Agenda of Long Term Plan/Annual Plan Subcommittee

17 31 March 2021

Long Term Plan/Annual Plan Subcommittee

23 March 2021

File: (21/301)

Report no: LTPAP2021/1/61 (2)

Consultation Document and Draft Long Term Plan 2021-2031

Purpose of Report

1. The purpose of this report is to seek approval of the Consultation Document for the Draft Long Term Plan 2021-2031 and the information that underlies the document being the detailed Draft Long Term Plan 2021-2031.

Recommendations

That the Subcommittee recommends that Council:

(1) receives the information;

(2) notes the high level plan as outlined in table 1 and that the formal public consultation process is planned for the period 6 April to 5 May 2021;

(3) endorses the decisions of the Long Term Plan Working Group (comprising the Mayor and Chairs of standing committees) as detailed in table 2;

(4) agrees to adopt the underlying information for the Draft Long Term Plan 2021-2031, attached as Appendix 2 to the report;

(5) agrees to adopt the Consultation Document attached as Appendix 1 to the report for public consultation between 6 April 2021 and 5 May 2021;

(6) receives the Audit opinion from Audit New Zealand following the adoption of the Consultation Document; and

(7) agrees that the Chief Executive be delegated authority to make minor editorial changes to the Draft Long Term Plan 2021-2031 documents ahead of these being published for consultation.

Acronyms:

CD – Consultation Document

DLTP – Draft Long Term Plan 2021-2031

Executive Summary

2. Over the past 12 months Council has taken a range of decisions to address key matters across Lower Hutt. This has included drafting a Long Term Plan amendment to progress major projects such as Naenae Pool (which was ultimately deferred as a result of COVID-19), the 2020/2021 Annual Plan Emergency budget and completing a Long Term Plan amendment to implement a new rubbish and recycling service.

3. Council’s work programme to date has broadly focused on investment in basic infrastructure and services, which has been a clear directive from elected members. The 2020/2021 Annual Plan for example focused on investment in three waters infrastructure – particularly asset renewals.

4. Officers have sought elected member feedback through a range of engagements. From this officers have distilled the aspirations, priorities and vision elected members have for the city. For the DLTP, the six priorities are:

- Investing in infrastructure | Whanake i ngā poupou o te hapori

- Increasing housing supply | Hei āhuru mōwai mō te katoa

- Caring for and protecting our environment | Tiaki taiao

- Supporting an innovative, agile economy and attractive city | Taunaki ōhanga auaha, tāone whakapoapoa

- Connecting communities | Tūhono hapori

- Being financially sustainable | Whakauka ahumoni

5. Council has been through a lengthy process to prepare the draft Long Term Plan 2021-2031 for public consultation. This report seeks to adopt the Consultation Document (attached as Appendix 1) and the underlying detailed draft Long Term Plan content (attached as Appendix 2) so as to enable public engagement to proceed.

6. The Consultation Document (CD) seeks feedback across the six priorities, and includes particular focus on proposals for the following areas:

- Three waters

- Transport

- Naenae Pool

- Petone Wharf

- RiverLink

- Rates Policy

- Development Contributions Policy.

7. The draft LTP 2021-2031 has been updated to reflect all Council decisions to-date – including the most recent budget decisions on the 10 February 2021 for Naenae pool, decarbonisation of Council facilities, Cycling and Micromobility, Petone Wharf and Petone Recreation Grandstand.

A capital investment spend of $1.4 billion is proposed for the 10 years of the draft LTP which is more than double the previous LTP. Of the capital investment programme 43% is for Three Waters and 26% is for Transport. This reflects Council’s commitment to fix and improve years of underinvestment in these vital areas for our city and is the prime driver for the planned rates rises in the next ten years.

8. Council has considered the overall rates revenue increase in line with the legislative requirement for a balanced budget and financial prudence, as well as factoring in the economic environment as a result of Covid-19 and affordability of rates. Council has agreed that a proposed 5.9% rates revenue increase for 2021/22 be included in the DLTP for public consultation. The longer term DLTP rates projections are as follows:

	2021/22	2022/23	2023/24	2024/25	2025/26	2026-2031
Total overall rates revenue increase¹	5.9%	4.9%	4.9%	6.8%	6.8%	6.8%

Note 1- excludes revenue from growth in the rating base and excludes impact of service changes for waste services (rubbish, recycling, green waste).

9. Projected rating impact

Affordability of rates is a key consideration of Council. The proposed rates rise in 2021/22 equates to an average increase of $2.50 per week per household or an average increase of $130² per annum. Investment in Three Waters infrastructure makes up over half ($72) of the average $130 per annum rise. The remaining $58 covers cost increases for all the other services provided (including Transport, Parks, Libraries, Community facilities etc.).

