour of registration activities	$155 payable on application Remainder payable on invoice
Application for amendment to registration	$155 (includes one hour for processing of application) $155 per hour for every extra hour of processing the application	$155 payable on application Remainder payable on invoice

VERIFICATION ACTIVITIES

FUNCTION	FEE (INCLUSIVE OF GST)	TIMING OF PAYMENT
	VERIFICATION
Verification of a food control plan based on a template or model issued by MPI	$542.50 (includes three and half hours of verification activity) $155 per hour for every extra hour of registration activities	Payable at registration (if verification due within next 12 months) Remainder payable on invoice
Verification of a food control plan based on a National Programme Three (NP3) template	$387.50 (includes two and half hours of verification activity) $155 per hour for every extra hour of registration activities	Payable at registration (if verification due within next 12 months) Remainder payable on invoice
Verification of a food control plan based on a National Programme Two or One (NP2 or NP1) template	$310 (includes two hours of verification activities) $155 per hour for every extra hour of verification activities	Payable at registration (if verification due within next 12 months) Remainder payable on invoice

COMPLIANCE ACTIVITIES

FUNCTION	FEE (INCLUSIVE OF GST)	TIMING OF PAYMENT
	COMPLIANCE
Issue of improvement notice	$155 per notice (includes one hour of improvement notice activity) $155 per hour for every extra hour of improvement notice activity	Payable on invoice
Application for review of issue of improvement notice	$155 per application (includes one hour of review activity) $155 per hour for every extra hour of review activity	$155 payable on application Remainder payable on invoice
All other Services for which a fee may be set under the Food Act	$155 per hour	Payable on invoice

Further notes for consideration on Verification (Audit) Frequencies (refer to Appendix 1 – ‘Explanatory Notes’ for reference)

Options

18. Options Considered:

Option 1

Adopt the Statement of proposal to fix fees to recover the direct and indirect costs of the Council’s functions under the Food Act 2014. This is considered to be the most equitable option ensuring that funding for the Council’s functions under the Act are from users or beneficiaries of these functions and not from rates and other general funding sources. This also aligns with the Council’s Revenue and Financing policy.

This is the preferred option.

Option 2

Adopt an amended statement of fees to partially recover the direct and indirect costs of the Council’s functions under the Food Act 2014.

The option is not in accordance with the Councils revenue and financing policy. The option would mean the full cost of the Council’s functions under the Food Act 2014 would have to be recovered from rates or other funding sources.

This is not the preferred option.

Option 3

Adopt an amended statement of fees that charged all activity on an hourly rate basis with no upfront fixed fee

The option wouldn’t provide any certainty or estimate of the expected charges for the customer and would also have high administrative costs.

This is not the preferred option

Table 2: Advantages and disadvantages of three fee setting options

OPTIONS	POSITIVES	NEGATIVES
OPTION ONE Minimum fixed (minimum) fee based on average time, with the ability to recover additional costs as required. PREFERRED OPTION	• Rewards good compliance & behaviour • Recovers costs for actual work performed • Minimum charge removes risk of not recovering full costs • Consistent with MPI fees and charges methodology • Provides customer guidance on total fees	• Some averaging for some operators • More invoicing than current approach
OPTION TWO Subsidising cost recovery with rates funding to lower the hourly rate.	• Keeps costs for operators lower • Encourages use of Council as preferred verifier when competition is introduced	• Increases costs to ratepayers • Inconsistent with Food Act principle of equity, in that although users of food premises are beneficiaries, the real benefit of safe food premises are the business owners • Lower incentive for operators to be efficient
OPTION THREE Charging by the hour only (no upfront fixed fee).	Possible perceived lower charges by customers	• High administration costs which haven’t been factored into costs • High transaction volume • Uncertainty for operators as to likely total charges

Consultation

19. Council may, by resolution, fix fees under section 205(1) of the Food Act. Before making such a resolution, Section 205(2) requires the Council to consult using the special consultative procedure under Section 83 of the Local Government Act 2002.

20. Section 83 of the LGA requires Council ensure the following is publicly available:

a. The statement of proposal;

b. A description of how the local authority will provide persons interested in the proposal with an opportunity to present their views to Council;

c. A statement of the period within which views on the proposal may be provided to Council (being not less than a month from the date the statement is issued).

The statement of proposal must also be made as widely available as reasonably practicable as a basis for consultation.

An opportunity must be given for persons to present their views to Council in a way that enables spoken interaction between the person and Council. The person must be given a reasonable opportunity to do so and must be informed about how and when he or she may take up that opportunity.

21. In this instance officers will undertake a direct mail out to each of the commercial businesses that will be affected by this proposed change. The letter will enclose the statement of proposal and explain the proposal and the reasons for the proposal, timeframes, information on how a submission can be made, and the opportunity for submitters to present their submission in person.

22. Advertisements will also be placed in newspapers and on the Council website, advising of the proposal, the reasons for the proposal, timeframes and information on how a submission can be made.

