Agenda of Long Term Plan/Annual Plan Subcommittee

Attachment 1

Appendix 1: Seaview Marina Statement of Intent - 2021/22 to 2023/24

SEAVIEW MARINA LIMITED

FINAL STATEMENT OF INTENT

2021/22 to 2023/24

Contents

1. Mission. 3

2. Nature and Scope of Activities. 3

3. Corporate Governance Statement. 3

4. Corporate Goals. 3

5. Specific Objectives for the Year Ending 30 June 2022. 4

6. Performance Measures. 6

7. Financial Projections. 8

8. Accumulated Profits and Capital Reserves. 14

9. Share Acquisition. 14

10. Information to be Provided to Shareholders. 14

11. Pricing Policy. 15

12. Transactions with Related Parties. 15

13. Directory. 16

14. Accounting Policies. 17

1. Mission

Seaview Marina Limited’s mission is to be the centre for recreational marine activities and services in the Wellington Region.

2. Nature and Scope of Activities

Seaview Marina Limited (the Company) is responsible for the operation of the boating facilities and services, the maintenance of infrastructural assets and the development of additional facilities and services as demand dictates.

3. Corporate Governance Statement

The Company is 100% owned by Hutt City Council and accordingly is a Council Controlled Trading Organisation (CCTO) as defined by the Local Government Act 2002 (LGA). The Directors’ role is defined in Section 58 of the LGA which requires that all decisions relating to the operation of a CCTO shall be made pursuant to the authority of the directorate of the CCTO and its Statement of Intent (SOI). In addition to the obligations of the LGA, the Company is also covered by the Companies Act 1993 which places other obligations on the Directors.

The Directors are responsible for the preparation of the SOI which, along with the three-year financial plan, is provided to the Company’s Shareholder, Hutt City Council. Six monthly and annual reports of financial and operational performance are provided to the Shareholder. Financial and operational /management reports are prepared monthly for the Directors.

The Directors of the Company are responsible for the overall control of the Company but no cost-effective internal control system will permanently preclude all errors or irregularities. The control systems operating within the Company reflect the specific risks associated with the business of the company.

4. Corporate Goals

The principle goal of the Company is to operate as a successful business, achieving the objectives of its shareholder as specified in this Statement of Intent. The specific corporate goals of the Company are as follows:

General

4.1 To ensure that the Statement of Intent and operating policies for the Company are consistent with the operating policies of Hutt City Council.

4.2 To ensure that the Statement of Intent and operating strategies are adhered to.

4.3 To keep the Shareholder informed of matters of substance affecting the Company.

4.4 To perform continual reviews of the operating strategies, financial performance and service delivery of the Company.

4.5 To develop the Company into one of New Zealand’s premier marina businesses.

4.6 To further expand and diversify the Company’s marina facilities.

Economic

4.7 To maximise the financial returns achieved and the value added by the Company.

4.8 To return a minimum of 5% return on equity (ROE) per annum.

4.9 To maintain the Company’s financial strength through sound and innovative financial management.

Social and Environmental

4.10 To support recreational boating activities in the Wellington Region.

4.11 To promote safe work practices.

4.12 To act as a socially responsible and environmentally aware corporate citizen and to contribute to, or assist where possible, with Hutt City Council’s community outcomes (as listed in the HCC Annual or Long Term Plan).

4.13 Move towards meeting the Hutt City Council Carbon Policy.

5. Specific Objectives for the Year Ending 30 June 2022

In pursuit of its corporate goals, the Company has the following objectives for the next 12 months:

General

5.1 To review the Statements of Intent and Strategic Plans for consistency with the objectives of Hutt City Council.

5.2 To review the operating activities of the Company for compliance with the goals and objectives stated in the Statement of Intent and Strategic Plan.

5.3 To report all matters of substance to the Shareholder.

Economic

5.4 To achieve all financial projections.

5.5 To achieve or exceed a Return on Equity (ROE) as defined by the Shareholder (See section 7 item 3).

5.6 To ensure that the reporting requirements of the Company and the Shareholder are met.

Social and Environmental

5.7 To maintain good employer status by:

(a) complying with all employment legislation;

(b) operating open and non-discriminatory employment practices.

5.8 To ensure no transgression of environmental and resource laws.

5.9 To review the activities undertaken by the Company for the purposes of being a good socially and environmentally responsible corporate citizen.

6. Shareholder Expectations

The Shareholder has provided the Company with its expectations for the business over the next three years. These expectations are laid out under the following four categories: development, return to shareholder, social and environmental and lastly health and safety. The details are outlined below:

Continue with development plans

Focus on completing the remaining in-water development as the market demands and operating cash flows permit. Any substantial variations will require engagement with the Shareholder.

Returns to Shareholder

In the medium term the Shareholder expects financial returns by way of dividends and breakwater lease payments. Breakwater lease payments commenced in 2019/20. The timing of dividend payments is dependent on completion of the in-water development programme, which is currently planned for 2023/24. The Board will develop a Dividend Policy for consideration and approval of the shareholder.

Social and environmental

Support of charitable non-profit ventures connected with the Company’s business will continue to be a focus.

The Company will take steps to respond to the potential impacts of climate change and align itself with the Council’s ‘carbon zero’ initiatives.

Health and safety

Health and safety will continue to be a top priority and embedded within all activities of the marina.

7. Performance Measures

	Key Performance Indicator	2021/22	2022/23	2023/24	Reporting Frequency
	Financial
1	Deliver annual budgeted incomes for each of the four business entities · Boat storage · Hardstand · Marine Centre · Launching ramp	Achieve 100% of budgeted incomes	Achieve 100% of budgeted incomes	Achieve 100% of budgeted incomes	Six monthly
2	Control operational expenses (1)	Operational expenses within budget	Operational expenses within budget	Operational expenses within budget	Six monthly
3	Achieve prescribed rate of return on equity before tax(2)	4.1%	4.8%	3.4%	Annually
4	Manage Capital Expenditure (3)	Complete within capital budget and on time	Complete within capital budget and on time	Complete within capital budget and on time	Annually
	Relationship & Communication
5	Client Service	88% satisfaction in the bi-annual survey	88% satisfaction for the exit/entry survey	88% satisfaction in the bi-annual survey	Annually
6	Newsletter communications	Complete four newsletters per annum	Complete four newsletters per annum	Complete four newsletters per annum	Quarterly
7	Meet all shareholder reporting deadlines	See Section 9	See Section 9	See Section 9	Schedule in Section 9
	Risk Management and Human Resources
8	Notifiable health and safety incidents	None	None	None	Monthly to board
9	Business Continuity Plan	Run one test scenario and review	Run one test scenario and review	Run one test scenario and review	Annually
10	Staff Satisfaction	Achieve 85% staff satisfaction	Achieve 85% staff satisfaction	Achieve 85% staff satisfaction	Six Monthly
	Marketing
11	Implement marketing strategy to improve occupancy rates (additional berth development initially impacts negatively on berth occupancy rates)	Berth occupancy equal or greater than 95%	Berth occupancy equal or greater than 95%	Berth occupancy equal or greater than 95%	Monthly
12	Media and Public Relations	Six media releases or PR exercises per year	25 enquiries per month from website	30 enquiries per month from website	Annually
Non- Financial
13	To provide financial or non- financial support to at least three charitable (non-profit) ventures with a marine focus during any given financial year.	Support to at least three organisations	Support to at least three organisations	Support to at least three organisations	Annually

Notes to Financial Measures

(1) Operational expenses are defined as all expenses controllable by Seaview Management. Excludes depreciation and finance charges and losses arising from the revaluation of similar assets within an asset class.

(2) Return on equity is defined as net Surplus / (Deficit) before tax and excluding losses or gains arising from the revaluation of similar assets within an asset class divided by the opening balance of equity at the start of the year

(3) Excludes carry forward of expenses on projects from prior years, unless specifically budgeted for (e.g. where project spans two or more fiscal periods)

8. Financial Projections

The projections have been prepared using a number of assumptions about the future as well as business trends over the previous five years. In determining these projections the Board and Management have applied their judgement to the future commercial environment in which the Company operates.

The Return on equity without the breakwater lease is:

Note: Return on Equity is before tax.

Note 1: Ownership of infrastructural assets is retained by the Shareholder (or other clients).

Note 2: Seaview Marina has to date returned all financial benefits to its Shareholder through increasing the capital value of the marina with trading profits being retained and invested in the strategic development programme. Dividends are expected to be returned to the Shareholder after completion of the marina in-water capital development programme (i.e. 2023/24).

Equity Value of the Shareholders’ Investment

The estimated net value of the shareholders’ investment in the company at 30 June 2021 will be $10.1m and $10.4m on 30 June 22.

9. Accumulated Profits and Capital Reserves

The intention is to pay a dividend to the Shareholder commencing in 2023/24. The Company will develop a Dividend Policy upon completion of the planned in-water developments (H and I Piers).

10. Share Acquisition

There is no intention to subscribe for shares in any other company or invest in any other organisation during the period covered by this Statement of Intent. Not with standing this, the purchase of any shares requires shareholder approval.

11. Information to be provided to Shareholders

In each year the Company shall comply with the reporting requirements under the Local Government Act 2002, the Companies Act 1993, and other relevant regulations. In particular the Company will provide:

11.1 Statement of Intent

A draft Statement of Intent by 1 March of the year preceding the financial year to which it relates detailing all matters required under the Local Government Act 2002, including financial information for the next three years.

A final Statement of Intent before the commencement of the financial year to which it relates.

11.2 Half-Yearly Report

Within two months after the end of the first half of each financial year, the Company shall provide a report on the operation of SML to enable an informed assessment of its performance, including financial statements, and progress on activities and projects (in accordance with section 66 of the LGA 2002).

11.3 Annual Report

Within three months after the end of each financial year, the Company will provide an annual report which provides a comparison of its performance with the Statement of Intent, with an explanation of any material variances, audited consolidated Financial Statements for that financial year, and an Auditor’s Report (in accordance with section 67, 68 and 69 of the LGA 2002).

12. Pricing Policy

The Company operates in a competitive market competing with four other marinas within the Wellington Region and to a lesser extent with the Marlborough marinas. All marina charges, apart from the Wellington Marine Centre Leases, are reviewed on an annual basis. The review is based on a number of criteria which are listed below:

12.1 Market Trends

The Company positions it charges at the lower end of the Wellington marina market but will adjust charges according to movements in other marinas of a similar standard.

12.2 Operating Costs

Increases in operating costs related to the marina activities compared with the previous year (not CPI).

12.3 Achievement of ROE

Hutt City Council sets a minimum ROE which the Company is required to achieve each year and to achieve this rental charges are set accordingly.

13. Transactions with Related Parties

Transactions between the Company, Lower Hutt City Council and other Hutt City Council controlled enterprises will be conducted on a wholly commercial basis. Charges from Hutt City Council and its other companies will be made for services provided as part of the normal trading activities of the Company.

Related Party	Transaction
Hutt City Council Finance Department	Provision of accounting services and the consolidation of the Company’s financial accounts into the Hutt City Council’s accounts.
Hutt City Council IT Department	Provision of technical support for the Company’s computer hardware and systems.

14. Directory

Directors

Brian Walshe (Chairman, retiring on 30 June 2021)

Peter Steel (new Chairman, commencing 1 July 2021)

Deborah Hislop

Pamela Bell

Rick Wells

Chief Executive

Alan McLellan (retiring on 23 July 2021)

Tim Lidgard (new CE, commencing 26 July 2021)

Registered Office

100 Port Road

Seaview

Lower Hutt

New Zealand

Postal Address

Private Bag 33 230

Petone 5012

Telephone

+64 (4) 568 3736

Website

www.seaviewmairna.co.nz

Auditor

Audit New Zealand on behalf of the Auditor General

Bankers

Westpac Banking Corporation of New Zealand Limited

Lower Hutt

New Zealand

Solicitors

Thomas Dewar Sziranyi Letts

Level 2, Corner Queens Drive & Margaret Street

Lower Hutt

New Zealand

15. Accounting Policies

REPORTING ENTITY

Seaview Marina Limited (SML) is a Council Controlled Trading Organisation (CCTO), 100 per cent owned by Hutt City Council. The primary objective of SML is the operation of a marina which benefits the community of Hutt City. SML is designated a public benefit entity for financial reporting purposes.

BASIS OF PREPARATION

The financial statements have been prepared on the going concern basis, and the accounting policies have been applied consistently throughout the period.

Statement of compliance

These financial statements have been prepared in accordance with the requirements of the Local Government Act 2002, which includes the requirement to comply with generally accepted accounting practice in New Zealand (NZ GAAP). They comply with IPSAS and other applicable Financial Reporting Standards, as appropriate for public benefit entities (PBE) that apply Tier 2 PBE accounting standards. As SML’s total expenses are under $30,000,000, it has elected to apply Tier 2 PBE accounting standards.

Measurement base

The accounting policies set out below have been applied consistently to all periods presented in these financial statements.

The financial statements have been prepared on a historical cost basis.

Functional and presentation currency

The financial statements are presented in New Zealand dollars and all values have been rounded to the nearest dollar. The functional currency of SML is New Zealand dollars.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICES

Revenue

SML derives revenue from its licensees and casual clients. The income is generated from a range of rentals for boat storage and building tenancies as well as services available through the facilities provided by SML.

Revenue is measured at the fair value of consideration received. THE FINANCIAL STATEMENTS

Revenue from the rendering of services is recognised by reference to the stage of completion of the transaction at balance date, based on the actual service provided as a percentage of the total services to be provided.

Sales of goods are recognised when a product is sold to the customer. The recorded revenue is the gross amount of the sale, including credit card fees payable for the transaction. Such fees are included in other expenses.

Interest revenue is recognised using the effective interest method.

Expenses

Expenses are recognised when the goods or services have been received on an accrual basis.

Cash and cash equivalents

Cash and cash equivalents includes cash on hand, deposits held at call with banks, other short term highly liquid investments with original maturities of three months or less, and bank overdrafts.

Trade debtors and other receivables

Trade debtors and other receivables are initially measured at fair value and subsequently measured at amortised cost using the effective interest method, less any provision for impairment.

Inventory

Inventory is recorded at cost on a first in – first out basis.

Property, plant and equipment

Land is measured at fair value, and buildings are measured at fair value less accumulated depreciation. All other asset classes are measured at cost less accumulated depreciation and impairment losses.

Additions

Expenditure of a capital nature of $500 or more is capitalised. Expenditure of less than $500 is charged to operating expenditure. The cost of an item of property, plant and equipment is recognised as an asset if, and only if, it is probable that future economic benefits or service potential associated with the item will flow to SML and the cost of the item can be measured reliably.

Labour costs relating to self-constructed assets are capitalised if, and only if, it is probable that future economic benefits or service potential associated with the item will flow to SML and the cost of the item can be measured reliably.

Work in progress is recognised at cost less impairment and is not depreciated.

Disposals

Gains and losses on disposals are determined by comparing the proceeds with the carrying amount of the asset. Gains and losses on disposals are recognised in the Statement of Comprehensive revenue and expense.

Subsequent costs

Costs incurred subsequent to initial acquisition are capitalised only when it is probable that future economic benefits or service potential associated with the item will flow to SML and the cost of the item can be measured reliably.

Revaluation

Land and buildings are reviewed each year to ensure that their carrying amount does not differ materially from fair value, and are revalued when there has been a material change. All other asset classes are carried at depreciated historical cost. Revaluation movements are accounted for on a class of asset basis.

The net revaluation results are credited or debited to other comprehensive revenue and expenses and are accumulated to an asset revaluation reserve in equity for that class of asset. Where this would result in a debit balance in the asset revaluation reserve, this balance is not recognised in other comprehensive revenue and expenses but is recognised in the surplus or deficit. Any subsequent increase on revaluation that reverses a previous decrease in value recognised in the surplus or deficit will be recognised first in the surplus or deficit up to the amount previously expensed, and then recognised in other comprehensive revenue and expenses.

Depreciation

Depreciation is provided on a straight-line basis on all property, plant and equipment at rates that will write off the cost of the assets to their estimated residual values over their useful lives. The straight-line depreciation rates are as follows:

Property, plant and equipment consist of the following asset classes: land, buildings, leasehold improvements, furniture and office equipment and motor vehicles.

Estimated economic lives	Years	Rate
Buildings Service Centre, hardstand, travel lift	5 - 33 2 - 77	3% - 20% 1.3% - 50%
Site improvements	3 - 60	1.7% - 33.3%
Piers and marina berths	4 - 30	3.3% - 25%
Plant and equipment	1.5 - 66	1.5% - 67%
Vehicles	5	20%

The residual value and useful life of an asset is reviewed and adjusted if applicable at each financial year end.

Intangible assets

Software acquisition and development

Acquired computer software licenses are capitalised on the basis of the costs incurred to acquire and bring to use the specific software. Costs associated with maintaining computer software are recognised as an expense when incurred. Costs that are directly associated with the development of software for internal use by SML, are recognised as an intangible asset.

Amortisation

The carrying value of an intangible asset with a finite life is amortised on a straight-line basis over its useful life. Amortisation begins when the asset is available for use and ceases at the date that the asset is derecognised. The amortisation charge for each period is recognised in the Statement of Comprehensive revenue and expense.

The useful lives and associated amortisation rates of major classes of intangible assets have been estimated as follows:

Estimated economic lives	Years	Rate
Computer software	2.5 - 33	3% - 40%

Impairment of non-financial assets

Assets with a finite useful life are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. If an asset’s carrying amount exceeds its recoverable amount, the asset is impaired and the carrying amount is written down to the recoverable amount. The recoverable amount is the higher of the asset’s fair value less costs to sell and value in use. The total impairment loss is recognised in the Statement of Comprehensive revenue and expense.

Goods and services Tax

All items in the financial statements are stated exclusive of GST, except for receivables and payables, which are presented on a GST inclusive basis. Where GST is not recoverable as input tax then it is recognised as part of the related asset or expense.

Employee entitlements

Short-term entitlements

Employee benefits that SML expects to be settled within 12 months of balance date are measured at nominal values based on accrued entitlements at current rates of pay. These include salaries and wages accrued up to balance date, annual leave earned to, but not yet taken at balance date, retiring and long service leave entitlements expected to be settled within 12 months, and sick leave.

SML recognises a liability for sick leave to the extent that absences in the coming year are expected to be greater than the sick leave entitlements earned in the coming year. The amount is calculated based on the unused sick leave entitlement that can be carried forward at balance date, to the extent that SML anticipates it will be used by staff to cover those future absences.

