OVERVIEW:

This Committee assists Council in setting the broad direction of the city, discharging statutory functions, and overseeing organisational performance.

The Committee is aligned with the Transformation & Resources, and Strategy & Engagement, Directorates.

Its areas of focus are:

§ Long term/high level strategic focus

§ Long Term Plan/Annual Plan oversight

§ District Plan oversight

§ Housing/homelessness

§ City growth/economic development

§ Financial and non-financial performance reporting

§ Oversight of Property Working Group

§ Oversight of strategies and policies

§ Bylaw development

§ Oversight of CCOs/approval of SOIs

PURPOSE:

To assist the Council in setting the broad vision and direction of the city in order to promote the social, economic, environmental and cultural wellbeing of the city’s communities in the present and for the future. This involves determining specific outcomes that need to be met to deliver on the vision for the city, and overseeing the development of strategies, policies, bylaws and work programmes to achieve those goals. This committee is also responsible for monitoring the overall financial management and performance of the Council Group.

DELEGATIONS FOR THE COMMITTEE’S AREAS OF FOCUS:

§ All powers necessary to perform the Committee’s responsibilities including the activities outlined below.

§ Develop required strategies and policies. Recommend draft and final versions to Council for adoption where they have a city-wide or strategic focus.

§ Implement, monitor and review strategies and policies.

§ Oversee the implementation of major projects provided for in the LTP or Annual Plan.

§ Oversee budgetary decisions provided for in the LTP or Annual Plan.

§ Recommend to Council the approval of any financial decisions required outside of the annual budgeting process.

§ Maintain an overview of work programmes carried out by the Council’s Transformation & Resources, and Strategy & Engagement, Directorates.

§ Conduct any consultation processes required on issues before the Committee.

§ Approval and forwarding of submissions.

§ Any other matters delegated to the Committee by Council in accordance with approved policies and bylaws.

§ The committee has the powers to perform the responsibilities of another committee where it is necessary to make a decision prior to the next meeting of that other committee. When exercised, the report/minutes of the meeting require a resolution noting that the committee has performed the responsibilities of another committee and the reason/s.

§ If a policy or project relates primarily to the responsibilities of the Policy, Finance & Strategy Committee, but aspects require additional decisions by the Communities Committee, Infrastructure & Regulatory Committee and/or Climate Change & Sustainability Committee, then the Policy, Finance & Strategy Committee has the powers to make associated decisions on behalf of those other committees. For the avoidance of doubt, this means that matters do not need to be taken to more than one of those committees for decisions.

District Plan Delegations:

§ Undertake a full review of the City of Lower Hutt District Plan, including oversight of the District Plan Review Subcommittee in establishing a District Plan work programme and monitoring its implementation.

§ Consideration of matters related to the preparation and ongoing monitoring of the City of Lower Hutt District Plan.

§ Preparation of required Changes and Variations to the City of Lower Hutt District Plan for Council approval to call for submissions.

§ Make recommendations to Council on private District Plan Change requests for Council to accept, adopt or reject.

§ The Chair of the Policy, Finance & Strategy Committee, in conjunction with the Chief Executive, is authorised to appoint a District Plan Hearings Subcommittee of suitably qualified persons to conduct hearings on behalf of the Committee.

Bylaw Delegations:

§ Develop and agree the Statement of Proposal for new or amended bylaws for consultation.

§ Recommend to Council the approval of draft bylaws prior to consultation.

§ The Chair of the Policy, Finance & Strategy Committee, in conjunction with the Chief Executive, is authorised to appoint a Subcommittee of suitably qualified persons to conduct hearings on draft bylaws on behalf of the Committee.

§ Recommend to Council new or amended bylaws for adoption.

Financial, Project and Performance Reporting Delegations:

§ Recommend to Council the budgetary parameters for preparation of the Council’s Long Term Plans (LTP) and Annual Plans.

§ Monitor progress towards achievement of budgets and objectives for the Council Group as set out in the LTP and Annual Plans, including associated matters around the scope, funding, prioritising and timing of projects.

§ Monitoring and oversight of significant city-wide or strategic projects including operational contracts, agreements, grants and funding, except where these are the responsibility of another standing committee.

§ Monitor progress towards achievement of the Council’s outcomes as set out in its overarching strategies for the city and their associated plans.

§ Oversee the activities of the Property Working Group in its implementation of the Purchase and Sale of Property for Advancing Strategic Projects Policy.

§ Oversee the acquisition and disposal of property in accordance with the LTP.

§ Monitor the integrity of reported performance information at the completion of Council’s Annual Report process.

§ Review and recommend to Council the adoption of the Annual Report.

§ Recommend to Council the approval of annual Statements of Corporate Intent for Council Controlled Organisations and Council Controlled Trading Organisations and granting shareholder approval of major transactions.

§ Monitor progress against the CCO and CCTO Statements of Intent and make recommendations to Council in the exercising of Council powers, as the shareholder, in relation to Council Controlled Organisations/Council Controlled Trading Organisations under sections 65 to 72 of the Local Government Act.

§ Oversee compliance with Council’s Treasury Risk Management Policy.

§ Consider and determine requests for rates remissions.

§ Consider and determine requests for loan guarantees from qualifying community organisations where the applications are within the approved guidelines and policy limits.

NOTE:

The Ministry for the Environment advocates that Councils offer specialist RMA training in areas of law which are difficult to grasp or where mistakes are commonly made. This is to complement the Good Decision Making RMA training that they run (which is an overview and basic summary of decision making, rather than an in-depth training in specific areas of the RMA). Therefore in order to facilitate this, the RMA training run for councillors that wish to be hearings commissioners is mandatory.

Reasons for the importance of the training:

1. Hearings commissioners are kept abreast of developments in the legislation.

2. Legal and technical errors that have been made previously are avoided (many of which have resulted in Environment Court action which is costly, time consuming and often creates unrealistic expectations for the community).

3. The reputation of Council as good and fair decision makers or judges (rather than legislators) is upheld.

12 14 September 2021

Policy, Finance and Strategy Committee

03 August 2021

File: (21/1215)

Report no: PFSC2021/4/196

Land Sale Proposal - 2 Miromiro Road

Purpose of Report

1. This report seeks Council approval to resolve an encroachment by selling Council land adjacent to 2 Miromiro Road, Normandale, which has been occupied by the dwelling since 1954.

Recommendation

That the Committee recommends that Council agrees to proceed with the sale of land to resolve the encroachment which is an approximately 58m2 section of land on Part Section 73 Normandale Settlement CT WN492/165 attached as Appendix 1 to the report.

For the reason to resolve a long established reserve encroachment.

Background

2. Councillors at the Communities Committee meeting held on 4 March 2021, asked officers to report back to the Policy, Finance and Strategy Committee the historic significance of the encroachment and legal advice regarding the matter.

3. November 24 1959: A report by the City Engineer’s Department identified the encroachment during a survey carried out for the laying of the sewer extension up Miromiro Road.

4. December 7 1959: The minutes of the meeting of the Works and Drainage Committee, attached as Appendix 2 to the report, resolved that Mr JA Fawcett be requested to submit a proposal for remedying the position with regard to the siting of his dwelling.

5. December 11 1959: A letter was sent to Mr JA Fawcett indicating that the dwelling at 2 Miromiro Rd was erected partly on Council owned land WN492/165 Part Section 74 Normandale Settlement.

6. December 17 1959: The Council Surveyor identified a 6 perch (151m2) area that would be suitable to sell to Mr JA Fawcett for the Council Valuer’s indicated price of £10.

7. April 11 1960: In a letter from the Town Clerk it was indicated that Mr JA Fawcett was willing to pay the £10 and associated survey and legal fees.

8. April 13 1960: The minutes of the meeting of the Works and Drainage Committee resolved that the application to transfer the land to resolve encroachment be approved subject to the payment of the survey, legal, and land value fees by Mr JA Fawcett.

9. June 29 1960: Currently the last known letter regarding the matter was sent to the City Solicitor stating that they would be instructed to proceed with the legal formalities upon completion of a “subdivisional” plan.

10. No further correspondence or documentation, other than what can be seen in Appendix 3 to the report regarding the sale and adjustment of boundaries has been found.

11. A letter to the homeowner at 2 Miromiro Road was sent in 2015 by a previous Council officer noting the encroachment.

12. Recently, the current homeowner approached Council enquiring about options to resolve the encroachment.

Discussion

13. Council officers have offered to sell an approximately 58m2 portion of Martin Grove Reserve to resolve the encroachment upon approval from Council. Exact boundaries and land area will need to be assessed by an independent surveyor.

14. Council practice is to resolve encroachments via the exchange or sale of land or by the removal of the encroachment. Given that Council land in this instance is being encroached by a permanent structure Council officers believe that a sale of land is most suitable.

15. There is no known evidence of a land sale purchase agreement, title transfer, or receipt of the £10 being paid from 1959-1960. The current homeowner has indicated that the £10 was paid by Mr JA Fawcett based on the recollection of Mr Fawcett’s family.

16. There is no known evidence of Mr JA Fawcett paying surveying and legal fees as required to proceed with the sale of land.

17. The encroached area has no known recreation, community, environmental, cultural or spiritual purpose and is therefore not managed as a park or reserve.

18. Should the surveyor find any evidence that the reserve land was subdivided and amalgamated to 2 Miromiro Road, it is expected that it will be remedied with LINZ and in the Certificate of Title.

19. Martin Grove Reserve is not classified under the Reserves Act 1977 and is held by Council in Fee Simple. Martin Grove Reserve’s Record of Title can be found attached as Appendix 4 to the report.

20. A valuation report was completed and the Committee will consider the report in the public excluded part of the meeting.

Options

21. Proceed with the land sale process as normal with the indicated market value.

22. Proceed with a minor boundary adjustment; a sale price will not be negotiated on the presumption that the £10 was paid.

23. Proceed by issuing a long-term licence to occupy; this would be inconsistent with current Council practice.

Climate Change Impact and Considerations

24. There are no significant negative or positive impacts on climate change from this decision.

Consultation

25. There are no affected parties to this minor boundary adjustment other than Council and the owner of 2 Miromiro Road.

Legal Considerations

26. The Committee will consider the legal advice in the public excluded part of the meeting.

Financial Considerations

27. The costs associated (surveying, legal, and any other distributions) with the land sale will be met by the property owner.

Appendices

No.	Title	Page
1 ⇩	Appendix 1: 2 Miromiro Road Encroachment Area	13
2 ⇩	Appendix 2: Minutes of the works and drainage committee	14
3 ⇩	Appendix 3: 1959-1960 correspondence	18
4 ⇩	Appendix 4: WN492/165 Martin Grove Reserve Record of Title	31

Author: Tyler Kimbrell

Parks, Reserves and Recreation Planner

Reviewed By: Marcus Sherwood

Head of Parks and Recreation

Approved By: Andrea Blackshaw

Director Neighbourhoods and Communities

38 14 September 2021

Policy, Finance and Strategy Committee

11 August 2021

File: (21/1271)

Report no: PFSC2021/4/197

Budget Update 2021/22

Purpose of Report

1. To seek approval of budget changes for 2021/22.

Recommendations

That the Committee recommends that Council:

(1) notes the year-end carryovers of projects due to timing changes; and

(2) agrees to amend the operating and capital budgets for 2021/22 as detailed in this report due to the new carryovers that have been identified, refer Table 1 contained in the report and Appendix 1 attached to the report.

For the reasons outlined in this report.

Background

2. The 2021- 2031 Long Term Plan (LTP) was adopted by Council on 30 June 2021. The budgets included in the plan were based on the latest financial information and estimates available at the time of the preparation of the plan. There were also a number of carryovers from the 2020/21 Annual Plan that were identified early and were therefore approved to also be included in the LTP.

3. Through the review of the year-end financial results for 2020/21 there have been a number of other projects that were not able to be completed that have flow on impacts for 2021/22 and some out years. For example, the estimated timing of project expenditure assumed in the 2020/21 Annual Plan has changed for a range of reasons and the value of expenditure actually incurred in 2020/21 is different to that forecasted previously and therefore requiring further expenditure in 2021/22. From a project/budget manager perspective the budget in 2021/22 is requested to be updated to reflect the timing difference so that there is clarity on the correct budget for the project/budget manager.

4. In recent years where budget changes to existing approved budgets have been required, the change to the budget has been treated as a ‘Revised Budget.’ This paper seeks Council approval related to a Revised Budget for 2021/22 to reflect the inclusion of the new budget carryovers to improve the accuracy of budgets and the associated reporting of variances.

Performance reporting

5. Council is legislatively required to prepare an Annual Report and for this report to include financial results which compare to the Annual /Long Term Plan budgets. There is no change proposed in relation to this process.

6. From a financial performance monitoring perspective, the quarterly reporting to the Policy, Finance and Strategy Committee will include both information on Annual Plan budgets and the Revised Budgets which have been approved by Council. The focus of performance monitoring will be on financial results compared to the Revised Budgets as this would be the most meaningful and useful from a performance perspective. This is in line with the process applied in 2019/20 and 2020/21.

7. Monthly internal performance monitoring processes for Council will focus on delivery of the work programme against the Revised Budgets and accountabilities around this.

8. There could be further changes to the Revised Budget during the year. For example, Council may make a decision during the year to progress a new priority initiative, and reprioritise funding. This will be included as a Revised Budget change which would provide officers with the authority to progress the initiative. In the past two years there were some cases where this happened, for example in 2019/20 in response to the Covid-19 pandemic $100,000 of funding was approved for the Community Resilience Fund.

Year-end carryovers/deferrals

9. Council delivered $65M of capital expenditure in 2020/21, which was 81% of the $81M Annual Plan budget and 75% of the Revised Budget of $86M.

10. As part of the 2021-2031 Long Term Plan considerations and final adoption, Council approved a number of carryovers of budgets from 2020/21 to 2021/22 and later years which included operating budgets of $3.9M and capital budgets of $14.3M. These carryovers were prepared based on best information available at the time.

11. As part of the year-end process, officers have reviewed the 2020/21 results against the revised budget and re-assessed the need to carry forward unspent budgets into the subsequent financial years. The assessment is based on specific criteria:

a) Deferrals are for discrete projects that are in execution phase but have experienced unexpected timing changes.

b) Deferrals relate to specific circumstances, for example grants committed to third parties etc.

c) Ongoing development and renewal programme budgets cannot be carried forward unless they meet the requirements of a) above.

d) Savings and unused contingencies of completed projects cannot be carried forward and cannot be used to offset other projects.

e) The whole of life project cost cannot be changed unless there is an approved variation. The budget changes represent a timing change only.