23. The statement of proposal will be publicly available at the Council admin building and Council libraries.

Legal Considerations

24. The requirements of section 205 of the Food Act have largely been set out above. To reiterate, Council can only fix fees to recover direct and indirect costs related to registration, verification and compliance and monitoring activities (as explained in more detail above).

25. The fee fixed must not provide for the recovery of more than the reasonable cost incurred by Council in preforming the relevant function.

26. Council, when fixing the fee, must take into account the criteria in section 198(2) of the Food Act 2014. Those are the 4 criteria of equity, efficiency, justifiability and transparency, described in more detail above.

27. When fixing the fees a strict apportionment of the costs to be recovered for a particular function or service based on usage is not required.

28. A fee may be set at a level or in a way that is determined by calculations that involve an averaging of costs or potential costs and takes into account costs or potential costs (that are not directly to be provided to the person who pays the fee but which are an indirect or potential cost) arising from delivery of the service or class of service to a class of persons or all persons that use the service.

29. An increase in fees for any financial year must not come into effect other than at the commencement of that financial year. This can be overridden if an increased or new fees is consulted on and Council is satisfied that the persons, or their representatives, affected by the increase in fees or the new fees agree or substantially agree with the alteration or fixing.

30. Officers are not aware of any regulations which influence the way these fees can be set.

31. Section 205(2) of the Food Act requires the Council to consult using the special consultative procedure under Section 83 of the Local Government Act 2002.

32. A summary of the information contained in the statement of proposal is not considered necessary to enable public understanding of the proposal, which is clearly and concisely set out in the statement of proposal.

Financial Considerations

33. This is a fee increase proposal, so no funding is required. The public consultation process will be carried out by existing staff within the Environmental Health team and will be part of the team’s operating costs.

34. The increase in fees will enable the Environmental Health team to cost recover the actual time spent on food premises activities to a better extent and thus reduce the rates contribution component for the team’s operating costs.

35. Currently, the team is working on a 40:60 funding ratio, where 40 % is to be recovered through Environmental Health activities and 60% through rates funding.

36. The Environmental Health team at present is recovering 36% (a total income of $611,000.00 per annum – with the food premises activities being $244,092.00 based on the fee model for 2015/16 Financial Year). This figure is not expected to change for the 2016/17 Financial Year as the fees and charges remain unchanged.

37. The proposed fee review (for the 2017/18 Financial Year) will ensure the team’s total Environmental Health activities recovers 42% (with a projected income under the proposed fees for the Food Act 2014 to be $344,229.90 per annum on average over a five year period).

Other Considerations

38. In making this recommendation, officers have given careful consideration to the purpose of local government in section 10 of the Local Government Act 2002. Officers believe that this recommendation falls within the purpose of the local government in that it meets the current and future needs of communities for good-quality local infrastructure, local public services, and performance of regulatory functions in a way that is most cost-effective for households and businesses. . It does this in a way that is cost-effective because it appropriately presents and anticipates future circumstances in order to provide good-quality customer service and performance that are efficient and effective.

Appendices

No.	Title	Page
1 ⇩	Explanatory notes	126
2 ⇩	Current Fees and Charges 2016-2017 Financial Year	135
3 ⇩	Statement of Proposal	140

Author: Raaj Govinda

Manager Environmental Inspections

Reviewed By: Bradley Cato

Solicitor

Reviewed By: Geoff Stuart

Divisional Manager, Regulatory Services

Approved By: Joycelyn Raffills

General Manager, Governance and Regulatory

Attachment 1

APPENDIX 1_EXPLANATORY NOTES

EXPLANATORY NOTES FOR PROPOSED FEE STRUCTURE UNDER FOOD ACT 2014

Transition Timetable

The Food Regulations 2015, Schedule 1, Part 1, Clause 5 and 6 specify the due dates for registration and transition of existing businesses:

Due dates for registration applications

(3) The operator must apply by the end of—

(a) 31 March 2017, if the business belongs to a food sector listed in the first column of clause 6; or

(b)31 March 2018, if the business belongs to a food sector listed in the second column of clause 6; or