SML recognises a liability and an expense for bonuses where contractually obliged or where there is a past practice that has created a constructive obligation.

Payables

Short term creditors and other payables are recorded at their face value.

Provisions

SML recognises a provision for future expenditure of uncertain amount or timing when there is a present obligation (either legal or constructive) as a result of a past event, it is probable that expenditures will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.

Provisions are not recognised for future operating losses.

Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to the passage of time is recognised as an interest expense.

Borrowings

Borrowings are initially recognised at their fair value plus transaction costs. After initial recognition, all borrowings are measured at amortised cost using the effective interest method. Borrowings are classified as current liabilities unless SML has an unconditional right to defer settlement of the liability for at least 12 months after balance date.

Borrowing costs

Borrowing costs are recognised as an expense in the period in which they are incurred.

Income tax

Income tax expense includes components relating to both current tax and deferred tax.

Current tax is the amount of income tax payable based on the taxable profit for the current year, and any adjustments to income tax payable in respect of prior years. Current tax is calculated using tax rates (and tax laws) that have been enacted or substantively enacted at balance date

Deferred tax is the amount of income tax payable or recoverable in future periods in respect of temporary differences and unused tax losses. Temporary differences are differences between the carrying amount of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit.

Deferred tax is measured at tax rates that are expected to apply when the asset is realised or the liability is settled, based on tax rates that have been enacted or substantively enacted at balance date. The measurement of deferred tax reflects the tax consequences that would follow from the manner in which the entity expects to recover or settle the carrying amount of its assets and liabilities.

Deferred tax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which the deductible temporary differences or tax losses can be utilised.

Deferred tax is not recognised if the temporary difference arises from the initial recognition of goodwill or from the initial recognition of an asset or liability in a transaction that is not a business combination, and at the time of the transaction, affects neither accounting profit nor taxable profit.

Current and deferred tax is recognised against the surplus or deficit for the period, except to the extent that it relates to a business combination, or to transactions recognised in other comprehensive revenue and expense or directly in equity.

Leases

Operating leases

An operating lease is a lease that does not transfer substantially all the risks and rewards incidental to ownership of an asset. Lease payments under an operating lease are recognised as an expense on a straight-line basis over the lease term.

Finance leases

SML has not entered into any material finance leases.

Financial instruments

The Company is party to financial instrument arrangements as part of its normal operation. Revenue and expenses in relation to all financial instruments are recognised in the Statement of Comprehensive Revenue and Expenses.

All financial instruments are recognised in the Statement of Financial Position on the basis of the Company’s accounting policies. All financial instruments disclosed on the Statement of Financial Position are recorded at fair value.

Budget figures

The budget figures are those approved by the Board at the beginning of the year. The budget figures have been prepared in accordance with generally accepted accounting practice (GAAP), using accounting policies that are consistent with those adopted by the Board for the preparation of the financial statements.

Critical accounting estimates and assumptions

In preparing these financial statements SML has made estimates and assumptions concerning the future. These estimates and assumptions may differ from the subsequent actual results. Estimates and assumptions are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

The estimates and underlying assumptions are reviewed on an on-going basis. Revisions to accounting estimates are recognised in the reporting period in which the revision is made and in any future periods that will be affected by those provisions.

Assumptions have been made for the useful lives of property, plant and equipment and intangible assets as noted above.

Purpose

The purpose of this Statement of Intent is to:

a. State publicly the activities and intentions of this Council-Controlled Organisation for the year and the objectives to which those activities will contribute;

b. Provide an opportunity for shareholders to influence the direction of the organisation; and

c. Provide a basis for the accountability of the directors to their shareholders for the performance of the organisation.

This Statement of Intent covers the year 1 July 2021 to 30 June 2022 and forecasts for the following two financial years. It has been prepared in accordance with Section 64 (1) of the Local Government Act 2002.

Introduction

Urban Plus Limited (UPL) is in a time of significant transition with a broadening remit from the Shareholder across parts of the housing continuum which the company had not addressed previously. This shift signifies an openness of both the Shareholder and UPL to new ways of working, bringing in new expertise, forming new partnerships and exploring how the Shareholder and UPL can work more deeply together to address some of the housing issues Lower Hutt faces currently and in the future.

UPL is wholly owned by Hutt City Council (HCC) and operates as a Council Controlled Organisation (CCO) under the Local Government Act 2002. UPL was established effective 1 May 2007 with principle objectives as stated below under ‘Our Business Objectives’.

UPL is a company registered under the Companies Act 1993, is governed by the requirements of that Act and Section 6 of the Local Government Act 2002, and is covered by law and best practice. It also has responsibilities under the general law including the Resource Management Act 1991.

The Urban Plus Group comprises Urban Plus Limited (UPL), UPL Limited Partnership (UPLLP) and UPL Developments Limited (UPLDL).

Shareholder’s Mandate to Urban Plus Limited

UPL is charged with providing housing outcomes for Lower Hutt. In alignment with the Shareholder’s revised 2020 – 2022 key priorities and expectations (set out below), UPL will set out to deliver wider housing outcomes and benefits than previous years.

Previously, UPL focussed on delivering social housing to the low income elderly and releasing affordable housing into the local market for sale. These new, wider expectations and deliverables set by the Shareholder entail that UPL cannot act as developer and continue to hold property long term. Cyclical project programming is fundamental to successfully delivering the company’s objectives. Future projects’ success and deliverables are reliant on a continued cycle of development and release (and repeat).

1. Provide for Wider Housing Need

UPL is to provide for need across the housing continuum. UPL will develop a framework to enable the development of social housing and housing for a range of households in addition to those who qualify as ‘low income elderly’ (see definition p7), market rental, affordable housing and commercially focussed developments. The primary focus of this priority is to bring more homes into the supply chain.

1.1 Release of Council-Owned Land for Development

To affect 1 (above), UPL will work closely with the Shareholder throughout the 2021-22 financial year and outer lying years to assist in reviewing and identifying parcels of land to enable further growth and assist in achieving its Urban Growth targets to assist in addressing the housing shortage currently being experienced in Lower Hutt. There is formal direction^ from Central Government (NPS-UDC) to Local Government to provide more residentially zoned land for development than is currently being supplied due to projected population growth.

^Source: John Pritchard, Principal Research & Policy Advisor at HCC 4/11/2020 email extract: “The Housing and Business Development Capacity Assessment, completed in circa October 2019 in response to the National Policy Statement on Urban Development Capacity (NPS-UDC), population growth in Lower Hutt will mean [Lower Hutt] needs between 5,233 and 9,606 additional dwellings up to 2047. (For planning purposes the NPS-UDC requires Council to provide for more supply than the above so the figures are increased to 6,105 and 11,256. We also need to deliver a range of housing types to respond to population changes.”

1.2 Urban Growth Strategy

UPL will assist HCC in the Urban Growth Strategy by applying knowledge, experience, expertise and skill from within UPL as and when called upon to assist the Shareholder wherever possible to invigorate urban growth, and development, and provide other property related assistance.

2. Build More Housing Partnerships

In order to deliver homes across the areas of the housing continuum identified in point 1 above, UPL is to develop relationships with key organisations such as Community Housing Providers (CHPs), mana whenua, non-governmental organisations, developers, as well as Crown agencies with responsibilities for delivering housing. Partnerships with key organisations within the housing and social sectors will enable UPL to achieve outcomes where it cannot achieve them on its own. UPL is charged with delivering housing to organisations which provide their own in-house management and wrap-around support services.

3. Build Pathways to Permanency

UPL will look to develop a framework which delivers opportunities for individuals and families / whanau to assist them to transition to housing permanency. Structures / arrangements for UPL to investigate further could include 'rent for life' accommodation where UPL provides rental accommodation that remains affordable and that people can make their home permanently (with any associated social support required from relevant parties), all the way through to home ownership.

In addition, UPL will investigate, and deliver where appropriate, initiatives such as shared equity, rent to buy, reduced deposit schemes, and other means of assisting qualifying households into home ownership. It is anticipated that such initiatives can be aligned via partnerships with Crown agencies, and partners such as CHPs and mana whenua.

As noted above, the pathways to permanency will require consideration of affordable rental opportunities as well as the development and sale of homes.

4. Implement HomeStar 6 Rating & Environmental Standards

The Shareholder has set its own carbon zero objective, and as such UPL aims to align with this direction where possible. UPL has, and will continue to, incorporate features into its dwelling design and development site layouts that lower carbon emissions – to align with the Shareholder’s aspirations for the city to be ‘zero carbon’ by 2050. Examples include using electricity or renewable sources of energy for space and water heating, minimising building waste, and making buildings ready for charging electric vehicles.

UPL will seek to incorporate design and environmental considerations into future projects, and align these with the HomeStar rating assessment to achieve no less than 6 stars in future housing development projects. UPL will explore how implementing HomeStar 6 standards will contribute towards Council achieving its aims of lowering carbon emissions and whether additional measures are required. The aim of this priority is for UPL and Council to show environmental leadership by continuing to set higher standards for how we deliver sustainable, warm, safe, and dry homes.

5. Achieve Wider Outcomes

The achievement of these new priorities will require the development of a considerable number of new homes throughout Lower Hutt. This requires a skilled workforce that is ready and able to deliver. Delivering more supply is an opportunity for UPL to create and support local employment and training and to work with a tertiary education provider(s) and other partners to support capacity uplift in the building, construction and built environment sectors, and partner with the construction industry to offer employment and career development. UPL will explore opportunities which support and enable tertiary education providers to increase off-site construction, which again has the potential to increase supply and affordability.

6. Deliver on Plan Change 43

District Plan Change 43 enables greater housing capacity and a wider range of residential development in areas of the city which are located near transport and retail nodes. UPL is mandated to seek housing opportunities around suburban shopping centres and transport hubs afforded by Plan Change 43 and to be an exemplar of the well-designed developments Council envisaged in the Medium Density Design Guide that accompanied the plan change.

Further, UPL is expected to align with the Shareholder’s aspiration in terms of:

7. Promote Maori Outcomes

Council is committed to improving outcomes for Maori and to working with our mana whenua partners to shape Lower Hutt for the future. UPL will seek to fully participate alongside Council in any formal relationship agreements with mana whenua as they relate to improving housing outcomes.

8. Support Central Government Initiatives

When sought by the Shareholder, UPL will look to support Central Government initiatives where it is financially, socially and environmentally prudent, and is to the overall betterment to Lower Hutt City. Further, UPL will seek to work with any form of social or community housing providers which promote the growth of housing in Lower Hutt.

The Provision of Accommodation for the Low Income Elderly

In addition to the above priorities, UPL is also charged with the ongoing provision of housing to the low income elderly:

1. A safe community

The UPL portfolio of residential housing is predominantly occupied by those considered to be the ‘low-income elderly’. We feel that an elderly presence in any community contributes to a safer community by having people present in residential areas during the working day. This passive security presence provides ‘stability’ and value to a community by having people in the area while those of younger age may be at work or school.

2. A strong and diverse economy

Providing appropriate accommodation for our elderly where they can retain independent living with dignity contributes significantly to community diversity by retaining the elderly in that community.

3. An accessible and connected city

The elderly can contribute significantly to the community and families by being actively involved in the community. This connectivity with the community spans generations and encourages understanding and tolerance between young and old.

4. Healthy people

UPL has a significant role in providing warmer, drier, healthier homes to the low-income elderly who may not be in a position to self-fund independent accommodation. The forecast is for steadily growing numbers of the over 65’s entering this sector as the population ages. The changing Lower Hutt demographic will put increased pressure on UPL to provide an increased number of housing units in the future. UPL has a significant role to play in appropriately housing this growing and aging demographic.

5. A healthy natural environment

UPL aims to be a good community citizen in the widest sense taking responsibility for project management, material selection and disposal in a way that minimises harm and impact on the environment. We endeavour to apply HomeStar principles in terms of passive design (insulation, double glazing and where possible, positioning for solar gain) to minimise energy consumption promoting the concept of warmer, drier, healthier homes at minimal ongoing cost to the occupier.

6. Actively engaged in community activities

The provision of residential housing aimed at the low-income elderly is a community activity where we are using our skills, expertise and professionalism to assist those elderly that are in need of assistance in finding appropriate accommodation.

7. Strong and inclusive communities

Prior to embarking on any development, UPL considers the overall amenity value of the community including proximity to public transport, retail, medical centres, land contour etc. so our residents can live safely and in an engaged manner within the community, whilst retaining mobility and independence.

8. A healthy built environment

Our developments and management of the existing portfolio contribute to a healthy built environment by sound practice property maintenance, developments that are sympathetic to community values, and are complimentary to desirable urban planning aspirations and planning rules. New properties are insulated, double glazed, warm, dry homes with accessibility issues minimised by prudent design. It is recognised that those occupying warmer drier homes are naturally healthier, consume less energy in keeping those homes warm, and enjoy reduced doctors / hospital visits with increased longevity.

Our Statutory Objectives

Section 59 of the Local Government Act 2002 provides:

Principal objective of council-controlled organisation

(1) The principal objective of a Council-Controlled Organisation is to:

(a) Achieve the objectives of its shareholders, both commercial and non-commercial, as specified in the Statement of Intent;

(b) Be a good employer;

(c) Exhibit a sense of social and environmental responsibility by having regard to the interests of the community in which it operates, and by endeavouring to accommodate or encourage these when able to do so; and

(d) If the Council-Controlled Organisation is a Council-Controlled Trading Organisation, conduct its affairs in accordance with sound business practice.

(2) In subsection 1.b, good employer has the same meaning as in clause 36 of Schedule 7 of the Local Government Act 2002.

Our Business Objectives

In addition to the Statutory objectives, the Business objectives of the Company are to:

1.1 operate as a successful and profitable undertaking;

1.2 provide for need across the housing continuum by developing property for housing outcomes such as: affordable, social, market rentals and commercial projects;

1.3 be a provider of housing into the local supply chain with various housing typologies;

1.4 build housing partnerships with local and nationwide community housing organisations, mana whenua and Crown agencies;

1.5 develop a framework to enable households to transition into housing permanency;

1.6 demonstrate environmental leadership by the implementation of HomeStar methodologies and other practices which lower carbon emissions;

1.7 support and advance training and employment opportunities within the construction and built environment sectors;

1.8 seek greater housing capacity outcomes afforded by Plan Change 43;

1.9 support Central Government initiatives where and when prudent, in alignment with the Shareholder;

1.10 provide for the long term a growing portfolio of rental housing for the low-income elderly^{^[1]} consistent with, and to give effect to, Council’s housing policy;

1.11 manage and develop the housing portfolio in a manner which increases its property values;

1.12 ensure that the housing portfolio for the low-income elderly is appropriate for the changing needs of the community in terms of the objectives outlined in Council’s housing policy;

1.13 purchase, develop, lease or on-sell future development projects in a manner which maximises its value at a level of risk appropriate for the investment of funds and/or which aligns with the aspirations of the Shareholder;

1.14 comply with all legislative and regulatory provisions relating to its operations and performance;

1.15 ensure all assets owned by the company are maintained to the applicable standards;

1.16 maintain an effective business continuance plan;

1.17 maintain a register of current Council policies relevant to its business and operations; and

1.18 assist Council when asked to do so in its endeavours in regards to the Urban Growth Strategy.

These objectives will be monitored and where in conflict (with each other or themselves), these objectives will be pursued giving greater weight to the interests of maximising value to the Shareholder provided that in relation to the provision of social housing, value to the Shareholder will include the consideration of social value.

Nature and Scope of Activities to be undertaken by the Company

The nature and scope of activities of the Company are to:

1. Operate as a successful business, returning benefits to the Shareholder;

2. Own, operate and maintain, to an acceptable standard, a portfolio of rental housing to provide community housing for the low-income elderly in accordance with normal commercial guidelines and the housing policy of Council;

3. Ensure that the housing portfolio for the low-income elderly is appropriate for the changing needs of the community in terms of the objectives outlined in Council’s housing policy;

4. Develop property in preparation for sale or lease, which is declared surplus to the needs of Hutt City Council and which provide an appropriate return for the costs and risks of development;

5. Actively participate in the market with intent to acquire / purchase property to develop for sale, lease, portfolio retention or public market rental which provides appropriate returns for the levels of cost, risk and funds invested;

6. Purchase, develop, lease or on-sell the development property portfolio in a manner which maximises its value at a level of cost and risk appropriate for the investment of funds and is in alignment with the aspirations of the Shareholder; and

7. Otherwise become involved in property-related transactions and property-technical advisory services on a commercial basis that support the Shareholder’s vision for the future development of the city. This specifically includes assisting with progressing the Urban Growth Strategic Objectives.

Section 59 of the Local Government Act 2002 also provides that the principal objectives of a Council-Controlled Trading Organisation include the objectives of its Shareholders.

In order to meet our objectives we focus our work activity on asset planning and development, capital project management, operations management, risk management, staff development and corporate governance.

Other

UPL will continue to be involved in property-related transactions on a commercial basis that support the Shareholders' vision for the future development of the city.

UPL will continue to provide a wide range of strategic property advice and property consultancy when required to the Shareholder. Work has included:

1. Advice and general direction for Making Places projects;

2. Commercial leasing management advice for HCC property and subsidiaries;

3. Specific property advice; and

4. Assist with strategic HCC property acquisition and divestment as directed by the Shareholder.

Funding

UPL’s existing funding thresholds are very restrictive for what has been mandated by the Shareholder to action in the upcoming years. As such there is both an essential requirement and opportunity to seek alternative funding channels or further Shareholder support. Future investigation is required into alternative mechanisms which will enable UPL to undertake scale developments.

Mechanisms such as project funding (most UPL Group projects are cyclical in nature and require only short term funding peaks, and therefore funds can be recycled quickly upon each projects conclusion), directly engaging the Local Government Funding Agency (LGFA) as a direct CCO issuer or directly approaching banks for funding (either as corporate / project financing, or both) are some options to be progressed. LGFA covenants and Regulatory aspects will be managed accordingly should alternative funding streams be engaged.

Leveraging the existing asset portfolio and divestment of existing housing are additional mechanisms which UPL can utilise, subject to Shareholder approval which must be received before proceeding with any divestment programmes. Any variation to existing debt-to-equity ratios, leveraging ratios and divestment programmes are subject to unanimous Board and Shareholder approval.

Ultimately, there will be a requirement within the next 3 financial years for a funding facility level of $43M – which includes an allowance to undertake current Board-approved projects, future projects, potential strategic purchases and other contingencies as they arise. This peak funding level is only for short term due to the cyclical nature of property development.

