OVERVIEW:

This Subcommittee has a monitoring and advisory role in reviewing the effectiveness of the manner in which Council discharges its responsibilities in respect to governance, risk management and internal control.

The Committee is primarily aligned with the Transformation & Resources Directorate.

Its areas of focus are:

§ Oversight of risk management and assurance across the Council Group with respect to risk that is significant

§ Internal and external audit and assurance

§ Health, safety and wellbeing

§ Business continuity and resilience

§ Integrity and investigations

§ Monitoring of compliance with laws and regulations

§ Significant projects, programmes of work and procurement, focussing on the appropriate management of risk

§ The LTP, Annual Report and other external financial reports required by statute.

PURPOSE:

To carry out a monitoring and advisory role and provide objective advice and recommendations around the effectiveness of the manner in which Council discharges its responsibilities in respect to governance frameworks, risk management, internal control systems and the Council Group’s financial management practices.

DELEGATIONS FOR THE SUBCOMMITTEE’S AREAS OF FOCUS:

§ The Subcommittee has no decision-making powers other than those in these Terms of Reference.

§ The Subcommittee may request expert advice through the Chief Executive where necessary.

§ The Subcommittee may make recommendations to the Council and/or Chief Executive.

Risk Management:

§ Review, approve and monitor the implementation of the risk management framework and strategy, including significant risks to the Council Group.

§ Review the effectiveness of risk management and internal control systems including all material financial, operational, compliance and other material controls. This includes legislative compliance (including health and safety), significant projects and programmes of work, and significant procurement.

§ Review risk management reports identifying new and/or emerging risks.

Assurance:

§ Review and approve, and monitor the implementation of, the assurance strategy and detailed internal audit coverage and annual work plans.

§ Review the coordination between the risk and assurance functions, including the integration of the Council’s risk profile with the internal audit programme. This includes assurance over all material financial, operational, compliance and other material controls. This includes legislative compliance (including health and safety), significant projects and programmes of work, and significant procurement.

§ Review the reports of the assurance functions dealing with findings, conclusions and recommendations (including assurance over risks pertaining to Council Controlled Organisations and Council Controlled Trading Organisations that are significant to the Council Group).

§ Review and monitor management’s responsiveness to the findings and recommendations, inquiring into the reasons that any recommendation is not acted upon.

Fraud and Integrity:

§ Review, approve and monitor the implementation of the assurance strategy, including the fraud and integrity aspects.

§ Review the arrangements in place by which staff may, in confidence, raise concerns about possible improprieties in matters of financial reporting, financial control or any other matters, and ensure that there is proportionate and independent investigation of such matters and appropriate follow-up action.

§ Review the procedures in relation to the prevention, detection, reporting and investigation of bribery and fraud.

§ Review and monitor policy and process to manage conflicts of interest amongst elected and appointed members, management, staff, consultants and contractors.

§ Review internal and external reports related to possible improprieties, ethics, bribery and fraud related incidents.

Statutory Reporting:

§ Review and monitor the integrity of the Long Term Plan and Annual Report including statutory financial statements and any other formal announcements relating to the Council’s financial performance, focussing particularly on the areas listed below.

§ Compliance with, and the appropriate application of, relevant accounting policies, practises and accounting standards.

§ Compliance with applicable legal requirements relevant to statutory reporting.

§ The consistency of application of accounting pollicies, across reporting periods, and the Council Group.

§ Changes to accounting policies and practices that may affect the way that accounts are presented.

§ Any decisions involving significant judgement, estimation or uncertainty.

§ The extent to which financial statements are affected by any unusual transactions and the way they are disclosed.

§ The disclosures of contingent liabilities and contingent assets.

§ The clarity of disclosures generally.

§ The basis for the adoption of the going concern assumption.

§ Significant adjustments resulting from the audit.

External Audit:

§ Discuss with the external auditor, before the audit commences, the nature, scope and fees of the external audit, areas of audit focus, and error and materiality levels.

§ Review, with the external auditors, representations required by elected members and senior management, including representations as to the fraud and integrity control environment.

§ Review the external auditor’s management letter and management responses, and inquire into reasons for any recommendations not acted upon.

§ Where required, the Chair may ask a senior representative of the Office of the Auditor General to attend meetings of the Subcommittee to discuss the office’s plans, findings and other matters of mutual interest.

Interaction with Council Controlled Organisations and Council Controlled Trading Organisations:

§ Other committees dealing with CCO and CCTO matters may refer matters to the Audit & Risk Subcommittee for review and advice.

§ This Subcommittee will inquire to ensure adequate processes at a governance level exist to identify and manage risks within a CCO. Where an identified risk may impact on Council or the Council Group, the Subcommittee will also ensure that all affected entities are aware of and are appropriately managing the risk.

Matrix of Experience, Skills and Personal Qualities

Experience, Skills and Personal Qualities	Member A	Member B	Member C	Member D	Independent Chairperson
The recommended combination of experience is:
· financial reporting
· broad governance experience
· familiarity with risk management disciplines
· understanding of internal control and assurance frameworks
· good understanding of the roles of internal and external audit
· local government expertise
For an “advisory-oriented” audit committee, particular emphasis should be placed on:
· Strategy
· Performance management
· Risk management disciplines
In determining the composition of the audit committee, the combined experience, skills, and personal qualities of audit committee members is critical. Members should bring:
· the ability to act independently and objectively
· the ability to ask relevant and pertinent questions, and evaluate the answers
· the ability to work constructively with management to achieve improvements
· an appreciation of the public entity’s culture and values, and a determination to uphold these
· a proactive approach to advising the governing body and chief executive of matters that require further attention
· business acumen
· appropriate diligence, time, effort, and commitment
· the ability to explain technical matters in their field to other members of the audit committee

HUTT CITY COUNCIL

Audit and Risk Subcommittee | Komiti Iti Ahumoni I Tūraru

Meeting to be held in the Council Chambers, 2nd Floor, 30 Laings Road, Lower Hutt on

Thursday 25 February 2021 commencing at 2.00pm.

ORDER PAPER

Public Business

1. APOLOGIES

2. PUBLIC COMMENT

Generally up to 30 minutes is set aside for public comment (three minutes per speaker on items appearing on the agenda). Speakers may be asked questions on the matters they raise.

3. CONFLICT OF INTEREST DECLARATIONS

Members are reminded of the need to be vigilant to stand aside from decision making when a conflict arises between their role as a member and any private or other external interest they might have.

4. External Audit Update - Seaview Marina Limited (21/84)

Report No. ARSC2021/1/27 by the Financial Accounting Manager 11

Chair’s Recommendation:

“That the recommendation contained in the report be endorsed.”

5. External Audit Update - Hutt City Community Facilities Trust (21/86)

Report No. ARSC2021/1/28 by the Financial Accounting Manager 35

Chair’s Recommendation:

“That the recommendation contained in the report be endorsed.”

6. External Audit Update - Urban Plus Limited (Parent and Group) (21/143)

Report No. ARSC2021/1/29 by the Financial Accounting Manager 63

Chair’s Recommendation:

“That the recommendation contained in the report be endorsed.”

7. Petone Wharf Temporary Closure and Next Steps (21/230)

Report No. ARSC2021/1/40 by the Head of Parks and Recreation 124

Chair’s Recommendation:

“That the recommendation contained in the report be endorsed.”

8. Eastern Bays Shared Path Project Update (21/77)

Report No. ARSC2021/1/31 by the Senior Project Engineer 131

Chair’s Recommendation:

“That the recommendations contained in the report be endorsed.”

9. RiverLink Update (21/168)

Report No. ARSC2021/1/30 by the Director Economy and Development 140

Chair’s Recommendation:

“That the recommendations contained in the report be endorsed.”

10. External audit update - Hutt City Council (21/233)

Report No. ARSC2021/1/41 by the Chief Financial Officer 148

Chair’s Recommendation:

“That the recommendations contained in the report be endorsed.”

11. Information Items

a) Kerbside Rubbish & Recycling Implementation Project (21/159)

Report No. ARSC2021/1/19 by the Strategic Advisor 169

Chair’s Recommendation:

“That the recommendation contained in the report be endorsed.”

b) Naenae Projects progress report (21/95)

Memorandum dated 28 January 2021 by the Strategic Projects Manager 179

Chair’s Recommendation:

“That the recommendation contained in the report be endorsed.”

c) Managing COVID-19 Risks (21/54)

Report No. ARSC2021/1/20 by the Risk and Assurance Manager 187

Chair’s Recommendation:

“That the recommendations contained in the report be endorsed.”

d) Audit and Risk Work Programme 2021 (21/35)

Report No. ARSC2021/1/21 by the Democracy Advisor 194

Chair’s Recommendation:

“That the recommendation contained in the work programme be endorsed.”

12. QUESTIONS

With reference to section 32 of Standing Orders, before putting a question a member shall endeavour to obtain the information. Questions shall be concise and in writing and handed to the Chair prior to the commencement of the meeting.