Table of end dates for authorised transition period

30 June 2017	30 June 2018	28 February 2019
Manufacturers of food for vulnerable populations	Manufacturers of commercially sterilised food products	Manufacturers of vegetable proteins or other protein products
Manufacturers of fresh ready-to-eat salads	Manufacturers of meat, poultry, or fish products	Processors of grain
Manufacturers of non-shelf-stable sauces, spreads, dips, soups, broths, gravies, or dressings	Manufacturers of dairy products	Manufacturers of oils or fats for human consumption
Food service provided to pre-school children (including children under 5 years of age) in a centre-based service setting	Manufacturers of processed egg products	Manufacturers of dry mix products
Processors of nuts and seeds	Manufacturers of meals and prepared foods (not otherwise covered in Schedule 1 of the Act)	Brewers, distillers, and manufacturers of vinegar, alcoholic beverages, or malt extract
On-licence food service sector	Wholesale bakeries	Manufacturers of shelf-stable grain-based products
	Food retail sector where food businesses prepare or manufacture and sell food	Manufacturers of crisps, popcorn, pretzels, or similar snack products
	Processors of herbs or spices	Manufacturers of dried or dehydrated fruit or vegetables
	Retailers that handle food (but do not prepare or manufacture food)	Manufacturers of water-based products including ice, iced confectionery, and iced desserts
	Manufacturers of food additives, processing aids, vitamins, minerals, or other nutrients intended to be added to food	Manufacturers of shelf-stable condiments (including sauces, spreads, and preserves)
	Manufacturers of non-alcoholic beverages	Manufacturers of frozen fruit or vegetables
	Retailers of manufacturer-packaged chilled or frozen food (excluding ice cream, iced confectionery, and iced desserts)	Retailers of hot beverages and shelf-stable manufacturer-packaged foods only
	Manufacturers of confectionery	Extractors and packers of honey
	Bakeries that prepare or manufacture bread or bread products only	Manufacturers of sugar or related products
	Food service sector	Transporters or distributors of food products
		Producers of horticultural food and horticultural packing operations (packhouses)
		Retailers of manufacturer-packaged ice cream, iced confectionery, and iced desserts
		Deemed plan sector

FOOD SECTORS SUBJECT TO FOOD CONTROL PLANS

Food Act 2014 Schedule 1

The following provides a summary of food sectors that are subject to food control plans under this schedule:

(a) food retail sector where food businesses prepare or manufacture and sell food:

(b) food service sector (except for those categories of food service listed below as subject to other risk-based measures):

FOOD SECTORS SUBJECT TO NATIONAL PROGRAMMES

Food Act 2014 Schedule 2

The following table provides a summary of the food sectors that are subject to a national programme under this schedule:

National programme level		Food sector
National programme level 3		Brewers, distillers, manufacturers of vinegar, alcoholic beverages, or malt extract
		Manufacturers of non-alcoholic beverages
		Manufacturers of oils or fats for human consumption
		Manufacturers of food additives, processing aids, vitamins, minerals, or other nutrients intended to be added to food
		Processors of grain
		Retailers that handle food (but do not prepare or manufacture food)
		Processors of herbs or spices
		Manufacturers of dry mix products
National programme level 2		Bakeries that prepare or manufacture bread or bread products only
		Food service provided to pre-school children (including children under 5 years of age) in a centre-based service setting
		Manufacturers of confectionery
		Processors of nuts and seeds
		Manufacturers of crisps, popcorn, pretzels, or similar snack products
		Manufacturers of dried or dehydrated fruit or vegetables
		Manufacturers of shelf-stable condiments (including sauces, spreads, and preserves)
		Manufacturers of shelf-stable grain-based products
		Manufacturers of water-based products including ice, iced confectionery, and iced desserts
		Retailers of manufacturer-packaged chilled or frozen food (excluding ice cream, iced confectionery, and iced desserts)
		Manufacturers of frozen fruit or vegetables
National programme level 1		Extractors and packers of honey
		Producers of horticultural food and horticultural packing operations (packhouses)
		Manufacturers of sugar or related products
		Retailers of hot beverages and shelf-stable manufacturer-packaged foods only
		Retailers of manufacturer-packaged ice cream, iced confectionery, and iced desserts
		Transporters or distributors of food products

FOOD SECTORS NOT REQUIRED TO OPERATE UNDER FOOD CONTROL OR NATIONAL PROGRAMME (EXEMPT)

Food Act 2014 Schedule 3

The following provides a summary of the food sectors that are not required to operate under a food control plan or a national programme under this schedule:

(a) accommodation providers: food for up to 10 guests:

(b) accommodation providers: snacks or breakfasts:

(d) early childhood education service providers who undertake minimal food handling only:

(e) fishing vessel operators who supply food to crew:

(f) food trading: once a year:

(g) food service sector: catering of specified nature:

(h) food service sector: clubs, organisations, and societies (internal):

(i) food service sector: clubs, organisations, and societies (external):

(j) horticultural producers: direct sales of own produce to consumers only:

(k) retailers or direct sellers of shelf-stable, manufacturer pre-packaged food.

Verification (Audit) Frequencies

Food Regulations 2015

90 Frequency of verification of food business and food control plan

(1) The frequency levels for the verification of a food business that is subject to a food control plan and of the food control plan are as follows:

Steps	Frequency of verification
5	18 months
4	12 months
3	9 months
2	6 months
1	3 months

(2) If the result of the initial verification is an acceptable outcome, the verification agency or verifier must carry out verification of the food control plan and food business at the frequency referred to in step 4 of the table in subclause (1) (the table).

(3) If the result of the initial verification or any subsequent verification (including any unscheduled verification) is an unacceptable outcome, the verification agency or verifier must, after considering the frequency criteria, increase the frequency of verification to a level set out in steps 3 to 1 of the table.

(4) If the results of 2 consecutive verifications (including any unscheduled verification) are 2 acceptable outcomes, the verification agency or verifier must reduce the frequency of verification to a lesser frequency further up the table.