Performance Measures

The Company will meet the following measures for the next three years:

Rental Housing

1.1 Capital expenditure within budget.

1.2 Operational expenditure within budget.

1.3 Net Surplus before Depreciation and tax and after Finance Expenses as a Proportion of the Net Book Value of Residential Land and Buildings at the Start of the Year – Greater than 2.25%.

1.4 Tenant satisfaction with the provision of the company’s rental housing greater than or equal to 90%.

1.5 Percentage of total housing units occupied by low-income elderly^{^[2]} greater than or equal to 85%.

1.6 Rentals charged shall be no more than 80% of ‘market’ rent.

1.7 Increasing the portfolio size to 220 units by December 2023.

1.8 All rental housing units in the portfolio to have a HomeFit certificate by 30 June 2024.

1.9 Any rental housing units purchased and not already utilising electricity or renewable sources of energy for space heating, water heating, and cooking facilities, shall be converted to utilise only electricity or renewable sources of energy within five years of acquisition.

1.10 New rental housing units constructed by UPL to utilise only electricity or renewable sources of energy for space heating, water heating and cooking facilities.

Property Development

1.11 Capital expenditure within budget.

1.12 Operational expenditure within budget.

1.13 From 1 July 2019, any new developments not already resource consented as at 30 June 2019, shall only utilise electricity or renewable sources of energy for space heating, water heating and cooking facilities.

1.14 From 1 July 2021, all new housing units (standalone house or townhouse) shall achieve a certified HomeStardesign rating of at least six stars.

1.15 A pre-tax return of not less than 20% on Development Costs including Contingency on each commercial development project (except where the Board and Shareholder agree otherwise to achieve specified objectives).

1.16 A pre-tax return of not less than 15% on Development Costs including Contingency on housing released to market as ‘Affordable’ (except where the Board and Shareholder agree otherwise to achieve specified objectives).

1.17 Value of divestment to Community Housing Providers (or socially-likeminded organisations) set at each project’s Development Cost (includes contingency and GST) plus a margin of no less than 10% (except where the Board and Shareholder agree otherwise to achieve specified objectives).

1.18 Long term public rental accommodation pre-tax returns at no less than (or equal to) 3.5% after depreciation.³

³ Returns are specific to each project’s (Board Approved) business case where long term market rentals are developed. Future rents are set as per independent annual review.

Professional Property Advice

1.19 Achieve a market return on additional services provided to the Shareholder.

UPL Developments Limited

1.20 Undertake, negotiate and execute tender and procurement processes for and on behalf of the Partnership and ‘parent’ company as required.

1.21 Facilitate civil and construction contracts for and on behalf of the Partnership and ‘parent’ company as required.

1.22 Facilitate payment of contract progress claims for Board approved contracts as well as payments to other suppliers engaged to provide services or goods to defined development projects.

1.23 Should UPLDL be used for future developments, the same performance measures apply as for Property Development (refer above).

1.24 Act as General Partner when a Limited Partnership structure is utilised for development projects.

UPL Limited Partnership

1.25 Develop land in a manner which maximises its value at a level of risk appropriate for the investment of funds.

1.26 To perform business undertakings in common with UPL with a view to profit from development projects for the purposes of funding for the elderly housing portfolio and meeting the Shareholder’s wider key priority outcomes.

1.27 Should UPLLP be used for future developments, the same performance measures apply as for Property Development (refer above).

Risk Management

Health and Safety in Employment

UPL will maintain sound industry practice with ongoing reviews of its Health and Safety policies to ensure they remain current in terms of compliance.

Business Continuity

UPL will maintain a Business Continuity Plan for unforeseen circumstances so any event will have minimal impact on the day-to-day operation of the business.

Insurances

UPL will maintain appropriate insurances to mitigate risk of portfolio damage, business interruption and professional indemnity. This will include Directors and Office Bearers cover where appropriate.

Emergency preparedness

UPL will rehearse and maintain systems and procedures to best position itself to deal with emergency situations.

Commercial Risk

UPL will manage its affairs in a manner that minimises commercial risk recognising that some risk will need to be taken to achieve targets.

Board of Directors

The Board of Directors consists of up to six members, with the Shareholder appointing Council representation as Director(s) and Independent Directors. Directors generally serve three-year terms.

The Board is responsible for the proper direction, governance and control of UPL.

Unanimous approval of the Board is required for:

1.1 Employment of staff and creation of new permanent positions outside of resolved budget limits;

1.2 Extraordinary transactions (entering into any contract or transaction except in the ordinary course of business);

1.3 Delegation of Directors’ powers to any person;

1.4 Major transactions (entering into any major transaction);

1.5 Disputes (commencing or settling any litigation, arbitration or other proceedings which are significant or material to the Company’s business);

1.6 Borrowings in a manner that materially alters the Company’s banking arrangements, advancing of credit (other than normal trade credit) exceeding $5,000 to any person except for making deposits with bankers, or giving of guarantees or indemnities to secure any person’s liabilities or obligations;

1.7 Sale of assets (sell or dispose of fixed assets for a total price per transaction exceeding $100,000 or a series of transactions aggregated exceeds $300,000); and

1.8 Capital expenditure (other than in the ordinary course of doing business) at a total cost to the Company, per transaction, exceeding $100,000 or a series of transactions aggregated exceeds $300,000. However, the UPL Chief Executive has delegated authority to approve individual, project-specific capital expenditure invoices up to $300,000 + GST if the Board has unanimously approved the budget for that project.

The Board will require the agreement of the Shareholder for:

1.1 Any changes to the Constitution;

1.2 Any increases in capital and the issue of further securities, share buybacks and financial assistance;

1.3 Any alteration of rights attaching to shares;

1.4 Any arrangement, dissolution, reorganisation, liquidation, merger or amalgamation of the Company; and

1.5 Any ‘major transactions’ as that term is defined in the Companies Act 1993.

Ratio of consolidated Shareholders’ funds to total assets

The target ratio for consolidated Shareholders' funds to total assets is at least 50%. Consolidated Shareholders' funds comprise share capital and accumulated reserves. Total assets comprise all tangible assets of the Company, the main component being housing and undeveloped land. The forecast consolidated Shareholders funds as at June 2021 is 74%. The share capital of $15.3 million consists of 27,000,001 ordinary shares on issue, of which 12,000,001 are fully paid and 15,000,000 are issued but uncalled.

Accumulated profits and capital reserves

There is no intention to pay a dividend in the 2021/22 financial year or succeeding years.

Information to be provided to Shareholders

In each year UPL shall comply with the reporting requirements specified for CCO’s under the Local Government Act 2002 and the Companies Act 1993 regulations.

In particular, it shall provide:

Annually

1. Annually report, within two months after the end of each financial year, which will include:

2. A Statement of Intent detailing all matters required under the Local Government Act 2002;

3. An annual budget for the coming financial year, broken out by the two major areas of operation; Rental Housing and Land Development, including the assets employed and debt attributable to each area;

4. A written report on the financial operations of the Company to enable an informed assessment of its performance including a comparison against budget and the Statement of Intent, the Return on Equity and Return on Assets for the Period;

5. Financial statements comprising the Statement of Financial Position, Statement of Comprehensive Revenue and Expenses and Statement of Cash Flows;

6. A business plan indicating the nature of property development it proposes to undertake and the range of investment and estimated return it proposes to achieve;

7. An assessment of the current market for rental housings and the appropriateness of the current housing portfolio to meet the needs of the low-income elderly.

Half Yearly

8. Six-monthly, within two-months of the end of the six month reporting period.

9. A written report on the operations of the Company by the two major areas of operation to enable an informed assessment of its performance including a financial comparison against budget and the Statement of Intent, the Return on Equity and Return on Assets for the Period.

10. Financial statements comprising the Statement of Financial Position, Statement of Comprehensive Revenue and Expenses and Statement of Cash Flows.

11. Progress on activities outlined in the agreed business plan.

Share acquisition

There is no intention to subscribe for shares in any other company or invest in any other organisation.

(NOTE: UPL has a subsidiary company UPL Developments Limited).

Compensation from Local Authority

It is not anticipated that the company will seek compensation from any local authority other than in the context of normal commercial contractual relationships.

NB: if a CCO has undertaken to obtain or has obtained compensation from its Shareholders in respect of any activity, this undertaking or the amount of compensation obtained will be recorded in:

1. The annual report of the Council-Controlled Organisation; and

2. The annual report of the local authority.

Equity value of the Shareholder’s investment

For the year ended 30 June 2022, the estimated net value of the Shareholder’s investment in Urban Plus Group will be $48.663 million.

Financial Forecasts

Planning and programming for development projects will be based on exceeding the agreed minimum financial performance thresholds as set out in the Performance Measures section for each commercial, residential portfolio, affordable housing and long term market rental development project. Each development project will require the approval of the Board to ensure strategic fit and achievement of the minimum rate of return.

The current volatility of the property market and anticipated future interest rate increases has resulted in considerable uncertainty in terms of what projects will become available, and what sales might result from those projects. Details of potential development projects will be included in the regular reporting to the Board and Shareholder.

The company’s most recent development projects, both completed in the 2020/21 financial year, were Central Park on Copeland and The Lane, Waterloo. The first mentioned was a thirty-four townhouse development on part of the former Copeland Street Reserve land in Epuni which achieved its financial targets. The latter development was a twenty-seven townhouse development in Waterloo – on land owned by UPL which also met its financial targets. All sixty-one townhouses were unconditionally sold well before construction commenced at either site, and achieved sales levels higher than the Board-approved business case figures.

The success of these developments has enabled UPL to not only strengthen its financial position, but also to reinvest the profits of the development to achieve the wider outcomes set out in the Objectives (above) in this Statement of Intent.

These two commercial development projects were managed by UPL Developments Limited – a wholly owned subsidiary of UPL providing property development management services – through UPL Limited Partnership - a partnership between UPL Limited Partnership (as General Partner) and UPL (as Limited Partner).

The original target date for UPL to achieve 220 rental units was 30 June 2020. This target date will not be achieved based on the current development programme with only 189 units projected as at 30 June 2020, and the wider mandate now provided by the Shareholder. The target of 220 units is now expected to be achieved by December 2023. Between 2018 and 2021, UPL has developed and sold to the private market, 105 houses, the profits from which will fund the growth in UPL’s rental portfolio without requiring ratepayer assistance.

The Shareholder has provided a mandate far wider than previous years’ focus on ‘for-profit’ commercial projects and growing the residential portfolio. Accordingly, there has been a recalibration of targets to grow the portfolio due to the revised Shareholder direction and aspiration of wider outcomes. Future focus is toward the development and on-selling of property to (but not limited to) Community Housing Providers, release of affordable housing, and long term market rentals, production of housing for rent-to-own and shared equity schemes; rather than the primary focus on UPL’s residential portfolio growth.

Consolidated Statement of Financial Performance

Consolidated Statement of Changes in Equity

Consolidated Statement of Financial Position

Consolidated Statement of Cash Flows

Statement of Accounting Policies

UPL will apply the following accounting policies consistently during the year and apply these policies to the Statement of Intent. In accordance with the New Zealand Institute of Chartered Accountants Financial Reporting Standard 42 (FRS 42), the following information is provided in respect of the Statement of Intent.

Nature of prospective information

The financial information presented consists of forecasts that have been prepared on the basis of best estimates and assumptions on future events that UPL expects to take place.

Statement of compliance with International Financial Reporting Standard

The financial statements have been prepared in accordance with New Zealand generally accepted accounting practice. They comply with New Zealand equivalents to International Financial Reporting Standards (NZ IFRS) and other applicable financial reporting standards, as appropriate for public benefit entities.

Reporting entity

UPL is a company registered under the Companies Act 1993 and a Council-Controlled Trading Organisation as defined by Section 6 of the Local Government Act 2002. Hutt City Council is the only shareholder. The company was incorporated in New Zealand in 13 December 1996 as De Luien Developments Limited, changed its name to Centre City Plaza Limited on 27 June 1997, changed its name to Hutt Holdings Limited on 20 January 2003 and finally changed its name to Urban Plus Limited on 25 May 2007.

The financial statements have been prepared in accordance with the requirements of the Companies Act 1993, the Financial Reporting Act 1993 and the Local Government Act 2002.

For purposes of financial reporting, UPL is a public benefit entity.

Reporting period

The reporting period covers the 12 months from 1 July 2021 to 30 June 2022. Comparative projected figures for the year ended 30 June 2023 and 30 June 2024 are provided.

Specific accounting policies

The accounting policies set out below have been applied consistently to all periods presented in these financial statements.

The measurement basis applied is historical cost.

The accrual basis of accounting has been used unless otherwise stated. These financial statements are presented in New Zealand dollars rounded to the nearest thousand, unless otherwise stated.

Judgements and estimations

Preparing financial statements in conformity with NZ IFRS requires judgements, estimates and assumptions that affect the application of policies and reported amounts of assets, liabilities, income and expenses. Where material, information on the major assumptions is provided in the relevant accounting policy or will be provided in the relevant note to the financial statements.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods.

Judgements that have a significant effect on the financial statements and estimates with a significant risk of material adjustment in the next year are discussed in the relevant notes.

Cash and cash equivalents

Cash and cash equivalents includes cash on hand, deposits held at call with banks, other short term highly liquid investments with original maturities of three months or less, and bank overdrafts.

Debtors and other receivables

Debtors and other receivables are initially measured at fair value and subsequently measured at amortised cost using the effective interest method, less any provision for impairment.

Revenue

Revenue is measured at the fair value of consideration received.

Property sales are recognised on settlement date, along with the related expenses. Interest income is recognised using the effective interest method.

Property, plant and equipment

On transition to NZ IFRS assets were recorded at cost less accumulated depreciation and impairment losses.

Revaluation

Land and buildings are revalued with sufficient regularity to ensure that their carrying amount does not differ materially from fair value and at least every three years. All other asset classes are carried at depreciated historical cost. The carrying values of revalued assets are assessed annually to ensure that they do not differ materially from the assets’ fair values. If there is a material difference, then the off-cycle asset classes are revalued.

Revaluations of property, plant, and equipment are accounted for on a class-of-asset basis. The net revaluation results are credited or debited to other comprehensive income and are accumulated to an asset revaluation reserve in equity for that class of asset. Where this would result in a debit balance in the asset revaluation reserve, this balance is not recognised in other comprehensive income but is recognised in the surplus or deficit. Any subsequent increase on revaluation that reverses a previous decrease in value recognised in the surplus or deficit will be recognised first in the surplus or deficit up to the amount previously expensed, and then recognised in other comprehensive income.

Additions

Expenditure of a capital nature of $500 or more has been capitalised. Expenditure of less than $500 has been charged to operating expenditure. The cost of an item of property, plant and equipment is recognised as an asset if, and only if, it is probable that future economic benefits or service potential associated with the item will flow to UPL and the cost of the item can be measured reliably.

Disposals

Gains and losses on disposals are determined by comparing the proceeds with the carrying amount of the asset. Gains and losses on disposals are recognised in the Statement of Comprehensive Income.

Subsequent costs

Costs incurred subsequent to initial acquisition are capitalised only when it is probable that future economic benefits or service potential associated with the item will flow to UPL and the cost of the item can be measured reliably.

Depreciation

Depreciation is provided on a straight line basis on all property, plant and equipment at rates that will write off the cost (valuation) of the assets to their estimated residual values over their useful lives. The straight line depreciation rates are as follows:

Estimated economic lives	Years	Rate
Buildings	5 - 69	1.45% - 50.00%
Plant and equipment	8 - 13	7.69% - 12.00%

The residual value and useful life of an asset is reviewed and adjusted if applicable at each financial year end.

Intangible assets

Software acquisition and development

Amortisation

The useful lives and associated amortisation rates of major classes of intangible assets have been estimated as follows:

Estimated economic lives	Years	Rate
Computer software	2.8	36%

Impairment of non-financial assets

Assets with a finite useful life are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. If an asset’s carrying amount exceeds its recoverable amount, the asset is impaired and the carrying amount is written down to the recoverable amount. The total impairment loss is recognised in the Statement of Comprehensive Income.

Goods and services tax

All items in the financial statements are stated exclusive of GST, except for receivables and payables. Where GST is not recoverable as input tax then it is recognised as part of the related asset or expense.

The net amount of GST recoverable from, or payable to, the Inland Revenue Department (IRD) is included as part of receivables or payables in the Statement of Financial Position.

Commitments and contingencies are disclosed exclusive of GST.

Employee entitlements

Short-term entitlements

Employee benefits that UPL expects to be settled within 12 months of balance date are measured at nominal values based on accrued entitlements at current rates of pay. These include salaries and wages accrued up to balance date, annual leave earned to, but not yet taken at balance date, retiring and long service leave entitlements expected to be settled within 12 months, and sick leave.

UPL recognises a liability for sick leave to the extent that absences in the coming year are expected to be greater than the sick leave entitlements earned in the coming year. The amount is calculated based on the unused sick leave entitlement that can be carried forward at balance date, to the extent that UPL anticipates it will be used by staff to cover those future absences.

UPL recognises a liability and an expense for bonuses where contractually obliged or where there is a past practice that has created a constructive obligation.

Borrowings

Borrowings are initially recognised at their fair value. After initial recognition, all borrowings are measured at amortised cost using the effective interest method.

Borrowing costs

Borrowing costs are recognised as an expense in the period in which they are incurred.

Creditors and other payables

Creditors and other payables are initially measured at fair value and subsequently measured at amortised cost using the effective interest method.

Income tax

Income tax for the period is calculated by reference to the amount of income taxes payable or recoverable in respect of the taxable profit or tax loss for the period. It is calculated using tax rates and tax laws that have been enacted or substantively enacted by the reporting date. Current tax for current and prior periods is recognised as a liability (or asset) to the extent that it is unpaid (or refundable).

Property intended for sale

Property previously held but now being sold as it is no longer required is classified as a property held for sale.

This classification is used where the carrying amount of the property will be recovered through sale, the property is available for immediate sale in its present condition and sale is highly probable.

Property held for sale is recorded at the lower of the carrying amount and fair value less costs to sell. From the time a property is classified as held for sale, depreciation is no longer charged on the improvements.

Where property is held for sale or for development for sale, in the ordinary course of business, it is classified as inventory. Such property is recorded at the lower of cost and net realisable value (selling price less costs to complete and sale costs). Any write-downs to net realisable value are expensed in the net surplus/(deficit) for the year.