Property category	2020/21 rates	2021/22 rates	Change per annum	Change per week
Average residential, CV $629k	$2,608	$2,738	$130²	$2.50
Average commercial central, CV $1.7M	$13,994	$14,774	$780	$15.00

Note 2 – this excludes the changes to waste service charges (rubbish, recycling, green waste) which were previously consulted on and approved by Council.

10. Included in the DLTP budgets is $2.2M of savings identified as part of the LTP Base Budget Review; these savings have been applied in order to reduce the rating impact. Council also took a number of decisions which led to savings of $3M as part of the 2020/2021 Annual Plan (Emergency Budget). These savings have an ongoing effect and also reduce the rating impact.

11. The financial projections included in the DLTP and based on the preferred options are:

- A projected underlying net operating deficit in 2021/22 of $19.0M

- A balanced budget projected to be achieved in 2028/29

- Net debt is projected to peak at $603M in 2028/29

- Net debt to revenue ratio peaks in 2025/26 at 206%, which is within the financial strategy limit approved for the DLTP of 250%.

12. The external audit process has been completed successfully, although there were some delays experienced in the audit of Wellington Water related information. The audit opinion (refer Appendix 3) is explained in section C of the report. The Audit Director will be in attendance at the meeting.

13. The public engagement and consultation process is planned for the period 6 April through to 5 May 2021 (refer Section D). The design focus has been on developing an interactive website dedicated to the ten year plan that engages people and is easy to navigate. A rates calculator has been developed to help ratepayers understand what the proposed rates charges are for 2021/22. Engagement with the community is planned at a series of venues such as the Naenae market, Riverbank market and through hui at our community facilities and hubs.

Section A – High-level plan for LTP 2021-2031 (LTP)

14. Council is required to prepare a 10 year LTP every three years. Table 1 provides a summary of the process completed to-date together with the next stages and timing.

Table 1: High-level plan

Activity	Date	Status
Officers progress initial planning and preparation	July to Aug 2020	Complete
Waste Services Review decisions	15 September 2020	Complete
Councillors & Community Board Chairs Long Term Plan hui	21 September 2020	Complete
High level plan endorsed together with key assumptions. Initial decisions progressed on strategic direction and policies.	24 September 2020	Complete
Council agreed: purpose, vision and priorities, three waters investment, base budget review changes, rates policy etc.	27 October 2020	Complete
Development contributions policy and Revenue and Financing policy progressed.	30 November 2020	Complete
Early engagement seeking feedback on key priorities	2 December to 18 January 2021	Complete
Key decisions finalised to enable draft CD and DLTP to be prepared ahead of audit.	21 December 2020	Complete
Feedback from early engagement. Initial draft CD and DLTP, Infrastructure Strategy, Financial Strategy endorsed ahead of external audit.	10 February 2021	Complete
Council adopts CD and DLTP for public engagement	31 March 2021	Today
Formal public consultation	6 April to 5 May 2021
Hearing of submissions and related advice	17, 20 & 21 May 2021
Council meets to make final decisions	9 June 2021
Council adopts the LTP and sets the rates	30 June 2021

Section B - Decisions by the LTP Working Group

15. Since the last Long Term Plan Subcommittee meeting on
10 February 2021, the timelines have been particularly tight to finalise the external audit process and prepare the public consultation material. This had been anticipated at the meeting and the Council resolved as follows :

- agrees that the LTP Working Group (comprising the Mayor and Chairs of standing committees) be delegated the power to make decisions required as part of preparing the draft plan for consultation; and

- requires that any such decisions made by the LTP Working Group be reported back to the next LTP subcommittee or Council meeting.

16. The decisions that have been progressed through the LTP Working Group are summarised in Table 2. The LTP/AP Subcommittee is requested to endorse these decisions.

Table 2: LTP Working Group decisions for review

	Priority area	Brief description	LTP Working Group decision
1.	Caring for and protecting the environment Increasing housing supply Supporting an innovative, agile economy And attractive city	Length of Consultation Document (CD) The CD is required to meet legislative requirements and be “fit for purpose”. Initial feedback received from Audit NZ was that the document was very lengthy.	Officers looked at options to shorten and simplify content. The LTP Working Group agreed to the reduction of content for a few items that had detailed information on both a preferred option and alternative option. The revised content simply refers to Council’s preferred option for the following items: decarbonisation of Council facilities, business incubator/start up hub, Love Wainuiomata and Urban Plus Limited.
2.	Investing in infrastructure	RiverLink Project This partnership project is progressing indicative design work for purposes of submitting the Resource Consent in mid- 2021. At the LTP/AP Subcommittee meeting 10 February 2021, it was reported that the Quantity Surveyor cost estimates were being developed, with delivery expected by mid-March.	Whilst initial estimates from the quantity surveyor work have been received, there is further review work to be completed. There are therefore no budget updates proposed at this stage. The cost estimate information included in the draft plan (inflationary adjusted) is capex $121.5M and offsetting revenue $7.3M (Waka Kotahi) and assumed land sales of $20.3M.
3.	N/a	Section C of this report provides information about the audit process. Feedback from the audit process required additional disclosures to be added into the CD.	The LTP Working Group was kept informed as the audit process was progressing and were provided with an opportunity to have an early view of the changes incorporated into the CD.