Subpart 2—Verification of food businesses subject to national programmes

91 Food businesses subject to national programme level 3

(1) The operator of a food business that is subject to national programme level 3 must ensure that the food business’s compliance with the national programme is verified by a verification agency or verifier,—

(a) in the case of an existing business, within 6 months of registration; or

(b) in the case of a new business, within 1 month of registration.

(2) A verification agency or verifier must, after completion of the initial verification, verify the food business’s compliance with national programme level 3—

(a) no more frequently than every 3 months; and

(b) at least once every 2 years; and

92 Food businesses subject to national programme level 2

(1) The operator of a food business that is subject to national programme level 2 must ensure that the food business’s compliance with the national programme is verified by a verification agency or verifier,—

(a) in the case of an existing business, within 1 year of registration; or

(b) in the case of a new business, within 1 month of registration.

(2) A verification agency or verifier must, after completion of the initial verification, verify the food business’s compliance with national programme level 2—

(a) no more frequently than every 3 months; and

(b) at least once every 3 years; and

93 Food businesses subject to national programme level 1

(1) The operator of a food business that is subject to national programme level 1 must ensure that the food business’s compliance with the national programme is verified by a verification agency or verifier,—

(a) in the case of an existing business, within 1 year of registration; or

(b) in the case of a new business, within 1 month of registration.

(2) A verification agency or verifier must—

(a) carry out an initial verification of the food business’s compliance with national programme level 1; and

(b) carry out any subsequent verification in accordance with regulation 94(3) and (4).

94 Frequency of verification of food businesses subject to national programmes

(1) The frequency levels for verification of food businesses subject to national programmes are as follows:

Steps	National programme level 3	National programme level 2	National programme level 1
8			no verification
7		3 years	3 years
6	2 years	2 years	2 years
5	18 months	18 months	18 months
4	12 months	12 months	12 months
3	9 months	9 months	9 months
2	6 months	6 months	6 months
1	3 months	3 months	3 months

(2) If the result of the initial verification is an acceptable outcome, the verification agency or verifier—

(a) must, if the food business is subject to national programme level 3, carry out subsequent verifications at the frequency referred to in step 6 of the table in subclause (1) (the table); and

(b) must, if the food business is subject to national programme level 2, carry out subsequent verifications at the frequency referred to in step 7 of the table; and

(c) must not, if the food business is subject to national programme level 1, carry out any further verifications unless regulation 102 applies.

(a) If the food business is subject to national programme level 3, to a level set out in steps 5 to 1 of the table; or

(b) If the food business is subject to national programme level 2, to a level set out in steps 6 to 1 of the table; or

(4) If, after the initial verification, the result of a subsequent verification (including any unscheduled verification) is an acceptable outcome, the verification agency or verifier must, after considering the frequency criteria, reduce the frequency of verification,—

(a) If the food business is subject to national programme level 3, to a level set out in steps 6 to 2 of the table; or

(b) If the food business is subject to national programme level 2, to a level set out in steps 7 to 2 of the table; or

Registration Frequencies (Food Control Plan)

Food Act 2014

61 Duration of registration

(1) The registration of a food control plan is effective from the date of registration until—

(a) the date that is 12 months after the date of registration; or

(b) a later date specified by the registration authority by written notice to the operator of the food control plan.

(2) Subsection (1) applies unless the registration—

(a) expires in accordance with a condition imposed under section 60; or

(b) is cancelled under section 67; or

(3)The registration may be renewed for further periods in accordance with Part 2 of Schedule 4.

Registration Frequencies (National Programme)

Food Regulations 2015

44 Duration of registration

The registration of a food business that is subject to a national programme commences on the date of registration and ends on—

(a) the date that is 24 months after the date of registration; or

(b) any later date that is specified in writing by the registration authority.

Attachment 2

APPENDIX 2_CURRENT FEES AND CHARGES_2016-2017 FINANCIAL YEAR

FEES AND CHARGES FOR 2016/2017 - ENVIRONMENTAL HEALTH

Premises meeting the required standard by 1 July are eligible for a discount, provided re-registration is applied for by 20 August.

Highlighted sections are due for change in the 2017/18 Financial Year cycle.