Leased assets

Operating Leases

Leases where the lessor effectively retains substantially all the risks and rewards of ownership of the leased items are classified as operating leases. Payments made under these leases are expensed in the Statement of Comprehensive Income on a straight-line basis over the term of the lease. Lease incentives received are recognised in the Statement of Comprehensive Income as an integral part of the total lease payment.

Finance Leases

The Company has not entered into any material finance leases.

Financial instruments

73 09 June 2021

Long Term Plan/Annual Plan Subcommittee

28 May 2021

File: (21/812)

Report no: LTPAP2021/3/130

Final decisions on the Long Term Plan 2021-2031

Purpose of Report

1. The purpose of this report is to confirm final Long Term Plan 2021-2031 decisions following the public engagement and feedback process.

Recommendations

That Council:

(1) receives the information;

(2) notes that Council approved on 31 March 2021 the draft Long Term Plan 2021-2031 Consultation Document and underlying information for public engagement;

(3) notes that the detailed analysis and results of the public engagement was reported to Council on 24 May 2021, refer Section C;

(4) approves for inclusion in the final Long Term Plan 2021-2031 the Three Waters investment option 1, refer paragraphs 12 to 14;

(5) approves for inclusion in the final Long Term Plan 2021-2031 the Transport investment option 1, refer paragraphs 15 to 17;

(6) approves for inclusion in the final Long Term Plan 2021-2031 the Naenae pool investment option 1, refer paragraphs 18 to 20;

(7) notes that decisions on the proposed changes to the Rates Postponement Policy are to be progressed outside the Long Term Plan process due to further legal advice sought, refer paragraph 27;

(8) considers the budget matters as detailed in table 2 and agrees decisions on these matters for the final Long Term Plan 2021-2031;

(9) agrees the rates increases to be included in the final Long Term Plan 2021-2031 as follows:

	2021/22	2022/23	2023/24	2024/25	2025/26	2026-2031
Rates revenue increase¹	5.9%²	5.9%	5.9%	7.2%	7.2%	7.2%

Note 1- excludes revenue from growth in the rating base

Note 2- excludes impact of service changes introduced in 2021/22 for waste services (rubbish, recycling and green waste)

(10) notes the projected rating impact for 2021/22 for the average residential ratepayer is $2.51 per week which excludes the new targeted rates for rubbish and recycling;

(11) notes the projected debt and debt to revenue ratio for the final Long Term Plan 2021-2031, refer graphs 2 and 3;

(12) notes the projected balanced budget position for the final Long Term Plan 2021-2031, refer graph 4;

(13) endorses the updated Statement of Service Performance information, refer Appendix 4;

(14) notes the external audit process that is to be completed;

(15) agrees that the LTP Working Group (comprising the Mayor, Deputy Mayor and Chairs of Committees) be delegated the authority to make decisions as required in preparing the Long Term Plan 2021-2031 for Council adoption on 30 June 2021; and

(15) requires that any such decisions made by the LTP Working Group be reported back to the Council meeting on 30 June 2021.

Acronyms:

AP - Annual Plan 2020/21

DLTP – Draft Long Term Plan 2021-2031

FLTP - Final Long Term Plan 2021-2031

CD – Consultation document

Capex – capital expenditure

Opex – operating expenditure

Section A – Context and high-level plan

2. The Local Government Act 2002 requires all Councils to adopt a Long Term Plan (LTP) and review it every three years. The LTP must be adopted before the commencement of the first year it relates to after being consulted with the community through a special consultative procedure. Table 1 provides a summary of the process completed to-date together with the next stages.

Table 1: High-level plan

Activity	Date	Status
Officers progress initial planning and preparation	July to Aug 2020	Complete
Waste Services Review decisions	15 Sept 2020	Complete
Councillor and Community Boards Chairs LTP hui	21 Sept 2020	Complete
High level plan endorsed together with key assumptions. Initial decisions progressed on strategic direction and policies.	24 Sep 2020	Complete
Council agreed: purpose, vision and themes for engagement, three waters investment, base budget review changes, rates policy etc.	27 Oct 2020	Complete
Development contributions policy and Revenue and Financing policy progressed.	30 Nov 2020	Complete
Early engagement seeking feedback on key priorities	2 Dec 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	Complete
Formal public consultation	6 Apr to 6 May	Complete
Council briefing on results of public consultation	13 May 2021	Complete
Public hearing of submissions elated advice	20 &21 May 2021	Complete
Council agreed direction/decisions post public consultation	24 May 2021	Complete
Council meets to agree final decisions	9 June 2021	Today
Council adopts the LTP and sets the rates	30 June 2021

Section B – Background and development of the draft LTP 2021-2031

3. Over the past 18 months Council has taken a range of decisions to address key matters across Lower Hutt. This has included drafting an LTP amendment in early 2020 to progress major projects such as Naenae Pool (which was ultimately deferred as a result of COVID-19), the Annual Plan 2020/21 Emergency budget and completing a LTP 2018-2028 amendment to implement a new waste and recycling service.

4. Ahead of preparing the draft LTP 2021-2031 (DLTP), Council’s work programme broadly focused on investment in basic infrastructure and services. A number of specific challenges faced by Hutt City Council were identified in preparing the DLTP, including:

- Demand and pressure on infrastructure, largely due to ageing assets and historical underinvestment,

- Housing supply and affordability,

- Delivering services for a fast growing population,

- Climate change and sustainability,

- Covid-19 impacts and uncertainties.

5. Officers sought elected member feedback and direction through a range of engagements, including a hui with Councillors and Community Board Chairs in September 2020, in order to progress the development of the DLTP. From this hui, officers were able to distill the aspirations, priorities and vision elected members have for the city. As a result of this and general public feedback (from relevant consultations), six draft priorities were agreed:

- 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

- Connected communities | Tūhono hapori

- Being financially sustainable | Whakauka ahumoni

6. Early engagement with the public on these priorities took place from 2 December 2020 to 18 January 2021. There was generally strong support for these priorities.

7. Detailed proposals for public consultation were then developed by Council across the six key priority areas. Council considered a wide range of advice and information in developing the DLTP from September 2020 to March 2021.

8. The DLTP Consultation Document and supporting information are statutorily required to be audited. Audit NZ worked alongside relevant staff for some months to complete the audit process for the consultation phase. Audit NZ issued their audit opinion on 31 March 2021 ahead of the public consultation proceeding. The audit opinion included three matters of emphasis being:

- uncertainty over the delivery of the capital programme,

- uncertainty over the Three Waters Reforms

- uncertainty over the Three Waters forecasts (largely due to the asset condition information based on age of assets).

Section C – Feedback on the proposals and final Council decisions

9. The Consultation Document and supporting DLTP information adopted on 31 March 2021 outlined Council’s proposals for 2021-2031. Options were presented for each proposal and public feedback was sought.

10. The detailed analysis of public feedback on the proposals was reported to Council on 24 May 2021 (refer LTPAP2021/2/119). Initial direction and decisions were progressed by Council at this meeting.

11. The purpose of the meeting today is to agree the final Council decisions for the LTP so that officers can prepare the LTP for adoption on 30 June 2021.

Three Waters investment proposal

12. Advice received on the state of our Three Waters infrastructure showed us that we face significant challenges with the condition and age of the Three Waters assets, with much of the infrastructure reaching or nearing the end of its life. The growing population is also adding pressure on the Three Waters infrastructure.

13. A significant increase in Three Waters infrastructure was proposed as the preferred option 1 in the DLTP, with the alternative option 2 being modest additional investment. The option 1 additional investment proposed was largely to avoid asset failures and disruption of services to customers, improve environmental outcomes and plan for growth. Option 1 comprises Three Waters investment of $582M capex, and includes

- Increased funding of $331M of asset renewals,

- Sustainable water supply, capex funding of $35M and opex funding of $11M,

- Healthy urban waterways, capex $29M and $8M opex,

- Reducing carbon emissions, capex $53M and $3M opex.

14. Public feedback was very supportive of the preferred option 1, with 82% in favour of option 1 and 18% in favour of option 2. Officer advice is supportive of option 1 being included in the FLTP.

Transport investment proposal

15. In light of the growth in our city, investment in transport infrastructure was proposed to enable users to enjoy a well-functioning transport system. Council is developing an Integrated Transport Strategy which looks at a multi-modal approach to transport, including road users, walkers, cyclists and people using micro-mobility modes of transport (e.g. electric scooters and bikes).

16. A proactive approach to Transport infrastructure investment was proposed as the preferred option 1 in the DLTP, with an alternative option 2 being a more reactive approach with reducing service levels over time. Option 1 comprises Transport infrastructure investment of $353M over 10 years and includes:

- Investment in transformative projects like Cross Valley Transport Connections $198M over 10 years, Eastern Bays Shared Path $30M, Cycling and Micromobility $10M.

- Road resurfacing increased 25% investment of $15M (from $76M to $91M) ,

- Traffic safety increased investment of $6.2M to a total of $11M,

- Footpath renewals increased investment of $2.3M to a total of $4.7M over 10 years.

17. Public feedback was very supportive of the preferred option 1, with 83% in favour of option 1 and 17% in favour of option 2. Officer advice is supportive of option 1 being included in the FLTP.

Naenae pool investment proposal

18. In April 2019 Naenae Pool was closed due to earthquake safety concerns. This had a big impact on the local community and the wider region. Community engagement about the options for the future of the pool was progressed and a spatial plan for Naenae was developed. Council successfully secured $27M of co-funding from the central government’s COVD-19 Response and Recovery Fund.

19. The DLTP proposed a preferred option 1 being a new Naenae Pool be built that provides a similar facility and services as the existing pool at a cost of up to $68M. The alternative option 2 was a new Naenae Pool being built with a lower level of facility and services as the existing pool, at a cost of up to $54M. The preferred option 1 includes:

- Two pools (the main 50 metres pool and a children’s pool),

- Improvement to some areas of the pool that were considered sub-standard, including changing rooms and accessibility,

- A fitness suite

- A “zoom” tube returned

- Introduction of new technology which would reduce operational costs (e.g. reduced energy consumption) and the pools impact on the environment.

20. Public feedback was very supportive of the preferred option 1, with 80% in favour of option 1 and 20% in favour of option 2. Officer advice is supportive of option 1 being included in the FLTP.

Petone Wharf

21. Council considered this matter on 24 May 2021 (refer report LTPAP2001/2/125) and resolved in support of option 1 from the DLTP which was to bring forward the full refurbishment of the Petone wharf to the first three years of the plan. This included the update of the budget to the latest estimate of up to $20.9M following the quantitative risk analysis and peer review of the engineer scope and cost estimates. This option includes the demolition of part of the head of the wharf. As part of the early design process, officers will prepare a report for the Communities Committee on potential future functionality of the wharf, to ensure this investment is optimised.

22. Public feedback was split on this with the preferred option 1 supported by 48% of respondents and option 2 (delay refurbishment to 2032) by 52% of respondents.

RiverLink project

23. Council considered this matter on 24 May 2021 (refer report LTPAP2001/2/127). Council resolved in support of option 1 from the DLTP which is to increase investment in RiverLink, rather than option 2 which was to maintain funding levels. Updated projected cost and revenue estimates were presented to Council in the May 2021 report, which showed in summary projected a project cost of $138M and revenue of $43M, with a net cost of $95M (similar to the net costs included in the DLTP).

24. Public feedback was supportive of the preferred option 1 at 57%, with option 2 supported by 43% of respondents.

Hutt City Community Facilities Trust (CFT)

25. Council considered this matter on 24 May 2021 (refer report LTPAP2001/2/120). Council agreed in principal to proceed with the transfer of the assets from CFT to Hutt City Council and then wind up CFT. A final decision report will be presented to Council on 30 June 2021 when further information from the Inland Revenue Department on the taxation risks is expected to be available.

Rating policy

26. Council considered these matters on 24 May 2021 (refer report LTPAP2001/2/124). Council progressed a number of decisions which were largely in line with the preferred options in the DLTP:

- adopt a percentage allocation approach for sharing the total general rate

- agreed to reduce the residential differential rating category share of general rates from 63% to 62% in 2021/22 and make further reductions of 1% per year for the following two years with the corresponding increases in commercial percentages,

- agreed to align the definition of “rural” for rating purposes with rural activity areas in the District Plan,

- agreed to combine the Commercial Queensgate and Commercial Central differential rating categories,

- agreed to remove the Commercial Accommodation differential rating category by merging properties into either Commercial Central or Commercial Suburban differential rating categories depending on location,

- agreed to the Rates Remission Policy being updated to include a one year remission of 50% of the increase of the general rates for ratepayers changing from the Rural to Residential differential rating category and from Commercial Accommodation to Commercial Central differential rating category,

- agreed to the targeted rates for rubbish and recycling being set for 2021/22 as consulted on except for the 80 litre refuse targeted rate which is to be reduced to $105 per annum,

- agreed to the targeted rates for water supply and wastewater being set as consulted on.

The Rates Funding Impact Statement for 2021/22 has been updated to reflect the decisions of Council on 24 May 2021 and is attached as Appendix 10.

27. The proposed changes to the Rates Postponement Policy were not progressed on 24 May 2021. These proposed policy changes are in line with Porirua City Council (PCC) policy. It has become apparent that implementing the scheme may result in it being required to comply with the Credit Contracts and Consumer Finance Act. We are working with PCC to consider the legal implications and plan to report back to Council on 30 June 2021. As further decisions are likely to be required at this time, the Rates Postponement Policy will be removed from the FLTP and dealt with separately.

Development Contributions

28. Council considered this matter on 24 May 2021 (refer report LTPAP2001/2/123). Council agreed to a policy of meeting 100% of the Council’s planned growth costs from development and financial contributions. Some changes to the policy were agreed following feedback from submitters.

Section D – Operating and capital expenditure

29. Council has been through a lengthy process to consider budget requirements to support the priority areas of investment. Following the preparation of the draft plan for consultation, further budget decisions were progressed at the LTP Subcommittee 24 May 2021 (refer report LTPAP2021/2/125). These decisions included changes to the timing of some projects, increased funding for a few projects/initiatives and updates to reflect latest information available.

30. These latest budget decisions from 24 May 2021 have been incorporated into the financial information presented in this report, together with updates to associated costs with these (e.g. depreciation, interest costs). Appendix 1 provides a summary listing of all the key decisions that have been progressed in the preparation of the DLTP and the FLTP.

Budget cuts and savings included in the LTP

31. Council included a range of budget cuts and savings in decisions for the DLTP which are summarised below and further details are available in Appendix 1.

32. Reduction in budgets – savings: Budget cuts from the emergency budget Annual Plan 2020/21 which were reconfirmed and result in savings in the 10 years of the DLTP included

- Regional amenities fund $2M,

- Major Events fund $1.8M,

- Libraries $1M,

- Pools $1M,

- Parks $1M.

33. Further budget reductions included in the preparation of the DLTP included:

- Library collection replacement budget - $0.4M saving over 10 years,

- Petone Settlers Museum and Dowse Museum – change to education programmes which include some changes to opening hours resulting in net savings of $0.3M over 10 years,

- Projected interest cost savings of $1.3M in 2021/22 largely due to lower cost of borrowings and interest rate strategy management,

- A range of minor savings across a number of areas, including reduced budgets as a result of changes to the Sensitive Expenditure Policy.

34. The annual savings equivalent was communicated in the DLTP at $5.2M. There are no proposed Council decisions to amend any of the savings for the FLTP.

Further budget matters requiring Council review and decisions

35. Council is requested to consider the budget matters detailed in Table 2 and decide on how each matter is to be dealt with in the FLTP.

Table 2: Budget matters requiring review and decisions for the FLTP

	Priority area	Brief description	Financial impact over the 10 years of the LTP and officer recommendation	Further information Appendix 2
1.	Investing in infrastructure Caring for and protecting the environment Connected communities	Cycling and micromobility programme (CMP) has the following investment objectives: (1) To increase the number of residents that use bikes and micromobility as a mode of transport. (2) Increase the potential for school students to use active transport to and from schools. (3) Improve safety for people who use bikes and micromobility. The Beltway cycleway programme has aligned objectives.	The DLTP included $10M funding for CMP spread over three years and $5M for the Beltway project spread over 10 years, together with offsetting NZTA funding at 51% of the costs. At the meeting 24 May 2021, Council requested that two alternative options be presented for consideration: Option 1 - extend CMP funding out to five years. Option 2 – extend CMP funding out to 10 years. Option 1 - capex is $27M, NZTA revenue $13M, net $14M. Option 2 - capex $58M and NZTA revenue $30M, net cost $28M. Both these options can be accommodated in the FLTP without impacting on the rates increases (per table 3) and maintaining the balanced budget target being achieved in 2028/29. Option 2 would result in higher debt levels and a reduced balanced budget result (surplus retained).	Refer Attach-ment A which provides information on two options.

Priority area

Brief description

Financial impact over the 10 years of the LTP and officer recommendation

Further information Appendix 2

Investing in infrastructure

Caring for and protecting the environment

Connected communities

Cycling and micromobility programme (CMP) has the following investment objectives:

(1) To increase the number of residents that use bikes and micromobility as a mode of transport.

(2) Increase the potential for school students to use active transport to and from schools.

(3) Improve safety for people who use bikes and micromobility.

The Beltway cycleway programme has aligned objectives.

The DLTP included $10M funding for CMP spread over three years and $5M for the Beltway project spread over 10 years, together with offsetting NZTA funding at 51% of the costs.

At the meeting 24 May 2021, Council requested that two alternative options be presented for consideration:

Option 1 - extend CMP funding out to five years. Option 2 – extend CMP funding out to 10 years.

Option 1 - capex is $27M, NZTA revenue $13M, net $14M. Option 2 - capex $58M and NZTA revenue $30M, net cost $28M.

Both these options can be accommodated in the FLTP without impacting on the rates increases (per table 3) and maintaining the balanced budget target being achieved in 2028/29. Option 2 would result in higher debt levels and a reduced balanced budget result (surplus retained).

Refer Attach-ment A which provides information on two options.

Connected communities

Wainui Skate-park

Repairs required to this facility. Proposed transfer of $40k funding into the Wainuiomata Streetscape project and completion of the work as part of this project.

Transfer funding of $40k currently available in budgets to be incorporated into the Wainuiomata Streetscape project (increase budget up to $8,400k from $8,360k).

Officers recommend approving the transfer of funding.

Refer Attach-ment B.