12. Alongside these criteria is the need to assess overall financial performance and check whether there are any other reasons not to progress the carry forward of budget.

13. Many of the carryovers that are being requested are required to address the state of some of Council’s assets. However progressing some of this work along with other projects has been held up due to shortages of materials and availability of resources both within council and externally with a shortage of contractors.

14. Appendix 1 to the report provides a detailed project listing of the proposed year-end carryovers for which approval is sought. The changes have been split into two categories; firstly amendment to previously approved carryovers and secondly new carryovers proposed. These are summarised in Table 1.

Table 1 : Summary of proposed budget changes for carryovers

$000

Previously approved carryovers

New carryovers proposed

Total carryovers proposed

NZTA subsidy revenue

673

Increase

Reduction

576

Increase

Opex

3,956

Increase

1,992

Increase

5,948

Increase

Capex

14,369

Increase

4,652

Increase

19,021

Increase

15. Council approval is sought to revise the 2021/22 budgets to include these carryovers so as to enable improved performance monitoring of project budgets in 2021/22. The financial impact of these changes is minor as it is timing of expenditure.

Summary financial impact for all budget changes

16. The following table shows a summary of financial impact of changes proposed.

Table 2: Financial impact summary for 2021/22

$Million	Net deficit	Capital investment
Long Term Plan 2021/22 Year	0.5 Surplus	103.5
Carry forward changes	2.1	4.2
Other budget changes	0.0	0.0
Revised Budget 2021/22	1.6 Deficit	107.7

17. The impact of the carry-forwards is only on the timing of borrowings between years.

18. Table 3 that follows provides an overview by activity of the proposed carryover budget changes.

Table 3 – summary by activity of proposed carryover budget changes

$Million	2021/22		Later years
Activity	Opex	Capex	Opex & Capex	Commentary
Integrated Community Services	0.290	2.461	0.0	Opex is mainly due to deferral of buildings maintenance works that have been delayed and unspent portion of the COVID-19 recovery fund. Capex is mainly to cover a number of building renewals projects that could not be completed due to issues with supplying materials and limited staff resources. Included in the carryovers is $0.5M for Naenae Town Centre improvements and $0.6M for the Community Panels’ projects.
Parks and Reserves	0.120	0.379	0.0	Opex is mainly the portion of the HV Gym Sport grant allocated for demolition costs at Fraser Park. Capital is for a number of projects not completed including toilets upgrades and wharves refurbishment work.
City Environment	(0.076)	(1.900)	0.0	Opex is a reduction in the carryover amount for the City Spatial Plan. Capex is removing the previously approved carryover for the RiverLink project as the budget for 2020/21 was fully spent (land settlement late in June 2021).
City Development	1.211	1.069	0.0	Opex mainly relates to the carryover of unspent portion of the Development Stimulus fund. Capex is from the Urban Growth Strategy project which has been delayed.
City Resilience	0.000	0.360	0.0	Capex carryover relates to two Emergency Management projects, new generators and improvements to Western Hutt Rd facility that have been delayed.
Roads and Accessways	0.097	0.394	0.0	Opex is a reduction in the subsidy amount resulting from revised subsidies on capital projects. Capex is due to delays on a number of projects.
Three Waters	0.0	0.485	0.449	Capex relates to an underspend across water supply projects which has been assigned to reactive renewals in 2021/22, and additional stormwater upgrades underspend which has been moved to 2022/23.
Solid Waste	0.0	0.660	0.0	Capex is for work that has been delayed at the Silverstream Landfill to improve traffic flow and the transfer station.
City Leadership	0.447	0.295		Opex is to complete a numbers projects including the Community Engagement Research and Homelessness Strategy which have been delayed. Capex carryover is mainly for IT projects that have been delayed.
Total	2.089	4.203	0.449

Climate Change Impact and Considerations

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

Consultation

20. Consultation was carried out when preparing the 2021-2031 Long Term Plan and the previous 2020/21 Annual Plan

Legal Considerations

21. The most relevant legislation includes the Local Government Act 2002.

Financial Considerations

22. The financial considerations are detailed in this report.

Appendices

No.	Title	Page
1 ⇩	Appendix 1 - List Of Proposed Carryovers	39

Author: Karl Eagle

Senior Management Accountant

Author: Philip Benseman

Budgeting and Reporting Manager

Approved By: Jenny Livschitz

Group Chief Financial Officer

49 14 September 2021

Policy, Finance and Strategy Committee

18 August 2021

File: (21/1275)

Report no: PFSC2021/4/198

Financial Assistance - Knowing Your Pipes

Purpose of Report

1. To update Council on development on the financial assistance for the Knowing Your Pipes project and agree an approach for the scheme going forward.

Recommendations

That the Committee recommends that Council:

(1) agrees not to proceed with the Voluntary Targeted Rating Scheme and rates postponement scheme as consulted on in the Draft Long Term Plan 2021-2031 process;

(2) agrees to offer assistance on an individual contractual basis, as noted in option three; and

(3) agrees in principle that officers progress work with other councils to engage with the Ministry of Business and Innovation and seek an exemption for the Voluntary Targeted Rating Scheme from the Credit Contracts and Consumer Finance Act 2003.

For the reasons contained in the report.

Background

2. As part of the Draft Long Term Plan 2021-2031, in March 2021 Council approved for consultation a voluntary targeted rating scheme (VTRS) and rates postponement policy to fund repairs to private stormwater and wastewater pipes. Under the scheme consulted on, assistance would be by way of Council incurring the cost of repairs or renewals and reclaiming this through a targeted rate. The proposed rates postponement scheme was largely based on a scheme that had been adopted by Porirua City Council.

3. For those property owners that elected to utilise the scheme:

a. a charge would be registered against the property,

b. processing fees and interest would be charged against the amount outstanding each year,

c. an amount of $500 a year would be repaid through rates with the outstanding balance postponed.

4. Subsequently, it has become apparent that implementing the scheme may result in it being required to comply with the Credit Contracts and Consumer Finance Act. The Commerce Commission (ComCom) advised all councils to look at their VTRS in light of the formal warning issued by them to Auckland Council. ComCom considered that Auckland Council’s VTRS was a ‘consumer credit contract’ under the Credit Contracts and Consumer Finance Act 2003 (CCCFA) and resulted in Auckland Council being required to repay interest and costs back to ratepayers. This was primarily based on the scheme charging interest, administration fees and taking a security interest.

5. At the 9 June 2021 Long Term Plan Subcommittee meeting it was agreed to progress the decisions on the rates postponement policy and voluntary targeted rating scheme outside the Long Term Plan 2021-2031 process following the receipt of legal advice and further investigation of options.

6. Officers engaged Simpson Grierson to provide advice on the VTRS and rates postponement policy. As it stands this would likely be subject to the CCCFA due to the interest cost, administration fee, and security interest of the scheme. The CCCFA would impose a heavy administrative burden on Council including responsible lending obligations.

7. The design of the Council scheme consulted on was closely based on the approach used by Porirua City Council. Subsequent to implementing their scheme, Porirua have been considering their options in light of the warning issued by ComCom.

8. Wellington Water is progressing with their Knowing Your Pipes work in Wainuiomata. Sub-catchment testing has been completed. Priority areas have been identified and smoke and dye testing and CCTV inspections begun. No specific properties requiring remedial works have been identified at the time of this report.

Discussion & options

9. The options currently available to Council are outlined below.

Option one - Stay with the VTRS and rates postponement scheme

10. Council could adopt the VTRS and rates postponement scheme as consulted on. There is still uncertainty as to whether the VTRS needs to comply with the CCCFA or not. If Council adopts the VTRS and doesn’t comply with the CCCFA, Council could risk legal action in the future. This is not considered an acceptable option.

11. Council could adopt the VTRS consulted on and comply with the requirements of the CCCFA. Part of this compliance means we would need to abide with the responsible lending obligations. Each applicant would need to provide their financial position (assets, liabilities, income, expenses) and officers would need to assess the applicant’s ability to pay.

12. This is problematic, as rates in general are not assessed on an ‘able to pay’ basis and we could encounter applicants who have difficulty meeting these requirements.

Option two - Offer no financial assistance

13. Council is trying to provide financial assistance to ratepayers for what is essentially a ‘private’ cost to fix water pipes on their own private property. Council could decide not to offer financial assistance and each ratepayer would need to pay their own costs.

14. This option would not be aligned to the purpose of the Knowing Your Pipes initiative and the recommendations being developed as part of the Whaitua Implementation Programme. The Whaitua Committee are tasked with developing a programme to improve the quality of our streams, rivers and harbour.

Option three - Contract Basis

15. Council could enter into individual contractual arrangements (on an interest and administration fee free basis) with each relevant ratepayer to achieve the goals of the scheme. The ratepayer would repay council on the terms set out in the contract as opposed to through the targeted rate.

16. Benefits of this approach would include it falling outside the CCCFA, still being able to offer financial assistance to those who might need it and ensuring repairs of private pipes are paid for by the individual ratepayer.

17. However, this option would not have the operational efficiency and security afforded by the VTRS. As an unsecured debt, unpaid accounts would follow Council’s standard debt collection process which could include debt collectors.

Option four - Rating solution

18. Council could change the proposed structure of the scheme so that the costs associated with the works are funded through other sources (such as the general rate or a new targeted rate that is collected from all ratepayers).

19. Benefits of this approach would be the ease of administering the scheme and could be justifiable in terms of the broader public benefits of the programme. The harbour and water are benefits the whole city enjoys, therefore the whole city could contribute to achieving harbour water quality. The whole city would also benefit from the future cost savings of delays to upgrading or new wastewater treatment plants.

20. This is a significant change from the original intention of the scheme and is based on all ratepayers funding the costs of repairs to private water pipes.

Seek an exemption from the Ministry of Business, Innovation and Employment

21. There are a number of councils that provide VTRS, or that are intending to provide VTRS, and are considering an application to MBIE for a broader CCCFA exemption for VTRS. Council could consider joining this group in parallel to selecting one of the above options.

22. If approved, this would allow Council to adopt the original scheme with its operational efficiencies and security.

23. There would be a cost sharing arrangement for legal fees with the other councils. It is likely however that the exemption application process would take considerable time.

Officer advice

24. The current proposed model of financial assistance raises compliance issues with the CCCFA as highlighted by ComCom therefore cannot go ahead in its current form

25. Officers recommend proceeding with option three. However, given this will be on a fee and interest free basis to avoid being captured by the CCCFA, it is recommended that some restrictions are put in place to reduce the availability of the scheme to those who are unable to fund works privately. Primarily, that those with the ability to borrow through a mortgage are required to utilise that funding mechanism in the first instance.

26. Under this option the costs of interest and administration of the scheme will be borne through the general rate. Knowing Your Pipes investigation works are not sufficiently progressed to provide an accurate indication of the level of these costs.

27. Officers recommend joining the group of councils seeking an exemption for VTRSs from MBIE. This may enable the original scheme as intended to be adopted in the future and allow flexibility to Council for any future uses of VTRSs.

Climate Change Impact and Considerations

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

29. Providing financial assistance will help Council progress its environmental goals.

Consultation

30. There is no legal requirement for consultation.

Legal Considerations

31. Legal advice has been received from Simpson Grierson in the preparation of this report.

Financial Considerations

32. Financial considerations are noted in the body of the report.

Appendices

There are no appendices for this report.

Author: Daniel Koenders

Manager Financial Strategy & Planning

Author: Bruce Hodgins

Strategic Advisor

Reviewed By: Jenny Livschitz

Group Chief Financial Officer

Reviewed By: Bradley Cato

Chief Legal Officer

Approved By: Jo Miller

Chief Executive

59 14 September 2021

Policy, Finance and Strategy Committee

04 August 2021

File: (21/1237)

Report no: PFSC2021/4/199

Class 4 Gaming Venue and Board Venue Policy

Purpose of Report

1. To inform the Committee of the findings of the review conducted into the Class 4 Gaming Venue and Board Venue Policy, including the social impact assessment of gambling in Te Awa Kairangi ki Tai Lower Hutt, and seek agreement from Council to consult on the recommended policy options.

Recommendations

That the Committee recommends that Council:

(1) notes that the Gambling Act 2003 requires Councils to adopt a Class 4 Gaming and Board Venue Policy and to review this every three years;

(2) notes that the Gambling Act requires councils to set a Class 4 Gaming and Board Venue Policy and that councils powers are limited to regulating and administering class 4 gaming;

(3) notes the Gambling Act requires Council to adopt a policy to influence the extent and minimise the impacts of Class 4 gaming in the city;

(4) notes that Council is required to use the Special Consultative Procedure set out in the Local Government Act 2002 for consultation on this policy;

(5) notes there are three options outlined and discussed in the report:

a. Option 1: Wellbeing approach – sinking lid. This is the recommended option;

b. Option 2: Status quo; and

c. Option 3: Implementing a per capita cap on machines and venues across the city;

(6) agrees to consult on the proposed policy options for the Class 4 Gaming and Board Venue Policy;

(7) agrees to endorse the Summary of Proposal and Statement of Proposal attached as Appendices 1 and 2 to the report;

(8) establishes a subcommittee comprising the Mayor, Deputy Mayor, Chairs of Committee and two other Councillors to hear submissions on the options for the Class 4 Gaming Machine and Board Venue Policy and make a recommendation to Council; and

(9) notes that Council will continue to work closely with mana whenua and other partners to collectively advocate to central government for transparency and control of the distribution of gambling profits and the actual costs and benefits of gambling for communities; and

(10) agrees that the public consultation material on the Class 4 gambling review be subject to review by the Mayor and Committee Chairs before release.

For the reason that under the Gambling Act 2003 Council is required to adopt a Class 4 Gaming and Board Venue Policy to influence the extent and minimise the impacts of Class 4 gaming.

Executive Summary

2. The review of the Class 4 Gaming Venue and Board Venue Policy 2015 is required by the Gambling Act 2003 (the Act) and was undertaken using Council’s vision as a guiding principle. The review included a social impact assessment (SIA) – attached as Appendix 3 to the report and a report by the New Zealand Institute of Economic Research (NZIER) on the impact of Class 4 gambling in the city attached as Appendix 4 to the report.

3. Under the Act, Council’s powers are limited to regulating and administering Class 4 gaming. The Act requires Council to set a Class 4 gaming venue policy to influence the extent of, and minimise the impacts of, Class 4 gaming in the city. In particular, it enables Council to control where venues can be established and limit the permitted number of gaming machines at each venue.