FOOD PREMISES	2016/2017		8
	FEE	DISCOUNT FEE
Class One – Fruiterers, pre-packaged only (low risk, pre-packaged)	$365.00	$247.00
Food Control Plan – Class One - Fruiterers, pre-packaged only (low risk, pre-packaged)	$365.00	$247.00
Class Two – Dairies, service stations (small premises – ready-made foods – some ice cream/pre-wrapped pies), clubs (medium), supply of low-risk food	$434.00	$303.00
Food Control Plan – Class Two – Dairies, service stations (small premises – ready-made foods – some ice cream/pre-wrapped pies), clubs (medium), supply of low-risk food	$434.00	$303.00
Class Three – Clubs (large), rest homes (<25), service stations (large), minimarts, canteens (small), supply of medium-risk food	$556.00	$390.00
Food Control Plan – Class Three -– Clubs (large), rest homes (<25), service stations (large), minimarts, canteens (small), supply of medium-risk food	$556.00	$390.00
Class Four – Takeaways, eating houses (<40), meat and fish, delicatessens, canteens (large), caterers (small), bakeries, wholesalers (small), rest homes (25-50), supermarkets (medium), supply of high-risk food	$648.00	$453.00
Food Control Plan – Class Four - Takeaways, eating houses (<40), meat and fish, delicatessens, canteens (large), caterers (small), bakeries, wholesalers (small), rest homes (25-50), supermarkets (medium), supply of high-risk food	$648.00	$453.00
Class Five – Eating houses (>40), caterers (large), wholesalers (large), rest homes (>50), supermarkets (large), supply of high-risk food	$1,067.00	$740.00
Food Control Plan – Class Five - Eating houses (>40), caterers (large), wholesalers (large), rest homes (>50), supermarkets (large), supply of high-risk food	$1,067.00	$740.00
Clubs/canteens (small) – type 16 – no food preparation	$145.00	$100.00
Food Control Plan – Clubs/canteens – minimal food preparation	$145.00	$100.00
Travelling shops – food – high risk	$426.00	$320.00
Food Control Plan –Travelling shops – food – high risk	$426.00	$320.00
Travelling shops – food – medium risk	$296.00	$201.00
Food Control Plan – Travelling shops – food – medium risk	$296.00	$201.00
Travelling shops – food – low risk	$194.00	$178.00
Food Control Plan – Travelling shops – food – low risk	$194.00	$178.00
Stalls – food – high risk	$426.00	$320.00
Food Control Plan – Stalls – food – high risk	$426.00	$320.00
Stalls – food – medium risk	$296.00	$201.00
Food Control Plan – Stalls – food – medium risk	$296.00	$201.00
Stalls – food – low risk	$194.00	$178.00
Food Control Plan – Stalls – food – low risk	$194.00	$178.00

Note: Food premises operating under approved Food Control Plans will continue to be charged according to the listed risk category.

other licences	2016/2017
other licences	FEE	DISCOUNT FEE
Travelling shops – no food	$140.00	N/A
Hairdressers	$302.00	$194.00
Camping grounds	$517.00	$461.00
Hawkers	$55.00	N/A
Amusement devices	$89.00	N/A
Mortuaries	$383.00	$261.00
Offensive trades	$419.00	$292.00

Additional Charges	2016/2017
One-off food stalls	$45.00
Market organiser/operator fees for one-day markets, festivals and special events	<10 food stalls $200.00 11-20 food stalls $400.00 21-40 food stalls $600.00 41-60 food stalls $800.00
Sale of low risk food (where food sales are counted as less than 20% of business)	$80.00
Food Control Plan (FCP) initial consultation fee (per visit)	$140.00
Replacement FCP (photocopy and bound)	$25.00
Replacement diary (photocopy and bound)	$25.00
Thermometer	$25.00
Additional inspections of registered premises or follow-up visits for non-compliance with Food Control Plan (corrective actions)	$140.00
Complaints Investigations – vexatious, repeat offending	$140.00
New premises – establishment fee	$140.00
Initial registration fee	$100.00
Transfer registration fee	$60.00

Noise Control	2016/2017
Seizure fine (stereo equipment)	$170.00 and $1.00 per day after the 1^st month of storage
	$300.00 for any subsequent seizures from a property or equipment within a six month period and $1.00 per day after the 1^st month of storage
Security alarms – daytime attendances	$112.50
Security alarms – after hours attendances	$188.60
Consultancy and survey fee	$105.00 per hour

Attachment 3

APPENDIX 3_STATEMENT OF PROPOSAL

Setting Fees under the Food Act 2014

Statement of Proposal

Introduction

This statement of Proposal has been prepared to fullfill the Local Government Act 2002 (LGA) and section 205 (2) of the Food Act 2014 (The Act) requirements.

Background

The Act was passed into law in June 2014, replacing the Food Act 1981. A three year transition period to implement the Act started on 1 March 2016.

The Act introduces a risk based regulatory regime that places a primary duty on the persons trading in food to ensure that the food sold is safe and suitable.

The purpose of the Act is to:

· Restate and reform the law relating to how persons trade in food

· Achieve the safety and suitability of food for sale

· Maintain confidence in New Zealand’s food safety regime

· Provide for risk-based measures that:

o Minimise and manage risks to public health

o Protect and promote public health

o Provide certainty for food businesses in relation to how the requirements of this Act will affect their activities

o Require persons who trade in food to take responsibility for safety and suitability of that food

Businesses Affected

As of January 2017, there are 638 registered food related businesses in Lower Hutt City that will be subject to either a Food Control Plan or National Programme risk bases measures. An estimated breakdown of the risk based measure that businesses fall into is as follows:

Risk Based Measure	Number of Businesses
Food Control Plan	474
National Programme level 3	113
National Programme level 2	10
National Programme level 1	22
Exempt (businesses that do not fall under any of the risk-based measure categories and do not require registration i.e. accommodation providers, home based early childhood centres, club premises)	19
Total number of businesses	638

An additional number of premises may be required to register with the Council that were not previously required to register. The most significant sector of this market is the early childhood education centres (ECE’s). There are approximately 99 ECEs in Lower Hutt City (these are subject to National Programme Level 2).