Latest projected financial information

36. The latest projected financial information for inclusion in the FLTP is available in Appendix 5 - Capital projects, Appendix 6 - Financial statements, Appendix 7- Activity Statements, Appendix 8 - Funding Impacts Statements and Appendix 9 - Prudence Reporting. This includes all decisions by Council to date, being the preferred options on the DLTP proposals, latest budget decisions from the 24 May 2021 and assumed decisions from table 2(option 1 for CMP). These financial projections are not audited and may require minor corrections and updates through the external audit process.

37. The projected capital works programme total $1.4 billion over 10 years. Graph 1 provides an overview of the timing of delivery of the programme and a split of the activity areas.

Graph 1- Projected capital investment programme

Section E- Revenue

Non-rates revenue

38. Council endorsed the fees and charges to be included in the FLTP on 24 May 2021 (refer report LTPAP2021/2/127). All non-rates revenue projections included in this report (e.g. Development Contributions, grants and subsidies) reflect the latest decisions of Council and projections.

Rates revenue

39. After considering the budget changes to be included in the FLTP on 24 May 2021, Council provided direction on the preferred option on the rates revenue to be included in the FLTP (Report LTPAP2021/2/125). The legal requirements for a balanced budget and financial prudence were considered.

Council agreed to the rates revenue increases as outlined in Table 3 to be included in the FLTP.

Table 3: Projected rates revenue increases for the FLTP

	2021/22	2022/23	2023/24	2024/25	2025/26	2026-2031
Rates revenue increase¹	5.9%²	5.9%	5.9%	7.2%	7.2%	7.2%

Note 1- excludes revenue from growth in the rating base

Note 2- excludes impact of service changes introduced in 2021/22 for waste services (rubbish, recycling and green waste)

40. Updated modelling of the rating impact for 2021/22 is included in Appendix 3. A summary of the rating impacts is provided in tables 4 and 5. The modelling has been prepared based on the rating policy decisions of Council for the FLTP. These projected rates impacts are indicative and are based on the latest rating information database; there is expected to be some further minor changes in the rating database ahead of the rates being set on 30 June 2021.

Table 4: Projected rating impact for 2021/22 by property category

Property Category	2020/21 Rates	Draft Long Term Plan		Final Long Term Plan
Property Category	2020/21 Rates	Change per annum	Change per week	Change per annum	Change per week	%
Average Residential¹	$2,608	$130	$2.50	$131	$2.51	5.0%
Average Commercial Central	$13,994	$780	$15.00	$808	$15.53	5.8%
Average Commercial Suburban	$11,922	$1,158	$22.28	$1,202	$23.12	10.1%
Commercial Queensgate²	$1,906,376	$386,717	$7,436.87	$394,488	$7,586.31	20.7%
Average Rural (no services)¹	$1,617	$61	$1.16	$61	$1.17	3.8%
Utilities	$18,294	$812	$15.61	$966	$18.57	5.3%

Note 1: Residential and Rural 2021/2022 rates do not include increases for rubbish, recycling, and green waste.

Note 2: Queensgate property value has increased from $240M to $295M.

Table 5: Indicative projected rating impact on residential suburbs

Range - Lowest Haywards $2.10 per week. Highest Days Bay $3.17 per week.

Note the range of rates increases are between 4.7% and 5.3% (before adjusting for rubbish and recycling new targeted rates; noting that households will have offsetting savings for these as there is no longer need to buy Council rubbish bags or pay commercial operators).

Section F - Projected debt and balanced budget position

41. The projections that follow are based on the decisions of Council on the rates revenue increases for the FLTP (refer Table 3) and include all the budget updates and decisions of Council on 24 May 2021. It also includes option 1 in the Cycling and Micromobility programme (refer Table 2, i.e. funding for five years of the programme). Table 6 provides a comparison of the DLTP to the revised updated plan.

Table 6: Comparison of projected balanced budget and debt results, of DLTP and updated LTP

	Draft LTP	Updated LTP
Balanced budget, refer graph 4	Achieved in 2028/29	Achieved in 2028/29
Net debt projected peak, refer graph 2	$603M in 2028/29	$563M in 2028/29
Debt to revenue ratio peak, refer graph 3	2025/26 at 206%	2025/26 191%

Graph 2: Projected net debt

Graph 3: Projected debt to revenue ratio

Graph 4: Projected balanced budget target

Note - The Hutt City Council balanced budget target is defined as the Local Government (Financial Reporting and Prudence) Regulations 2014 definition, modified to exclude from the definition of revenue Waka Kotahi capital improvement subsidies and central government COVID-19 Response and Recovery co-funding for Naenae Pool and Eastern Bays Shared Path.

Section G – Statements of Service Performance

42. The performance measures established for the Long Term Plan 2021-2031 have been developed with managers and were guided by best practice guidelines. Alignment has been made between these key performance indicators (KPI’s), which are measuring what we do, and the outcomes we are trying to achieve for the city (why we are doing it).

43. The following criteria were used to assess the measures included in the LTP:

- Need to be measurable,

- Must be measured at least annually,

- Represent business as usual – core business, what we will be doing in 30 years and not subject to a change of strategy or plan,

- Align with key priorities of Council,

- Are key to performance, that is, they are used by managers to inform decision making at least annually,

- Need to be directly controllable by Council.

44. All the performance measures that we are required to include under the DIA reporting requirements have been included.

45. For each wellbeing, outcome measures have been included. These are not part of our performance framework as such. Rather these measures represent broader, city wide outcomes that help indicate if our city is thriving and where it is doing well, where improvement is needed, and where our community is struggling. In general, the outcomes included are those that Council has some potential to influence and in many cases there is a link that will enable Council to tell the story of the effect our activities are having in our community.

46. Council’s performance management framework and the appropriateness of the performance information was an area highlighted in the Audit NZ management report from the audit of the DLTP (refer report ARSC2021/2/83). The report noted that “the Council no longer plans to report against a number of satisfaction measures from 2022 annual report onwards…we recommend Council carefully considers the performance reporting activities affected and ensures that the planned performance reporting is clearly articulated to ensure appropriate and fulsome reporting will be able to be made in future annual reports”.

47. Officers engaged an external specialist to complete a review of the performance management framework included in the DLTP. Officers have reviewed the detailed feedback and suggestions in the report and made updates to the service performance information to be included in the FLTP. Appendix 4 provides the updated content proposed to be included in the FLTP. Note that the external audit process may identify further changes. The key changes incorporated are:

- Further clarification has been made between what we are doing and why we are doing it and the measures,

- Resident satisfaction measures have been included for several activities,

- Targets have been reviewed where data has become available,

- Some measures have edited to ensure readers understanding of what is being measured and where necessary footnotes added.

Section H – Audit of the final LTP 2021-2031

48. Our FLTP is required to be audited prior to adoption by Council. The audit is due to commence on 8 June 2021. The audit of the FLTP involves reviewing and understanding significant changes made to the DLTP following consultation. The audit team will gain assurance that appropriate consequential changes and disclosures have been made.

49. Auditing the long term plan involves reporting on whether the plan provides a reasonable basis for:

- long-term decision-making and co-ordination of Council’s resources;

- its accountability to the community.

50. The audit team will also report on whether the LTP’s underlying information and assumptions are reasonable and whether legislative disclosure requirements have been met.

51. Once this audit visit begins, any significant changes to our FLTP or underlying information may result in additional work required to be undertaken by the audit team and can create delays and/or add cost to the process.

Section I – Next steps

52. Officers will finalise the content of the FLTP to enable Council to adopt the plan on 30 June 2021. The rating resolutions will also be prepared for 30 June 2021.

53. The external audit process will be completed and the Audit Director will present the results of the audit process at the Council meeting on 30 June 2021.

54. The content for the FLTP will require further review and checking. There are likely to be other updates and minor adjustments to content (eg budget changes) as this review process is completed.

55. Officers will report through to the LTP Working Group (comprising the Mayor, Deputy Mayor and Chairs of Committees) on any matters requiring decisions ahead of the agenda papers being prepared for the Council meeting 30 June 2021.

Section J - Legal Considerations

56. The most relevant legislation includes the Local Government Act 2002, Local Government (Rating) Act 2002 and the Rating Valuations Act 1998.

57. Specialist external legal advice has been sought on a number of the more complex LTP matters, such as Development Contributions Policy and Rating Policy.

Section K - Financial Considerations

58. There are no further financial considerations apart from those detailed in this report.

Appendices

No.	Title	Page
1 ⇩	Appendix 1 - Previous budget decisions of LTP Subcommittee/Council in the preparation of the LTP 2021-2031	74
2 ⇩	Appendix 2 - Proposed project budget changes to inform the final LTP 2021-2031	85
3 ⇩	Appendix 3 - Projected rating impact for 2021/22 (property categories)	92
4 ⇩	Appendix 4 - Updated Section 3 of the draft LTP, The four wellbeings or Statements of Service Performance	93
5 ⇩	Appendix 5 - Capital Projects	127
6 ⇩	Appendix 6 - Financial Statements	134
7 ⇩	Appendix 7 - Activity Statements	138
8 ⇩	Appendix 8 - Funding Impact Statements	151
9 ⇩	Appendix 9 - Prudence Reporting	165
10 ⇩	Appendix 10 - Draft Rates Funding Impact Statement for 2021/22	171

Author: Philip Benseman

Budgeting and Reporting Manager

Author: Daniel Koenders

Manager Financial Strategy & Planning

Author: Bradley Cato

Chief Legal Officer

Reviewed By: Jenny Livschitz

Group Chief Financial Officer

Approved By: Jo Miller

Chief Executive

Attachment 1

Appendix 1 - Previous budget decisions of LTP Subcommittee/Council in the preparation of the LTP 2021-2031

A) Draft LTP 2021-2031 – decisions by Council to reduce budgets – Budget savings

	Priority area	Brief description	Financial impact	Further details
1.	Being financially sustainable	Confirmation of Annual Plan budget cuts Budget cuts that were initially introduced in emergency budget Annual Plan 2020/21 and then reconfirmed as part of the DLTP to be included for 10 years of the plan.	In the preparation of the emergency Annual Plan there were a wide range of budget cuts. Officers sought confirmation that these budget cuts were intended to be permanent and not one-off for 2020/21 only. Total operational savings of $0.73M p.a. (libraries $0.1M, pools $0.1M, parks $0.1M, museums $50k, events $0.18M, Regional Amenities fund $0.2M). Council agreed that these savings should be permanent budget reductions for the DLTP.	24 September 2020 Refer Attachment F
2.	Supporting an innovative, agile economy and attractive city Being financially sustainable	Dowse Museum Increase capacity to have more public education programmes by closing the Museum to the public on Monday. The programmes could include school and community groups, and also longer more in depth group programmes. Building and exhibition maintenance could be carried out on Monday’s to ensure uninterrupted visitor experience on other days.	Over ten years of LTP: A reduction in opex of $0.2M and increased revenue of $0.1M. This is largely due to slightly reduced staffing on Monday and additional revenue generation from some of the new activities offered.	27October 2020 Refer Attachment A
3.	Supporting an innovative, agile economy and attractive city	Dowse Museum Collections Store Refurbishment This work has been planned for many years and is budgeted to occur in 2021/22. The proposal is to defer $0.8M of the $1M budget out one year to 2022/23. The works would address the current inefficient storage solutions for the collection assets and also address health and safety risks.	No change to overall budget proposed – change timing with $0.8M deferred to 2022/23. Approval also confirmed to progress securing additional funding towards the project..	27 October 2020 Refer Attachment B
4.	Being financially sustainable	Library services – collections replacement budget As part of the Annual Plan 2020/21 budget cuts, this budget was reduced by 20% (by $170k down to $680k). Attachment C provides comparisons to other councils and rationale for the proposed changes to the future LTP budgets. In summary a 10% reduction of budget is proposed for 2021/22 with modest increases thereafter.	A reduction in capex of $0.4M over the ten years of the LTP.	27 October 2020 Refer Attachment C
5.	Supporting an innovative, agile economy and attractive city Being financially sustainable	Petone Settlers Museum The Museum is closed on Mondays and Tuesdays between Easter and Labour Day and is open 7 days during the alternative summer months. It is proposed that the Museum is closed on Mondays and Tuesdays throughout the year. Attachment R provides analysis of number of visitors and other analysis. Changes to the hours would enable larger school and community group visits, including more in-depth educational visits.	Reduced opex of $0.07M and increased revenue of $0.05M.	27 October 2020 Refer Attachment R

B) Budget decisions from LTP subcommittee 24 September 2020 - increases in budget

	Priority area	Brief description	Financial impact	Further details
1.	Supporting an innovative, agile economy and attractive city	Naenae pool – central government funding	The capital cost of this project is estimated at $54M, of which central government co-funding of $27M has been agreed. DLTP budgets updated to reflect latest projections for both capex, opex and revenue.	24 September 2020 Refer Attachment A
2.	Investing in infrastructure Caring for and protecting our environment	Eastern Bays Cycleway update, including central government funding	The latest cost estimate for this project is $30M with central government co- funding of $22.4M (Covid response funding $15M, NZTA $7.4M); this is an increase of $1.8M capex and $8M additional revenue. The timing of the works has also updated to reflect consenting and delivery plans.	24 September 2020 Refer Attachment B
3.	Investing in infrastructure	Cross Valley Transport Connections Programme Business Case (CVTC)	Following the CVTC being reported to Council in July 2020 (refer HCC2020/4/24); Budget approved for revises cost estimate for CVTC to $160M capex with assumed NZTA funding of $81.6M; this is an increase of $40M capex and $20.4M revenue from previous estimates included in the AP. Phasing of the works as proposed in the business case being stage 1 from 2021-2027, improvements around the Gracefield/ Wainuiomata Hill Road Interchange in Stage 2 from 2028 – 2031 and the bulk of the project in Stage 3 from 2029 onwards to align with other significant projects in the region that impact this project.	24 September 2020 Refer Attachment C
4.	Increasing housing supply	Homelessness Prevention	The Homelessness update 2019/20 report was presented to the Policy, Finance and Strategy Committee on 7 September 2020 and reported on progress in the year since July 2019, including data from services. (PFSC2020/5/177). Opex budget approved of $0.56M p.a. for all years of the plan - $5.6M in total (increased from previously approval by Council of $1.6M over three years).	24 September 2020 Refer Attachment D
5.	Caring for and protecting our environment	Wainuiomata Summer Pool – thermal cover for main outdoor pool	The project is an initiative in the Council’s internal energy and carbon reduction plan 2020-2024. The project will realise cost savings in consumption of natural gas estimated at $16,000 per season and realise greenhouse gas emission reductions estimated at 56 tonnes per season. The business case was not available at the time of the preparation of the AP. Funding of $65k capex approved for 2020/21 and DLTP updated to reflect expected cost savings resulting from this investment.	24 September 2020 Refer Attachment E
6.	None	Akatarawa Cemetery Extension	Capital contribution towards extension of shared cemetery at Akatarawa. Additional funding of $0.3M capex sought (total costs $2.55M). Project brought forward by two years to 2022-2025. Officers recommend these changes.	24 September 2020 Refer Attachment G