4. Council’s policy can cap the number of gaming machines, set limits on the number of venues, take a position on merging locations and on relocating machines and venues, and proactively regulate venues with gaming machines. It cannot close Class 4 gaming venues. Additionally, the policy position can include a focus on Council getting its own house in order in relation to Class 4 gaming such as:

a. action on using Council owned venues for Class 4 gaming;

b. not seeking funding from gambling proceeds to support Council activities; and

c. reconsidering the approach to the leasing of Pelorus House.

5. The SIA found that the current policy has been largely unsuccessful in achieving the stated objectives of controlling the growth of Class 4 gaming machine numbers in Te Awa Kairangi ki Tai Lower Hutt, and putting in place measures to reduce the harm caused by problem gambling. In contrast, Council’s policy has had the effect of prioritising the availability of Class 4 gaming proceeds for community and Council projects above the harms caused to individuals, whānau, and the community.

6. The money collected by gaming machines is known as Gaming Machine Proceeds (GMP), or gaming machine profits or player losses. GMP = Turnover – prizes – jackpots + adjustments.

7. In 2019, the 425 electronic non-casino gaming machines located across 28 venues in Te Awa Kairangi ki Tai Lower Hutt collected over $29 million in profit. The Problem Gambling Foundation has calculated that approximately $4 million of this total was returned to the local community in the form of grants from non-club^{^[1]} Gaming Trusts. This equates to only 16 percent of gaming machine proceeds (GMP)^{^[2]}. The highest amount was 30 percent returned in 2017. The Act requires 40 percent of GMP to be returned to the community at a New Zealand level.

8. While not all the proceeds available are returned to Te Awa Kairangi ki Tai Lower Hutt, distribution to national or regional groups such Riding for the Disabled and Wellington Regional Ambulance does benefit people in our community who need or use the services these organisations provide locally.

9. The NZIER report, Harmless fun for all – class 4 gambling in Lower Hutt was commissioned to support the SIA. The analysis identified the following situation in the city:

a. a greater exposure to Class 4 gaming, with 4 electronic gaming machines (EGMs) per 1000 population, compared with 2.9 EGMs per 1000 population nationally. Lower Hutt also has more venues per 1000 population than nationally;

b. total gaming machine profits in the city amounted to over $26 million in 2020, representing a 45 percent increase since 2015, despite GMP decreasing in 2020 due to the COVID-19 level 4 lockdown;

c. GMP per adult was $100 higher than the national GMP per adult in 2019. The rapid increase in GMP in Lower Hutt cannot be explained by increasing incomes or local economic growth. Personal incomes in the city increased by only 8 percent between the 2013 and 2018 Census, and the economy grew at a slower rate than the national economy from 2015 to 2020;

d. GMP per machine increased 66 percent between 2015 and 2020 and GMP per adult is over 50 percent higher than national GMP per adult;

e. Lower Hutt has the highest GMP per capita and per adult compared to territorial authorities with similar sized populations (Palmerston North, Hastings, Tauranga, and Whangarei) or neighbouring territorial authorities (Porirua, Upper Hutt, and Wellington);

f. EGMs are disproportionately located in higher deprivation areas, including 93 of the 425 EGMs located in the most deprived areas (NZDep 10), with no EGMs located in the least deprived areas (NZDep 1).

10. In summary, Te Awa Kairangi ki Tai Lower Hutt has a higher than average number of Class 4 Gaming Machines and higher gambling expenditure per capita than the national average. A substantial proportion of the gaming machines are in areas of the community that can ill-afford them and have a higher risk of developing problems from gambling.

11. Officers have worked closely with our mana whenua partners during the development of the policy, attending quarterly hui with mana whenua organisations to discuss the proposed options for consultation. They support a move towards a wellbeing approach and reducing the number of machines over time and agree with the need to respond proactively to reduce the problems associated with Class 4 gaming and its impact on whānau iwi Māori.

12. The potential impact on funding for community, sports, and service organisations was also discussed and questions asked whether there would be any loss of funding if gaming expenditure declined in future.

13. There is a tension between the harm that can occur in the community through problem gambling and the benefit to some organisations from funding granted by trusts that manage the distribution of Class 4 gaming proceeds. Many organisations are caught in a ‘funding trap’ and are becoming increasingly reliant on gaming machine proceeds as other sources decrease or disappear.

14. However, given that expenditure on gaming machines has continued to rise despite a natural decrease of 60 machines since 2015, a policy limiting the growth of gaming machines in the city is unlikely to have an immediate or medium term impact on the level of funds available to community organisations.

15. Council is limited in what it can achieve in its regulatory capacity. Two of the policy options propose that Council play a greater kaitiaki/stewardship role in managing Class 4 gaming alongside the Department of Internal Affairs (DIA) and community organisations and also support those working with whānau affected by problem gambling.

16. Additionally, Council and community can work together to advocate to central government for:

a. a strengthened role in regulating the availability of Class 4 gaming machines in our communities;

b. the introduction of a requirement that trusts return the full 40 percent of gaming machine proceeds to the community in which it was spent; and

c. greater transparency from the gaming industry around the total amount of proceeds being taken from specific communities.

17. Through LGNZ’s remit process, Territorial Authorities have already asked central government to address local governments’ role in administering Class 4 gaming. Until legislation is amended, and given the evidence of harm in our communities resulting from Class 4 gaming, the best that Council can do is implement a policy that helps to reduce and limit this harm.

18. In recent years several councils have introduced sinking lid policies that aim to reduce gambling harm. In the region, both Wellington City Council and Porirua City Council have introduced sinking lid policies. Auckland City has had such a policy since 2013. Ōtorohanga is the only council to go against this trend recently.

Discussion

19. The recommended policy seeks to address and influence some of the harms caused by Class 4 gaming in the city. It has two main elements – taking a wellbeing approach to minimising the regressive and inequitable social and economic harms of Class 4 gaming, particularly in high deprivation communities, and ensuring that Council is taking a leadership role; and demonstrate this through its operational work and management of its own estate.

20. This proposal takes a more proactive approach to gambling and gambling harm, for individuals, their whānau and communities than the current policy. The goal is to reduce the number of EGMs and Class 4 gaming venues in the city and the proposal recommends a sinking lid on Class 4 gaming meaning that no new machines could be added. Venues would be regularly monitored by Council officers. Venues would not be able to relocate and no new licences would be issued. If a Class 4 venue closed for over six months it could not be re-opened by another operator. Over time, this approach means that the number of gaming venues may decrease.

21. In addition, Council will explore providing support to problem gambling service providers to prevent and minimise the harms caused and contributed to by gambling and gaming venues.

22. The recommended option also includes a focus on Council’s own business.

· Council owned venues would no longer be used for Class 4 gaming. Existing gaming machines operated from Council owned venues would be removed over a period of time.

· Council would no longer seek funding from gaming machine societies.

· Council would reconsider the leasing of Pelorus House and its fit with the proposed policy direction.

23. The elements related to Council’s own business could be progressed operationally whichever policy option is selected but they fit well with the recommended option of influencing the gaming environment in the city and demonstrating that Council is reinforcing this through its own operational practices.

24. There are a number of operational considerations associated with the proposed kaitiaki approach in the policy. The most significant of these would be the use of Council enforcement officers to assess gambling venues as part of their routine work.

25. Oversight of gambling venues in relation to their overall compliance with the requirements of the policy and regulatory obligations places shared onus on venue operators and Council. This moves Council’s policy from a current ‘one off’ assessment to an ongoing and holistic approach, integrated with liquor licensing enforcement. It is likely that additional operational resources will be required for this work. Implementing these aspects requires further discussions with the Regulatory Services Division. Support for intervention services that work with problem gamblers is also likely to require Council resources.

26. As a consequence of not using Gaming Machine grants, we may have to investigate alternative sources of funding for community projects. The SIA shows that in the past three years the proportion of funds allocated from gaming machine proceeds collected in Te Awa Kairangi ki Tai Lower Hutt has varied from almost 30 percent in 2017 to a low of 16 percent in 2019 (excluding clubs).

27. A further breakdown of the distribution of the 2019 grants shows that sports groups received approximately half of the funding available, with community groups and services receiving 17 percent and 33 percent respectively. Grants identified as being directly for Council activities amounted to 1.2 percent or $52,000, slightly less than grants made to netball.

28. One of the key points raised during the 2015 policy process was that grants from gaming societies were integral to the viability of some Council projects and activities. While this point may have been valid at the time, the latest figures indicate this is no longer the case.

29. As noted, Council can lower the cap on the number of gaming machines in the city and be more proactive in regulating venues that include machines but, other than the influence it has over machines on its property, it cannot close venues.

30. The proposed approach will therefore not decrease the funds available to sport and community organisations from the proceeds of gambling in the medium term. For example, although there are now 60 fewer machines in the city than in 2015 spending has increased and the amount of funding available, excluding 2020 because of COVID-19, is greater than it was in 2015.

31. As the funding available from the proceeds of gambling will not decrease in the medium term, this enables Council to consider ways to provide alternative assistance or support e.g. reducing the costs to access facilities and for ground hire etc. to organisations if it wishes to do so.

Options

32. The three options developed as a result of the review are shown below.

1. Wellbeing approach – sinking lid (Recommended)	2. Status quo	3. Per capita reduction in machines approach
Prevent new gaming machine venues from opening and reduce the number of gaming machines over time.	Retain the current policy without amendment.	Continue to prohibit the location of new class 4 gaming venues in suburban areas and encourage a limited number of venues to relocate to the two commercial areas. Place some additional obligations on venue owners.
Objectives · to reduce Class 4 gaming machine numbers and venues in Te Awa Kairangi ki Tai Lower Hutt; · to adopt public health approaches to prevent and minimise harm from gambling, to support community problem gambling service providers, and monitor Class 4 Gaming venues; · to provide community access to information about the funds produced and distributed from Class 4 gambling within the city; and · to facilitate community involvement in decisions about the provision of Class 4 Gaming in Te Awa Kairangi ki Tai Lower Hutt.	Current · to control the growth of Class 4 gaming machine numbers in Lower Hutt · put in place measures to reduce the harm caused by problem gambling	Objectives · to reduce Class 4 gaming machine numbers and venues in Te Awa Kairangi ki Tai Lower Hutt; · to adopt public health approaches to prevent and minimise harm from gambling, to support community problem gambling service providers, and monitor Class 4 Gaming venues; · to provide community access to information about the funds produced and distributed from Class 4 gambling within the city; and · to facilitate community involvement in decisions about the provision of Class 4 Gaming in Te Awa Kairangi ki Tai Lower Hutt.
Sinking lid policy introduced	Leave cap as it is i.e. 545	Reduce cap to the national average per capita – 325 machines and 25 venues.
No new gaming machine licences granted	Retain relocation policy	Retain relocation policy
No merger of venues	Retain merger policy	Retain merger policy
Venue licences cannot be transferred to a new location	Not a current requirement	Social impact assessment completed by venue owner
New approach to EGMs in council owned buildings – remove machines when policy approved	No policy or restriction on EGMs in Council owned buildings	Establish policy on EGMs in council owned buildings – no new machines in venues but no effect on current venues
Council would not apply for funding generated by class 4 gambling	No policy on Council use of gaming machine funds	An approach to ceasing Council use of gaming machine funds over the period of the policy
Kaitiaki (operational) approach • Location assessed as appropriate • All applications incur a licensing fee • Best practice guidelines • Gaming venues assessed as part of routine enforcement work • Self-excluded patrons supported • Non-club Class 4 to provide additional evidence of primary business sustainability.	Status quo operations	Kaitiaki (operational) approach • Location assessed as appropriate • All applications incur a licensing fee • Best practice guidelines • Gaming venues assessed as part of routine enforcement work • Self-excluded patrons supported • Non-club Class 4 to provide additional evidence of primary business sustainability.

Climate Change Impact and Considerations

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

Consultation

34. Under the Gambling Act, where the policy is going to be changed or replaced, Council must use the special consultative procedure under section 83 of the Local Government Act 2002. There are statutory requirements under the Gambling Act to consult with gambling societies (the Class 4 sector) and organisations representing Māori. Engagement with Māori is also mandated by the Local Government Act to:

a. provide opportunities for Māori to contribute to the decision-making processes of councils,

b. maintain processes to contribute to decision-making,

c. foster the development of Māori capacity to contribute to decision-making processes, and

d. provide relevant information to Māori.

35. Face to face hui (Zoom if needed) will be held with:

a. Mana whenua –with Kaitātari Tumuaki Māori and Pou Mahere Rautaki, quarterly hui

b. Regional Bowls Club - with Head of Parks and Recreation and relationship manager. This is underway with initial discussions with the Chair on how we can work alongside the club during this process

c. Pelorus House - with Head of Parks and Recreation and relationship manager

d. NGO sector - with Healthy Families, Head of Community Hubs and Community Projects and Relationships

e. Ministry of Health – with Healthy Families

f. Councillors/Mayor and other elected members – briefings and updates on engagement process and outcomes

g. CLT – briefings and updates on engagement process and outcomes.

36. The Summary of Proposal and the final Statement of Proposal are attached as Appendices 1 and 2 to the report.

37. A communications plan is being developed.

Legal Considerations

38. Legal challenge from gaming sector is a possibility although it is unlikely. A scan of recently introduced sinking lid policies has not found any legal challenges being mounted by the gaming sector. Equally, lack of a change in policy direction may result in opposition and legal challenge from the NGO sector and community. Again, there is no evidence that this has occurred recently.

Financial Considerations

39. As the funding available from the proceeds of gambling will not decrease in the medium term, this enables Council to consider ways to provide alternative assistance or support e.g. reducing the costs to access facilities and for ground hire etc., to organisations if it wishes to do so.

40. If Council, after hearing community feedback, decides on Option 1, this will have financial implications for the Regional Bowls Centre. Their current business model is based on receiving the majority of their income from their GMP, although they have other income streams through their beverage and food service. In the last financial year the club received $778,000 in GMP.

41. Council will also need to consider any financial impact on its own operations of ceasing to apply for gaming proceeds funding and removal of machines from its own venue. As noted, there may also be additional operational costs to regulatory services.

Appendices

No.	Title	Page
1 ⇩	Appendix 1 - Summary of Proposal Gambling 2021	60
2 ⇩	Appendix 2 - Final Statement of Proposal 2021	64
3 ⇩	Appendix 3 - Social Impact Assessment	71
4 ⇩	Appendix 4 - NZIER report - Harmless fun for all? Social and Economic Impacts of Class 4 Gambling in Lower Hutt	102

Author: John Pritchard

Principal Policy Advisor

Author: Wendy Moore

Head of Strategy and Planning

Approved By: Matt Boggs

Director, Strategy and Engagement

Attachment 1

Appendix 1 - Summary of Proposal Gambling 2021

Summary of Proposal

Options to amend Hutt City Council’s Class 4 Gambling Venue and Board Venue Policy 2015

Gambling machines or ‘pokies’ in pubs and clubs (i.e. outside a casino) are classified as 'Class 4' gambling. Under the Gambling Act 2003 every Territorial Authority (Council) in New Zealand must adopt a policy on Class 4 gambling venues, and that policy must be reviewed every 3 years.