Council to set fees under the Act

Territorial Authorities may, by resolution, fix fees to recover the direct and indirect costs of any of the following functions under the Act:

Registration:

Verification:

This includes auditing of food premises, including preparation (booking appointments, preparing the report/checklist for the audit, checking resource and building consents as well as prior history); travel time, actual on site time to carry out the audit, completion of the audit report and updating of two recording systems. Travel time has been averaged across all premises and will be set at 30 minutes per verification. There will be the need to increase the charge for some verifications as some make take significantly longer than 3.5 hours to complete due to the size and scale of a premises. It is also estimated that up to 50% of businesses will require extra time on site to begin with. The time spent above the standard fixed verification charge will be charged on an hourly rate basis. As businesses become more familiar with the requirements of the Act, it is likely that the proportion of business requiring extra time will reduce.

Compliance and monitoring activity:

Proposal to set fees

The Council is required under the LGA to adopt a Revenue and Financing Policy that provides details on the funding of operational and capital expenditure. During its development, analysis was undertaken with regards to the parts the community contribute towards paying of activities. Food businesses will transition over to the Act over a three year period as of 1 March 2016. During this transitional period, a portion of the businesses will be charged under the Act and the remaining that have not been transitioned will continue to be charged under the existing fees set pursuant to the Health Act 1956 and the Food Hygiene Regulations 1974.

The Council proposes the following fee structure to ensure the recovery of direct and indirect costs incurred by the Council in performing its functions. The proposed fees will come into effect on 1 July 2017 and will only apply to premises that register under the Act. Existing premises that have not transitioned will continue to pay the existing Council fees set pursuant to the Health Act 1956 and the Food Hygiene Regulations 1974

In setting the proposed fees in the fee structure contained in this paper, Council has taken into consideration the four principles under the Act (section 198(2)): equity, efficiency, justifiability and transparency:

Equity

‘Funding should come from the persons using or benefiting from the functions, power or service’

• This approach recognises that general complaint investigation has public benefits and should not be directly recovered from the food operator where a complaint is not justified.

Efficiency

‘Costs should be allocated and recovered so that maximum benefits are delivered at minimum cost.’

• The Council seeks to deliver its functions in the most efficient manner possible and to ensure this efficiency is reflected in the costs to users.

Justifiability

‘Costs should be collected only to meet actual and reasonable costs (including indirect costs).’

Transparency

‘Costs should be identified and allocated to the tangible service provision for the recovery period in which the service is provided.’

Proposed fee structure

Cost recovery under the Act is different than under previous legislation. All businesses will be required to pay an annual registration fee payable on the anniversary date of their initial registration. Set fees for both registration and verification will be set separately. An additional fee, calculated at an hourly rate will be charged for all additional visits for verification, or compliance and monitoring activities.

The Council has estimated the volumes of registration, verification, compliance and monitoring visits it currently carries out and what it will be as of 1 March 2016 by reviewing its performance data from previous years in line with its current and proposed fee schedules.

The proposed hourly rate fee is in align with Ministry of Primary Industries, Auckland City Council and Wellington City Council, all of which are providing the same service and implementation of the Act. The hourly rate charge reflects the Council’s direct and indirect costs.

Table 1: Proposed fee schedule for administering the Food Act 2014

FUNCTION	FEE (INCLUSIVE OF GST)	TIMING OF PAYMENT
	REGISTRATION
Application for registration of Food Control Plan (FCP) based on a template or model issued by MPI	$310 (includes two hours of processing of application) $155 per hour for every extra hour of registration activities	$310 payable on application Remainder payable on invoice
Application for registration of a business subject to a national programme template	$155 (includes one hour of processing of application) $155 per hour for every extra hour of registration activities	$155 payable on application Remainder payable on invoice
Application for renewal of registration	$155 (includes one hour of processing of application) $155 per hour for every extra hour of registration activities	$155 payable on application Remainder payable on invoice
Application for amendment to registration	$155 (includes one hour for processing of application) $155 per hour for every extra hour of processing the application	$155 payable on application Remainder payable on invoice

FUNCTION	FEE (INCLUSIVE OF GST)	TIMING OF PAYMENT
	VERIFICATION
Verification of a food control plan based on a template or model issued by MPI	$542.50 (includes three and half hours of verification activity) $155 per hour for every extra hour of registration activities	Payable at registration (if verification due within next 12 months) Remainder payable on invoice
Verification of a food control plan based on a National Programme Three (NP3) template	$387.50 (includes two and half hours of verification activity) $155 per hour for every extra hour of registration activities	Payable at registration (if verification due within next 12 months) Remainder payable on invoice
Verification of a food control plan based on a National Programme Two or One (NP2 or NP1) template	$310 (includes two hours of verification activities) $155 per hour for every extra hour of verification activities	Payable at registration (if verification due within next 12 months) Remainder payable on invoice