C) Budget decisions from LTP subcommittee 27 October 2020 – increases in budget

	Priority area	Brief description	Financial impact over 10 years of LTP	Further details
1.	Investing in infrastructure	There have been a number of reports on the Three Waters investment options and the related financial impacts. The initial advice provided by Wellington Water on options had significant affordability concerns. Subsequent advice from Wellington Water provided for a revised “mid-option” which included accounting for Three Waters Reform funding from central government. Council agreed to progress this option for consultation whilst also revising the debt limits higher in the Financial Strategy to enable the funding of this programme.	- Managing existing infrastructure - $331M assets renewals over 10 years, - Providing growth related infrastructure- $40M capex and $2.7M opex over 10 years(note capex number adjusted recently from original $54M following DC review process), - Sustainable water supply - $30M capex (includes universal metering), $9M opex over ten years. - Healthy Urban Waterways – capex $26.4M and opex $6.75M over 10 years - Reducing Carbon Emissions - $44M capex and opex $2.6M over 10 years, - Other, including resilience - $20M capex and opex $8M - Increased bulk water cost increase of $1M in 2021/22 with ongoing projected cost increases of about 5% p.a. thereafter (pending decisions by GWRC). Note a proposal to increase metered water charges for commercial users is likely to result in increased revenue of $0.3M.	27 October – Refer report “Three waters investment 2021-2031 LTP”
2.	Supporting an innovative, agile economy and attractive city	Stokes valley pool roof and Huia pool roof After testing the budgets through independent contractors for the pool roofing projects (Huia old $0.28M and Stokes Valley $0.4M) the budget is insufficient to complete both roof replacements. If the work is not completed then serious damage to the structure of the building will start occurring and a more expensive cost and loss of service to the community.	Increase capex by $0.65M to complete these works in 2021/22 (total budget of $1.6M)	27October 2020 Refer Attachment D
	Priority area	Brief description	Financial impact	Further details
3.	Supporting an innovative, agile economy and attractive city	Huia pool replace moveable floor 2024/25 Based on high level cost estimate to replace the current movable floor it requires an additional amount of $0.45M, in addition to current budget of $1M (total $1.45M). The current floor is 39 years old and will be 44 when the work is completed.	An increase in capex of $0.45M.	27October 2020 Refer Attachment E
4.	Supporting an innovative, agile economy and attractive city	Activating Naenae town centre With the closure of the Naenae pool, funding was approved for Naenae of $0.3M for two years (activities $100k and activation $200k). The funding source for this was from the Naenae pool operating budgets. Given the extended delivery date of the project, it is proposed that this funding is extended for a further two years until the Naenae pool project is completed in 2023/24.	No net impact on budgets as involves transfer of funding of $0.3M from Naenae pool budget.	27October 2020 Refer Attachment F
5.	Connecting communities	Spatial planning The existing ‘Suburban shopping centre’ capital budget is proposed to be replaced by a Spatial planning operating budget. This funding would enable the City plan, Naenae and Wainuiomata plans to be progressed in 2020/21.	Capex of 1.44M (Suburban shopping centre budget) over the period 2020/21 to 2030/31 is proposed to be reprioritised to opex of $1.63M.	27October 2020 Refer Attachment G
6.	Connecting communities	Extend partner program - Love Wainuiomata Additional funding is sought to enable Love Wainuiomata to continue involvement in spatial planning for the town centre and surrounds and continue to implement the Wainuiomata Development Plan with the community. There is no funding set aside in the LTP for Love Wainuiomata as it was approved for a fixed term.	Additional opex of $1M.	27October 2020 Refer Attachment H
7.	Supporting an innovative, agile economy and attractive city	Extend partner program- Business incubator funding/start up hub Additional funding sought is to continue a business incubator/start up hub to encourage the start-up and development of future digital and physical product ventures. In 2020/21 there is funding of $0.1M for the business incubator due to a carryover from 2019/20.	Additional opex of $1M.	27October 2020 Refer Attachment I
8.	Connecting communities Investing in infrastructure Increasing housing supply	Wellington Regional Growth Framework The additional funding sought is for Council to participate in the master planning of the Lower Hutt triangle project with iwi and multiple government agencies.	Increase in opex of $0.6M (in the first three years of the LTP).	27October 2020 Refer Attachment J
9.	Investing in infrastructure Increasing housing supply	Wise Street Extension Funding is sought is to enable housing development to continue within the Residential zoned area of Wise Street, Wainuiomata to meet increasing housing demand. This would enable a further 180+ houses.	The capital cost of $1.2M will be recovered through Development Contributions.	27October 2020 Refer Attachment K
	Priority area	Brief description	Financial impact	Further details
10.	Investing in infrastructure	Transport – road resurfacing Resurfacing and rehabilitation of the network’s roads to ensure the safety and travel comfort of road users, as well as providing waterproofing to the road pavements to provide for longer life.	Increase capex by $16.3M (from $62.8M to $79.1M) a 25% increase. After adjusting for NZTA subsidy net costs over ten years of $8M. In 2020/21 the increase of budget is $0.4M p.a., with an assumed NZTA subsidy of $0.2M.	27October 2020 Refer Attachment L
11.	Investing in infrastructure	Transport – roading network improvements This proposed change is addressing the known upcoming increased programme of work required for the cyclic resurfacing of roads, to ensure the safety and travel comfort of road users, as well as providing waterproofing to the road pavements to provide for longer life. The programme of work requires current budget to be brought forward to align with the physical works timing.	There is no increase to budget requirement. Proposed changes to the timing of planned works, to enable a revised start of 2024/25 rather than previous planned start in 2029/30. Over the ten year period of the LTP there is an increase of $2.6M offset by NZTA funding of $1.3M.	27October 2020 Refer Attachment M
12.	Investing in infrastructure	Transport – funding for bridges Additional funding sought for annual condition inspections of the bridges, retaining walls and seawalls, together with undertaking the physical works of structural maintenance as identified in the inspections.	Increased opex by $2.27M (from $3.78M to $6.05M) or 60% increase. After adjusting for NZTA subsidy net costs over ten years of $1.1M. In 2020/21 the increase of budget is $0.2M p.a., with an assumed NZTA subsidy of $0.1M. Officers recommend the approval of the proposed changes.	27October 2020 Refer Attachment N
13.	Investing in infrastructure	Transport – traffic safety Proposed safety driven improvements to intersections and routes and includes · Kerb extensions and refuge islands to improve pedestrian safety; · Raised platforms for pedestrian crossings and to slow traffic; · Median barriers; · Intersection geometry improvements; · Signalising priority controlled intersections; · Installation of roundabouts	Increase capex of $5.4M (from $4M to $9.4M), which includes no increase for 2021/22 and thereafter an increase of $0.6M per year.	27October 2020 Refer Attachment O
14.	Supporting an innovative, agile economy and attractive city	Upgrading the flag infrastructure across the city The outdated flag system across the city makes it cost prohibitive to erect and remove flags on a regular basis. Having a decorated city is a high impact way to add vibrancy and life and demonstrate a thriving economy. It is also a high impact way to promote events and activities to the city.	Increase capex by $0.3M.	27October 2020 Refer Attachment P
	Priority area	Brief description	Financial impact	Further details
15.	Investing in infrastructure	Footpath renewals Footpath renewals are required when the condition assessment determines that renewal is more cost effective than continued maintenance. Appropriate maintenance and renewal of footpaths is essential to ensure the safety of footpath users.	Increase footpath renewal budget by $2M (from $2.1M to $4.1M). Funded from transfer of budget from Road reconstruction budget $1M, together with additional funding of $1M to meet the needs of growing network across the city.	27October 2020 Refer Attachment S

D) Budget decisions from LTP subcommittee 21 December 2020 – increases in budget

	Priority area	Brief description	Financial impact	Further details
1.	Caring for and protecting our environment	Decarbonisation of Hutt City Councils pools. As part of the Energy and Carbon Reduction Plan 2020-2024, a partial or full replacement is proposed of the existing gas boilers with heat pumps at Eastbourne Pool, the original Huia Pool and Fitness Facility and Huia extension and Stokes Valley Pool. Total avoided carbon emissions would amount to 14,600 tonnes by 2050.	An increase in capex of $1.77M to fund the heat pumps; a net reduction in opex of $0.64M.over ten years of the plan. The net present value of the initiative at 2050 is $0.45M.	21 December 2020 Refer Attachment A. Note report CEC2020/6/278 which includes detailed business case info.
2.	Caring for and protecting our environment	Accelerating the roll out of public charging stations for electric vehicles (EV) in Lower Hutt. To help facilitate continued growth in the number of people switching from petrol/diesel fuelled vehicles to EVs. Proposed roll out of medium speed DC public charging stations at 10 locations.	An increase in capex of $0.74M with 50% of this funded from the government’s Low Emissions Vehicle Contestable Fund and or/private sector. Cost neutral to Council with opportunity to generate surplus and reinvest in the longer term.	21 December 2020 Refer Attachment B. Note report CEC2020/6/278 which includes detailed business case info.
3.	Caring for and protecting our environment	Decarbonisation of The Dowse As part of the Energy and Carbon Reduction Plan 2020-2024, a change from a condensing boiler to a heat pump is proposed at The Dowse. Total avoided carbon emissions would amount to 3,600 tonne by 2050.	An increase in capex of $0.6M; a net reduction in opex of $0.16M. The net present value of the project at 2050 is $83k.	21 December 2020 Refer Attachment C
4.	Investing in infrastructure	Eastern Hutt road retaining wall strengthening project A key arterial road connecting Hutt City and Upper Hutt City. A series of retaining walls support the road platform. The crib wall is vulnerable to failure in storm events and earthquakes. The project would strengthen the crib wall and steep unstable river bank to improve resilience.	Capex increase of $2.1M from previously budgeted $2.9M, to total cost of $5M. Funding from NZTA would cover $2.55M of the total cost.	21 December 2020 Refer Attachment D
	Priority area	Brief description	Financial impact	Further details
5.	Investing in infrastructure	Cuba Street over bridge seismic strengthening project Final bridge to be seismically strengthened as part of broader work programme.	Capex increase of $0.48M from previously budgeted $0.82M, to total cost of $1.3M. Funding from NZTA would cover $0.663M of the total cost.	21 December 2020 Refer Attachment E
6.	Being financially sustainable Caring for and protecting our environment	Dog tag for life - A proposal to replace the current annual dog tags with a dog tag for the life of the dog. Includes opportunity to reduce plastic in the environment, decrease the cost of postage sending tags to users annually, and reduce the administration cost around annual dog tags.	One off opex cost of about $120k. Over ten year period expect opex reduction of $0.3M.	21 December 2020 Refer Attachment F
7.	Caring for and protecting our environment Supporting an innovative, agile economy and attractive city	District Plan - includes full review of Operative District Plan, as well as implementation and monitoring. Over the last 12 months significant new national policy direction on notable topics, e.g. urban development and freshwater management, with further expected in short term on indigenous biodiversity.	Increase in opex of $5.1M to a total cost of $11.6M.	21 December 2020 Refer Attachment G
8.	Caring for and protecting our environment	Solid Waste disposal and resource recovery Proposed changes include : - Ongoing development at Silverstream landfill (landfill lining, leachate capture and reticulation, gas capture and treatment) with changes to timing, - development of a regional facility to accept asbestos - improvements to the refuse transfer station to address safety issues, enabling the development of a new resource recovery area - increased opex largely due to central government imposed costs (waste levy, emission trading scheme) - Increased revenue to offset increased costs; noting that surplus provides a funding source for new initiatives such as decarbonisation initiatives (e.g. pools, EVs).	Proposed re-phased capital budget for the ongoing development of Silverstream landfill, development of regional asbestos disposal facility (capex $4.1M), refuse transfer station $2.25M and resource recovery $0.75M together with revised operational and revenue budget changes.	21 December 2020 Refer report ‘Proposed budgets for Solid Waste Disposal and Resource Recovery’.
9.	Connecting communities Investing in infrastructure	Parks and Reserves assets Includes asset renewals building and structure renewals and refurbishments(toilets, grandstands, changing rooms, bridges), Reserves landscaping improvements, asset renewals for main assets groups (hard surfaces, park furniture, park signs, tracks and trails), Williams Park improvements, Percy Scenic Reserve, Petone Recreation grandstand, Naenae park changing room replacements. The asset management plan is being peer reviewed and not yet finalised. There will be a further report to Council on this area early in the new year.	Capex increase of $20M over ten years (or $2M per annum) to fund asset renewals. New capex of $7.5M for the rebuild of Petone Grandstand had been proposed however the Council direction was for a preferred renewal of the facility. Capex for new Naenae Park Changing room replacement $1M.	21 December 2020 Refer report on the agenda ‘Approach for asset management.’
	Priority area	Brief description	Financial impact	Further details
10.	Connecting communities Investing in infrastructure	Facilities asset renewals and maintenance Currently information on the condition of Council’s buildings is incomplete, meaning the full cost of maintaining these assets into the future is unknown. Work to complete this information is underway. To manage the risks in relation to these assets, it is proposed that a capex renewals fund is budgeted together with an increase in the maintenance budgets. As further information becomes available, there will be further reporting to Council.	Capex renewals increase of $10M and opex increase of $1M (maintenance costs).	21 December 2020 Refer report ‘Approach for asset management.’
11.	Investing in infrastructure	Petone Wharf- asset maintenance and renewals work Awaiting further information from engineers regarding safety and maintenance works. Capex budget of $0.8M in 2021/22 is insufficient.	Increase opex by $0.5M for demolition of Petone wharf head; increase capex for renewal of Petone Wharf $0.5M 2021/22 and $0.5M 2022/23.	21 December 2020 Refer report ‘Approach for asset management.’
12	Investing in infrastructure	Point Howard Wharf demolition No funding set aside for the planned demolition works. The yacht club would like the stub of the wharf to be retained to house the control box for yachting events.	Increase in opex of $0.5M in 2022/23 for the demolition of the outer end of the wharf; $1M capex for the renewal of stub of Point Howard Wharf.	21 December 2020 Refer report on the agenda ‘Approach for asset management.’
13.	Connected communities	City safety Support improved safety outcomes through a wide range of programmes, using a partnership approach to crime prevention and community reassurance.	Increase in opex of $0.45M (being $150k p.a. in years 1 to 3)	21 December 2020 Refer Attachment N
14.	Supporting an innovative, agile economy and attractive city Investing in infrastructure Increasing housing supply	Riverlink is a transformative project aiming to create a more resilient, connected and vibrant Hutt City. The project office is getting closer to confirming the final project design. Further property acquisitions are required in South Daly Street and at the Melling bridge vicinity to enable to project to be delivered. Additional funding for land acquisition is sought together with opex funding to enable the design and preparatory work in assembling properties (master planning, quantity surveying, subdivision, due diligence etc.). The plan is that surplus land that is not required for the Riverlink project will be sold to developers. This will occur after the surplus land has been assembled and master planning completed.	Capex increase of $27.5M in addition to the current project budget of $78M to enable land acquisitions. Further opex funding of $0.2M p.a. for three years is sought to enable the design and preparatory works for development activities. The early indicative proceeds from the disposal of land are estimated at $17M, which is $13M higher than previous budgeted in the last LTP.	21 December 2020 Refer Attachment J
15.	Supporting an innovative, agile economy and attractive city	City event fund Creating a vibrant and attractive city by empowering our community to deliver a city event and instilling community whakahī (pride) around a winter solstice/Matariki experience. A collaborative approach is proposed by coordinating event planning, promotion and funding while enabling our community to deliver a city event/series of events that celebrate our diversity, bring the city together during winter, build on each community’s strengths and drives social and economic wellbeing.	Increase in opex of $1.5M.	21 December 2020 Refer Attachment L
	Priority area	Brief description	Financial impact	Further details
16.	Supporting an innovative, agile economy and attractive city	Wainuiomata Town Centre and Streetscape Plan This plan builds on the Wainuiomata and helps to translate key community aspirations into implementable actions and activities. The ongoing development of the Wainuiomata Mall site is a key component.	Proposed funding of Wainuiomata Hub of $4.3M in 2028/29 brought forward and repurposed into “Wainuiomata Queen Street development” fund totaling $4.3M across 2021/22 and 2022/23.	21 December 2020 Refer Attachment H
17.	Supporting an innovative, agile economy and attractive city	Petone 2040 established a comprehensive strategy for the coordinated development and design of Petone and the wider Jackson Streetscape. It is proposed that a budget of $2.5M over the life of the LTP is established to support the implementation of agreed activities for Jackson Street Petone.	Increased opex of $0.5M and increased capex of $2M to fund implementation of the plan.	21 December 2020 Refer Attachment K
18.	Supporting an innovative, agile economy and attractive city	Naenae Spatial Plan Alongside work progressing on the rebuild of Naenae pool, a spatial plan for the wider Naenae town centre has been progressed this year. A range of projects have been identified as part of the plan. These projects will be prioritised within the proposed funding envelope of $9M.	It is proposed that the $9M capex funding set aside for the Naenae Hub is used to fund the prioritised projects from the spatial plan process. The capex fund of $9M is repurposed and a renamed “Naenae development fund”.	21 December 2020 Refer Attachment I
19.	Investing in infrastructure Connecting communities	Cycling and micromobility programme Proposed programme to support the ‘Walk and Cycle the Hutt 2014-2019 strategy’, aiming to develop a connected cycleway and shared path network. The next stage includes connection at Waterloo Station and delivers connections from the Beltway Cycleway to schools and the hospital.	Increase in capex of $9.75M with assumed funding from NZTA at 51% of $5M. Following decisions at the LTP subcommittee, the timing of this capex of 9.75M has been brought forward to be in the first three years of the plan.	21 December 2020 Refer Attachment M
20.	Investing in infrastructure Being financially sustainable	Development Contributions (DC) revenue There is an opportunity to fund a wider range of growth related infrastructure projects from development contributions revenue. A review of the DC policy has been progressing through the LTP Subcommittee since September 2020, with a further report included in this agenda.	Increase in revenue of approximately $29M over the period of the LTP, being an increase in budget from $10M to approximately $39M). The revenue is spread over the following activities – Transport $6.3M, Stormwater $1.9M, Water Supply $18.3M and Wastewater $12.2M. The increase in revenue results in lower borrowing requirements for the Council.	21 December 2020 Refer report on the agenda “Development Contributions”

Attachment 2

Appendix 2 - Proposed project budget changes to inform the final LTP 2021-2031

Further detailed content on specific budget matters follows. Below is a summary on the contents of this attachment.

Attachment A: Cycling and micromobility

Attachment B: Project Wainuiomata Skate-Park

Attachment A: Cycling and micromobility

1.	Project/ initiative	Cycling & Micromobility Programme
2.	LTP Activity	Transport
3.	Business lead	Kara Puketapu-Dentice
4.	Brief project description (problem/opportunity statement)	Hutt City Council has made significant progress in completing the projects referenced in the Walk and Cycle the Hutt 2014-2019 strategy which includes the Wainuiomata Hill Shared Path, the Eastern Bays Shared Path and The Beltway cycleway. To exploit the opportunity created by this framework, we need to develop a connected cycleways and shared pathways network in Hutt City. A Single Stage Business Case for the Cycling and Micromobility Programme has been formulated and it identifies the following problem and benefit statements. Problem 1: The transportation network does not meet cycle needs or expectations, leading to an increase in urban congestion (50%) Problem 2: A low and declining number of children are cycling to school contributing to increased vehicular congestion around schools (30%) Problem 3: Cycling infrastructure is unsafe, resulting in an unacceptable number of crashes involving cyclists (20%) Benefit 1: Improved safety for network users (30%) Benefit 2: Increased participation in sustainable transport (40%) Benefit 3: Reduced traffic volumes (30%) Resulting in the following Investment Objectives; Investment objective 1: Increase the number of residents that use bikes and micromobility as a mode of transport. Investment objective 2: Increase the potential for school students to use active transport to and from schools Investment objective 3: Improve safety for people who use bikes and micromobility
5.	Strategic alignment and desired outcomes sought	To provide a safe and connected pedestrian and micro-mobility transport network which supports the economic and social aspirations of the city. This activity is strategically aligned with national, regional and city objectives as detailed in the Government Policy Statement, Arataki 2019, Road to Zero 2019, Regional Land Transport Programme 2015 - 21, Urban Growth Strategy 2012 – 2032, Petone 2040, Walk & Cycle the Hutt 2014 – 19 and the Central City Transformation Plan 2019.
6.	Community engagement	Communication and engagement with stakeholder and the community is critically important for the success of the proposed cycling and micromobility programme. Hutt City Council will take a collaborative approach in engaging with stakeholders and the community where feedback is sought early in the route and design choice process. This would be an iterative process where concepts would be presented to stakeholders and the community for feedback and then developed in more detail before further feedback was sought. The list of key stakeholders includes: · Community boards · Hutt Cycle Network · Living Streets Aotearoa · Hutt Valley Chamber of Commerce · Business associations · Iwi · Automobile Association · Hutt Valley District Health Board · School board of trustees · Residents and business owners
7.	Overview of project costs and funding source (refer tables below)	The cost profile of the work programme options for five and ten years are represented in the tables below. Note, all of this work is eligible for NZTA subsidy funding and the first 5 years of the programme have been included in the 2021-24 RLTP and NLTP submissions. The first three years of the programme was included in the draft LTP. The tables below reflect an updated impact of adding in years 4-5 or alternatively 4-10 of the business case. Funding allocated in the draft LTP to the Beltway project has been incorporated in the micro mobility budget from 2022/23 due to the aligned nature of the future of the beltway funding and the cycling and micromobility programme.
8.	Risks and mitigation plans	The Single Stage Business Case details the risks and mitigations relating to this programme of work. All risks are considered low except the financial and stakeholder/public risks. The financial risk relates to the estimate accuracy and programme affordability. The stakeholder/public risk relates to the acceptability of the proposed programme and the cost. Both risks are being better understood as this project moves through the LTP process. Also related to the affordability risk is whether this programme of works receives NZTA subsidy funding. This is dependent on successfully navigating the business case process and there being sufficient funds available in the NLTF.
9.	LTP key assumptions	It is assumed this expenditure will receive NZTA subsidy funding at the current Funding Assistance Rate of 51%. Numbers presented are uninflated.