Hutt City Council’s Class 4 Gambling Venue and Board Venue Policy 2015 is currently under review. During this review the Council will consider three options to amend the policy. We are seeking feedback from the community on three proposed options to amend the policy.

Making a submission

Submissions on proposed amendments close on xy October 2021 at 5pm.

A submission can be made by email or by writing. Please make sure your contact details are sent along with your submission if you wish to speak to a committee under public comment, or be updated on decisions and meeting times. You can also make a submission online.

For more information about making a submission, go to: http://www.huttcity.govt.nz/en/Your-Council/Have-your-say/Make-a-submission/ or phone 04 570 6666.

The next stages

- After the consultation period has finished, Hutt City Council will hold a hearing where members of the public can come and speak to their submissions

- During that meeting the Council will meet to deliberate on the findings and make a decision about whether or not to amend the current policy

Hutt City Council’s Class 4 Gambling Venue and Board Venue Policy 2015

Hutt City Council’s existing policy was adopted in accordance with section 101 of the Gambling Act 2003.The purpose of the policy is to:

· control the growth of Class 4 gaming machine numbers within Hutt City;

· put in place measures to reduce the harm caused by problem gambling;

· encourage responsible gambling practices and attitudes in Class 4 gambling venues; and

· facilitate community access to information about the funds produced and distributed from Class 4 gambling within the city.

Where Class 4 Gambling venues may be established

Hutt City Council’s existing policy places restrictions on new Class 4 gaming venues. Currently Class 4 gaming venues may only be established within the central commercial and Petone commercial activity areas; suburban commercial and special commercial zones; and general recreation activity areas and special recreation activity areas subject to:

· meeting application and fee requirements;

· the number of venues being able to be met within the overall city cap (maximum) on venue licenses determined by Council;

· not being a venue at which the primary activity is a family or children's activity;

· not being adjacent or adjoining to any residential zone, school, early childhood centre, kindergarten, place of worship or other community facility;

· two Class 4 venues may not be adjacent or adjoining.

The existing policy specifies the total maximum number of gaming machines that may operate across the city. Currently the maximum number of gaming machines in Hutt City is capped at 545 and the maximum number of class 4 venues is capped at 39.

Options to Amend the Policy

We are asking for feedback on the following three options to amend the policy:

1. Wellbeing approach – sinking lid (Recommended)	2. Status quo	3. Per capita approach
Prevent new gaming machine venues from opening and reduce the number of gaming machines over time.	Retain the current policy without amendment.	Continue to prohibit the location of class 4 gaming venues in suburban areas and encourage a limited number of venues to relocate to the two commercial areas. Place some additional obligations on venue owners.
Objectives · to reduce Class 4 gaming machine numbers and venues in Te Awa Kairangi ki Tai Lower Hutt; · to adopt public health approaches to prevent and minimise harm from gambling, to support community problem gambling service providers, and monitor Class 4 Gaming venues; · to provide community access to information about the funds produced and distributed from Class 4 gambling within the city; and · to facilitate community involvement in decisions about the provision of Class 4 Gaming in Te Awa Kairangi ki Tai Lower Hutt.	Current objectives · to control the growth of Class 4 gaming machine numbers in Lower Hutt · put in place measures to reduce the harm caused by problem gambling	Objectives · to reduce Class 4 gaming machine numbers and venues in Te Awa Kairangi ki Tai Lower Hutt; · to adopt public health approaches to prevent and minimise harm from gambling, to support community problem gambling service providers, and monitor Class 4 Gaming venues; · to provide community access to information about the funds produced and distributed from Class 4 gambling within the city; and · to facilitate community involvement in decisions about the provision of Class 4 Gaming in Te Awa Kairangi ki Tai Lower Hutt.
Sinking lid policy introduced	Leave cap as it is i.e. 545	Reduce cap to the national average per capita – 325 machines and 25 venues.
No new gaming machine licences granted	Retain relocation policy	Retain relocation policy
No merger of venues	Retain merger policy	Remove merger policy – treat as new application
Venue licences cannot be transferred to a new location	Not a current requirement	Social impact assessment completed by venue owner
Establish council policy on EGMs in council owned buildings – remove machines when policy approved	No policy or restriction on EGMs in Council owned buildings	Establish council policy on EGMs in council owned buildings – no new machines in venues but no effect on current venues
Establish council policy on gaming machine funds – do not apply for these funds	No policy on Council use of gaming machine funds	No policy on council use of gaming machine funds – reduce then exclude over 3 year period of Class 4 Policy
Kaitiaki (operational) approach • Location assessed as appropriate • All applications incur a licensing fee • Best practice guidelines • Gaming venues assessed as part of routine enforcement work • Self-excluded patrons supported • Non-club Class 4 to provide additional evidence of primary business sustainability.	Status quo operations	Kaitiaki (operational) approach • Location assessed as appropriate • All applications incur a licensing fee • Best practice guidelines • Gaming venues assessed as part of routine enforcement work • Self-excluded patrons supported • Non-club Class 4 to provide additional evidence of primary business sustainability.

Option 1 – sinking lid

Under this option no new Class 4 licenses will to be granted by Hutt City Council. Venues licences would not be allowed to be transferred to another location, and once a Class 4 venue is closed for more than 6 months it cannot be reopened by another operator.

Option 2 – status quo

Under this option the current policy remains in force.

Option 3 – per capita approach

Under this option, a cap of 325 machines and 25 venues would be introduced. This would align the number of machines and venues with the national average. The relocation aspect of the current policy would remain as will the prohibition of the location of class 4 gaming venues in suburban areas and encourage a limited number of venues to relocate to the two commercial areas. Some additional obligations would be placed on venue owners and Council would play a more active role.

For more information about the proposed options, please read the full statement of proposal. This is available online, at the Hutt City Council administration building and at Hutt City Libraries.

For any enquiries, please contact Wendy Moore, Head of Strategy and Planning on 04 570 6666 or wendy.moore@huttcity.govt.nz.

Attachment 2

Appendix 2 - Final Statement of Proposal 2021

Statement of Proposal

Options to amend Hutt City Council’s Class 4 Gambling Venue and Board Venue Policy

Gaming machines or ‘pokies’ in pubs and clubs (ie outside a casino) are classified as 'Class 4' gambling. Every Territorial Authority (Council) in New Zealand must adopt a policy on Class 4 gambling venues, and that policy must be reviewed every three years.

Hutt City Council’s Class 4 gambling Venue and Board Venue Policy 2015 is currently under review. During this review Council will consider options to amend the policy. We are seeking feedback from the community on five proposed options.

This Statement of Proposal has been prepared in accordance with section 83 of the Local Government Act 2002. It includes information about the review process and on 5 proposed options which the Council will consider to amend the policy

Submissions

Submission period
Submissions on proposed amendments close on Friday xy October at 5pm.

The next stages are:

- After the consultation period has finished, Hutt City Council will hold a hearing where members of the public who have made a written submission can choose to speak to their submission.

- During that meeting Council will deliberate and decide about whether or not to amend the current policy.

Making a submission

Your submission can be made by email or by writing.

For more information contact Wendy Moore at Hutt City Council on 027 440 3445 or write to: Hutt City Council, Private Bag 31 912, Lower Hutt 5040. You can also make a submission online.

Please make sure your contact details are sent along with your submission if you wish to speak in support of your submission or be updated on decisions and meeting times. For more information go to: www.huttcity.govt.nz/ Have-your-say or phone 04 570 6666.

Background

In reviewing the Class 4 gambling venues policy, Councils must consider the effects that gambling has on their local communities. Hutt City Council has done this through the paper The Social Impacts of Gambling in Hutt City 2021. A copy of the social impact assessment is available online or at Hutt City libraries.

What are Class 4 Venues and Board Venues?

Class 4 gambling venues are places outside of casinos (typically TAB’s, pubs, restaurants or clubs) where electronic gaming (or pokie) machines are operated.

Board venues are also known as Totalisator Agency Boards (or TABs).

How is gambling controlled in New Zealand?

The Department of Internal Affairs (DIA) is the main controller of the gambling sector in New Zealand. DIA regulate, audit and investigate all types of gambling activity and issue certificates and licenses.

Class 4 gambling operators must hold both an operator’s and a venue license. DIA is responsible for operator licensing, but Councils are responsible for approving venue licences.

Council Gambling venue policies specify where new Class 4 venues and Board venues may be located and number of machines that can operate in the venue. Venue policies cannot take away licences that have already been granted.

Hutt City Council’s current policy

The main purpose of the current policy is to control the growth of Class 4 gaming machine numbers within Hutt City and put in place measures to reduce the harm caused by problem gambling.

Where venues may be established

Hutt City Council’s current policy places restrictions on where new Class 4 gambling venues may be established. For example, venues may not be established in residential areas, or next to another venue.

The policy specifies that gaming venues may be established within the Central Commercial and Petone Commercial activity areas; suburban commercial and special commercial zones; and general recreation activity areas and special recreation activity areas subject to:

· not being a venue at which the primary activity is a family or children's activity;

· not being adjacent or adjoining to any residential zone, school, early childhood centre, kindergarten, place of worship or other community facility;

· two Class 4 venues may not be adjacent or adjoining.

Venues that were established before the policy was approved in 2010 may continue to operate even if they do not meet the criteria set out for new venues.

Maximum number of venues and machines

The current policy also specifies the total maximum number of gaming machines and venues that may operate across the city.

The maximum number of gaming machines in Hutt City is capped at 545 and the maximum number of Class 4 venues is capped at 39 (the number of venues and gaming machines in operation in when the policy was adopted in 2010).

PROPOSED OPTIONS to amend the policy

Hutt City Council is currently consulting on options to improve the 2015 policy. The Council’s vision is for a city where everyone thrives, reviewing our policies to ensure that they contribute to that vision is a fundamental role of Council.

The Social Impact Assessment undertaken by the Hutt City Council indicates that the current policy has largely been unsuccessful in meeting the Councils stated objectives. Effectively, the Councils current policy has prioritised the Class 4 gaming proceeds available to the community above the harm caused to the community.

As of September 2020, Te Awa Kairangi/Lower Hutt had 425 non-casino gaming machines spread across 28 separate venues. In the preceding 12 months, these 425 gaming machines took in $25.6 million despite the national lock-down due to Covid 19. This equates to $69,500 per day and is the fourth highest level of gaming machine proceeds of any region in New Zealand.

Over the September 2020 quarter, the Te Awa Kairangi/Lower Hutt population spent an average of $75 per-person on non-casino gaming machines; this is in the top 20 percent of all New Zealand Regions.

The Social Impact Analysis (SIA) and associated modelling has shown the following:

· Lower Hutt’s population has greater exposure to Class 4 gambling, with 4 EGMs per 1000 population, compared with 2.9 EGMs per 1000 population nationally. Lower Hutt also has more venues per 1000 population than nationally.

· The difference in exposure to Class 4 gambling indicates an excess of 100 EGMs and 4-5 venues in Lower Hutt relative to national Class 4 gambling exposure.

· Total gaming machine profits in Lower Hutt amounted to over $26 million in 2020, representing a 45 percent increase since 2015, despite GMP dropping in 2020 due to the COVID-19 level 4 lockdown.

· Lower Hutt GMP per adult was $100 higher than the national GMP per adult in 2019.

· The rapid increase in GMP in Lower Hutt cannot be explained by increasing incomes or local economic growth. Personal incomes in Lower Hutt grew by only 8 percent between the 2013 Census and the 2018 Census, and Lower Hutt’s economy grew at a slower rate than the national economy from 2015 to 2020.

· GMP per EGM increased 66 percent between 2015 and 2020.

· Lower Hutt has a relatively high and increasing gaming machine profits per capita – it’s placed 10th out of all New Zealand territorial authorities.

· Lower Hutt’s GMP per adult is over 50 percent higher than national GMP per adult.

· Lower Hutt has the highest GMP per capita and per adult in a group of comparator territorial authorities selected for having a similar sized population (Palmerston North, Hastings, Tauranga and Whangarei) or being a neighbouring territorial authority (Porirua, Upper Hutt and Wellington).

· Lower Hutt’s EGMs are disproportionately located in higher deprivation areas, including 93 of the 425 EGMs located in the most deprived areas (NZDep 10) and no EGMs located in the least deprived areas (NZDep 1).

The proposals developed to address these issues range from retaining the current policy to the adoption of key changes focusing on preventing and minimising gambling harm.

A. refocus Policy Objectives

Council is proposing a shift in focus for its C4 Gaming and Board Venue Policy to modify existing objectives to:

a. recognise the addictive nature and inequitable impact of gambling on the Te Awa Kairangi ki Tai/Lower Hutt community and

b. acknowledge the Councils role in mitigating this.

The alternative is remaining with the status quo and existing policy objectives.

Purpose

By taking a public health approach, focused on preventing and minimising gambling harms, the Councils policy objectives will move away from emphasising the individual responsibility of gamblers, to acknowledging the societal risks and harms of gambling. Such a change is in line with emerging research indicating the ineffectiveness of ‘responsible gambling’ programmes and other forms of self-regulation by the gaming industry.

Effective harm prevention and minimisation will, over time, lead to a reduction in gambling revenues available to the community. However, the health and well-being of the population will likely be enhanced significantly by adoption of such an approach.

Amendments to the Policy Objectives

There are two options for amending the Council’s Class 4 Gambling and Board Venue Policy to reflect a public health approach to the control of Class 4 Gaming within the Te Awa Kairangi ki Tai/Lower Hutt community – the proposed revised objectives are:

1. to reduce Class 4 gaming machine numbers within Te Awa Kairangi/Lower Hutt;

2. to adopt public health approaches to prevent and minimise harm from gambling, supporting community problem gambling service providers and monitoring Class 4 Gaming venues; and

3. to provide community access to information about the funds produced and distributed from Class 4 gambling within the city

4. to facilitate community involvement in decisions about the provision of Class 4 Gaming in Te Awa Kairangi/Lower Hutt.