Section C - External audit process

17. Our CD is required to be audited prior to going out for consultation. Auditing the CD involves reporting on:

o whether the CD provides an effective basis for public participation in the council’s decisions about the proposed content of its LTP i.e. that it is “fit for purpose”; and

o whether the underlying information and assumptions are reasonable.

18. The Audit New Zealand engagement letter for the audit of the CD and Long Term Plan 2021-2031 was reported to the Audit and Risk Subcommittee on 25 February 2021 (refer report ARSC2021/1/41 External audit update).

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

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

- Financial strategy and infrastructure strategy

- Assumptions

- Quality of asset-related forecasting information.

20. The audit has progressed in line with plans with one area of difficulty which has caused delay; this was the audit of the asset management plan information for Three Waters. Wellington Water Limited is responsible for preparing this information on behalf of Hutt City Council and was unable to provide all the information requested by the auditors. This was largely due to some asset condition information gaps and incomplete asset management planning processes.

21. As a result of the issues experienced, the CD has been updated to include additional content re. Three Waters investment (refer pages 18 and 19 of the CD). Extract of some content as follows:

‘Council received advice based on the current information available to Wellington Water. This advice included the need for additional investment in understanding the condition of our underground assets. Using age based asset information, it also identifies that we have a backlog of renewals that presents an increased risk of failure and service interruptions, and is contributing to increases in unplanned maintenance and operating costs. The forecast investment profile using age based information will, over the next 30 years, reduce this backlog as well as addressing future renewal needs. It will also refine our understanding of the overall condition and expected life of assets. ‘

22. Another key area of focus in the audit has been in do-ability of the capital programme. There is a significant increase in investment planned over the next ten years. The CD has been amended to include additional commentary (refer page 63). Extract of some content as follows:

‘Council is projecting a significant increase in its capital programme to achieve the outcomes in the proposed long term plan. We are investing in resources to support delivery and taking actions alongside our partners to manage the increased expenditure effectively. These include:

o additional operating funding to support Wellington Water Ltd increase its capacity to deliver on the increased programme;

o an independent review of local sector capability and capacity. This will assess Wellington Water and their supply partner’s current capability and test their growth plans and ability to deliver all their client councils capital programmes. The outcomes of this review are expected to be available to enable this to be factored into advice provided to Council for the final plan;

o Council’s transport team have engaged specialists focussed on programme delivery; and

o changes proposed as part of Council’s organisational review include both scaling up teams that support delivery and bringing specialist knowledge in house.

The significant increase in the capital programme carries a level of uncertainty and risks to achievability as we implement the actions above. It is important for us to get it right as delays to the programme may result in Council not meeting planned levels of service, or result in greater costs in the long term.’

23. The unsigned audit opinion is attached to this report as Appendix 3. This is an unqualified audit opinion with three specific ‘emphasis of matter’ items. These are:

- Three Waters Reform: this is matter relevant for all Councils across NZ.

- Capital programme do-ability: this is a matter that is being raised in the audit opinions of a number of Council’s across NZ.

- Wellington Water related risks and uncertainties due to some asset management planning information gaps: this is a matter raised in other audit opinions across the Wellington region.

The Audit Director will be attending the meeting and will be able to elaborate further on these matters.

24. The CD is going through its final audit review with Audit New Zealand and is attached as Appendix 1. There are no further changes expected. If however there are any late changes required to the document as a result of the audit, then an updated version of the CD will be circulated prior to the LTP/AP Subcommittee meeting.

25. No further material alterations can be made following the completion of the audit apart from minor editorial changes. Issues can be noted for discussion in the final decision making processes in May/June 2021.

26. The signed Audit Opinion will be released once the CD has been adopted by Council.

Section D- Proposed Changes to 3 Waters Performance Measure Targets

27. Wellington Water has recommended to its shareholder Councils to consider amending performance measures and targets for the 3 water activities for the 2021-2031 Long Term Plan.

28. This follows direction from the Water Committee at its meeting in November 2020 that in principle there be regionally consistent performance measures and targets that would meet legislative requirements, improve efficiency and provide useful information for customers.

29. The proposed changes are being made to ensure the targets are not only regionally consistent but are realistic and better reflect the current level of service and investment being provided.

30. Councils proposed uplift in investment in renewals will help ensure that performance is maintained at the target levels of service as the assets reach the end of their useful lives and are replaced.