FUNCTION	FEE (INCLUSIVE OF GST)	TIMING OF PAYMENT
	COMPLIANCE
Issue of improvement notice	$155 per notice (includes one hour of improvement notice activity) $155 per hour for every extra hour of improvement notice activity	Payable on invoice
Application for review of issue of improvement notice	$155 per application (includes one hour of review activity) $155 per hour for every extra hour of review activity	$155 payable on application Remainder payable on invoice
All other Services for which a fee may be set under the Food Act	$155 per hour	Payable on invoice

Further notes for consideration on Registration & Verification (Audit) Frequencies (refer to Appendix 1 – ‘Explanatory Notes’ for reference)

Options Considered

Option 1

This is the preferred option.

Option 2

Adopt an amended statement of fees to partially recover the direct and indirect costs of the Council’s functions under the Food Act 2014.

This is not the preferred option.

Option 3

Adopt an amended statement of fees that charged all activity on an hourly rate basis with no upfront fixed fee

The option wouldn’t provide any certainty or estimate of the expected charges for the customer and would also have high administrative costs.

This is not the preferred option

Table 2: Advantages and disadvantages of three fee setting options

OPTIONS	POSITIVES	NEGATIVES
OPTION ONE Minimum fixed (minimum) fee based on average time, with the ability to recover additional costs as required. PREFERRED OPTION	• Rewards good compliance & behaviour • Recovers costs for actual work performed • Minimum charge removes risk of not recovering full costs • Consistent with MPI fees and charges methodology • Provides customer guidance on total fees	• Some averaging for some operators • More invoicing than current approach
OPTION TWO Subsidising cost recovery with rates funding to lower the hourly rate.	• Keeps costs for operators lower • Encourages use of Council as preferred verifier when competition is introduced	• Increases costs to ratepayers • Inconsistent with Food Act principle of equity, in that although users of food premises are beneficiaries, the real benefit of safe food premises are the business owners • Lower incentive for operators to be efficient
OPTION THREE Charging by the hour only (no upfront fixed fee).	Possible perceived lower charges by customers	• High administration costs which haven’t been factored into costs • High transaction volume • Uncertainty for operators as to likely total charges

APPENDIX ONE

EXPLANATORY NOTES FOR PROPOSED FEE STRUCTURE UNDER FOOD ACT 2014

Transition Timetable

The Food Regulations 2015, Schedule 1, Part 1, Clause 5 and 6 specify the due dates for registration and transition of existing businesses:

Due dates for registration applications

(3) The operator must apply by the end of—

(a) 31 March 2017, if the business belongs to a food sector listed in the first column of clause 6; or

(b) 31 March 2018, if the business belongs to a food sector listed in the second column of clause 6; or

Table of end dates for authorised transition period

30 June 2017	30 June 2018	28 February 2019
Manufacturers of food for vulnerable populations	Manufacturers of commercially sterilised food products	Manufacturers of vegetable proteins or other protein products
Manufacturers of fresh ready-to-eat salads	Manufacturers of meat, poultry, or fish products	Processors of grain
Manufacturers of non-shelf-stable sauces, spreads, dips, soups, broths, gravies, or dressings	Manufacturers of dairy products	Manufacturers of oils or fats for human consumption
Food service provided to pre-school children (including children under 5 years of age) in a centre-based service setting	Manufacturers of processed egg products	Manufacturers of dry mix products
Processors of nuts and seeds	Manufacturers of meals and prepared foods (not otherwise covered in Schedule 1 of the Act)	Brewers, distillers, and manufacturers of vinegar, alcoholic beverages, or malt extract
On-licence food service sector	Wholesale bakeries	Manufacturers of shelf-stable grain-based products
	Food retail sector where food businesses prepare or manufacture and sell food	Manufacturers of crisps, popcorn, pretzels, or similar snack products
	Processors of herbs or spices	Manufacturers of dried or dehydrated fruit or vegetables
	Retailers that handle food (but do not prepare or manufacture food)	Manufacturers of water-based products including ice, iced confectionery, and iced desserts
	Manufacturers of food additives, processing aids, vitamins, minerals, or other nutrients intended to be added to food	Manufacturers of shelf-stable condiments (including sauces, spreads, and preserves)
	Manufacturers of non-alcoholic beverages	Manufacturers of frozen fruit or vegetables
	Retailers of manufacturer-packaged chilled or frozen food (excluding ice cream, iced confectionery, and iced desserts)	Retailers of hot beverages and shelf-stable manufacturer-packaged foods only
	Manufacturers of confectionery	Extractors and packers of honey
	Bakeries that prepare or manufacture bread or bread products only	Manufacturers of sugar or related products
	Food service sector	Transporters or distributors of food products
		Producers of horticultural food and horticultural packing operations (pack houses)
		Retailers of manufacturer-packaged ice cream, iced confectionery, and iced desserts
		Deemed plan sector