How it would work

Under the revised objectives, the Hutt City Council will focus on reducing the number of gaming machines and venues in the Te Awa Kairangi/Lower Hutt community. Venues will be regularly monitored by Council Officers. In addition, problem gambling service providers will be supported by council activities to prevent and minimise the harms gaming venues contribute to

Class 4 gaming venue and board venue detailed policy changes

Improvement proposals

The proposed changes contained in policy options 1 and 3 signal the council’s acknowledgement that current class 4 gaming venues are disproportionally targeting communities in lower socioeconomic areas of Te Awa Kairangi ki Tai Lower Hutt and that council has a role to play in mitigating this. The status quo option would mean choosing to retain the current policy (objectives and content) without amendment. The maximum limit of 545 gaming machines, and 39 venues and other restrictions (such as where in the city a venue may be established) would stay the same.

Policy Options

1. Wellbeing approach – sinking lid (Recommended)	2. Status quo	3. Per capita approach
Prevent new gaming machine venues from opening and reduce the number of gaming machines over time.	Retain the current policy without amendment.	Continue to prohibit the location of class 4 gaming venues in suburban areas and encourage a limited number of venues to relocate to the two commercial areas. Place some additional obligations on venue owners.
Objectives · to reduce Class 4 gaming machine numbers and venues in Te Awa Kairangi ki Tai Lower Hutt; · to adopt public health approaches to prevent and minimise harm from gambling, to support community problem gambling service providers, and monitor Class 4 Gaming venues; · to provide community access to information about the funds produced and distributed from Class 4 gambling within the city; and · to facilitate community involvement in decisions about the provision of Class 4 Gaming in Te Awa Kairangi ki Tai Lower Hutt.	Current objectives · to control the growth of Class 4 gaming machine numbers in Lower Hutt · put in place measures to reduce the harm caused by problem gambling	Objectives · to reduce Class 4 gaming machine numbers and venues in Te Awa Kairangi ki Tai Lower Hutt; · to adopt public health approaches to prevent and minimise harm from gambling, to support community problem gambling service providers, and monitor Class 4 Gaming venues; · to provide community access to information about the funds produced and distributed from Class 4 gambling within the city; and · to facilitate community involvement in decisions about the provision of Class 4 Gaming in Te Awa Kairangi ki Tai Lower Hutt.
Sinking lid policy introduced	Leave cap as it is i.e. 545	Reduce cap to the national average per capita – 325 machines and 25 venues.
No new gaming machine licences granted	Retain relocation policy	Retain relocation policy
No merger of venues	Retain merger policy	Remove merger policy – treat as new application
Venue licences cannot be transferred to a new location	Not a current requirement	Social impact assessment completed by venue owner
Establish council policy on EGMs in council owned buildings – remove machines when policy approved	No policy or restriction on EGMs in Council owned buildings	Establish council policy on EGMs in council owned buildings – no new machines in venues but no effect on current venues
Establish council policy on gaming machine funds – do not apply for these funds	No policy on Council use of gaming machine funds	No policy on council use of gaming machine funds – reduce then exclude over 3 year period of Class 4 Policy
Kaitiaki (operational) approach • Location assessed as appropriate • All applications incur a licensing fee • Best practice guidelines • Gaming venues assessed as part of routine enforcement work • Self-excluded patrons supported • Non-club Class 4 to provide additional evidence of primary business sustainability.	Status quo operations	Kaitiaki (operational) approach • Location assessed as appropriate • All applications incur a licensing fee • Best practice guidelines • Gaming venues assessed as part of routine enforcement work • Self-excluded patrons supported • Non-club Class 4 to provide additional evidence of primary business sustainability.

Option 1- adopt the revised policy objectives and a sinking lid policy

Option 2 – status quo

Under this option the current policy remains in force.

A venue operator would be permitted to relocate Class 4 gaming machines to a venue located within the Petone Commercial Area or the Central Commercial Area, if the proposed venue meets the location requirements of the policy.

Figure 1: Map Central Commercial Area

Figure 2: Map Petone Commercial Area

Option 3 – per capita cap

The purpose of this option is to reduce the numbers of gaming venues in the city over time to align with the national average and to prohibit the location of new Class 4 Gaming venues in suburban areas to encourage gaming machine venues in suburban areas to relocate to the Central Commercial and Petone Commercial Areas.

Amendments to the Policy

Under this option Council’s Class 4 Gambling and Board Venue Policy would be amended through the addition of a section prohibiting any new venues from being established in the city.

How it would work

This policy options establishes a goal of reducing the number of EGMs and Class 4 gambling venues in Lower Hutt to align with the national average (a reduction of 100 EGMs and a reduction of 4 to 5 venues) as a conservative approach to potential risk.

Under a per-capita reduction policy venues cannot relocate and no new licences would be issued. This means that the number of gaming venues may reduce over time, as new venue licences will not be given.

It should be noted, however, that Section 98 of the Gambling Act states that territorial consent is only required for a venue if it has not been held by a public society for more than 6 months.

Therefore under this option a venue operator could get consent to take over an existing venue that had been closed for less than 6 months. This significantly undermines the effectiveness of a reduction policy, especially because venues are in high demand from operators.

More information

For more information contact Wendy Moore at Hutt City Council on 04 570 6666 or write to: Hutt City Council, Private Bag 31 912, Lower Hutt 5040 or email submissions@huttcity.govt.nz.

Attachment 2

Proposed policy on Dangerous, Affected, and Insanitary Buildings

Dangerous, Affected, and Insanitary Buildings Policy 2021

Contents

1. Introduction

2. Purpose

3. Priorities

4. Taking action on dangerous, affected, or insanitary buildings

5. Heritage buildings

6. Economic impact

7. Information and record keeping

8. Policy Review

9. Definitions

1. Introduction

Hutt City Council is committed to ensuring that Te Awa Kairangi ki Tai Lower Hutt is a city where everyone thrives. The Building Act 2004 (the Act) requires Territorial Authorities (TA) to ensure that dangerous or insanitary buildings are managed in an effective and timely manner to remove the danger and address the issues and building condition.

Section 131 of the Act requires TAs to adopt a policy on dangerous and insanitary buildings and section 132(4) of the Act requires the policy to be reviewed every five years. This policy has been developed following a review of the policy Council agreed in 2016.

The definitions of dangerous, affected, or insanitary buildings are set out in sections 121 and 123 of the Act. To assist to understand the provisions outlined below, see the definitions in section 9 of this policy.

2. Purpose

This policy sets out the approach of Hutt City Council to dangerous, affected, or insanitary buildings. In-line with one of the key purposes of the Act, this policy helps to ensure that people in and around buildings in Te Awa Kairangi ki Tai Lower Hutt are safe. In accordance with the requirements in section 131 of the Act, this policy sets out:

· the approach that Hutt City Council takes in performing its functions under the Act;

· its priorities in performing those functions; and

· how the policy applies to heritage buildings.

3. Priorities

Hutt City Council will respond to complaints received from the public e.g. building occupiers, or neighbours, and from agencies such as Fire and Emergency New Zealand (FENZ), New Zealand Police, and others, and inspect buildings to assess their condition and status.

The Council will give priority to buildings that have been determined to be immediately dangerous as identified in section 129 of the Act.^{^[3]} Immediate action will be required in these situations to remove the danger, such as prohibiting any person from occupying or using the building. If necessary, the building will be secured to prevent entry.

Buildings that are determined to be dangerous, but not immediately dangerous, will be subject to timeframes set by Council in a dangerous building notice for reduction or removal of the danger (being not less than 10 days) as set out in section 124(2)(c) of the Act.^{^[4]}

4. Taking action on dangerous, affected, or insanitary buildings

Council will investigate complaints received about a building that is reported to be dangerous or insanitary and inspect the building in question. The Council will assess dangerous, affected, or insanitary buildings in accordance with section 121 and section 123 of the Act.^{^[5]} ^{^[6]}

In accordance with section 124 and section 125 of the Act, Hutt City Council:

· will advise and liaise with the owner/s of the building; and

· may, under section 121 of the Act, request a written report on the building from FENZ if appropriate.

If the building is determined by Council to be dangerous, Council will:

· attach a written notice to the building requiring work to be carried out within the time stated in the notice, a period of not less than 10 days, to reduce or remove the danger;

· give copies of the notice to the building owner, occupier, and every person who has an interest in the land, or is claiming an interest in the land, as well as Heritage New Zealand Pouhere Taonga if the building is a heritage building;

· contact the owner at the expiry of the time period given in the notice in order to gain access to the building to ascertain whether the notice has been complied with; and

· where the danger is the result of non-consented building work, also issue a Notice to Fix under section 124 of the Act.

If the Dangerous Building notice requirements are not met within a reasonable period of time, Council will pursue enforcement action under the Act.

If the building is considered an immediate danger, as defined in section 129 of the Act, Council will:

· take any action necessary to remove the danger (this may include prohibiting persons using or occupying the building and demolition of all or part of the building);

· take action to recover costs from the owner/s if the Council must undertake work to remove the danger; and

· inform the owner/s the amount recoverable by Hutt City Council that will become a charge on the land on which the building is situated.

Under section 41(1)(c) of the Act, building consent is not required for work on buildings assessed as being immediately dangerous and where a building consent cannot practically be obtained in advance because the building work has to be carried out urgently. If consent is required then the owner must subsequently apply for a Certificate of Acceptance (section 42(1)). However, prior to any action being taken, it is prudent for building owners to discuss with provide Council.

Building owners have the right to apply to the Ministry of Business, Innovation, and Employment (MBIE) for a determination under section 177 of the Act if they wish to challenge's the Council's assessment of a building as being dangerous or insanitary.

5. Heritage Buildings

Heritage buildings are scheduled in Hutt City Council’s District Plan and/or identified in the New Zealand Heritage List/Rārangi Kōrero. Council’s Heritage Policy 2021 recognises the importance of heritage to the story and identity of Te Awa Kairangi ki Tai Lower Hutt. The heritage policy includes incentives for the conservation of heritage buildings, and is available on Council’s website www.huttcity.govt.nz

The Act requires that if a building is listed under the Heritage New Zealand Pouhere Taonga Act 2014 (HNZPTA) that Council sends a copy of any notice issued under section 124 of the Act to Pouhere Taonga Heritage New Zealand (HNZPT). Council will consult with HNZPT for any buildings that are listed in the New Zealand Heritage List/Rārangi Kōrero and for those included in the heritage schedule of the District Plan.

Except in emergencies, where demolition constitutes emergency works under sections 330 and 330A of the Resource Management Act 1991, heritage buildings (included in Council’s District Plan) cannot be demolished without resource consent. Emergency works can be done where any sudden event means that a building is likely to cause loss of life, injury, or serious property damage, for example if a building wholly or partially collapses.

If the demolition of a building constructed before 1900 is proposed, the archaeological provisions of the HNZPTA apply. Council will seek advice from the HNZPT on any other permission required under the HNZPTA. Additional consents may be required for work affecting buildings subject to Heritage Orders and those subject to heritage covenants or encumbrances.

Council will ensure that alternative methods to avoid unnecessary demolition of heritage buildings are actively considered, including:

· Providing extended timeframes for heritage buildings in relation to any dangerous building notice requiring work.

· Ensuring that any dangerous building notice requiring work provides options to repair the building as appropriate.

6. Economic Impact

Hutt City Council does not receive many complaints about buildings that are deemed dangerous or insanitary. The overall economic impact of the policy is considered to be minor.

7. Information and record keeping

Any buildings identified as being dangerous or insanitary will be noted as such on Council’s property database until the issues are resolved. The following information will be recorded on the Land Information Memorandum (LIM) for a property:

· where dangerous and insanitary conditions, or affected building status, are confirmed and not resolved;

· any outstanding written notice under section 124(2) of the Act, along with explanatory information of the Act requirements.

Information is not included on a LIM when dangerous or insanitary conditions, and affected building status, have been resolved. Information about those matters may still be made available in response to a request for information in accordance with the Local Government Official Information and Meetings Act 1987.

8. Policy review

Section 132(4) of the Act requires Council to review this policy every five years. This policy will be reviewed by December 2026.

9. Definitions

Term	Definition
Dangerous building	Under section 121 of the Act, a building is dangerous if: a. in the course of events (excluding the occurrence of an earthquake), if the building is likely to cause i. injury or death (whether by collapse or otherwise) to any persons in it or to persons on other property; or ii. damage to other property; or b. in the event of fire, injury or death to any persons in the building or to persons on other property is likely because of fire hazard or the occupancy of the building.
Insanitary building	Under section 123 of the Act, a building is insanitary if it is: a. offensive or likely to be injurious to health because: i. of how it is situated or constructed; or ii. it is in a state of disrepair; or b. has insufficient or defective provisions against moisture penetration so as to cause dampness in the building or in any adjoining building; or c. does not have a supply of potable water that is adequate for its intended use; or d. does not have sanitary facilities that are adequate for its intended use .
Affected building	Under section 121A of the Act, a building is an affected building if it is adjacent to, adjoining, or nearby a. a dangerous building as defined in section 121; or b. a dangerous dam within the meaning of section 153.
Heritage building	Heritage buildings are buildings or structures that are: a. identified in New Zealand Heritage List/Rārangi Kōrero; b. scheduled heritage buildings or heritage structures in Hutt City Council’s District Plan
Building owner	Owner is defined in section 7 of the Act. Owner in relation to land and any buildings on the land a. means a person who i. is entitled to the rack rent from the land; or ii. Would be so entitled if the land were let to a tenant at a rack rent; and b. includes i. the owner of the fee simple of the land; and ii. for the purpose of sections 32, 44, 92, 96, 97, and 176 (c), any person who has agreed in writing, whether conditionally or unconditionally, to purchase the land or any leasehold estate or interest in the land, or to take a lease of the land, and who is bound by the agreement because the agreement is still in force.
Immediate danger	In accordance with section 129 of the Act, if the state of the building means a. immediate danger to the safety of people is likely in terms of section 121 or 123; or b. immediate action is necessary to fix insanitary conditions.

167 14 September 2021

Policy, Finance and Strategy Committee

16 August 2021

File: (21/905)

Report no: PFSC2021/4/201

Council performance overview for the year ended 30 June 2021

Purpose of Report

1. The report provides an overview of the Hutt City Council performance results for the period ended 30 June 2021.

Recommendations

That the Committee:

(1) receives the report;

(2) notes the highlights and achievements as detailed in Appendix 1 to the report;

(3) notes the Waiora engagement survey results detailed in Appendix 2 to the report;

(4) notes the health, safety and wellbeing results detailed in Appendix 3 to the report;

(5) notes the performance measure results as detailed in Appendix 4 to the report; and

(6) notes the financial performance results as summarised in the report and detailed in Appendices 5 and 6 to the report.