Toi Lealofi

DEMOCRACY ADVISOR

Priority	Priority
Priority	Urgent	Necessary	Beneficial	Total
Open matters from prior year	0	3	0	3
Matters resolved	0	-1	0	-1
New matters in current year	0	1	0	1
Current open matters	0	3	0	3

5. The table below provides an overview of the current open matters:

	Audit NZ recommendation	Year First Raised by Audit NZ	Officer update
1	Journals review SML engages with the Finance Team to analyse and document the different types of journals processed to understand the risk of incorrect or inappropriate journal being processed	2017/18	Good progress has been made to improve the financial controls and manage risks over the last year. A new General ledger Journal Entry Policy was implemented across the Council Group in February 2020. This aims to improve controls and manage risks. The materiality level for detailed review of journals was set at $10k, which is considered reasonable in this context. Information is available to the reviewer for journals below $10k if a more detailed review is required. SML will discuss this matter further with the auditors. There will also be a further review undertaken to consider the risks of incorrect and inappropriate journals being posted.
2	Legislative compliance SML reviews its systems, policies and procedures to ensure that it has an appropriate legislative compliance system in place to ensure compliance with all relevant legislative requirements.	2017/18	Work will commence in the second half of 2020/21 to develop and implement a framework for staff and Board reporting. SML will seek feedback from the auditors once this framework has been developed.
3	Performance reporting SML looks to how it can improve its performance reporting to better show its development and responsibilities as a Public Benefit Entity.	2019/20	Three new measures will be added to the final 2021/22 to 2023/24 Statement of Intent. SML will discuss any updates with the auditors prior to finalization of the SOI 30 June annually.

6. A further recommendation was closed last financial year, relating to the provision of future Statements of Intent within the prescribed timeframes outlined in the Local Government Act 2002.

Climate Change Impact and Considerations

7. There are no climate change impacts or considerations arising from this report.

Legal Considerations

8. There are no legal considerations arising from this report.

Financial Considerations

9. The financial considerations are detailed in Appendix 1 to this report.

Appendices

No.	Title	Page
1 ⇩	Appendix 1: Seaview Marina Limited Report to the Board YE 30 June 2020	15

Author: Sharon Page

Senior Management Accountant

Reviewed By: Darrin Newth

Financial Accounting Manager

Approved By: Jenny Livschitz

Chief Financial Officer

39 25 February 2021

Audit and Risk Subcommittee

27 January 2021

File: (21/86)

Report no: ARSC2021/1/28

External Audit Update - Hutt City Community Facilities Trust

Purpose of Report

1. To provide an update on the information contained within the recent management report issued by Audit NZ.

Recommendations

That the Subcommittee notes the progress achieved in addressing the audit recommendations attached as Appendix 1 to the report.

Background

2. The primary purpose of the external audit is to complete checks that enable Audit NZ to issue an audit opinion on the Hutt City Community Facilities Trust (CFT) performance results for the year end.

3. CFT’s Annual Report for the year ended 30 June 2020 was approved and adopted by the CFT Board and tabled at Council on 8 December 2020. Audit NZ issued an unmodified audit opinion, however the auditors did have two emphasis of matters as follows:

a. Uncertainties surrounding the review of the Trust’s operating model (referred to in note 1 on pages 17 to 18 of the annual report); and

b. Impact of Covid 19 (referred to in note 20 on pages 31 to 32) of the Annual Report.

Audit NZ management reports

4. Summary:

Priority	Priority
Priority	Urgent	Necessary	Beneficial	Total
Open matters from prior year	0	3	2	5
Matters resolved	0	-1	-1	-2
New matters in current year	0	2	0	2
Current open matters	0	4	1	5

5. The table below provides an overview of the current open matters:

	Audit NZ recommendation	Year First Raised by Audit NZ	Officer update
1	Monitoring of Building Warrants of Fitness CFT puts a more formal monitoring or control mechanism in place to ensure positive assurance is obtained to minimise the risk of no-compliance	2018	Current procedures will be reviewed by 30 June to ensure no further WOFs expire without appropriate action taking place. NB: all CFT buildings have current WOFs.
2	Journals Review CFT engages with the Finance Team to analyse and document the different types of journals processed to understand the risk of incorrect or inappropriate journals being processed.	2017	Good progress has been made to improve the financial controls and manage risks over the last year. A new General ledger Journal Entry Policy was implemented across the Council Group in February 2020. This aims to improve controls and manage risks. The materiality level for detailed review of journals was set at $10k, which is considered reasonable in this context. Information is available to the reviewer for journals below $10k if a more detailed review is required. CFT will discuss this matter further with the auditors. There will also be a further review undertaken to consider the risks of incorrect and inappropriate journals being posted.
3	Discovery of One Undisclosed Interest CFT ensures that all interests are fully disclosed.	2016	Trustee (resigned early 2019/20) and was a partner in a law firm, and a trustee on numerous Trusts. There were no transactions between CFT and this interest. Board members are reminded at each meeting to update their interest disclosures.
4	Compliance with Sensitive Expenditure Policy CFT ensures that sensitive expenditure is in line with policy	2020	The Council’s Sensitive Expenditure Policy was changed in February 2020 which prohibits the purchase of alcohol as a general rule, with some exceptions provided for. The transaction selected by Audit NZ complied with the previous Sensitive Expenditure Policy applying at the time of the transaction but not with the new policy. Board members have been reminded of the need to comply with the current policy.
5	Performance Measures CFT revises the relevant performance measures to reflect ongoing maintenance of the current buildings or levels of services achieved by current building.	2020	All measures have been reviewed for their future relevance as part of current SOI process. CFT will discuss any updates with the auditors prior to finalisation of the SOI 30 June annually.

Uncorrected misstatement

6. In 2018/19 the Trust capitalised $113k of retention costs related to work on the Stokes valley Community Hub and Fraser Park Sportsville. A corresponding liability for asset retentions was raised. The retentions were not paid due to issues with the completed works and expected costs of remedial work. The Trust reversed the liability by increasing revenue.

7. The auditors disagreed with this accounting treatment and recommended reversing the revenue entry and an increasing the asset revaluation reserve.

8. Officers agree that this correction was required. There were difficulties in working through this retention matter which was unusual in nature. The amount was not considered to be material for the Annual Report.

Climate Change Impact and Considerations

9. There are no climate change impacts or considerations arising from this report.

Legal Considerations

10. There are no legal considerations arising from this report.

Financial Considerations

11. The financial considerations are detailed in Appendix 1 to this report.

Appendices

No.	Title	Page
1 ⇩	Appendix 1: Hutt City Facilities Trust Report to the Board YE 30 June 2020	40

Author: Sharon Page

Senior Management Accountant

Reviewed By: Darrin Newth

Financial Accounting Manager

Approved By: Jenny Livschitz

Chief Financial Officer

Priority	Priority
Priority	Urgent	Necessary	Beneficial	Total
Open matters from prior year	0	8	0	8
Matters resolved	0	-2	0	-2
New matters in current year	1	1	0	2
Current open matters	1	7	0	8

5. The table below provides an overview of the current open matters:

No	Audit NZ recommendation	Year First Raised by Audit NZ	Officer update
1	Preparation of the annual report Draft annual report was not provided on time (similar to previous years).	2015/16	The timeline agreed to was that the full UPL Group Annual Report would be delivered by 6 July 2020. This was largely driven by audit resourcing constraints in August. This timeline was very optimistic but practically not achievable. For the next audit, officers will aim to agree a more realistic timetable with audit which ensures there is sufficient time to complete full quality control processes.
2	Journals review UPL engages with the Finance Team to analyse and document the different types of journals processed to understand the risk of incorrect or inappropriate journals being processed.	2017/18	Good progress has been made to improve the financial controls and manage risks over the last year. A new General ledger Journal Entry Policy was implemented across the Council Group in February 2020. This aims to improve controls and manage risks. The materiality level for detailed review of journals was set at $10k, which is considered reasonable in this context. Information is available to the reviewer for journals below $10k if a more detailed review is required. UPL will work with the auditors to undertake a further review and understand the concerns and risks.
3	Legislative compliance UPL reviews its systems, policies and procedures to ensure that it has an appropriate legislative compliance system in place to ensure compliance with all relevant legislative requirements.	2017/18	Work will commence in the second half of 2020/21 to develop and implement a framework for staff and Board reporting. UPL will seek feedback from the auditors once this framework has been developed.
4	Sensitive expenditure policy UPL looks to separately specify guidelines and procedures for gifts and koha payments to non-employees; and ceases reimbursement of alcohol purchases through travel expenses - in line with Council’s policy.	2017/18	UPL abide by the Council’s sensitive expenditure policy with the exception of some variations defined in UPL’s sensitive expenditure policy. Management agree with the need to review the sensitive expenditure policies in light of the new OAG good practice guidelines. The board will be considering these policies in the second half of 2020/21 to ensure they are appropriate.
5	Conflicts of interest Extension of the interest register to other key employees.	2017/2018	Management have extended the interest register and now require all employees to disclose their interests. These interests will be updated twice annually.
6	Assessment of fair values and impairment. An independent valuation of land and buildings was completed as at 31 May 2020. An impairment assessment was not necessary. Audit NZ plan to follow this up again next year due to the strong growth in prices sales for residential properties in the Hutt region.	2017/2018	Management agree with the need for more frequent valuations while residential property prices remain strong.
7	Contract not signed A sub-lease agreement between HCC and UPL was not signed, with the premises having been occupied.	2019/2020	The sub-lease has now been signed, and the matter is now closed.
8	Accounting for GST on sales of commercial developments The initial recording of revenue on most properties in 2019/20 was inclusive of GST, and therefore non-compliant with generally accepted accounting policy .A subsequent adjustment in both the Limited Partnership and Group accounts was required.	2019/2020	Management immediately reviewed how this occurred and implemented improvements to processes. Additional evidence is now sought upon receipt of settlement funds and captured correctly through the bank reconciliation process. Further, additional processes and checks are in place during the monthly reporting process to ensure the correct GST treatment of property development sales. Council has subsequently made a voluntary disclosure and this matter has now been settled with the IRD. The PWC tax compliance review work to undertaken this year will include a focus on GST compliance. This review will be undertaken across the Council Group. This work is expected to be completed in March 2021 and will be reported to the Audit and Risk Subcommittee.