Further budget information – two options are provided

Option 1 – Include funding in the final LTP for 5 years of the programme

Table 1: Operating budgets – NZTA Capital Subsidy

$M	2021/22	2022/23	2023/24	2024/25	2025/26	2026-2031	Total
Draft LTP 2021-2031 Beltway	(0.27)	(0.27)	(0.27)	(0.27)	(0.27)	(1.35)	(2.7)
Draft LTP 2021-2031 Micro mobility	(1.66)	(1.66)	(1.66)	0	0	0	(4.98)
Final LTP Beltway 2021-2031	(0.27)	0	0	0	0	0	(0.27)
Final LTP 2021-2031	(1.66)	(1.66)	(1.66)	(3.52)	(3.52)	(1.35)	(13.37)
Variance	0	0.27	0.27	(3.25)	(3.25)	0	(5.95)

Table 2: Capital budgets

$M	2021/22	2022/23	2023/24	2024/25	2025/26	2026-2031	Total
Draft LTP 2021-2031 Beltway	0.52	0.52	0.52	0.52	0.52	2.6	5.2
Draft LTP 2021-2031 Micro mobility	3.25	3.25	3.25	0	0	0	9.75
Final LTP Beltway 2021-2031	0.52	0	0	0	0	0	0.52
Final LTP 2021-2031	3.25	3.25	3.25	6.9	6.9	2.6	26.15
Variance	0	(0.52)	(0.52)	6.38	6.38	0	11. 72

Option 2 – Include funding in the final LTP for 10 years of the programme

Table 3: Operating budgets – NZTA Capital Subsidy

$M	2021/22	2022/23	2023/24	2024/25	2025/26	2026-2031	Total
Draft LTP 2021-2031 Beltway	(0.27)	(0.27)	(0.27)	(0.27)	(0.27)	(1.35)	(2.7)
Draft LTP 2021-2031 Micro mobility	(1.66)	(1.66)	(1.66)	0	0	0	(4.98)
Final LTP Beltway 2021-2031	(0.27)	0	0	0	0	0	(0.27)
Final LTP 2021-2031	(1.66)	(1.66)	(1.66)	(3.52)	(3.52)	(17.44)	(29.46)
Variance	0	0.27	0.27	(3.25)	(3.25)	(16.09)	(22.05)

Table 4: Capital budgets

$M	2021/22	2022/23	2023/24	2024/25	2025/26	2026-2031	Total
Draft LTP 2021-2031 Beltway	0.52	0.52	0.52	0.52	0.52	2.6	5.2
Draft LTP 2021-2031 Micro mobility	3.25	3.25	3.25	0	0	0	9.75
Final LTP Beltway 2021-2031	0.52	0	0	0	0	0	0.52
Final LTP 2021-2031	3.25	3.25	3.25	6.9	6.9	34.2	57.75
Variance	0	(0.52)	(0.52)	6.38	6.38	31.6	43.32

Attachment B: Project Wainuiomata Skate-Park

1.	Project/ initiative	Wainuiomata Skate-Park Priority area: Connected communities
2.	LTP Activity
3.	Business lead	Kara Puketapu-Dentice
4.	Brief project description (problem/opportunity statement), include project status update	The Wainuiomata Skate-Park requires repair and maintenance. This has been a matter which has been signalled by the community to Council. Funding to the value of $40K was allocated to this project in the 2020/21 financial year Council has been working with the community to agree the types of repairs and maintenance required. Getting agreement with the community and in particular users and key stakeholders has taken longer than first anticipated. For this reason we are seeking that the $40K be included within the $8.4M Wainuiomata Streetscape budget and therefore completed as a part of the Wainuiomata Streetscape project. This would mean that the budget would be rolled over into the timescale of the Wainuiomata Streetscape project which over 2021/22 to 2022/23. Although the Wainuiomata Streetscape project spans two financial years, it is anticipated that the Wainuiomata Skate-Park component would be completed in 2021/22 financial year.
5.	Strategic alignment and desired outcomes sought	This project aligns with Councils objective around connecting communities and ensuring that our services, assets and recreation areas are fit for purpose.
6.	Community engagement	Engagement with the community, users and key stakeholders on the Skate-Park has been ongoing and will now be included in the engagement as a part of the Wainuiomata Streetscape project. This will be lead out by the Wainuiomata Streetscape Project Steering Group and Project Team and will include support and input from the Parks and Reserves team who will be responsible for the future care and maintenance of the Skate-Park into the future.
7.	Overview of project costs and funding source	The original funding of $40K was drawn from the baseline budgets within the Parks and Reserves and Transport teams. This funding will now be transferred to the Wainuiomata Streetscape budget and will be delivered as a part of that project.
8.	Risks and mitigation plans	The Wainuiomata Streetscape Project has terms of reference which sets out project structure. The project structure includes a project steering group (which includes the project sponsor, project manager and three Councillors) and the project team (Project Manager, Placemaker, Landscape Architect and consultant team and a reference group (Wainuiomata Community Board Chair, a representative from Love Wainuiomata and team members from the Wainuiomata Hub, Parks and Reserves and Transport teams). The project manager is responsible for providing monthly reporting to the project steering group, noting risks and issues with the recommended mitigations.
9.	Annual Plan/LTP key assumptions	The migration of $40K currently in Parks and Reserves ($10K) and Transport ($30K) into the Wainuiomata Streetscape Budget in 2021/22. The total Wainuiomata Streetscape Budget is set out over two financial years (2021/22 – 2022/23).

Table 2: Capital budgets

Current budget

$	2020/21	2021/22	2022/23	2023/24	2024/25	2025-2031	Total
Transport Net		30K					30K
Parks		10K					10K
City Development		3,000K	5,360K				8,360K
Total Draft LTP		3,040K	5,360K				8,400K

Updated budget

$	2020/21	2021/22	2022/23	2023/24	2024/25	2025-2031	Total
Transport Net		0					0
Parks		0					0
City Development		3,040K	5,360K				8,400K
Total Final LTP		3,040K	5,360K				8,400K
Variance		-	-				-

Attachment 4

Appendix 4 - Updated Section 3 of the draft LTP, The four wellbeings or Statements of Service Performance

Environmental wellbeing (page 15)

Environmental Wellbeing & Outcomes

A healthy natural environment can support community wellbeing. The environment directly and indirectly impacts on our health and wellbeing. Addressing environmental issues and concerns, and ensuring communities have access to quality green spaces and clean, safe waterways has direct positive effects on our communities health and wellbeing. We depend on the environment for energy and the materials needed to sustain life while environmental hazards can increase the risk of disease.

The outcome measures illustrated (below) give us an insight into how our city is doing in areas relating to environmental wellbeing. These outcome measures cannot be controlled by Council^{^[3]}; there are many influences outside of Council that will contribute to these measures moving in a positive or negative direction over time. However, some of Council’s projects are aimed at having an impact on these city outcomes, for example by enabling and encouraging the installation of EV charging stations Council can assist in growing the infrastructure needed to encourage more people to purchase an EV rather than a petrol or diesel car.

Measure	Data
Average residential electricity consumption	January 2020 - 418 kWh June 2020 - 790 kWh
Number of new connections for renewable energy (July 2019-June 2020)	Solar – 165	Wind – 0	Other – (-1)
Total number of connections for all types of renewable energy (June 2020)	Solar – 1,379	Wind – 13	Other - 8
Perceptions of problems	Traffic congestion – 84%
	Air pollution – 23%
	Noise pollution – 40%
	Water pollution – 61%
Number of EV’s (Dec 2020)	Light pure electric vehicles – 532 Light plug-in hybrid vehicles – 105 % of total new registrations
Percentage of people with at least 4 days of emergency food and water (June 2020)	Up to 3 days – 23% Between 4 and 7 days – 51% More than 7 days – 25%

Key Performance Indicators

The Key Performance Indicators (KPIs) measure performance (what we do) and link to the outcomes we are trying to achieve for the city (why we are doing it) and were developed with service delivery managers to ensure that the KPIs:

• Align with Council’s six key priorities

• Are central to improving performance, that is, they can be used by managers at least quarterly to inform decision making and make service/performance improvements to respond to results

• Are directly controllable by Council and measure the outcomes that we can directly influence

• Are measurable and can be measured at least quarterly.

The activities measured by these KPIs lend themselves most directly to ensuring clear alignment can be made between the KPIs measuring performance (what we do) and the outcomes we are trying to achieve for the city (why we are doing it).

Water Supply (page 16)

What we do

We provide a sustainable and high-quality water supply to our community and regularly monitor the water quality and carry out any maintenance and upgrades necessary to ensure the required service. We are improving water conservation and exploring the use of meters as a means of managing the network to ensure leakage from both the public and private parts of the networks is minimizes.

Having taken into account the expert advice we received on our water infrastructure, we are going to significantly increase investment in the city’s Three Waters infrastructure. The increase in funding will allow us to:

· Reduce the risk of asset failure and service disruption

· Provide infrastructure required for future growth, and relieve stress on existing assets

· Support a reduction in water consumption – which will extend the life of some infrastructure

· Improve the health of our urban waterways

· Support reduction in carbon emissions

We provide this service through ownership of the assets involved in the service provision however the day to day service provision is provided via Wellington Water Limited. Wellington Water Limited is a CCO owned by the six Wellington Councils to run the Water Supply across the Wellington region.

Why we do it

To ensure our community has equitable access to reliable quality drinking water and a sustainable reliable water supply. Our investment is aimed at: reducing the risk of asset failure and service disruption, and; supporting a reduction in water consumption which will extend the life of some infrastructure. We are increasing our investment to avoid asset failures, improve environmental outcomes and plan for growth. Planning to renew infrastructure what is reaching the end of its life reduces the risk of service interruptions and minimises maintenance costs.

Significant negative effects and mitigation

Potential negative effects include the decline of watercourses (rivers, streams etc.) due to the rate of water extraction, and the decline of habitats affected by upgrading and replacing three waters infrastructure. Extraction is managed to ensure that potential adverse effects are minimised to acceptable levels. We contribute towards managing the demand for water, and therefore the requirement to develop new water sources.

Three waters reform

The way that water services are provided is currently being reviewed by central government. The comprehensive water reform process is in its early stages. For further details see section 1.

KPI’s and targets for LTP	Actual performance 2019-20	Target 2020-21	Annual Target 2021–31
We want to ensure our community has access to a safe, clean, reliable water supply
Drinking water supply complies with part 4 of the drinking-water standards (bacteria compliance criteria)	Full Compliance – 100%	Full Compliance – 100%	Full Compliance – 100%
Drinking water supply complies with part 5 of the drinking-water standards (protozoal compliance criteria)	Full Compliance – 100%	Full Compliance – 100%	Full Compliance – 100%
Number of complaints for drinking water per 1000 connections	13	≤ 20	≤ 20
Residents satisfaction with the water supply service they receive	98%	≤ 95%	≤ 90%^{^[4]}
Attendance for urgent callouts: from the time that the local authority receives notification to the time that service personnel reach the site	99 minutes	≤ 60 minutes	≤ 90^{^[5]} minutes
Resolution of urgent callouts: from the time that the local authority receives notification to the time that service personnel confirm resolution of the fault or interruption	7.4 hours	≤ 4 hours	≤ 8^{^[6]} hours
Attendance for non-urgent callouts: from the time that the local authority receives notification to the time that service personnel reach the site	113 hours	≤ 36 hours	≤ 72^{^[7]} hours
Resolution of non-urgent callouts: from the time that the local authority receives notification to the time that service personnel confirm resolution of the fault or interruption	13 days	≤ 15 days	≤ 20^{^[8]} working days
We need to ensure we have a sustainable water supply for the future
Average drinking water consumption per resident per day	389 l/p/d	≤ 345 l/p/d	≤ 385^{^[9]} l/p/d
Percentage of real water loss from networked reticulation system	19%	≤ 18%	≤ 20%^{^[10]}

Wastewater (page 19)

What we do

We provide a pipe network that takes effluent to the Seaview Wastewater Treatment Plant and treats it to public health and environmental standards.

· Reduce the risk of asset failure and service disruption

· Provide infrastructure required for future growth, and relieve stress on existing assets

· Support a reduction in water consumption – which will extend the life of some infrastructure

· Improve the health of our urban waterways

· Support reduction in carbon emissions

Why we do it

By collecting, treating and disposing of wastewater, we provide a service to residents and businesses that protects the physical environment and our community’s health. Our population is expected to grow which will put additional pressure of our infrastructure. We are increasing our investment to avoid asset failures, improve environmental outcomes and plan for growth. Planning to renew infrastructure what is reaching the end of its life reduces the risk of service interruptions and minimises maintenance costs.

Significant negative effects and mitigation

The discharges of odours, overflows, and the degradation of watercourses due to overflows, are all potentially significant negative effects. Odour control systems have been fitted to parts of the wastewater infrastructure where odour problems have been experienced. Reports of odour are monitored through Council’s Request for Service system and through reports from the wastewater system maintenance and operations contractor.

Areas where overflows have occurred are being progressively upgraded using a combination of measures. Upgrading is carried out through the asset renewal programme, which provides for the replacement of every wastewater pipeline as it reaches the end of its useful life, and through the asset development programme, which reflects long term demand projections for the wastewater system.

Three waters reform

The way that water services are provided is currently being reviewed by central government. The comprehensive water reform process is in its early stages. For further details see section 1.

KPI’s and targets for LTP	Actual performance 2019-20	Target 2020-21	Annual Target 2021–31
It is critical our community is not exposed to any health or environmental risks associated with wastewater by providing a safe, reliable, quality wastewater network
Dry weather wastewater overflows per 1000 connections	4.2	0	20^{^[11]}
Number of complaints per 1000 connections	19	≤ 30	≤ 30
Residents satisfaction with the wastewater service they receive	94%	≥ 95%	≥ 90%^{^[12]}
Where the territorial authority attends to sewerage overflows resulting from a blockage or other fault in the territorial authority’s sewerage system, the following median response times:
Attendance time: from the time that the territorial authority receives notification to the time that service personnel reach the site	86 minutes	≤ 60 minutes	≤ 90 minutes^{^[13]}
Resolution time: from the time that the territorial authority receives notification to the time that service personnel confirm resolution of the blockage or other fault	3.8 hours	≤ 6 hours	≤ 8 hours^{^[14]}
Compliance with resource consents for discharges from wastewater system	No enforcement action - 100% compliance	No enforcement action - 100% compliance	No enforcement action - 100% compliance

Stormwater (page 21)

What we do

We provide a stormwater drainage pipe network to manage the surface water run-off as well as flood protection and control. Our objective is to achieve the best possible balance between the level of protection, impact on our environment and the cost to our community. This includes maintaining and upgrading assets to the required service levels. Planned changes and associated investment will improve current levels of service by reducing the probability of asset failure and service disruption.

· Reduce the risk of asset failure and service disruption

· Provide infrastructure required for future growth, and relieve stress on existing assets

· Support a reduction in water consumption – which will extend the life of some infrastructure

· Improve the health of our urban waterways

· Support reduction in carbon emissions

Why we do it

We need to control stormwater to protect our community’s health and safety and minimise property damage from flooding. We need to make sure our community can safely use our waterways and beaches for recreation and food gathering. We are increasing our investment to avoid asset failures, improve environmental outcomes and plan for growth. Planning to renew infrastructure what is reaching the end of its life reduces the risk of service interruptions and minimises maintenance costs.

Significant negative effects and mitigation

The discharge of contaminants in stormwater to watercourses and flooding when the capacity of the stormwater system is exceeded, are potentially significant negative effects. Pollution prevention programmes, road cleaning programmes and debris pits incorporated in the majority of inlets to the stormwater system assist in minimising the entry of contaminants, and are supplemented by our monitoring regime. The stormwater system is designed to standards which reflect the level of risk at different locations and are comparable to design standards in other New Zealand cities. The asset development programme progressively addresses gaps between the current levels of protection and target design standards. We also work with GWRC with respect to flooding issues associated with watercourses under Regional Council management.

Three waters reform

The way that water services are provided is currently being reviewed by central government. The comprehensive water reform process is in its early stages. For further details see section 1.

KPI’s and targets for LTP	Actual performance 2019-20	Target 2020-21	Annual Target 2021–31
We want to ensure our community can enjoy recreational assets
Achieve water quality at main recreational beaches: percentage of days that monitored beaches are suitable for recreational use during bathing season – 1 Dec to 31 Mar	100%	90%	100%
We want to ensure our City has a safe, reliable, quality stormwater system
Number of flooding events	1	0	2^{^[15]}
Number of habitable floors affected by flooding events (per 1,000 connections)	0.16	0	0.24^{^[16]}
Compliance with resource consents for discharges from stormwater system	1	No enforcement action - 100% compliance	No enforcement action - 100% compliance
Number of complaints about stormwater system performance (per 1000 connections)	10	≤ 30	≤ 20^{^[17]}
Residents satisfaction with the City’s stormwater system	78%	≥ 73%	≥ 70%^{^[18]}
Median response time to attend a flooding event, measured from the time that the territorial authority receives notification to the time that service personnel reach the site	264 minutes (4 hours, 24mins)	≤ 60 minutes	≤ 8 hours^{^[19]}

Solid Waste (page 24)

What we do

We are focused on waste minimisation and reducing the Council’s and City’s carbon footprint. We also own and operate the Silverstream landfill at which people and businesses can dispose of residual waste. We will be focusing on reducing the amount of waste put into the landfill to increase its longevity and protect ratepayers’ investment. We maximize the destruction of methane via a power plant and a supplementary flare at Silverstream landfill.

Council has introduced a new weekly kerbside rubbish and fortnightly recycling collection service, paid for through targeted rates, from 1 July 2021. A new green waste collection service is also available to households that opt in to receive the service.

We also want to consider ways to reduce the amount of waste going to landfill in the first place. This includes looking at opportunities for recovering construction and demolition waste. New infrastructure contracts, where possible, will include clauses requiring the consideration of sustainability standards e.g. GreenStar Building Rating and Infrastructure Sustainability Rating.^{^[20]}

Why we do it

Solid waste management is necessary for the health and quality of life of the community, the local economy and the environment. The solid waste activity promotes environmental wellbeing by contributing primarily to the wellbeing outcomes of healthy people and a healthy natural environment.