Background

2. The performance results for 2020/21 presented in this report are for Hutt City Council – the parent entity and not the consolidated group. The external audit by Audit NZ is currently underway and the results presented here are interim unaudited results for the year ended 30 June 2021.

Quarterly highlights and achievements

3. There were a number of highlights and achievements over the quarter. These are detailed in Appendix 1 attached to the report. A selection of key highlights are:

a) A major focus for this quarter was the work to engage on and finalise the draft Long Term Plan. We were very pleased to receive audit clearance for the consultation document and draft 10 year plan (LTP) with an unmodified audit report.

b) Our internal carbon reduction and climate resilience plan - Mahere Hukihuki Whakaiti Waro me te Manawaroa ā-Āhuarangi mō Te Kaunihera o Te Awa Kairangi was finalised and will now be implemented over the coming year.

c) The Te Tira Māori Work Plan was developed for implementation within Council and externally. It will be presented to Council for endorsement in September. Three key focus areas are identified in the 12-month plan. These are: Waka Houruatanga (Partnership); Te Amorangi ki Mua (Te Ao Māori Capable Council - external); and Te Hāpai Ō ki Muri (Te Ao Māori Capable Council – internal).

d) We proudly supported the Ministry of Health’s efforts to roll out the COVID-19 vaccine when Walter Nash was utilised to vaccinate border workers’ household contacts and frontline health and emergency workers.

e) The focus of central government on its reform programme continued with the launch of the independent review of local government by Local Government Minister Nanaia Mahuta at the Dowse, work on water reforms continuing and announcements of further details regarding the Resource Management Act.

f) Stakeholder engagement was front and centre this quarter with key meetings with central and local government and locally, with many hui held with Mana Whenua partners, Callaghan Innovation and the Hutt Valley Chamber of Commerce.

g) Consenting has processed $60M more consents in terms of value than for the same time last year. This means we have already surpassed the full year value to 31 March 2021 compared with the year to 30 June 2020, with an extra $11M value of consents processed. Consents for mutli-unit developments have more than doubled compared to the same period last year (2.3 times more).

h) A Council-wide team worked to prepare for the implementation of the new rubbish and recycling service from 1 July.

Waiora engagement survey

4. In June 2021 we ran our benchmark ‘Waiora engagement survey’ with an 84% response rate. While the survey was conducted during our organisational redesign programme, the information provided gives us the best baseline from which to measure improvement. The overall results are attached as Appendix 2 to the report.

Quarterly Health, Safety and Wellbeing results

5. Attached as Appendix 3 to the report are the quarterly results for health, safety and wellbeing.

Performance measure results

6. The latest key performance indicator (KPI) results are included in this report together with broader outcome trend information. Refer to Appendix 4 attached to the report for further detailed information.

7. Summary of Annual Report KPIs

· 58% of the 122 measures included in the 2020/21 Annual Report have achieved target. This is higher than last year. 29% have not reached target and 5% have not been measured for 2020/21. We are awaiting data on 10 measures.

· Some KPIs continue to be impacted by COVID restrictions, for example facilities that have had to close or reduce hours, or have had to reduce access to services e.g. computers, to maintain social distancing.

8. Key highlights from 2020/21

· In 2020/21, according to Stats NZ quarterly consents data, 940 new dwellings and units were consented in Lower Hutt. This is higher than any previous year on record.

· Between 99 and 100% of all LIMs, building consents and resource consents were issued within the required statutory timeframes; however, the percentage of Code of Compliance certificates reduced to 88%.

· A number of residents utilised the Eco-Design Advisor home visit service with 100% satisfaction being recorded.

· The number of households with at least seven days of emergency food and water increased significantly over the last year going from a quarter in 2019-20 to nearly a third (32%) in 2020-21.

· Residents’ satisfaction with our facilities was high across all facilities. Satisfaction was between 93 and 100% across all hubs, libraries, pools and museums.

Background - Annual Plan versus Revised Budget

9. The 2020/21 Annual Plan (AP) was approved on 18 June 2020. The budgets included in the plan were based on the latest financial information and estimates available at the time of the preparation of the plan.

10. Through the review of the year-end financial results for 2019/20 there were a few budget issues identified which had flow-on impacts for 2020/21. For example, the estimated timing of project expenditure assumed in the AP changed for a range of reasons and the value of expenditure actually incurred in 2019/20 was different to that forecasted previously. From a project/budget manager perspective the budget in 2020/21 was requested to be updated to include carryovers to reflect the timing difference so as to improve clarity of the correct budget for the project/budget manager.

11. A revised budget for 2020/21 was created to reflect the budget issues and updates required to improve the accuracy of budgets and the associated reporting of variances. Similar to the 2019/20 financial year, the focus of performance monitoring was on financial results compared to the revised budget, as this would be the most meaningful from a performance perspective.

12. Table 1 that follows provides a summary view of the budget changes made.

Table 1: Changes captured by the revised budget

$Million	Net deficit 2020/21	Capital investment 2020/21
Annual Plan 2020/21	(9.6) Deficit	80.7
Operating and capital project budgets and subsidies carried forward from 2019/20	(1.1)	2.8
Adjustments to Spatial Planning and Bridge Seismic Strengthening	(1.0)	(1.2)
Additional funding for Fraser Park Sportsville	(0.1)	-
Refuse & Recycling Change project investment brought forward	-	5.2
Change to Eastern Bays Cycleway capital project cost and subsidy	0.4	0.8
Information Systems adjustment from capex to opex to reflect use of as-a-service products.	(0.2)	(0.2)
Petone Wharf emergency repair	(0.5)	-
Update to RiverLink project timeline	-	(5.3)
LED streetlighting project brought forward	2.6	3.0
Naenae project investment brought forward	-	0.5
Other minor adjustments	0.1	-
Revised Budget 2020/21	(9.4) Deficit	86.3

Financial Performance Results

13. This section provides an overview of the financial performance results for the year ended 30 June 2021. Further detailed information is available in Appendices 5 and 6 attached to the report.

14. The financial performance results provide an indication on how Council performed against the approved budget, and the associated financial risks.

15. Overview of results: The year-end net operating result was a deficit of $10.8M which was $14.3M or 57% favourable compared to the revised budget. This was largely due to higher user charges of $7.8M received for the year together with delayed capital investment resulting in reduced depreciation charge of $2.9M and reduced interest costs of $0.8M.

Table 2: Operating Results

$Millions	Actual	Revised Budget	Variance $ and %		Annual Plan
Operating revenue	63.7	52.6	11.1	21%	52.2
Operating expenditure	(188.5)	(191)	2.5	1%	(188.2)
Net operating deficit before rates income	(124.8)	(138.4)	13.6	10%	(136.0)
Rates income	114.0	113.3	0.7	0.6%	113.3
Net operating deficit	(10.8)	(25.1)	14.3	57%	(22.7)
Capital contributions	14.1	15.7	(1.6)		13.1
Net surplus/ (deficit) before adjustments	3.3	(9.4)	12.7		(9.6)
Other non-operating adjustments	50.6	-	50.6		-
Net surplus/ (deficit)	53.9	(9.4)	63.3		(9.6)

16. Operating revenue: The annual operating revenue was $63.7M for the year, which was $11.1M (21%) favourable to budget of $52.6M. This is largely due to increased revenue across a number of areas including Silverstream landfill user charges, regulatory services revenue, central government funding for the Three Waters reform, parking infringements and Reserves contribution income.

17. Operating expenditure (opex): The opex spend was $188.5M for the year, which was $2.5M (1%) favourable to budget of $191M. This is largely due to delays in operating projects, $5.9M of which will be carried out in later financial years and reduced depreciation and interest expense related to delays in capital project delivery. There are offsets with higher costs mainly related to the Three Waters stimulus programme, increased operating costs for the Silverstream landfill, and a new provision set aside for the estimated historic payroll related Holidays Act 2003 compliance costs.

Of the $5.9M operating expense deferral, $3.9M of this was approved on 24 May 2021 by the Long Term Plan/Annual Plan Subcommittee, with new and amended deferrals detailed in a separate report for approval in this agenda (refer ‘Budget Update 2021/22’ report).

18. Rates income: The rates income for the year was $114.0M which was $0.7M higher than budgeted mainly due to slightly higher growth than expected together with other minor adjustments.

19. Capital contributions: These were $1.6M lower than budgeted largely due to delays in capital expenditure impacting the timing of NZTA funding, offset by greater vested assets received than budgeted, mainly from the Three Waters.

20. Non-operating adjustments: Gains on the fair value of derivatives was $13.7M at 30 June 2021. These are accounting (non-cash) adjustments related to fair value of the treasury derivatives portfolio and reflects the financial markets at the time.

21. As per the Council resolutions on 30 June 2021, the Community Facilities Trust has transferred its assets and liabilities to Hutt City Council on that day. The result is Hutt City Council recognising $40.4M in non-operating income for assets received and $3.4M in non-operating expenses for liabilities taken over.

Capital investment

22. Table 3: Capital expenditure results

$Millions	Actual	Revised Budget	Variance $ and %		Annual Plan
Replacements	23.2	25.0	1.8	7%	24.7
Improvements	35.8	47.5	11.7	25%	43.7
Growth	6.0	13.8	7.8	57%	12.3
Net deficit	65.0	86.3	21.3	25%	80.7

23. Capital delivery was 25% underspent in 2020/21 with delays to a number of projects, mainly due to a difficulty sourcing material and resourcing challenges. Year-end capital spend was $65M compared to the revised budget of $86.3M, an underspend of $21.3M but 68% higher than the previous year’s capital delivery of $38.7M. The key activities with underspends include Three Waters, Roading and Accessways, Information Services and Integrated Community Services. Appendices 5 and 6 provide further details of projects and activities where there are significant underspends.

24. The budgets for a number of delayed capital projects have already been incorporated into the 2021–2031 Long Term Plan, totalling $14.4M. There is a separate report in this agenda (refer ‘Budget Update 2021/22’ report) seeking approval for the transfer of a further $4.7M of unspent capital budget from 2020/21 to 2021/22 and later years, increasing the carryover to $19M. Details for the reasons for the delays are included in this report and include for example delays due to COVID-19 related supply issues.

Project delivery performance

25. Appendix 7 attached to the report provides a performance overview of key projects. This includes a status update, top risks and issues, financial summary, next major milestones and engagement activities planned. The projects included are the District Plan, Eastern Bays Shared Path, Naenae Pool and spatial plan, RiverLink, Kerbside collection and Three waters investment. There are a range of risks and issues being managed, with further more detailed reporting and briefings provided to relevant committees and the Major Projects Board. Officers will be in attendance at the meeting to provide further updates and respond to queries.

Treasury Compliance

26. Council has been fully compliant with Financial Strategy borrowing limits:

Measures	Policy	Actual 30 June 2021	Compliance
Net external debt/total revenue	Maximum 150%	101%	Yes
Net interest on external debt/total revenue	Maximum 10%	3.4%	Yes
Liquidity ratio	Minimum 110%	116.5%	Yes

27. The average cost of funds at the end of June 2021 was 3.06 per cent, which was 0.42 per cent below the budgeted level. Interest cost savings of $0.7M have been achieved mainly due to the delayed capital investment and lower interest rate environment. Net debt (including cash holdings and CCO investment) at 30 June 2021 was $194.1M.

28. Further detailed treasury information is available in Appendix 8 attached to the report.

Climate Change Impact and Considerations

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

Consultation

30. There are no consultation requirements arising from this report.

Legal Considerations

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

Financial Considerations

32. There are no financial considerations in addition to those already noted in this report.

Appendices

No.	Title	Page
1 ⇩	Appendix 1: Quarterly Performance Report 1 April to 30 June 2021	168
2 ⇩	Appendix 2: Overall results for Waiora engagement survey - June 2021	182
3 ⇩	Appendix 3 - Health, Safety and Wellbeing Quarterly Reporting to 30 June 2021	184
4 ⇩	Appendix 4: Outcome and Q4 2020-2021 KPI Dashboard	187
5 ⇩	Appendix 5: Summary financial performance results to 30 June 2021	214
6 ⇩	Appendix 6: Detailed Financial Tables 30 June 2021	224
7 ⇩	Appendix 7: Project performance overview for period ended 30 June 2021	258
8 ⇩	Appendix 8: Treasury Report for the period ended 30 June 2021	263

Author: Caryn Ellis

Head of Chief Executive's Office

Author: Catherine Taylor

Senior Research and Evaluation Advisor

Author: Karl Eagle

Senior Management Accountant

Reviewed By: Jenny Livschitz

Group Chief Financial Officer

Approved By: Jo Miller

Chief Executive

Attachment 1

Appendix 1: Quarterly Performance Report 1 April to 30 June 2021

Quarterly Performance Report

1 April to 30 June 2021

Key Highlights and Achievements

The major focus for the quarter was on the 10-year plan (Long Term Plan/LTP). Consultation occurred from 6 April to 6 May with significantly more engagement than before on council plans. 27 community meetings were held and over 900 feedback pieces were received and analysed. An unqualified audit opinion was issued with the plan now published here.

The 10 year plan sets our strategic direction with six clear priorities set that will contribute to our goal of a city that thrives. An ambitious capital investment programme has been set and planning is well underway to set us up to achieve this. Our internal organisational design programme reprioritises resources towards this and meeting the other priorities.

In this regard our internal carbon reduction and climate resilience plan - Mahere Hukihuki Whakaiti Waro me te Manawaroa ā-Āhuarangi mō Te Kaunihera o Te Awa Kairangi was finalised. This interim plan sets out 21 concrete and measurable actions that:

• outline our journey to reduce Hutt City Council’s corporate emissions to net zero by 2050

• help reduce Lower Hutt’s greenhouse gas (GHG) emissions to net zero by 2050

• support our city to achieve climate resilience.

Running in parallel to the development of the carbon reduction plan is a community engagement programme. A number of community workshops have been held and these will inform the development of a city-wide roadmap for reducing emissions and responding to climate change impacts later this year. Already over 150 people have participated in the process that has been designed in partnership with the Tenths Trust, Community Lead Group Representatives and is independently facilitated by Creative HQ.

We worked hard during the quarter on implementation of the new rubbish and recycling service (start date 1 July) and experienced some implementation challenges along the way. Calls and emails from the community about this significant change reached record levels and resources were priorities to this function. See section below.

Our partnership with Kahungunu Whānau Services, Te Rūnanganui o Te Āti Awa, and Council-controlled organisation Urban Plus Limited saw construction starting on a 19 dwelling development in Taita. Named Takai Here Tāngata, these properties which are built to Homestar-6 standards, are expected to be completed by March 2022.