Climate Change Impact and Considerations

6. There are no climate change impacts or considerations arising from this report.

Legal Considerations

7. There are no legal considerations arising from this report.

Financial Considerations

8. The financial considerations are detailed in the Appendix to this report.

Appendices

No.	Title	Page
1 ⇩	Appendix 1: UPL Report to Governors - Final	68
2 ⇩	Appendix 2: UPL DL Report to Governors - Final	93
3 ⇩	Appendix 3: UPL LP Report to Governors - Final	107

Author: Simon George

Senior Accountant

Author: Darrin Newth

Financial Accounting Manager

Reviewed By: Daniel Moriarty

Portfolio Manager, Urban Plus

Approved By: Jenny Livschitz

Chief Financial Officer

127 25 February 2021

Audit and Risk Subcommittee

15 February 2021

File: (21/230)

Report no: ARSC2021/1/40

Petone Wharf Temporary Closure and Next Steps

Purpose of Report

1. For the Audit and Risk Subcommittee to discuss this update on the temporary closure and next steps for Petone Wharf.

2. For the Subcommittee to note that a report is to be prepared and provided to the meeting on 23 April 2021 titled Petone Wharf Process and Risk Management of Repairs and Remediation. This report will focus on the risk management of repairs and remediation reflecting lessons learned from previous wharf refurbishments.

Recommendations

That the Audit and Risk Subcommittee receives and notes the update on the Petone Wharf temporary closure and next steps.

Petone Wharf Temporary Closure

3. A summary history of Petone Wharf is included in a report to the Long Term Plan/Annual Plan Subcommittee meeting held 10 February 2021. Refer to page 312 on the following link: http://infocouncil.huttcity.govt.nz/Open/2021/02/LTPAP_10022021_AGN_2879_AT.PDF

4. Two moderate earthquakes on 31 December 2020 and 2 January 2021 contributed to a number of piles underneath Petone Wharf failing causing severe slumping in the deck of the wharf. Calibre Engineering undertook a visual inspection of the structure on 2 January and confirmed the wharf was safe to remain open but urgent investigations needed to be completed.

5. Calibre Engineering was engaged to coordinate this detailed assessment.

6. To prevent further slumping, temporary support props were installed on 5 January 2021 that allowed continued public access and to mitigate the safety factors.

7. Specialist contracting firms G K Shaw and Undersea Construction Ltd were engaged to provide engineering advice and undertake a preliminary dive survey on the section affected by the slump to ascertain the extent of damage and possible urgent works.

8. A preliminary scope of works and cost estimate for urgent repairs was prepared as a result of the initial dive survey. The cost of the work was estimated to be $400,000 plus professional fees. This work is designed to ensure the wharf continues to operate safely.

9. While this work is essentially bringing forward planned maintenance, additional maintenance work is still needed over the next 12 months, if major refurbishment is not undertaken in the short term, to ensure the wharf continues to operate safely. This was advised in the officer’s report to the Long Term Plan/Annual Plan Subcommittee on 21 December 2020. Please refer to page 276 on the following link: http://infocouncil.huttcity.govt.nz/Open/2020/12/LTPAP_21122020_AGN_2864_AT.PDF

10. Given the urgency and safety of the work, approval was sought from the Chief Executive, to engage G K Shaw to commence repairs. This started on 11 January 2021. The budget for the earthquake damage is being covered by bringing forward $450,000 from the allocated 2021/22 budget of $800,000. The Council approved this budget transfer to 2020/21 on 10 February 2021.

11. Undersea Construction Ltd completed a visual dive survey of the wharf piles on the approach. This was already proposed as part of the detailed assessment, but was brought forward.

12. The detailed dive survey of the approach, was submitted to officers on 18 January 2021. It revealed that 40% of the piles on the approach section of the wharf (from the shoreline for a distance of approximately 270m along the wharf) to be in poor or very poor condition.

13. Calibre Engineering recommended that the wharf be closed to public access and until repairs could be made. This action was taken on 18 January 2021 and an email sent to governance that evening. The public was informed through usual media channels and this was shared widely with associated media coverage.

14. The decision document to close the wharf, a copy of the engineer’s letter and pile condition survey can be found on the following link: http://www.huttcity.govt.nz/Your-Council/News-and-notices/media-releases/petone-wharf-closure-for-urgent-repairs/

Current Work

15. Emergency works are progressing as planned and at this stage are likely to be within the estimated budget of $450k. The early time estimate of an eight week closure however is likely to push out for an additional two weeks.

Draft 2021-2031 LTP

16. Council agreed at its meeting on 10 February 2021 following recommendations from the LTP/AP Subcommittee to include options on Petone Wharf as part of the public consultation on the draft 2021-2013 Long Term Plan.

17. Council is proposing to accelerate the major refurbishment of Petone Wharf including the demolition of part of the outer concrete head by bringing forward the project from 2032 to 2021-2023. This would mean that the wharf would be closed for approximately two years in the short term but would greatly limit any future closure requirements and provide a wharf that is safer for public use. An alternative option of leaving the major refurbishment in 2032 and completing safety maintenance works periodically is also proposed as part of the consultation. An extract from the draft consultation document (pre-audit) is attached as Appendix 1 to the report.

18. While Council will not receive the detailed condition assessment of the wharf until April 2020 an initial rough order cost estimate of $14M has been provided by engineers based on predicted condition and knowledge from recently completed works on Days Bay Wharf. Due to the high level of uncertainty and risk associated with working in a marine environment a provisional cost range of $15M to $20M will be used for consultation purposes.

Next Steps

19. A detailed inspection and condition survey of the entire wharf has been commissioned from Calibre which is scheduled to be received in early April. This will provide a scope of works and cost estimate for major refurbishment accounting for the lessons learnt from previous works completed on Rona Bay and Days Bay wharves.

20. Officers are also commissioning a Quantitative Risk Assessment (QRA) on the project which will quantify all cost risks of the project, in a similar manner as was completed for the Naenae Pool project.

21. This information along with consultation results will be presented to Council in time for final Long Term Plan deliberations.

Climate Change Impact and Considerations

22. The matters addressed in this report have been considered in accordance with the process set out in Council’s Climate Change Considerations Guide.

Legal Considerations

23. There are no legal considerations at this time.

Financial Considerations

24. These are noted in reports to the LTP/AP Subcommittee. Please refer to page 312 on the following link: http://infocouncil.huttcity.govt.nz/Open/2021/02/LTPAP_10022021_AGN_2879_AT.PDF

Appendices

No.	Title	Page
1 ⇩	Appendix 1: Draft Information for Long Term Plan Consultation	128

Author: Marcus Sherwood

Head of Parks and Recreation

Reviewed By: Jenny Livschitz

Chief Financial Officer

Approved By: Jo Miller

Chief Executive

Page 136

Audit and Risk Subcommittee

26 January 2021

File: (21/77)

Report no: ARSC2021/1/31

Eastern Bays Shared Path Project Update

Purpose of Report

1. To update the Subcommittee on the Eastern Bays Shared Path.

Recommendations

That the Subcommittee:

(1) notes and receives the information contained in the report;

(2) notes the Procurement Programme attached as Appendix 2 to the report;

(3) notes the updated Project Risk Register attached as Appendix 1 to the report; and

(4) notes that public consultation on funding for the Eastern Bays Shared Path project was deferred due to the COVID-19 pandemic and that funding has now been included in the draft Long Term Plan (LTP) 2021-2031 that is subject to public consultation in March 2021 prior to inclusion in the final LTP 2021-2031 to be adopted by Council on 30 June 2021.

For the reason that the report is consistent with Council policies and processes around project management.

Background

2. The completion of an Eastern Bays Shared Path (the Project) has been an aspiration for Hutt City Council and its residents for many years. The shared path has featured in past strategies and is a key project in providing a safe and integrated network for commuting and recreational purposes.

3. The Project forms a key part of the Te Aranui o Poneke (the Great Harbour Way), a walking and cycling route around Te Whanganui-a-tara, the harbour of Wellington. Work is currently progressing on a number of projects around the harbour including Waka Kotahi’s Te Ara Tupua to complete this route.

4. A 2014 Eastbourne Community Survey identified that the completion of the Eastern Bays Shared Path as the most important local issue alongside climate change by residents.

5. Extensive community engagement has been undertaken in 2016 and late 2017 before the Resource Consent was submitted to Greater Wellington Regional Council (GWRC) in early 2019. Updates to the community following submission have been provided to the community via the Eastbourne Community Board and the current Chair has been involved with the Project since 2016.

6. The Resource Consent was notified by GWRC in early 2019 and received over 200 submissions. The majority of these were supportive of the Project.

7. Public consultation on funding for the Project was due to start in early April 2020 as part of the Annual Plan/LTP amendment process. However, due to the Covid-19 pandemic, the amendment was put on hold and Council instead agreed to an emergency budget for the Annual Plan 2020/21. As part of this process funding for the Project was pushed out a number of years.