Council wishes to promote recycling and waste reduction and to provide for the disposal of the city’s solid waste through the new kerbside rubbish, recycling and green waste services. The new rubbish and recycling services are expected to reduce waste entering the environment and reduce emissions by having fewer trucks on the road.

Significant negative effects and mitigation

Environmental effects caused through failure to comply with resource consent conditions is a possible risk that is addressed through our management techniques and best practice standards. Failure to provide effective recycling and refuse collection services could lead to more littering. Some sustainability practices such as the drive to reduce waste and introduce modern waste management practices may for some seem expensive, time consuming and an infringement on personal freedoms. These effects are mitigated through working collaboratively with communities to develop and agree approaches to sustainability.

KPI’s and targets for LTP	Actual performance 2019-20	Target 2020-21	Annual Target 2021–31
We are working to minimize the harmful effects of refuse
No resource consent-related infringement notices received from GWRC^{^[21]}	0 notices - 100% compliance	0 notices - 100% compliance	0 notices - 100% compliance
Methane destruction at landfill to generate electricity via a power plant	New measure 2021-22	New measure 2021-22	Increasing (tbc by Tonkin & Taylor)
We want to reduce litter and the negative impacts it can have on our natural environment and on our communities health
Number of litter complaints	New measure 2021-22	New measure 2021-22	Previous year less 10%
(Audit of) litter sample^{^[22]}	New measure 2021-22	New measure 2021-22	Improve on previous year
We are looking at ways to reduce the amount of waste going to landfill
Tonnes of waste to landfill (per person)	New measure 2021-22	New measure 2021-22	Less than previous year
Percentage of kerbside recycling that is contaminated and diverted to landfill	New measure 2021-22	New measure 2021-22	≤ 10%
Tonnes of kerbside recycling collected	7,025	Increasing	Previous year plus 2%
Satisfaction with Council’s kerbside rubbish collection	94%	≥ 93%	≥ 90%
Satisfaction with Council’s kerbside recycling collection	81%	≥ 86%	≥ 90%
Satisfaction with Council’s kerbside green waste collection	New measure 2021-22	New measure 2021-22	≥ 90%
Overall satisfaction with Council’s waste collection services	87%	≥ 85%	≥ 85%

Sustainability & Resilience (page 27)

The Sustainability and Resilience group focuses on the opportunities and risks we face in regard to our environment and emergency management. It looks for strategies to address potential issues, and provides short-term, mid-term and long-term solutions for change.

We must do better to look after our natural environment and to reduce our carbon footprint. We want to make our city more resilient to natural hazards and climate change risks such as sea level rise, flooding and earthquakes. Our investment in Three Waters and transport infrastructure is crucial in terms of creating a city that is more sustainable and resilient to the impacts of climate change. Through other activity areas we are also investing $7M in decarbonising all our Council buildings and facilities, by changing from natural gas heating to lower-carbon options, by 2030.

Activity: Climate change

What we do

In June 2019 we declared a climate emergency reflecting the need to raise awareness about climate change and to prioritise reducing council and city-wide emissions to net zero carbon. To contribute to this goal Council has increased the number of EV’s in our vehicle fleet and reduced the number of vehicles we run overall. We’re installing EV charging stations across our city and ensuring that any new builds that are in the planning stages, for example Naenae Pool, use sustainable energy.

We adopted an Energy and Carbon Reduction Plan 2020 to 2024 in March 2020 that sets targets for improving energy efficiency and reducing carbon emissions. We have established a Climate Change and Sustainability Committee to oversee Council’s overall environment and climate change response.

We are ensuring our transport system provides connections between neighbourhoods’, jobs and services with an emphasis on active modes for shorter trips

Why we do it

We need to do more to look after our natural environment and to reduce our carbon footprint. Our work on climate change will contribute to our city achieving environmental outcomes associated with sustainable living and resilience. We want our city to be resilient to natural hazards and climate change risks. We also need to increase the resilience of our assets – Wellington Water’s work on the renewal of the sewer along the Esplanade is critical to protecting a vital part of our wastewater infrastructure in an area that is at risk of sea level rise.

Activity: Biodiversity

What we do

We protect and enhance indigenous biodiversity in Lower Hutt by working alongside community groups and landowners, and managing and restoring habitats in Lower Hutt bush reserves. Our programmes include: planting of indigenous plants, pest plant programme, pest tree programme, Percy’s Scenic Reserve ex-situ conservation collection, indigenous biodiversity fund, and predator free Hutt Valley. Our investment in three waters infrastructure is also targeted at improving our urban waterways. Alongside these, we strive to integrate the protection of indigenous biodiversity in spatial plans and neighbourhood development. We aim to mitigate the threats to indigenous biodiversity such as climate change, land use intensification, predators and invasive pests.

Why we do it

Protecting biodiversity is essential for the health and wellbeing of our natural and semi-natural environment, including ecosystems, flora and fauna and open space is central to the wellbeing of our environment. It helps us to reduce negative outcomes such as air and water pollution. Protecting and enhancing indigenous biodiversity contributes to making our city a vibrant and attractive place for locals and encourages visitors who come to the city to enjoy the high quality tracks, beaches and reserves.

Significant negative effects and mitigation

At times the need to protect our biodiversity can impact on property owners in terms of how they can develop and/ or use their land. Council mitigates this by working closely with land owners to develop mutual understanding and agreement in management options.

Activity: Emergency management

What we do

The Emergency Management team provides local capability to manage an effective response to emergencies and continue to develop, implement and monitor city wide emergency management plans, input to all regional plans and strategies, and promote community preparedness for emergencies.

Local emergency management is supported by the Wellington Region Emergency Management Office (WREMO) which provides training, advice and resource

to the Emergency Management Office. At a local level, there is a community resilience team that coordinates the reduction, readiness, and response in the community with programmes such as community response plans, community hub guides, and business continuity planning. Hutt City Council has joined with all city and district councils in the region to form a Civil Defence Emergency Management (CDEM) Group under the CDEM Act of 2002.

Why we do it

The Civil Defence Emergency Management Act 2002 requires local authorities to plan and provide for civil defence emergency management within its district, and to be able to function to the fullest possible extent during and after an emergency. Every local authority must be a member of a CDEM Group that has functions relating to relevant hazards and risks, and a range of activities. The desired outcome is for a resilient and prepared city and community, it is therefore important to not only have emergency management plans for our community, but also ensure they are regularly reviewed and kept up to date.

Significant negative effects and mitigation

Emergency management response and recovery activities may also have a temporary adverse effect on community and environmental wellbeing while social systems and infrastructure are being rebuilt following an emergency event. An ineffective, under-performing emergency management response has the potential to cause catastrophic and/or long lasting negative effects on all four wellbeings. Meeting the requirements of the Civil Defence and Emergency Management Act 2002 and coordinated regional planning, programmes and activities, provides for the integration of national and local emergency management planning and activity.

KPI’s and targets for LTP	Actual performance 2019-20	Target 2020-21	Annual Target 2021–31
Council is responding to the impact of climate change and contributing to the goal of a carbon zero city by 2050
Emissions from Council owned facilities	New measure 2021-22	New measure 2021-22	Decreasing
Emissions from Council owned vehicle fleet	New measure 2021-22	New measure 2021-22	Decreasing
Our city is prepared for an emergency and can respond appropriately
Percentage of Community Resilience Plans that are more than 24 months old	New measure 2021-22	New measure 2021-22	0% (none)

Regulatory Services (page 29)

Regulatory Services

This activity is fundamental to achieving a clean, healthy, attractive, safe and sustainable environment for residents and visitors. It is also a legal requirement for Hutt City Council. The group is included under Environmental Wellbeing, however the Building and Resource Consents activities also contributes to economic wellbeing and those of Animal Control to social wellbeing.

Activity: Building consents and resource consents

What we do

These teams are responsible for the regulatory and compliance functions for building work in Lower Hutt, for general advice to the public on consenting matters, for co-ordinating LIM applications for Council and for advice on environmentally sustainable residential design and products.

Why we do it

Through this activity we can contribute to, and promote, a safe, healthy and attractive built environment. It enables the continued supply of new housing contributing to an increased housing stock and housing affordability.

Significant negative effects and mitigation

Perceptions of personal freedom can be reduced because of the need for regulatory activities that benefit the wider community. They can be interpreted as a barrier causing costs and delays. By ensuring that statutory timelines are met were possible we limit delays and costs.

Environmental Health

What we do

The Trade Waste team exists to protect public health in areas of sewage, stormwater and chemical hazards. It registers all commercial properties that discharge liquid waste and charges the users of the system to cover the cost of conveying, treating and disposing of their waste.

We audit 690 known trade waste discharges to the sewerage system in the Hutt Valley, and manage overland storm water and sewerage inspections.

Why we do it

We want a safe community and healthy people. We aim to protect the environment and our communities health by ensuring that our wastewater and stormwater are up to standard.

Significant negative effects and mitigation

Perceptions of personal freedom can be reduced because of the need for regulatory activities that benefit the wider community. They can be interpreted as a barrier causing costs and delays.

Activity: Animal control

What we do

The Animal Services team is responsible for the monitoring and enforcement of regulations under the Dog Control Act so that residents are safe, annoyance factors are minimised, and the welfare of animals is protected.

Why we do it

It is a legal requirement to manage dog control activities within the Council’s jurisdiction. We want to achieve a safe community and healthy people through: the administration of dog registrations; the management of safety and nuisance factors around dogs and other animals, and; the education of our community about animals and their care.

Significant negative effects and mitigation

Perceptions of personal freedom can be reduced because of the need for regulatory activities that benefit the wider community. They can be interpreted as a barrier causing costs and delays.

KPI’s and targets for LTP	Actual performance 2019-20	Target 2020-21	Annual Target 2021–31
We need to ensure that new housing is safe and meets standards without delaying the process
Building consents issued within the statutory timeframe	100%	100% within 20 days	100% within 20 days
Code of compliance certificates issued within the statutory timeframe	88%	100% within 20 days	100% within 20 days
Non-notified resource consents issued within the statutory timeframe	97%	100% within 20 days	100% within 20 days
We want a community where everyone feels safe
Existing food premises verified within time frames	New measure	95% by due date	95% by due date
Sale and supply of liquor (high risk premises) inspected	39%	95% of premises checked	95% of premises checked
Percentage of dog attack responded to within 30 minutes	95%	95%	≥ 95%
Noise control (excessive noise) complaints (%) investigated within 45 minutes	69%	≥ 85%	85%

Economic Wellbeing (page 32)

Economic wellbeing covers all aspects of present and future financial security. It includes the ability of individuals, families, and communities to consistently meet their basic needs (including food, housing, utilities, health care), and have control over their day-to-day finances. It includes the aspects that enable people to be actively involved in the economy that is; availability of transport and childcare, participation in education, and access to financial support.

The outcome measures illustrated (below) give us an insight into how our city is doing in areas relating to economic wellbeing. These outcome measures cannot be controlled by Council^{^[23]}; there are many influences outside of Council that will contribute to these measures moving in a positive or negative direction over time. However, some of Council’s projects are aimed at having an impact on these city outcomes, for example the percent of our community who have access to the internet will be influenced by providing free Wi-Fi in our community hubs and libraries.

Measure	Data
GDP	$1,345M
Consumer Spending	$275M
Unemployment rate	3.8%
NEET (Youth aged 15-24 Not in Employment, Education or Training)	9.8% (15-19 year olds) 9.0% (20-24 year olds)
Number of businesses	10,881
Average house price	$688,104
Mean rent	$472
Accommodation supplement recipients	7,317
Affordability of housing costs	Housing affordability – 6.1 (ratio of average house values to average household incomes) Rental affordability – 21.6 (ratio of average rent to average household incomes) 28% - disagree that their housing costs are affordable
Access to cell phone / mobile phone Access to internet No access to telecommunication systems (Census 2018)	93% 87% 1%
Median annual individual income (Census 2018)	$34,700
Annual individual income by income group (Census 2018)	$20,000 or less - 32% $20,001-$40,000 - 23% $40,001-$60,000 - 18%	$60,001-$100,000 - 17% $100,001-$150,000 - 6% $150,001 or more - 3%
Ability of income to cover every day needs	45% - have just enough, or not enough
Public transport access	82% - agree public transport is easy to access

Transport (page 34)

The Transport group manages programmes of work required to maintain, operate and renew our transport system.

We are investing in the Cross Valley Transport Connections project to ease access in and out of our city and ease pressure on current access points like Petone Esplanade as well as supporting public transport options and micro mobility. We are working on measures and investing in active transport modes and micro‑mobility to encourage our community to get out of cars and walk, cycle or use other micro-mobility modes of transport. In particular we are developing local connections that link the core routes with key employment, education, and transport hubs to encourage greater use of active modes; this includes the Eastern Bays Shared Path.

We need a transport system that enables our community to be connected, and our businesses to be efficient and that is above all safe for our community. We want to ensure that all roads users have their needs met and that they can get around our city efficiently and safely. We want walkers, cyclists and people using micro-mobility modes of transport (such as electric scooters, electric bikes or skateboards) to get around our city easily and safely.

Activity: Road Assets

What we do

We look after the operation and renewal of the road assets, including road pavements and surfacing, structures (bridges, retaining walls, and seawalls), footpaths and drainage assets. We manage our assets through a renewal programme which includes condition rating assessment, deterioration modelling, age and traffic volume, loading considerations and physical inspection.

Why we do it

Having the road corridor in public ownership ensures that all our residents have appropriate access to property and freedom of travel throughout Lower Hutt. Our work provides a safe, resilient and efficient transport system which supports the economy and connects our communities. By providing an appropriate level of service we reduce the number and severity of accidents on our transport infrastructure.

Significant negative effects and mitigation

The potential environmental effects of growing transport demand include: increased water runoff pollution from roads, particulates from the exhausts of heavy road vehicles, air pollutants from road transport, traffic noise and vibration, congestion on strategic and arterial routes, loss of productive and recreational land taken for transport infrastructure, and public health risks associated with traffic accidents. Transport planning considers and includes actions to mitigate these adverse effects. Crash reduction studies and remedial work are carried out on areas that experience a high number of crashes. Works are undertaken every year to minimise traffic delays and, as a result, air pollution. We are actively promoting alternative means of transport.

Activity: Traffic Assets

What we do

We manage the operation and renewal of traffic assets on the city’s transport system. In general, this includes assets within the road corridor and on or above the road surface such as signs and markings, traffic signals, safety barriers, parking meters, streetlights etc. Works programmes are formulated through best asset management practices and are in response to evidence-based requests for improvements. We aim to optimise whole of life costs while providing the appropriate level of service. Traffic asset renewal is strategically aligned with national, regional and city objectives.

Why we do it

Traffic assets ensure people and vehicles can travel efficiently and safely. We want to provide a safe, resilient and efficient transport system that supports the economic and social aspirations of the city. By providing an appropriate level of service we reduce the number and severity of accidents on our transport infrastructure.

Activity: Roading Maintenance & Infrastructure contracts

What we do

We undertake street and amenity cleaning, vegetation control, maintenance of road signs, road marking, graffiti, street lighting, repair and maintenance of all existing roads, footpaths and associated assets. This includes all assets on road reserves that serve a purpose for our community.

We carry out operations using maintenance contracts that cover a range of technical expertise procured by open tender. When a contract is signed we develop and manage best practice partnerships with contractors to achieve desired outcomes for NZTA and Council. These outcomes will be shaped by Covid impacts, in particular supporting local businesses and creating local employment and training opportunities.

Why we do it

Roads, footpaths and access ways are an essential service and lifeline for our community. They require high levels of service with a user friendly network to ensure the safety of pedestrians and road users. Our aim is to have quality and accessible assets maintained and cleaned to a high standard to support connectedness and minimise injury and accidents.

Activity: Road safety services

What we do

We manage road safety programmes and interventions to improve the road safety performance across the Lower Hutt transport system. Safety issues are identified via a number of methods including statistical analysis, direct reporting and risk assessments.

Why we do it

Programmes and interventions are designed to eliminate risk and/or mitigate the consequence of events to improve safety.

Activity: Parking enforcement services

What we do

We ensure the safety and convenience of the community in and around Lower Hutt by enforcing parking regulations and vehicle standard regulations. This ensures all drivers of vehicles have equal opportunity to use parking facilities in Lower Hutt. We respond to requests from the public regarding safety, inconvenience and nuisance problems that involve stationary vehicles. We aim to protect the safety of all Lower Hutt residents and have special focus on safety around schools.

Why we do it

The Land Transport Act delegates the responsibility of enforcement of stationary vehicle offences to Territorial Authorities. Parking enforcement and education will contribute to a safe community and ensure fair and equitable access for vehicle owners.

Activity: Active modes

What we do

We are focused on improving community connectedness and the travel options people can use safely and easily. We manage the Cycleway/Shared Path and Connectivity projects for Lower Hutt. We also improve accessibility infrastructure for vulnerable and mobility impaired transport users.

We are working on strengthening our active transport connections, including routes to Waterloo Station and from the Beltway Cycleway to schools and Hutt Hospital.

Why we do it

We need to maintain accessibility for our vulnerable and mobility impaired transport users and enable our community to increase their use of active and more sustainable alternative modes of transport. The Cycleway/Shared Path projects align with national, regional and city priorities and objectives and will provide an increased level of service for walking, cycling and micro-mobility.

KPI’s and targets for LTP	Actual performance 2019-20	Target 2020-21	Annual Target 2021–31
We need to be able to travel along key routes efficiently
Travel time on key routes^{^[24]}	New measure 2021-22	New measure 2021-22	TBC
Travel time reliability ^{^[25]}	New measure 2021-22	New measure 2021-22	TBC
Our transport system is safe to travel on
Road condition index which measures the condition of the road surface^{^[26]}	1.6	Hold or improve rating	Hold or improve rating
The average quality of ride on a sealed local road network, measured by smooth travel exposure	81%	Hold or improve rating	Hold or improve rating
Percentage of sealed local road network that is resurfaced annually	3.5%	8% (long term target)	≥ TBC^{^[27]}%
The change from previous financial year in number of fatalities and serious injury crashes on the local road network	184	Contribute to a reducing trend over 10 years	Number (previous year less 1%)
Road risk rating - Percentage that have a high/high rating^{^[28]}	New measure 2021-22	New measure 2021-22	≤ 5%
Residents satisfaction with the condition of their local roads	91%	≥ 92%	≥ 80%^{^[29]}
Percentage of footpaths that fall within the service standard for footpath condition

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