31. The main changes to targets relate to response times aligning to the resources available to manage them and therefore being realistic to achieve. Other changes to targets are where the target has been aspirational in nature and virtually impossible to achieve due to factors not able to be controlled.

32. For example achieving the target of zero dry weather sewerage overflows is unrealistic given that Council has little control over inappropriate items flushed down the toilet and/or tree root invasion of pipes, until an actual blockage (and ensuing overflow), occurs and is able to be identified and rectified.

Section E – Engagement and Consultation

33. The goal of the engagement material and presentation is that our community can easily access information, and give their feedback on the ten year plan.

34. The design focus is on developing an interactive website dedicated to the ten year plan that is quick to find, engages people and is easy to navigate. The CD itself is a “hard copy” version of the website using the same or similar design concepts giving a sense of continuity between digital and print content.

35. Engagement with the community is planned at a series of venues such as the Naenae market and Riverbank market, and in our communities through hui at our community facilities and hubs. These hui are supported by Neighbourhoods and Communities staff and reflect the shift in focus. CLT members are attending as are relevant council officers.

36. The first neighbourhood hui will be held at Koraunui Stokes Valley Hub on 6 April 2021 and the final hui in Eastbourne 17 April 2021. Kōrero with council events are planned for Saturday 10, 17 and 24 April 2021 at the Riverbank market, Queensgate and the Naenae market respectively.

37. We are working with a number of community groups that have regular hui with their membership for example local mārae, Probus, Pacifica organisations and churches. We have let these groups know that they can ask for elected members and/or officers to attend hui. These groups are also able to distribute information about the ten year plan through their membership, newsletters and email networks.

38. There is also planned engagement with the Chamber of Commerce and via the Developers forum. There has been ongoing hui with iwi.

39. A strong social media presence is planned along with posters, signboards – both street and digital – flyers and a rates notice insert. Other collateral includes the Councillors toolkit and media pack.

40. A rates calculator has been developed to help ratepayers understand what the proposed rates charges are in 2021/22 and provide feedback on the proposed rates policy change. A short video is also being progressed to help support the understanding of the rating aspects.

Section F – Next steps

41. Public consultation will be undertaken from 6 April to 5 May 2021. Submission analysis will progressed throughout the consultation period. Councillors will receive weekly interim result updates. Submissions will be included with the analysis. A final report will be presented at the Long Term Plan Subcommittee meeting in May 2021.

42. Officers will prepare a range of advice to Council for the LTP/AP Subcommittee meeting in May 2021 to reflect new information that is expected to be available, such as Petone Wharf and RiverLink project.

Section G - Climate Change Impact and Considerations

43. The matters addressed in this report have been considered in accordance with the process set out in Council’s Climate Change Considerations Guide. Climate impact statements need to be compiled for decisions/projects that affect greenhouse gas emissions (in relation to both Council’s own emissions and city-wide emissions) and/or be affected by a changing climate (eg sea level rise, etc.).

44. The draft LTP directly responds to the need to achieve emission reductions, by embedding emission reductions in a range of initiatives. For example, Council’s proposed investment in Naenae Pool includes that the new building would not use natural gas for heating and instead utilise alternative low-carbon energy sources. The proposed LTP also includes a number of projects to reduce emissions, including the decarbonisation of Council facilities (including pools and the Dowse) and by investing in public charging stations in order to order help accelerate the uptake of electric vehicles in the community.

45. Where applicable, climate impact statements are, or should be, in place for each of the key initiatives or investments that have been included in the draft LTP.

Section H - Legal Considerations

46. The most relevant legislation includes the Local Government Act 2002, Local Government (Rating) Act 2002 and the Rating Valuations Act 1998. The documents referenced in this report have been prepared to meet the legislative requirements.

47. As part of the process of preparing the DLTP for consultation, there has specialist external legal advice provided across key aspects such as Development Contributions Policy and Rating Policy.

Section H - Financial Considerations

48. Financial considerations associated with the CD and DLTP have been addressed in previous reports to the Subcommittee and Council.

Appendices

No.	Title	Page
1 ⇩	Appendix 1 - LTP 2021-2031 Consultation Document for adoption	32
2	To be separately circulated
3	To be separately circulated

Author: Wendy Moore

Head of Strategy and Planning

Author: Matt Boggs

Director, Strategy and Engagement

Reviewed By: Jenny Livschitz

Chief Financial Officer

Approved By: Jo Miller

Chief Executive

Attachment 1

Appendix 1 - LTP 2021-2031 Consultation Document for adoption

Mayor C Barry (Chair) Deputy Mayor T Lewis (Deputy Chair)

Cr D Bassett	Cr J Briggs
Cr K Brown	Cr B Dyer
Cr S Edwards	Cr D Hislop
Cr C Milne	Cr A Mitchell
Cr S Rasheed	Cr N Shaw
Cr L Sutton