8. In April 2020, the Government launched the Covid Response and Recovery Fund seeking infrastructure projects for potential investment to reduce the economic impact of the pandemic. The Eastern Bays Shared Path project was successful in receiving co-funding of up to $15M, which will be managed through Crown Infrastructure Projects (CIP).

9. The Project also remains eligible for the New Zealand Transport Agency Waka Kotahi (Waka Kotahi) subsidy on the balance of the project at a Funding Assistance Rate (FAR) of 51%, subject to satisfying the gateways required.

10. Funding for the Project has now been included in the draft LTP 2021-2031, which will go to public consultation in March 2021. The final LTP 2021-2031 is planned to be adopted by Council on 30 June 2021.

11. The main benefit sought by CIP is job creation, with the Project expected to create the equivalent of 100 full time jobs. A series of project milestones have been agreed and the project will receive co-funding instalments at the completion of each milestone.

12. As a requirement of the Funding Agreement, officers have advised CIP that Council have approved co-funding of the Project which will be included in the draft Long Term Plan 2021-2031. (Minute No. LTPAP 20503)

13. In October 2020 the Project Plan and Terms of Reference for the Eastern Bays Shared Path project were created. They include details on roles and responsibilities at each level of the project structure.

14. The project will be overseen by the Project Board established for Naenae Pool which will make decisions within the defined limits of the project as delegated by Council. The Project Board will meet monthly from November 2020. The Chief Financial Officer and Chief Legal Officer will attend Project Board meetings to provide advice

Discussion

Project Update

15. The Hearing for the Project was held with GWRC on the 15 – 17 December 2020 with a decision likely in mid to late February 2021.

16. Closing submissions and the final draft of consent conditions from Buddle Findlay (legal counsel) were submitted to the Hearing Commissioners on the 22 January 2021.

17. Discussions have been undertaken on the establishment of a Mana Whenua Steering Group (MWSG) and a draft Terms of Reference (TOR) is being reviewed and aligned with the current consent conditions by the legal counsel. It is intended that the MWSG be aligned with Te Ara Tupua.

18. The establishment of the MWSG will be fundamental given their input into a number of management plans which have tight timeframes to achieve commencement of construction.

19. The Project Team are currently in the process of compiling a task plan which covers the post Hearing to Procurement phase given the number of consent conditions which require satisfying prior to construction.

20. This task plan also forms the basis of the Procurement Programme attached as Appendix 2 to the report.

21. An experienced industry multi-disciplinary Project Manager is yet to be engaged to assist in the management side of the project in conjunction with the Hutt City Council Project Manager and the Project Team.

Risk

22. The updated Project Risk Register is attached as Appendix 1 to the report. The key risks remain as follows:

· Consenting risks and the changing regulatory landscape and policies;

· Managing the uncertainties around project cost (including consent mitigation costs, meeting the requirements of crown funding and the uncertain economic environment due to Covid-19).

· Ecology mitigation

23. The latest set of draft consent conditions compiled by the Project Team and submitted to GWRC following the Hearing addresses and reduces these risks.

Financial considerations

24. Council has budgeted $30M for the Project (including contingency) for both consenting and the construction phases. Central government is expected to co-fund $22.9M (being up to $15M from the Covid-19 Response and Recovery Fund and $7.9M from Waka Kotahi) and the balance of $7.6M to be funded by Council.

25. Following the cost estimate peer review completed in October 2020 by an external and independent Quantity Surveying (QS) provider on the Prelim Design (Rev J), a re-estimate was undertaken in November 2020 on the developing detailed design, which is now 80% complete and has been running in parallel with the consenting work. This re-estimate included the latest design information, updated quantities and the content of the QS review.

26. The remaining 20% of the detailed design is being undertaken post Hearing with the majority of the known costs being included in the re-estimate.

27. The updated interim detailed design project budget therefore is $29.43M including all contingencies of $6.13M.

28. The Year to Date expenditure to December 2020 is $607k of an expected Year End forecast expenditure of $1M, which matches the adjusted budget for 2020/21.

29. The Financial tables 1 and 2 that follow show the budget in the draft LTP 2021-2031. The public consultation on the draft LTP is planned for the period 29 March 2021 to 3 May 2021. The final LTP 2021-2031 is scheduled for adoption by the Council on 30 June 2021.

30. In line with the Council’s Revenue and Financing policy, the Council’s share of the capital expenditure will be funded from borrowing. The phasing of the proposed budgets for the LTP has been aligned with the signed crown funding agreement.

Table 1: Revenue/Funding sources - Comparison of AP 2020/21 and Draft LTP

Financial year $M	2020/21	2021/22	2022/23	2023/24	2024 /25	2025-2031	Total
Draft LTP 2021-2031	0.51	3.78	2.64	4.53	3.78	7.67	22.91
Further details: Waka Kotahi subsidy funding	0.51	1.28	0.89	1.53	1.28	2.42	7.91
Covid response and recovery co-funding*		2.50	1.75	3.00	2.50	5.25	15.00

*Covid Response and Recovery co-funding pays for $15M share of the Capital outlay of $30M

Table 2: Capital budgets – This is aligned with the signed crown funding agreement

Financial year

2020/21

2021/22

2022/23

2023/24

2024/25

2025-2031

Total

Draft LTP 2021-2031

1.00

5.00

3.50

6.00

5.00

9.50

30.00

Climate Change Impact and Considerations

31. The matters addressed in this report have been considered in accordance with the process set out in Council’s Climate Change Considerations Guide.

Communications and Consultation

32. Extensive community engagement has been undertaken in 2016 and late 2017 before the Resource Consent was submitted to GWRC in early 2019. Updates to the community following submission have been provided to the community via the Eastbourne Community Board and the current Chair has been involved within the Project Team since 2016.

33. Further community engagement is planned once the project has consent to complete the remaining Detailed Design and the Management Plans as noted in the current draft conditions of consent.

Legal and Regulatory

34. Currently only the legal agreement entered into is with CIP, which has specific requirements for Council to meet to receive government funding.

Appendices

No.	Title	Page
1 ⇩	Appendix 1: Eastern Bays Shared Path Risk Register	137
2 ⇩	Appendix 2 - Eastern Bays Shared Path Procurement Programme - February 2021	139

Author: Simon Cager

Senior Project Engineer

Author: John Gloag

Head of Transport

Reviewed By: Jenny Livschitz

Chief Financial Officer

Approved By: Kara Puketapu-Dentice

Director Economy and Development

145 25 February 2021

Audit and Risk Subcommittee

05 February 2021

File: (21/168)

Report no: ARSC2021/1/30

RiverLink Update

Purpose of Report

1. The purpose of this report is to update the Subcommittee on the RiverLink project

Recommendations

That the Subcommittee:

(1) notes and receives the information contained in the report;

(2) notes the updated Project Risk Register attached as Appendix 1 to the report; and

(3) notes that the review of cost estimates for the RiverLink project is currently underway by an independent quantity surveyor and expected in March 2021.

Background

2. RiverLink is a transformational project for Hutt City by improving resilience, connectivity, growth, ecological and wellbeing issues facing the city. It is a project that embraces and celebrates the spirit of its taonga, Te Awa Kairangi /Hutt River.

3. RiverLink is a collaborative partnership between Greater Wellington Regional Council (GWRC), Hutt City Council (HCC), Waka Kōtahi and Mana Whenua partners Ngāti Toa Rangitira and Taranaki Whānui ki te Upoko o te Ika (Port Nicholson Block Settlement Trust).

4. The overall project and HCC’s objectives are set out below.

5. The draft overall RiverLink project objective is for the integration of flood protection, transport and urban regeneration works between Ewen Bridge and Kennedy Good Bridge, including:

a. Enhanced flood protection for Lower Hutt's city centre and adjacent residential areas;

b. Enhanced connections on SH2 at Melling and linkages to local transport connections;

c. Enhanced amenity and connections so that Te Awakairangi becomes the centre piece of the city; and

d. The identity of Te Awakairangi and mana whenua within the project area is enhanced through design and the practice of kaitiakitanga.

6. The draft RiverLink project objectives for HCC are that Te Awa Kairangi between [Ewen Bridge and Kennedy Good Bridge] becomes the centre piece of the city by:

a. Enhancing walking and cycling connections to and within the river corridor and between the Hutt city centre and the relocated Melling train station;

b. Providing a promenade atop new eastern stop-banks; and

c. Enabling future mixed use development and public space that connects with the promenade and re-orientates the Hutt city centre to the river corridor.

7. The Project is to be completed in the following three phases:

· Phase 1 - the current phase, is the planning, design and consenting phase of the project, and includes all works required to acquire the necessary environmental approvals for the project. It is anticipated to run through to 2022;

· Phase 2 is the delivery of the capital project, including the detailed design and construction stages and is anticipated to run through 2022-2028, and

· Phase 3 is the phase of the project following the conclusion of construction under phase 2, which focusses on urban renewal of the Hutt City riverside and CBD, including the implementation of the post-construction goals.

8. Funding of $57M (all numbers are inflated) for the Project was included in the 2018-2028 Long Term Plan (LTP). Further capital investment of $64.5M is being included in the draft 2021-2031 LTP, which will go to public consultation in March 2021. The final 2021-2031 LTP is planned to be adopted by Council on 30 June 2021.

9. In August 2020 the Project Plan and Terms of Reference for Hutt City Council’s component of the RiverLink project were created. They include details on roles and responsibilities at each level of the project structure. With the appointment of the new Hutt City Council RiverLink Project Manager, the Terms of Reference is currently being reviewed.