FOOD SECTORS SUBJECT TO FOOD CONTROL PLANS

Food Act 2014 Schedule 1

The following provides a summary of food sectors that are subject to food control plans under this schedule:

(a) food retail sector where food businesses prepare or manufacture and sell food:

(b) food service sector (except for those categories of food service listed below as subject to other risk-based measures):

FOOD SECTORS SUBJECT TO NATIONAL PROGRAMMES

Food Act 2014 Schedule 2

The following table provides a summary of the food sectors that are subject to a national programme under this schedule:

National programme level		Food sector
National programme level 3		Brewers, distillers, manufacturers of vinegar, alcoholic beverages, or malt extract
		Manufacturers of non-alcoholic beverages
		Manufacturers of oils or fats for human consumption
		Manufacturers of food additives, processing aids, vitamins, minerals, or other nutrients intended to be added to food
		Processors of grain
		Retailers that handle food (but do not prepare or manufacture food)
		Processors of herbs or spices
		Manufacturers of dry mix products
National programme level 2		Bakeries that prepare or manufacture bread or bread products only
		Food service provided to pre-school children (including children under 5 years of age) in a centre-based service setting
		Manufacturers of confectionery
		Processors of nuts and seeds
		Manufacturers of crisps, popcorn, pretzels, or similar snack products
		Manufacturers of dried or dehydrated fruit or vegetables
		Manufacturers of shelf-stable condiments (including sauces, spreads, and preserves)
		Manufacturers of shelf-stable grain-based products
		Manufacturers of water-based products including ice, iced confectionery, and iced desserts
		Retailers of manufacturer-packaged chilled or frozen food (excluding ice cream, iced confectionery, and iced desserts)
		Manufacturers of frozen fruit or vegetables
National programme level 1		Extractors and packers of honey
		Producers of horticultural food and horticultural packing operations (pack houses)
		Manufacturers of sugar or related products
		Retailers of hot beverages and shelf-stable manufacturer-packaged foods only
		Retailers of manufacturer-packaged ice cream, iced confectionery, and iced desserts
		Transporters or distributors of food products

FOOD SECTORS NOT REQUIRED TO OPERATE UNDER FOOD CONTROL OR NATIONAL PROGRAMME (EXEMPT)

Food Act 2014 Schedule 3

The following provides a summary of the food sectors that are not required to operate under a food control plan or a national programme under this schedule:

(a) accommodation providers: food for up to 10 guests:

(b) accommodation providers: snacks or breakfasts:

(d) early childhood education service providers who undertake minimal food handling only:

(e) fishing vessel operators who supply food to crew:

(f) food trading: once a year:

(g) food service sector: catering of specified nature:

(h) food service sector: clubs, organisations, and societies (internal):

(i) food service sector: clubs, organisations, and societies (external):

(j) horticultural producers: direct sales of own produce to consumers only:

(k) retailers or direct sellers of shelf-stable, manufacturer pre-packaged food.

Verification (Audit) Frequencies

Food Regulations 2015

90 Frequency of verification of food business and Food Control Plan

(1) The frequency levels for the verification of a food business that is subject to a food control plan and of the food control plan are as follows:

Steps	Frequency of verification
5	18 months
4	12 months
3	9 months
2	6 months
1	3 months

Subpart 2—Verification of food businesses subject to National Programme

91 Food businesses subject to national programme level 3

(a) in the case of an existing business, within 6 months of registration; or

(b) in the case of a new business, within 1 month of registration.

(2) A verification agency or verifier must, after completion of the initial verification, verify the food business’s compliance with national programme level 3—

(a) no more frequently than every 3 months; and

(b) at least once every 2 years; and

92 Food businesses subject to national programme level 2

(a) in the case of an existing business, within 1 year of registration; or

(b) in the case of a new business, within 1 month of registration.

(2) A verification agency or verifier must, after completion of the initial verification, verify the food business’s compliance with national programme level 2—

(a) no more frequently than every 3 months; and

(b) at least once every 3 years; and

93 Food businesses subject to national programme level 1

(a) in the case of an existing business, within 1 year of registration; or

(b) in the case of a new business, within 1 month of registration.

(2) A verification agency or verifier must—

(a) carry out an initial verification of the food business’s compliance with national programme level 1; and

(b) carry out any subsequent verification in accordance with regulation 94(3) and (4).

94 Frequency of verification of food businesses subject to national programmes

(1) The frequency levels for verification of food businesses subject to national programmes are as follows:

Steps	National programme level 3	National programme level 2	National programme level 1
8			no verification
7		3 years	3 years
6	2 years	2 years	2 years
5	18 months	18 months	18 months
4	12 months	12 months	12 months
3	9 months	9 months	9 months
2	6 months	6 months	6 months
1	3 months	3 months	3 months