This innovative housing partnership alongside additional lending facility signed off as part of the 10 year plan for UPL will see additional capacity for housing in Lower Hutt.

We attended the launch in May by the Associate Minister for Housing (Homelessness) Hon Marama Davidson of Tāhuhu Oranga an initiative by Kahungunu Whānau Services (KWS) in partnership with Te Rūnanga o Te Āti Awa to support whānau through homelessness with the intention of achieving housing permanency.

We have continued to have significant building activity happening in our city in particular with our building inspectors who have been busier this year than previous years. This is expected to continue as consent approvals remain high. A technology solution is being investigated for low risk inspections to help manage workloads (see 1.2.3 below).

The high volume of building consent applications has continued into the fourth quarter. A total of 279 consents were received over the period with the combined value of $75.6M. This compares to 211 building consent applications with a value of $47.1M, for the same time last year. A number of these are multi-unit developments with 286 more consents processed for MUDs to 30 June. Around 4 developments that have required resource consent in the last year are proposed without car parking spaces noting that not all developments require resource consent.

The number of resource consents applications received is high with 120 received in June. This is partly driven by the change to the Development Contributions Policy and developers wanting to submit their application prior to the end of the policy on 30 June 2021. This will likely adversely impact deadlines for non-notified resource consents to be issued.

Accreditation as a Building Consent Authority was received this quarter via the Ministry of Business, Innovation and Housing.

The resourcing needed to cope with the increased workloads continues to be a challenge across the building and resource consents teams. A nationwide shortage of qualified and skilled people to process consents and undertake building inspections is exacerbated by Kāinga Ora establishing their own building consent authority and other private BCA’s attracting staff.

The 2020/21 Annual Residents’ Survey reported that overall performance remained high (84%). Residents continued to feel they received good value for the money they spend on rates and other fees (77%). Overall reputation had the greatest impact on overall performance and encouragingly four in five residents felt Council had a good to excellent reputation (81%).

Satisfaction with the quality of services and facilities provided by council declined year-on-year but remained high at 86%. This aspect has the greatest impact on perceptions of Council’s reputation so it will be a focus area for the year ahead.

Satisfaction with the look and feel of the city declined somewhat but remained strong at 86%. Satisfaction with roads and gutters being free of litter was the service area with the largest decline year-on-year at 73%

Residents identified housing (72%) and infrastructure, such as roading, footpaths and water supply (68%) as the most important areas for council to focus on in the next 10 years aligning with the priorities set in our Long Term Plan.

1.1 Reform Programme

The government’s reform programme progresses with ongoing preparatory work for changes to the Resource Management Act, local government and three waters reform. Senior staff alongside elected members have been attending key briefing sessions.

Local Government Reform

We hosted the launch of the Future for Local Government that will see an independent review of local government at the Dowse on 23 April. Minister for Local Government Hon Nanaia Mahuta outlined the focus on how local government can evolve over the next 30 years to improve the wellbeing of communities.

RMA Reforms

A briefing to all elected members on the RMA reform was held on 2 June 2021 and the District Plan Sub-Committee has been maintaining a watching brief on the reforms. The government released in late June an ‘exposure draft’ of the new Natural and Built Environments Bill (NBA) – the main legislation to replace the RMA. This ‘exposure draft’ is open for submission until 4 August, and has been referred to a special select committee inquiry. Staff are working with the Greater Wellington Regional Council and other City/District Councils in the region on preparing a joint submission.

The ‘exposure draft’ includes only the scene-setting provisions of the proposed legislation, the new ‘Part 2’ (the ‘why’) along with ‘placeholders’ for the implementation principles, the process for preparing a new national planning framework (NPF), and the new combined plans across the country (the ‘how’). Much of the content of the exposure draft is similar to the drafting included in the Cabinet paper released with the government announcement in February 2021. There are no details on the ‘exposure draft’ on the plan-making process, resource consents, designations, and monitoring and enforcement functions. The full new NBA Bill along with the new Strategic Planning Bill are scheduled to be released for consultation and referred to a select committee in early 2022. As more details will be available at that time, all potential opportunities and implications for Council and our communities can be assessed and responded to in a submission. Staff are continuing dialogue with Ministry for the Environment officials to better understand and assess the potential opportunities and implications for Council and our communities as new information comes available.

Three Waters Reform

In January 2021 officers completed a response to the Governments “Request for Information” as part of the reform programme. As a follow on from this on 2 June 2021, the Government released information on the evidence collated and case for change, including a peer review report. On the 30 June 2021 the Government announced decisions on the four new Water Services entities proposed (including boundaries), governance structures, the role of Iwi / Māori and further detailed data for each Council. Shortly thereafter in mid-July the Government announced a $2.5 Billion package related to Three Waters Reform.

Officers have been working collaboratively with regional partners to ensure that the region is well informed and contributes to the conversation about the reform. A report presented to 14 July 2021 Policy, Finance and Strategy Committee provided an update on Government decisions to the Committee and included specialist advice on the potential financial impact of the change.

Over the months of August and September 2021 the Government is seeking initial feedback on the proposed reform programme, and further advice will be presented to Council to support decisions.

1.2 COVID-19

We again experienced a change in Covid Alert Levels in late June and are fortunate that we have returned to Level 1 as at the date of this report. Resources were directed to helping to set up a Community Based Assessment Centre for testing at the Riverbank carpark. Our Covid-19 Resurgence Action Plan, guidelines for Alert Level 2 and business continuity plans were useful resources for the organisation. Vaccination centres are operating in our community as the rollout gains momentum including two new sites located at the Tamaiti Whāngai Vaccination Centre at Waiwhetu and at the Wainuiomata Community Marae. Staff in targeted groups are being vaccinated.

The Chief Executive attended sessions at Police Headquarters alongside National Emergency Management Agency, Wellington Regional Emergency Management Office and Iwi to look at modelling a new emergency response approach with Iwi at the centre, following on from lessons learned during the COVID-19 lockdown.

An initiative that develops and delivers a programme to better utilise skills of our non-clinical Pacific workforce in a Pacific pandemic response got underway.

A full update on the activities around managing the risks associated with COVID-19 are reported to the Audit and Risk Subcommittee.

Local Economy

Council officers continue to work closely with the Hutt Valley Chamber of Commerce on issues relevant to business and to monitor and act, if necessary, on local business surveys. The latest survey indicates businesses expect things to moderately improve in the next six to 12 months; the major barriers being impact of COVID-19; shortages of labour and material and general uncertainty of impact of government policies.

After the initial signs of recovery last year, the Lower Hutt economy continues to slow with a decrease in the value of electronic card spending in the June 2021 quarter compared to the March 2021 quarter. However, the year to June 2021 saw an increase of 11.8% compared to the year to June 2020. In the last quarter the number of people receiving the jobseeker work ready benefit decreased by 3.7 percent. However, the proportion of youth in Lower Hutt who are receiving Job Seeker Support remains high at 12.4 percent compared to the national figure of 9.7 percent.

Median house prices in Lower Hutt fell by 3.7% in July 2021 compared to June 2021 (from ($880k to $847,500k but increased by 37.2% when compared to July 2020 (from $617,500k to $847,500k). The annual increase in the region was 23.6%. The June to July data shows a fall in every area of the region except for the Masterton district, with Wellington city static.

Staff health & wellbeing

The staff wellbeing programme focus for the April to June quarter has been on physical health. During this time 213 people received a flu vaccination, 38 took up free health checks held on site and we’ve introduced the KYND app which empowers people to capture their health data and track progress, watch videos on ways to improve their health and have targeted content delivered to them. To date, 25 people have signed up and we’ll be doing further promotion to encourage staff uptake.

Other activities that were promoted across council during this period included Pink Shirt Day, Smoke Free awareness, Matariki and we commenced Wellbeing Wednesday communications which provide a variety of reminders relating to physical health and some of our key policies.

A fit for purpose organisation with the right capability and culture

During this quarter our phase 2 changes officially took effect and we also confirmed decisions relating to changes for our Information Services team. Following this, the focus has been on transition activity and preparing for phase 3 of our organisational design programme.

N&C staff were involved in workshops to develop the strategy earlier in the year and since then we’ve been able to take into account the significant shifts happening in local government, in particular the increasing role of Councils in enabling and supporting the wellbeing of our communities, shifting from a focus on transactional delivery of services and programmes through our facilities to placed-based approaches which harness the collective effort of everyone on the ground in each neighbourhood.

An operating model was developed and this has guided the proposed structure for N&C which we’ll be commencing consultation on from 28 July. Much like phase 2, we’ll be doing what we can to support our N&C colleagues during this period and through the process, we’ll be looking to ensure the vast majority of people find a home in the new structure.

1.2.1 Reporting to governance

Agendas for Council, Committee, Subcommittee and Community Board meetings were made available to the public at least four days prior to a meeting 100% of the time for this quarter (23 meetings). This reflects the way the Democratic Services team is working proactively with business units to ensure reports are published in advance of the legislative deadline.

Transparency

The number of Council, Committee, Subcommittee and Community Board resolutions made at public excluded meetings was two. There were 23 meetings held during the quarter.

The number of open briefings held for the quarter was 12. There were no closed briefings for the quarter.

1.2.2 Our people

In June we ran our benchmark ‘Waiora engagement survey’ and had an impressive 84% response rate. The survey is a key tool for us while we work towards creating a workplace where everyone can thrive. It will give us information we need to make improvements, ensure everyone can be effective in their work and make Hutt City Council a great place to work as well as a place to do great work.

We decided to conduct our survey during our organisational design programme of work and while we knew the timing wasn’t ideal, we thought that this would give us rich information and provide the best baseline from which to measure improvement. The results are broadly what we expected in a post-COVID year of change, with the market pressures being experienced and just prior to the remuneration review. Our overall measure of engagement - a measure of how positive people feel about their work shows just over two-thirds are either neutral or favourable with just under a third unfavourable (see the results appended). The survey also showed there is strong alignment with our values, our focus on wellbeing and people understanding how their role fits and what they need to do to be successful.

Key improvement areas are exactly what we expected them to be, better processes and tools are needed, better business planning, improve bi-cultural capability and becoming Te Ao Māori confident with more opportunities for career progression. Announcements on wellbeing were made in August and more work will follow. Directors and Business Unit Leads are now sharing the results with their group/team so everyone can be part of the improvements by agreeing some actions to take in response to the survey results. As well as acting on the results, we will repeat the survey at future dates, so we can continue to listen, act and improve.

Taituarā’s Annual Awards were held during this period and it was announced that our Management Challenge team ‘Team Auaha’, came second overall (out of 13 Councils). The Challenge is Australasia’s premier forum for current and emerging local government leaders and is designed to enhance leadership and management skills of managers and staff in local government.

Recruitment continues to be a key focus for our Managers and the People & Capability team with 70% of our phase 2 roles now being filled. An internal team have also worked on a great new recruitment video to tell our story and attract people to working in our organisation.

During this quarter we’ve had three staff participate in the Taituara Accelerated Leadership Programme, 13 staff attend the KickStart to Leadership programme and 12 people attend the How Local Government Works workshop. In addition to this all managers were required to attend a half day workshop on Leading Performance Excellence which was about getting back to basics on managing performance well and building a culture of trust and accountability.

1.2.3 Strategic Change Programme

We have been working on the Go Digital Programme priorities with staff from across council. While we have been working on the timeline for the next 4 years, we have commenced some further projects that were identified as immediate priorities including legal compliance reporting for council and our CCOs, and improving access to archives as we digitise assets. We are also progressing key business processes like consents to enable the selection and implement of the right systems to support this busy area of our organisation.

· Te Pātaka Digital Workplace – Work anywhere, anytime, any device, to access, collaborate and share information including implementing the latest Microsoft Office applications

The outputs from the 65 design sessions with staff have now been used to build our new digital workspaces in preparation for our first Go Live in July. All sites have been designed and finalised, and the builds will be completed. The large file solution has been built and is now ready to store videos etc. The roll out schedule, which will inform the order of Go Live for Teams across Council through to September, is close to completion and will be communicated to teams in the coming weeks. Readiness communications went to all staff encouraging them to do their “housekeeping” before Go Live and the Information Management team is available to assist where needed. We will do more targeted communications to individual teams as they near their Go Live dates. The staging environment has been set up for the migration and the team is finalising the detailed migration plan.

Te Pātaka will be available to all staff by November 2021.

· Website refresh
We have completed the commercials with SQUIZ and have a Project Manager on board who has completed the detailed project planning to design and build our main website and the Dowse microsite. A project board is overseeing progress. The content audit is progressing well and UX work has started with our preferred supplier on board. The project is on track for implementation in November 2021.

· Right Foundations

We continue to work on a number of technical projects to ensure we have a stable, secure and fit for purpose technology platform including:

· completing setup and migration to 365 exchange environment to support the build and roll out of Te Pātaka which starts it rollout later in July;

· moving our contact centre and service desk to modern contact systems providing council with greater opportunities during the Rubbish and Recycling roll out. Investigating moving the rest of council to a digital phones solution to mitigate risks with out dated and unsupported hardware in our enjoinment and considering how to best support council mobility and new ways of working; and

· completing a security audit to ensure our technical environment is secure and to strengthen security settings which was needed timely given the current escalation of cyber security risk in New Zealand. This has highlighted some areas of concern which have been addressed and others which are being addressed depending on severity/likelihood of occurrence.

1.2.4 Organisational Cultural Competency

The Te Tira Māori Work Plan has been developed and will be put forward to Council for endorsement in September. Three key focus areas are identified in the 12-month plan. These are: Waka Houruatanga (Partnership); Te Amorangi ki Mua (Te Ao Māori Capable Council - external); and Te Hāpai Ō ki Muri (Te Ao Māori Capable Council – internal).

The Pou Reo Me ōna Tikanga (Cultural Advisor) started in the role and is already making a positive impact on our organisation. Recruitment for the Pou Mahere Rautaki (Māori Policy Advisor) has finished and a new appointment for this role is set to commence on Monday 9 August. The primary outcomes for these roles will be to lead the development of our people and the organisation’s capacity to respond more effectively to Māori.

Coupled with these roles, recruitment for a Pou Whakamahere Kaupapa Here (Māori Policy Planner) has commenced to support the Planning Team in developing and maintaining the District Plan and other planning and policy documents from a Māori world-view, and to enable the team to better interface with Māori in this space.

1.3 Community and Organisational Leadership

1.3.1 Asset management strategy

The Organisational Design programme has confirmed additional resourcing to support improved asset management practices. This includes a Head of Assets and Facilities Management who is responsible for leading the development of our asset management approach.