10. The overall RiverLink project is overseen by the RiverLink Project Partner Board which includes two representatives each from the three partner entities (Greater Wellington Regional Council, Hutt City Council and Waka Kōtahi New Zealand Transport Agency).

11. The RiverLink project will also be reporting into an internal Hutt City Council Project Board established for the Naenae Pool project which will make decisions within the defined limits of the Project as delegated by Council.

12. Membership of the internal Hutt City Council Project Board includes Council Committee Chairs, Mayor, Deputy Mayor, Chief Executive, Project Sponsors, Chief Financial Officer and the Chief Legal Officer.

Discussion

Project Update

13. The RiverLink Project Office has been working with the consultant team to finalise the design for the project which is near completion. An update will be provided to the RiverLink Project Partner Board at the 18 February meeting.

14. The new stop bank design has been considered as a part of a development study which explored the development potential within particular sections of Daly Street.

15. Geotechnical investigations along Daly Street were completed on 24August. The investigations found that the ground conditions were not favourable for high rise buildings and that construction over five storeys high would require the piling of foundations into the Waiwhetu aquifer.

16. A preferred realignment route for Marsden St (Western side of Te Awa Kairangi) route has been developed which will require land currently owned by GWRC. The realignment of Marsden St will enable the construction of the Western stop banks of Te Awa Kairangi.

17. Waka Kotahi is still considering their preferred design option for the new Melling Bridge. HCC and Waka Kōtahi are exploring design options at key interface points between Queens Drive and the new Melling Bridge.

18. An independent quantity survey of all components of the Project, incorporating the new design elements is currently underway. The quantity survey work is due to be completed in March 2021.

19. The project partners have agreed in principle to a ‘hybrid alliance’ delivery model for RiverLink. The commercial framework and memorandum of understanding are currently under development. A workshop with HCC and GWRC Councillors is planned to take place in March.

Risk

20. The updated Project Risk Register is attached as Appendix 1 to the report. The key risks remain as follows:

a. Managing the relationship among partner organisations.

b. Hutt City Council does not achieve the objectives and deliverables expected from the Riverlink project - against stakeholder expectations, needs and outcomes for the city.

c. Managing the uncertainties around the allocation and availability of sufficient budget to deliver project.

21. The introduction of a rotating Chair has assisted in reducing the risk of the relationship among partner organisations. The most recent open days have provided insight into stakeholder and community outcomes for the city and the quantity surveying work to be completed in March will provide clarity on the budget required to deliver the project.

Project Milestones

Milestone	Date	Status
Commence briefing of Assessment of Alternatives	24^th August 2020	Completed
Board endorsement of assumptions and alternatives (and design scope freeze 1)	14^th October 2020	Approved by Board
Commence Assessment of Environmental Effects drafting	18^th November 2020	In progress
First Community Engagement	28^th November 2020	Completed
Commence establishment of structure for project delivery	26 January 2021	In progress
Lodgement of consents	May 31 2021 (TBC)	In progress
Commencement of construction - Melling Transport Improvements, Flood Protection works) - *early works packages are being considered by GWRC	October 2022 (TBC)

Financial Considerations

22. As a part of the 2018-2028 LTP, Council agreed to a budget of $57M for the design, consenting and delivery of the RiverLink Project. An increase of $64.5M is being sought as a part of the draft 2021-2031 LTP. This brings the total budget from $57M to a proposed $121.5M.

23. The increased capital investment includes:

a. Further property purchases

b. Upgrades to the local transport network including connections with Melling Bridge

c. Cost increases associated with the pedestrian bridge and the river edge / promenade construction and enhancements

d. Provision of project contingency

e. Project delivery costs

24. Co-funding from Waka Kōtahi (for roading projects) and revenue from the sale of surplus land in later years is expected to be $27.5M.

25. Table 1 below shows the budget in the draft LTP 2021-2031. The public consultation on the draft LTP is planned for the period 29 March 2021 to 3 May 2021. The final LTP 2021-2031 is scheduled for adoption by the Council on 30 June 2021.

26. In line with the Council’s Revenue and Financing policy, the Council’s share of the capital expenditure will be funded from borrowing and rates.

Table 1: 2021/31 Draft LTP Budget for RiverLink

Financial year

2020/21

2021/22

2022/23

2023/24

2024 /25

2025-2031

Total

Draft LTP 2021-2031

2.72

10.90

25.09

23.67

20.79

38.32

121.49

Partners and Stakeholders

27. A high level external stakeholders and partners list has been developed:

· Partners

o Greater Wellington Regional Council

o Hutt City Council

o Waka Kōtahi

· Iwi Partners

o Taranaki Whānui; and

o Ngāti Toa

· Stakeholders

o Residents and business alongside the river edge;

o Hutt City rate payers and residents;

o General public regional/national;

o Local Schools; and

o Media.

Climate Change Impact and Considerations

28. The RiverLink Project seeks to ensure greater resilience for Hutt City against flooding and the effects of climate change. The designs for the Project have taken into account climate change modelling for the Hutt River / Te Awa Kairangi.

Communications and Consultation

29. Extensive community engagement has been undertaken since 2016 on the RiverLink project with open days, workshops, online and printed media. In November 2020 and February 2021 the project office undertook open days in order to inform the resource consenting process. Over 400 people participated in the open days.

Legal Considerations

30. The only legal agreement HCC has entered into is the RiverLink Project Partner Agreement which sets out each partner’s responsibilities and requirements for the partnership.

Appendices

No.	Title	Page
1 ⇩	Appendix 1: Riverlink Risk Register - February 2021	146

Author: Jenny Livschitz

Chief Financial Officer

Author: Kara Puketapu-Dentice

Director Economy and Development

Approved By: Jo Miller

Chief Executive

150 25 February 2021

Audit and Risk Subcommittee

15 February 2021

File: (21/233)

Report no: ARSC2021/1/41

External audit update - Hutt City Council

Purpose of Report

1. To provide an update on the audit arrangements for the Long Term Plan 2021-2031.

2. To provide an update on the Audit NZ management report on the audit for the Group Annual Report 2019/20.

3. The Audit New Zealand Audit Director will attend the Subcommittee meeting.

Recommendations

That the Subcommittee:

(1) notes the Audit NZ engagement letter for the audit of the consultation document and Long Term Plan 2021-2031, attached as Appendix 1 to the report; and

(2) notes Audit New Zealand’s management report on the audit of the Group Annual Report 2019/20 has not been delivered to Hutt City Council as yet and will be reported at the next Audit and Risk Subcommittee meeting.

Audit plans for Long Term Plan 2021-2031

4. The engagement letter for the audit of the consultation document and Long Term Plan 2021-2031 as attached as Appendix 1 to the report. This letter covers

- the terms of the audit engagement and respective responsibilities of the Council and Audit NZ

- the audit scope and objectives

- the approach to be taken to complete the audit

- the areas of audit emphasis

- audit logistics

- professional fees;

5. The audit plan notes that the main focus areas for the audit include:

o Impact of the economic downturn caused by Covid-19 on Council’s forecasts

o Financial strategy and infrastructure strategy

o Assumptions

o Quality of asset-related forecasting information.

6. The high level audit plan and deliverables are in line with the Council’s project plan. The next key milestones are

	Deliverable	Date
1.	Verbal audit clearance	11 March 2021
2.	Audit opinion on consultation n document for adoption	22 March 2021

Update on the audit of the Group Annual Report 2019/20

7. The Group Annual Report 2019/20 was successfully approved by Council on the 21 December 2020 and the audit opinion issued. This was ahead of the statutory deadline of 31 December 2020.

8. The Audit NZ interim management report for the year ended 30 June 2020 was reported to the Audit and Risk Subcommittee on the 17 September 2020. It was noted in the report that there had been good progress achieved in closing out long-standing audit recommendations. The table that follows provides a summary of all the items closed out.

	Audit NZ recommendation	First raised by ANZ	Date reported as closed per ANZ
1.	Information and communications Technology Policies require review	2016/17	Dec 2019
2.	Lack of formal documentation of cost allocation percentages	2016/17	Dec 2019
3.	Revenue from the pools and Dowse – reconciliation process	2015/16	Dec 2019
4.	Creditor and payroll Masterfile changes	2018/19	July 2020
5.	Process for reviewing policies	2017/18	July 2020
6.	Annual review of network access rights not performed	2016/17	July 2020
7.	Financial delegations policy and related controls	2015/16	July 2020
8.	Property, plant and equipment – policy and procedure improvements	2014/15	July 2020

9. The final Audit NZ management report for the Group Annual Report 2019/20 has not been received by HCC as yet. It is expected to be reported to the next Audit and Risk Subcommittee meeting. There are further audit recommendations which are expected to be closed out.

Climate Change Impact and Considerations

10. The matters addressed in this report have been considered in accordance with the process set out in Council’s Climate Change Considerations Guide. There are no climate change impacts or considerations arising from this report.

Legal Considerations

11. There are no legal considerations arising from this report.

Financial Considerations

12. The financial considerations are detailed in this report in the relevant areas.

Appendices

No.	Title	Page
1 ⇩	Appendix 1: LTP 2021-2031 audit engagement process	151

Author: Jenny Livschitz

Chief Financial Officer

Author: Matt Boggs

Director, Strategy and Engagement

Approved By: Jo Miller

Chief Executive

173 25 February 2021

Audit and Risk Subcommittee

05 February 2021

File: (21/159)

Report no: ARSC2021/1/19

Kerbside Rubbish & Recycling Implementation Project

Background

1. This is a brief report on the identified risks and issues associated with the implementation of the Kerbside Rubbish & Recycling Project (the Project).

2. The Project Manager (Bruce Hodgins, Strategic Advisor) reports weekly to a Project Board, comprising Helen Oram, Director Environment and Sustainability (the Project Sponsor), Andrea Blackshaw, Director Neighbourhoods and Communities and Jörn Scherzer, Sustainability and Resilience Manager. The Project Board monitors progress and provides project oversight and governance.

3. The Project reports to Council through the Climate Change and Sustainability Committee, which will receive regular updates at its meetings.

4. The Audit and Risk Subcommittee will also receive regular updates for project assurance purposes.

Recommendation

That the Subcommittee notes and receives the report.

Update

5. A brief update of the progress of the Project is as follows:

· The project team has been planning and working on the implementation with good progress in most areas. Two aspects that have had some delays are: Multi-unit development (MUDs) assessments have taken longer than expected and Business As Usual (BAU) systems design was delayed. These are commented on separately further in the report.

· Communications were ramped up in December 2020 to address issues raised about the new service through social media.

· In January 2021, the “Feet on the Street” campaign was launched, which got officers out in the community to encourage ratepayers to make their bin selections.

· As at close-off of bin selection on 31 January 2021, over 65% of ratepayers had selected their bins, exceeding the Project Board’s target for a 50% overall response rate. A sample of around 200 ratepayers who did not make a selection is being contacted to identify reasons for not doing so. (We suspect many would have decided that they were happy with the default options but cannot be certain of this.) We are interested in finding out how many ratepayers did not know about the new planned kerbside services and/or bin selection process to see what changes in our communications we may need to make to ensure a wider reach and thereby minimise enquiries and complaints during the roll out period.

· An initial bin order was made with the bin supplier Rotaform, through Waste Management, in December 2020, with the final order placed on 3 February 2021. Bins and crates are due to arrive in a local warehouse in Seaview in March 2021, in preparation for the assembly and roll-out.

· Multi-Unit Developments (MUDs) have been visited by Council and Waste Management staff to work out appropriate solutions for each site. This has proven to be complex and will take until the end of February 2021 to complete, as it requires sign off from MUD owner representatives. The delay has not impacted bin ordering and will be completed in time for the bin roll-out.

· A comprehensive engagement and communications plan has been formulated and is being actioned. This is attached as Appendix 1 to the report.

· Workshops on the development of BAU processes for 1 July 2021 commenced February 2021. This series of workshops is to understand the requirements for a system to manage kerbside collection. It will include the following aspects and their related processes:

o Selection of a bin for a new build

o Changing an existing bin selection

o Interfacing to WMNZ for communication of the above

o Interfaces to the rates teams for rates setting

o Interfaces to the debtors system to allow charges for changes to bin sizes during the year

o Managing customer complaints and enquiries

Note that for the implementation phase, bin selection was undertaken via the existing Saberonline rates portal. Saberonline may be used for the BAU kerbside processes, but at this stage we are keeping an open mind on what will be best for the long term.

· Meetings are held fortnightly with Waste Management Limited to coordinate implementation. This meeting includes an update on a range of standing items including bin roll-out, vehicles, MUDS, assisted services, green waste services, engagement and communications, school roll-out of recycling and recycling education. At the most recent meeting Rotaform representatives were in attendance to go through its plans for manufacture and delivery of the crates and bins. Attached as Appendix 2 is a copy of its roll-out plan.

· Owners of the rural properties on Coast Road, Wainuiomata have been individually contacted this month to outline the proposed solution for servicing this road. There are specific safety issues which officers have had to consider given its 80kmh speed limit.

Risks and Issues

6. The following table outlines the risks and issues, which are reported regularly as part of a wider project update to the Corporate Leadership Team. The main risk to the project has been, from the beginning, that of having sufficient resourcing to have the service up and running within a tight timeframe.

7. Resourcing requirements are regularly reviewed and to this end a budget variation will be sought from the Policy, Finance and Strategy Committee to ensure effective implementation of the new services.

8. A copy of the risk register is attached as Appendix 3 to the report.

Risk	High, Med, Low	Risk Mitigation
COVID-19 resurgance (or other pandemic) resulting in lockdown, restricts ability to roll-out bins in time for start of service on 1 July.	Med	Obtain clearance from MBIE to classify roll out as an essential service to enable roll-out to commence or continue. Arrangement in place with rubbish bag supplier to provide bags at short notice for distribution throughout the City should they be required.
Bins or vehicles not available on time to commence the service on 1 July	Low	Contingency plans in place with WML to secure vehicles and bins from its existing operations in NZ and with bag supplier should bins not be available.
BAU software and processes in place on time to commence the service on 1 July	Low	Arrangements to be put in place with Saber, used for the initial bin capture process, for its software to be made available for BAU.

Issue	High, Med, Low	Issue Mitigation
Possibility of misinformation circulated from those with a vested interest.	Med	Provide Council and the community with factual independent advice based on the business case and sound data.
Increased opposition to the new services generated through social media and other means.	Med	Coordinated information campaign is in place to ensure reasons for change are clearly outlined and appropriately socialised.
Adequate resourcing required to ensure roll-out occurs on time.	Med	Additional people resources, either new or re-prioritised from existing resources, assigned to the project. Budget variation sought.
Organisational change programme impacts project through loss of key staff or staff engagement generally.	Med	Managed change programme in place. Key staff separately contracted.

Appendices

No.	Title	Page
1 ⇩	Appendix 1 Communications and Engagement Plan	174
2 ⇩	Appendix 2 Rotaform Roll Out Plan Summary	177
3 ⇩	Appendix 3: Kerbside Rubbish and Recycling Risk Register	178

Author: Bruce Hodgins

Strategic Advisor

Approved By: Helen Oram

Director Environment and Sustainability

MEMORANDUM 184 25 February 2021

Our Reference 21/95

TO: Chair and Members

Audit and Risk Subcommittee

FROM: Allen Yip

DATE: 28 January 2021

SUBJECT: Naenae Projects progress report

Recommendation

That the Subcommittee notes and receives the memorandum.

Purpose of Memorandum

1. To update the Subcommittee on the progress and management of the Naenae Project (Pool and Town Centre Development).

Background

2. In April 2019 Naenae Olympic Pool was closed to the public due to seismic issues.

3. Following extensive community engagement in December 2019 Council agreed to progress, subject to funding, a proposal to build a new pool and fitness suite on the site of, or adjacent to, the current pool. This required an amendment to the Long Term Plan and a consultation document was prepared with a projected capital cost of $54M.

4. Council also directed officers to urgently start work on a Spatial Plan for the wider Naenae town centre, and agreed to retain the $9M already budgeted for a community hub in Naenae to invest in other projects, as determined by the Spatial Plan.

5. In October 2020, a combined Naenae Pool and Spatial Plan Project was approved by the Corporate Leadership Team (CLT) to mitigate align project objectives and better manage the risks of managing two projects that have close dependencies.

6. The purpose of the project is to deliver:

a. An aquatic facility:

i. which responds to the voice of the community report in terms of meeting the needs of the community, aquatic sport and the wider Lower Hutt community.

ii. that fits within the existing Hutt and Wellington Region Aquatic network.

iii. that contributes to council’s sustainability and environmental strategies.

b. Other Council approved projects as identified in the spatial plan which contribute to the rejuvenation of the town centre.

7. Due to the Covid-19 pandemic, consultation on funding for the Naenae Pool project was not included in the Annual Plan 2020/21. Instead, funding for the Naenae Pool project is being included in the draft LTP 2021-2031, which will go to public consultation in March 2021. The final LTP 2021-2031 is planned to be adopted by Council on 30 June 2021.

8. The Naenae Pool project was successful in receiving co-funding of $27M, which will be managed through Crown Infrastructure Projects (CIP).

9. The Naenae Project Board meets monthly to monitor progress and provide project oversight and governance.

10. The Audit and Risk Subcommittee will receive updates every eight weeks to provide project assurance.

Project Update

11. The project initiation was approved by the Corporate Leadership Team (CLT) in February 2020. This enabled the project to engage a Project Manager and Engineer to the Contract for the project. In October 2020 the scope of the project was increased to include agreed projects from the spatial plan for Naenae’s town centre.

12. A Project Board has been established to oversee and direct the project. The Board meets monthly to monitor progress and to assist with decisions that are beyond the authority of the Project Manager.

a. The board is chaired by Project Sponsor Andrea Blackshaw, Director of Neighbourhoods and Community

b. It consists of Mayor Campbell Barry, Deputy Mayor Tui Lewis, Cr Simon Edwards, Cr Deborah Hislop, Cr Josh Briggs and Chief Executive Jo Miller. Meetings are also attended by the Chief Financial Officer, Chief Legal Officer and the Sponsor of the Spatial Plan elements of the project, Kara Puketapu-Dentice.

13. In December 2020, following a competitive process, AECOM were appointed to provide project management services.

14. One of their first tasks was to review the 2019 cost estimate ($54M) based on preliminary designs and assess probability of achieving the estimate given the time that has passed, increased understanding of the project scope and current economic conditions.

15. A Quantitative Risk Assessment (QRA) of the cost estimates was undertaken by members of the AECOM Quantity Surveyor and Risk teams along with Council officers on the 20 January.

16. This exercise is to inform the funding options recommended by the Board to the Long Term Plan/Annual Plan Subcommittee (the Subcommittee) for inclusion in the draft LTP 2021/31.

17. Procurement of the multi-disciplinary design team has started, with an advance notice being issued to proponents on the 13 January 2021. The RFP documentation, including a detailed scope of services is currently being prepared for issue the week commencing 10 February 2021.

18. Preparation of procurement documentation for the procurement of specialist consultants and demolition contractors will commence following the issue of the design team documentation.

Financial considerations

19. A cost plan for a new pool was prepared by Hawkins in June 2019, indicating a total projected cost of $54M. This was based on a preliminary designs and calculated using a combination of:

a. Calculations based on their experience of similar projects;

b. Quotes received for some elements where possible; and

c. Assumptions based on their experience of similar projects

20. In the past Council has estimated project costs differently, using an estimate on likely construction costs and materials on a “per square metre” basis, with additional percentage margins for escalation, design development, construction contingency and professional fees.

21. The QRA approach also takes into account risk. It provides a more realistic and risk based project cost estimate by factoring escalating costs in construction resulting from global supply chain disruption, increased demand for skilled labour, potential site issues that may be discovered during construction (including allowing for potential asbestos removal), and the inclusion of improved technology that would support Council’s sustainability objectives in reducing the operating costs of the new facility.

22. It assigns the likelihood of risks occurring and their value to elements of the project. Based on this it calculates the probability of the project exceeding budget. The client then has the opportunity to choose the level of risk it wishes to budget for. This approach is being used in projects at Wellington City Council and Kainga Ora, amongst others.

23. The QRA analysis has identified the opportunities and risks within the project, informed by the existing documentation (project brief), and the current preliminary designs. Other specific risks have also been identified and incorporated within the analysis.

24. During the first stages there is significant risk due to how early it is in the project, which provides more potential for the scope to change, and it is normal that the estimate will vary as a result of design and scope clarification as these become better defined.

25. The QRA was undertaken by the AECOM Quantity Surveyor and Risk team, with input from Council officers. This exercise included:

a. Review of existing cost estimate, benchmark with AECOM current cost data

b. Review of existing brief

c. Meeting with officers to review project objectives

d. Discussion on assumptions and methodology with the Hawkins quantity surveyor

26. The exercise looked at each project element, its estimated cost and the probability of achieving the cost estimate. The risks inherent in the original estimate and potential variance were applied to each element in order to calculate new probability values.

27. The analysis confirmed that the original Hawkins estimate was robust, although done in a very tight timeframe, which also creates inherent risk.

28. This exercise has determined that the initial cost estimate based on preliminary designs of $54M would now not be sufficient to deliver the project.

29. It identified the following series of project values:

	Estimated Value
Expected cost	$58.1M
Estimated cost at 50% probability of exceedance / confidence (P50)	$63.8M
Estimated cost at 90% probability exceedance / confidence (P90)	$68M

30. Noting that the P values represent the statistical exceedance probability where, based on the inputs to the model, there is a P% probability that this figure will not be exceeded.

31. If selecting 90% the Board would take the option that provides just a 10% probability that the budget will be exceeded.

32. The items at biggest risk of variance are:

a. Cost fluctuations due to market pressures until a contract is awarded

b. The risk of ground contamination

c. Unknown underground seismic conditions

d. The probability of asbestos

e. Incorporating environmentally sustainable design

f. Uncertainty due to COVID-19

g. Inherent risks of reusing the existing hydro-slide (Zoom Tube)

33. This analysis assumes that there will be no significant deviation from the brief and scope identified, which have been reviewed by the Project Board. If the Project Board sought a significant scope increase, it would require Council approval. This would increase the cost.

34. The Project Board recommended that the P90 value is used as the preferred option for the draft LTP 2021/31. This was agreed after consideration of a number of factors including advice that Waka Kotahi / NZ Transport Agency uses a 95% cost probability in the preparation of budgets, and that Treasury recommends 85%.

35. While this represents a realistic project cost, it would still require the Project Team to find efficiencies and to prioritise during the design phase.

36. At the LTP Subcommittee meeting on 10 February, the subcommittee agreed with the Project Board's recommendation to include the original $54M option as well as the $68M in the consultation documents. The option to demolish the pool, and repurpose the land was not considered because it had previously been consulted on and ruled out as an option.

Risk

37. The updated Project Risk Register is attached as Appendix 1 to the report. The key risks at this stage are:

a. Managing the uncertainties around having sufficient budget to deliver Naenae programme of projects and desired outcomes. However, using a risk approach to the cost estimates will provide sufficient contingency to mitigate this.

b. Uncertainty about ground conditions and contamination, which will not be known until testing is able to be done. The project team has prioritised the demolition which will allow the testing. The risk based approach to costing will ensure sufficient provision to address this.

Climate Change Impact and Considerations

38. The matters addressed in this report have been considered in accordance with the process set out in Council’s Climate Change Considerations Guide.

39. While all Council projects will be delivered in a way that supports Council’s Guidelines, the cost option chosen may have an impact on the actual Environmentally Sustainable Design and Innovation options.

Consultation

40. The analysis and options were developed by AECOM in consultation with Council officers, original Hawkins Quantity Surveyor and the Project Board.

Legal Considerations

41. At the conclusion of the Long Term Plan process the Project Board will seek delegated authority to make project decisions that are within the agreed project budget and scope.

42. Where decisions are required outside this, the Board will report to the Communities Committee and on risks to the Audit and Risk Subcommittee.

Appendices

No.	Title	Page
1 ⇩	Appendix 1: Naenae Projects - Risk Register ~ January 2021	185

Author: Allen Yip

Strategic Projects Manager

Approved By: Melanie Laban

Acting Director, Neighbourhoods and Communities

Page 187

Audit and Risk Subcommittee

15 January 2021

File: (21/54)

Report no: ARSC2021/1/20

Managing COVID-19 Risks

Purpose of Report

1. To provide assurance to the Subcommittee that risk around Council’s response to COVID-19 is being managed appropriately.

2. To confirm Council has in place a methodology for continuous service delivery to seamlessly transition between Alert Levels 1, 2 and 3 and to manage and minimise the risk of COVID-19.

Recommendation

That the Subcommittee:

(1) notes and receives the report; and

(2) notes that officers will update members at the meeting if there are any changes these will be reported during the meeting.

Background

2. This memorandum provides an update on activity since the last Managing COVID-19 Risks report to this Subcommittee on 25 November 2020 of how Council is managing the risks associated with the pandemic.

3. The Chief Executive’s statement provided to each Council meeting and the quarterly performance report to the Policy, Finance and Strategy Committee also provides details on how Council is responding to COVID-19.

Discussion

4. There have been no changes to Alert Levels in New Zealand since 7 October 2020 when Auckland moved to Alert Level 1 at 11:59pm. All of New Zealand is now at Alert Level 1.

5. The Corporate Leadership Team meets fortnightly with a standard item on emergency management.

6. If there are issues to be elevated to governance in between regular reporting these are addressed at the regular weekly meeting with the Mayor and on alternate weeks with the Deputy Mayor.

COVID-19 Planning – for resurgence, recovery, pandemic, business continuity

7. Officers continue to prioritise the health and safety of staff and community during these uncertain times and are following national guidance, updates from central government, response agencies and our COVID-19 resurgence plan.

8. In January when there was the threat of resurgence, staff was asked to follow the Ministry of Health advice for anyone who visited the locations/dates/times associated case. Those travelling to the Auckland and Northland regions were asked to check the Ministry of Health website for any updates before departing.

9. The latest requirements effective 15 January 2021 for pre-departure testing does not have a material impact on Council operations.

10. Officers are promoting the Make Summer Unstoppable campaign, reminding people to scan in, promoting online services, preparing for some scenario practice sessions with key staff, making sure staff are trained to cover key roles if needed, checking attendance rates at our facilities and replenishing our stocks of hand-sanitiser, PPE gear etc.

11. Officers have developed response plans locally, dedicated resources to assisting businesses and contributed to regional plans while progressing our COVID-19 Resurgence Plan. Officers remain in a state of readiness for resurgence.

12. The Chief Executive is a member of the Regional Leadership Group of the Wellington Region Emergency Management Office (WREMO). A focus of the Regional Leadership Group is to strengthen links between Councils, Ministry of Education, CCDHB and HVDHB, Te Puni Kōkiri and NZ Police. The Regional Manager of Civil Defence Emergency Management (CDEM) also attends. An output from this group has been the region’s resurgence plan.

13. New Zealand’s first batch of Pfizer/BioNTech COVID-19 vaccine may arrive in New Zealand from mid-February 2021. This will be an important milestone for New Zealand’s fight against COVID-19 and the elimination strategy. The COVID-19 Immunisation Programme will be New Zealand’s largest immunisation roll-out ever.

14. Hutt City Council will follow the lead of the Ministry of Health and work with our partners in the Regional Leadership Group of the Wellington Regional Emergency Management Office to provide assistance and support with the distribution of the COVID-19 vaccine. This could include, for example, making our facilities available if needed. As more details of the rollout become available we will share these with members.

15. Council’s operational Resurgence Action Plan enables Council functions to move quickly when needed to respond to shifts in level. It outlines the organisational response required at each Alert Level, and points to relevant documents. It also shows who is responsible for which actions, priorities and checklists.

16. A practical scenario was held on 1 February 2021 with around thirty staff in attendance. This exercise assists with our preparedness for an event/Alert Level change.

17. The Hutt Emergency Operations Centre (EOC) COVID-19 Resurgence Plan was developed using a regional template. It enables how the EOC would function and move quickly to respond to shifts in level. It incorporates the learnings from the first lockdown and Lower Hutt specific tasks are incorporated, for example, memorandums of understanding with foodbanks to ensure food supply at the commencement of a lockdown.

18. The emergency management training programme and professional development pathway for all staff with a role in the EOC will commence in February 2021 after have a break over the summer holidays.

19. Council’s Recovery Plan was presented to the Policy, Finance and Strategy Committee and adopted by Council at its meeting on 8 December 2020. It has two main areas of focus – the wellbeing of our people, especially those who are most at risk to the health and social impacts of COVID-19, and the recovery of our economy.

20. Business continuity plans across all business units are in place. Business unit managers were asked to review and update their plans following the confirmed COVID-19 community transition case in Northland, January 2021.

21. Council’s Pandemic Plan of November 2020 details the Council’s response and actions to be taken in line the changes in the Ministry of Health Alert Levels. Response, recovery and resurgence action plans specific to the COVID-19 pandemic are detailed above.

Operations, community facilities and services

22. Council continues to be vigilant and ready for any upward movement in Alert Level. Business is being conducted in line with government advice and rules under Alert Level 1 protocols.

23. Facilities and services continue business as usual with heightened health and safety measures such as:

§ Additional cleaning at most sites. Officers are doing regular checks on stock of hand sanitiser and cleaning products.

§ A check of our facilities to ensure QR codes are prominently displayed;

§ Regular checking of sanitising products. The business knows how to request additional supplies for restocking these products;

§ The government’s messaging has been shared internally at Council and on social media.

24. Through customer engagement officers are reinforcing the national campaign messaging and continuing to promote community awareness on:

§ Using NZ COVID tracer app and scanning QR codes;

§ Hand hygiene and etiquette around sneezing and coughing;

§ Using masks on public transport or in confined spaces; and

§ Staying home when unwell and call Healthline/doctor for advice.

25. Attendance and activities at most Council facilities is tracking slightly below pre-COVID levels. The increased uptake of digital resources has continued which may indicate that some people have switched and stayed with digital means of accessing services. Officers are continuing to promote online services and online payments, including through signage at facilities and rates notices.

26. Officers are using staff meetings and communications to ensure a possible change of COVID levels remains front of mind to ensure officers are able to move quickly if needed. This is also now being included in induction for new staff in our facilities. Additionally, in the next few months officers plan to carry out scenario planning sessions at a number of sites.

27. Officers continue to maintain connection with our social service providers at both a local level and central government to keep abreast of the support available. Officers also remain connected with individual community groups who were active throughout the 2020 Lockdown and attend a number of regular hui; the Lower Hutt Homeless Network Collective; Family Harm Collective; WREMO Welfare Response Collective; Police Intel Hui. Officers also maintain close contact with our local kai providers to ensure they are supported to activate quickly should r another form of lockdown occur in Lower Hutt.

28. Officers are seeing the impact of HCC COVID-targeted community funding. This has further strengthened our partnership with Kōkiri Marae who’s Pataka Kai in Wainuiomata initiative is going from strength to strength. Officers continue to work with Common Unity who are in process of convening a leadership group for the Hutt Valley Food Resilience Network project which should be in place mid-late February.

29. The financial impact of the COVID-19 pandemic in 2020 is being managed within base budgets. A cross-organisation team is in place and working to progress the ten year Long Term Plan ahead of public consultation, which incorporates the financial impacts of COVID-19 pandemic.

Council Workforce

30. Guidelines and protocols for flexible working arrangements are in place. The guidelines are being further developed as part of Council’s response to COVID-19 and ongoing flexible workplace initiatives.

31. Initiatives are underway, such as Wellbeing week and the GoodYarn programme, to raise awareness and strategies to respond to signs of poor mental health and provide information about where to find advice and support. This is in in acknowledgement of the strain COVID-19 is placing on mental health.

Technology

32. The IT infrastructure programme and digital workplace project underway will enhance resilience by allowing staff to work anywhere, anytime on any device (phone, tablet, laptop) to access, collaborate and share information including implementing the latest Microsoft Office applications. More details can be found in the Go Digital (Digital Transformation) Update to this Subcommittee at this meeting.

Community initiatives, welfare and funding

33. Council’s COVID-19 Recovery Plan was adopted by Council on 8 December 2020. The Plan has three initiatives: targeting community funding towards groups responding to COVID-19; pivoting Council resources to connect all forms of funding to the areas where it was most needed and developing strategic themes to inform the Long Term Plan 2021/2031. Business and Employment, and Housing and Homelessness themes are being developed and holistic and high trust approach to how Council worked with the community is proposed.

34. Reporting against the initiatives in the Recovery Plan has been incorporated into business as usual. Identified themes will be tracked and reported on in the respective business areas and in the Long Term Plan.

Response to Business

35. Officers have worked closely with the Chamber keeping the joint business support team in place and lobbying to tailor the business advice scheme to local need, resulting in improved arrangements. Officers continue to monitor and act on local business confidence surveys.

36. Overall consumer spend in Lower Hutt is slightly above consumer spend for the same period last year (up 1% at 31 December 2020, per Marketview data), despite hospitality, tourism and retail sectors being impacted by COVID-19. This compares to Porirua and Kapiti at 2% up, Upper Hutt up 1%, Wellington down 7.7% and the rest of New Zealand down 2.5%.

37. Consumer spend in Lower Hutt in 2020 compared with 2019

Source: Marketview

38. Council continues to receive regular economic insight reports from sources such as WellingtonNZ, MBIE, Marketview and Infometrics. Results from Hutt Valley Chamber of Commerce business survey shows varying levels of confidence (typically higher levels of confidence for own business than economy as a whole).

39. The number of Jobseeker Support recipients in Lower Hutt rose 15% in the September year reflecting weakness in the local economy. The city’s unemployment rate also edged up to 4.3% for the September 2020 year, which is just under the 4.4% for the Wellington Region and New Zealand. See also quarterly performance reporting to the Policy, Finance and Strategy Committee on 23 February 2021.

40. WellingtonNZ is part of the Government’s advisory group that was set up to respond to COVID-19. A WellingtonNZ staffer is stationed at the Hutt Valley Chamber of Commerce and provides a connection to between local and national efforts.

41. Supporting business was key focus early on in our response to COVID-19. A range of response initiatives were put in place in conjunction with the Hutt Valley Chamber of Commerce. Officers have kept these response initiatives and joint team together into recovery.

42. Up to 31 October businesses could access Government vouchers for up to $5K worth of local expert advice to adapt, re-focus or future proof their business. As at close of the scheme 259 Lower Hutt businesses had been issued 311 Covid-19 vouchers totalling $931K in value for advice on business continuity planning, getting set up online, employment matters, adapting for better cashflow, staff health and wellness and marketing strategies –from business experts based in the Hutt Valley and Wellington.

43. In addition 14 businesses received 16 Tourism Transition vouchers totalling $67K. This is advice funded by government and provided via Regional Business Partner Network via WellingtonNZ with operational support from Council and the Hutt Valley Chamber of Commerce.

Rates relief and payment plans

44. As part of our response to COVID-19 Council took steps to ensure ratepayers had many options for paying their rates including the implementation of a new rates postponement policy. The number of rate accounts in the COVID-19 non penalty grouping has reduced to 11, meaning most property owners that were experiencing difficulties have caught up.

45. Officers are continuing to encourage anyone facing financial difficulty to get in touch with us.

46. No ratepayers have taken up the offer of Rates relief via postponement, a few have enquired but we have been able to work through a payment plan to better suit their situation including new rates payment arrangements.

47. An additional 6,642 have opted to receive their rate accounts by email between April 2020 and January 2021, this is a significant increase on last year’s uptake over the same period and takes the total of ratepayers receiving their accounts by email to 13,052. This increase is likely due to the refuse and recycling choose your bins campaign, which enables the property owner to opt in for email accounts. Ratepayers who pay rates by cash or cheque have received letters explaining alternative payment options, to promote online services and online payments. There is signage at all of our facilities as we would like to move to cashless transactions.

48. There has been an increase in the number of applications for the Department of Internal Affairs Rates Rebate. These are assessed on the prior year’s income (2019/2020) which means that people who have been impacted by COVID-19 are ineligible. Officers are advising ratepayers to apply again next year.

Risk Reporting

49. Risks and effects on Council arising from COVID-19 are incorporated in the HCC Risk Registers. This includes the changing and emerging risks and possible impacts resulting from COVID-19, such as rates affordability, reduced Council revenue, potential impacts on costs of service delivery, increasing debt, interrupted project delivery and health, safety and wellbeing of staff. Our refreshed approach to risk reporting is currently being externally peer reviewed and this along with the full risk register will be presented at the next Subcommittee meeting on 23 April 2021.

Appendices

There are no appendices for this report.

Author: Enid Davids

Risk and Assurance Manager

Author: Caryn Ellis

Head of Chief Executive's Office

Approved By: Jo Miller

Chief Executive

Ms Suzanne Tindal (Independent Chair)

Mayor C Barry (Deputy Chair)	Cr D Bassett
Cr J Briggs	Cr S Edwards
Cr A Mitchell	Cr S Rasheed
Cr N Shaw