1.3.2 10-year Plan/Long Term Plan 2021-2031 (LTP)

The LTP was approved by Council in time for rates to be set for the new financial year starting on 1 July 2021 alongside an unqualified audit report issued. Extensive consultation was undertaken from 6 April to 6 May 2021 with a dedicated website attracting high numbers of visits with people engaging with the material. 27 community meetings were held and over 900 feedback pieces were received and analysed. 427 online survey forms were received during the engagement period (337 full forms and 90 single priority forms). An additional 25 paper forms were received.

Social media played a key role. There were at least 117 conversations on the Hutt City Council Facebook page relating to the 10-year plan and Facebook polls received 1,617 responses.

We were pleased to receive high levels of engagement on the 10 year plan that was due in part to a fresh modern look to our digital assets and hard copy documents.

The hearing of public submissions took place on 20 and 21 May 2021.

1.3.3 Financial policies update

The LTP decisions included a rethink and reset of Council strategies and policies. This encompassed the Financial Strategy, Revenue and Financing Policy (which includes rating policy), Development Contributions Policy and Rates Remission Policy. To support community engagement on these changes, the Consultation Document was carefully prepared by officers and audited by Audit NZ. Our “Rates calculator” was enhanced to support community understanding of the impacts of the changes for the new waste services (rubbish, recycling and green waste). A “Rates video” explained proposed changes to rating policy. .

A proposed change to the Rates Postponement Policy to provide financial support for homeowners who may be impacted by the “Know your Pipes” project was included in the LTP consultation process. Decisions have been placed on hold on this proposed policy change following advice from Porirua City Council and legal specialists concerning recent legislative changes which impact the policy.

The Sensitive Expenditure Policy has been reviewed in light of the October 2020 new Office of the Auditor General guidance on this matter. The findings have been reported to the Audit and Risk Subcommittee 23 April 2021.

A new Rating Sales Policy has been approved by the Council.

1.3.4 Financial results at year end 30 June 2021 are forecast to be within total budgets

Financial results at year end 30 June 2021 are in line with budgets approved by Council. (See Finance Performance Report at 30 June 2021).

1.3.5 Continue reduction year on year in financial ‘carry forwards’

Capital investment of $65M was delivered for the year end 30 June 2021, which is 76% of the programme approved for the year. This was a step up in investment from the prior year of $48M.

The LTP budgets included changes to the timing of the works programme to reduce the risks of do-ability. The Organisational Design programme has considered the capacity and capability needed to deliver the future work programme.

1.3.6 Risk Management

We have stepped up our approach to risk management and reporting on this. This work which included external expertise and review by the Audit and Risk Subcommittee culminated in the adoption of a new risk management framework and council signing off on a risk appetite statement in June 2021. Risk is being reported on quarterly to the Corporate Leadership Team with Issues (active risks) reported fortnightly to each formal meeting. An internal risk working group has been established and meets regularly. The group represents staff from all parts of our organisation working together on identifying and assessing strategies to mitigate risk.

1.4 Programme Management and Key Delivery Strategic Relationships Partnering

1.4.1 One Council, whole Council Group (including CCOs) approach to planning

As part of its commitment to become strategy led Hutt City Council recently approved its Strategic Framework. This Framework articulates the need for a 30 year Hutt City Strategy to provide a long term vision for the city to work towards through future LTPs. The City Strategy will provide a road map to guide us towards a city where everyone thrives which is delivered through consecutive LTPs. The City Strategy project is underway with the initial collation of evidence and research almost complete.

1.4.2 Strategic Relationships Partnering

Stakeholder engagement is a key focus area. We hosted Local Government Minister Nanaia Mahuta at the Dowse where the Minister announced the independent review of local government. This event was attended by LGNZ along with officials and stakeholders from across government. Following this, Hutt City Council briefed the Future for Local Government Review Panel.

A post budget briefing was hosted by the Hutt Valley Chamber of Commerce with Hon Grant Robertson the keynote speaker. Local businesses benefit from these types of events with our Chamber highlighting their (and our) interests to policy-makers.

The partnership with Callaghan Innovation and others including ESR, GNS, VUW and Wellington NZ has agreed to explore a number of initiatives. In particular for HCC, we are exploring how we support innovation in provision of infrastructure throughout our city and the wider Wellington region. This focus area has come about as a result of significant investment across the board in transport, three waters and housing infrastructure.

1.4.3 Integrated Transport Strategy

In October 2020 we appointed WSP to assist with our development of an Integrated Transport Strategy (ITS). WSP developed a work programme to achieve this outcome which included a comprehensive Stakeholder and Community Engagement Plan.

A parallel work-stream to develop the City Spatial Plan (CSP) was added to the programme to exploit engagement opportunities and avoid activity duplication. An introductory letter from the Mayor was sent to relevant stakeholder groups on 9 February 2021 explaining the work programme and inviting feedback on how they would like to be involved. Since then circumstances have seen the City Spatial Plan delinked from this work programme, although the ITS engagement feedback will still inform the CSP development when this resumes.

In consideration of the community engagement associated with other plans, LTP and District Plan Review in particular, the community engagement for the ITS was delayed until after 6 May. Other stakeholder engagement continued and it is expected the ITS will still be delivered by year end.

1.4.4 Beltway Cycleway

The construction of the Beltway Cycleway has been completed. The official opening was deferred due to a change in Alert Level and was held on 29 July.

1.4.5 Eastern Bays Shared Path

Eastern Bays Shared Path was given $15M as part of the government’s Covid Response and Recovery Fund (shovel-ready), co-funding. Resource Consent was granted on 5 March 2021 following a Hearing in December 2020 however an appeal to the Environment Court was received for these consents. That appeal has now been resolved and an early works package will commence in July 2021, with main construction starting in September 2021 at Windy Point / Sunshine Bay.

1.4.6 Naenae Pool and Town Centre Redevelopment

Design progress - following the appointment of Architecture HDT as the Multi-Disciplinary Design Team in April 21, good progress has been made to further define the scope of the project. The team have now completed the first major stage of design development namely a ‘Masterplan’ for the pool site which is an aspirational plan for the ideal development, using the initial design brief provided by Council and feedback from the Voice of the Community report from 2019. The Masterplan allows for the ‘identification, sizing and location of key components’ for stakeholder feedback and costing before a Baseline Scheme is prepared. In the event that costing reveals any affordability issues, the design can be scaled back to stay within the confines of the project budget.

Work is underway with Callaghan Innovation on a range of energy saving and carbon footprint reduction ideas that could be incorporated into the Naenae Pool and Fitness Centre. This includes some work to understand how the Greenstar rating system could be applied to the Pool Building.

Construction activity - demolition of the old Pool building will commence in September 21 following an open tender process and the works will take approximately six months to complete. Other works are planned for the next period (July-September) including the relocation of an electrical substation, geotechnical (soil) investigation and site survey. It is hoped to procure a Main Contractor late 2021 and to begin the main construction works mid-2022.

Stakeholder engagement and communication - regular meetings have been held with the Naenae Community Advisory Group, local iwi Te Atiawa and also with the Aquatic Sports User Group to ensure that the design process takes account of stakeholder views where possible. In addition a new pop-up community space is now open in the Hillary Court, providing opportunity for the community to find out more about the project.

Funding/timeline - the published version of Council’s Long Term Plan 2021-2031 includes the provision of up to $68M for the project and agreement has now been reached with the Crown (Crown Infrastructure Partners) to reset some of the early project milestone dates. The project is still on track for completion in July 2024 in line with the original funding agreement.

Naenae Spatial Plan - as agreed with the Community Advisory Group, we are actively working to secure property within Hillary Court to replace the Community Hall. Discussions are progressing with the owners of at least two properties which together could yield up to 1,200m2 of community space. Progress in this area is informed by a Property Strategy that provides a route map to the achievement of the Spatial Plan.

1.4.7 Wainuiomata Town Centre Framework and Streetscape Plan

Stakeholder engagement on the Wainuiomata Town Centre Framework and Streetscape Plan closed in May. Over 300 submissions were received mostly in support. Feedback received was incorporated into minor amendments proposed to the draft concept and presented to Council at a briefing on 16 June 2021.

Funding of $8.555M for this project was confirmed in the LTP 2021-2031 towards the detailed design and implementation of the Plan over two years commencing 1 July 2021.

The revised concept for implementation was taken to the Communities Committee on 14 July 2021 and approved to progress to detailed design and implementation.

1.4.8 RiverLink

The lodgement date for the consent application was 30 July. NZUP and HCC LTP funding was confirmed in June. Principal’s Technical Advisor and Post-lodgement contract negotiations are underway with the consultant. The critical path through programme is the procurement related activities.

1.4.9 The Sebel Hotel – Lower Hutt and Events Centre

The hotel construction is continuing with all consents now received. The current estimated opening date is last quarter 2021. Negotiations have been progressed with the operator with a viable future operating model currently now approved by Council.

Event centre operations were again impacted during the recent period at Covid-19 Alert Level 2 in the Wellington Region which imposes lower permitted numbers at events and gatherings.

1.4.10 Rubbish and recycling

The new kerbside service started on 1 July. The preparation and ongoing implementation of the new service has been a significant undertaking involving many staff across council and a major communications campaign.

The new service is largely the same as that agreed by Council in September 2020 with one change being to the price of an 80 Litre rubbish bin which dropped by 8%. This helps contribute to the behaviour change we are seeking to have less waste sent to landfill.

The new service is already contributing to improved environmental impacts with 5 EV trucks on the road and initial reports from our service provider showing that the quality and volume of recycling being processed is much improved on the previous service,

Despite initial teething problems in terms of the delivery of 3,000 bins, caused by international shipping delays, and an incorrect collection calendar distributed to some households, the new service is being largely well-received by the community. The focus now is on education programme to further reduce waste to landfill and to encourage good recycling practice.

There are 120 agreed assisted services being managed by our provider and arrangements are in place with multi-unit dwellings for a rubbish and recycling service including waste management plans which were approved by council.

A new website was launched www.toogoodtowaste.co.nz in conjunction with the rollout of the new service. This features a web app that helps people to work out what goes in each bin and when pick up days are. The web app is being further refined with features being added.

Regular reporting on rubbish and recycling is provided to the Climate Change and Sustainability Committee and the Audit and Risk Subcommittee.

1.4.11 Partnerships with Mana Whenua

A new high-level relationship agreement was developed for consideration by Mana Whenua. The purpose of the Tākai Here is to set out the relationship, the values, principles, roles and responsibilities, protocols and terms to give effect to the partnership. It replaces MoUs/SLAs that expired as at 30 June and documents the approach of council and each Mana Whenua partner as we seek to achieve our individual and shared goals and aspirations. Further to the Tākai Here it has been proposed that a process will be agreed to develop a framework by 30 November 2021 that:

· gives effect to a meaningful partnership;

· enables Mana Whenua decision making, is strategically-led, contributes to meaningful outcomes and enables direct involvement across the operational functions of council; and

· outlines representation on Council and the mechanism/s in place for the parties to contribute to Council business and planning.

Quarterly hui with Mana Whenua continued to be held with discussions focusing on the Tākai Here, 10 year plan outcomes, and proposed updated naming and Class IV gaming machine policies. These fora are attended by the Mayor or his nominee, the Chief Executive and senior staff and provide a useful forum for council and Mana Whenua.

1.4.12 Pacific Peoples

As part of our Community Funding aligned to the Covid Recovery Plan, Council has funded Nāku Enei Tamariki and Catalyst Pacific to enable them to develop and deliver a prgoramme to better utilise skills of our non-clinical Pacific Workforce in a Pacific pandemic repsonse. The short term objective is to train 75 Pacific Personnel to:

· perform at different levels of a communtiy response (if required);

· engage their Pacific communities in the event of a communtiy disaster; and

· able to interface with community and mainstream agencies.

This programme is also supported by range of Pacific partners, WREMO and HVDHB..

1.4.13 Wellington Regional Growth Framework

Consultation on the draft Wellington Regional Growth Framework closed in May. 79 submissions were received on the draft Wellington Regional Growth Framework using the online submission form as part of the public engagement. Of these, a large number of submissions were from people protesting the Southern Growth Area in Upper Hutt. A small number of submissions were received from other people in the region.

The Hon. Tracey Martin was appointed as the independent Chair of the new Wellington Regional Leadership Committee. At its first full business meeting on 1 July 2021 the Committee considered a recommendation to finalise the draft Wellington Regional Growth Framework with minor changes.

1.4.14 Council contracts - Living Wage

Council continues its programme of implementing the Living Wage as the minimum rate for people working on Council procured contracts for services. We continue to support and promote the Living Wage through procurement documentation, and with local employers in Lower Hutt as the council moves toward becoming an Accredited Living Wage Employer by December 2021.

For the quarter ending June 30, the Council entered into new contracts for service with Duncan Commercial Construction (for the Pavilion construction – Te Whiti Park) and Downer (for the Manor Park shared pathway construction); both these employers pay staff the Living Wage as a minimum rate.

In terms of our staff, Living Wage Aotearoa’s new rate (effective 1 September 2021), will be applied as our new minimum rate of pay for permanent and fixed term staff from 1 July 2021 and for casuals from 1 September 2021.

1.4.15 Climate change/zero carbon

Initiatives to reduce carbon emissions were included in the draft 10-year plan. This included removing natural gas from facilities, and investment in EV charging stations. The associated funding was approved, which means we are scheduled to achieve a 50% saving in emissions (from facilities) by 2030, and have in place 20 new EV charging stations across Lower Hutt by the end of 2022.

We achieved a 21% electrification share in our vehicle fleet. With a number of EVs on order to replace conventional fleet vehicles, we were scheduled to reach a 26% EV share in July 2021. New EV charging stations in Days Bay and Eastbourne were opened.

We were getting ready for changing our practices at the Silverstream landfill whereby green waste would no longer be used for landfill cover and instead be composted offsite, and a new flare at Silverstream landfill – to help destruct methane emissions – was made fully operational.

As part of our Climate Response Programme, we developed Council’s draft interim Carbon Reduction and Climate Resilience Plan, to capture the work that Council is doing to reduce its own emissions and to assist in facilitating the change across Lower Hutt. Further to this, our Lead Group of community representatives has continued to drive the co-design process on the Community Climate Change Response for Lower Hutt, which will ultimately result in a city-wide climate change response roadmap later in 2021.

Attachment 7

Appendix 7: Project performance overview for period ended 30 June 2021

Project performance overview for the period ended 30 June 2021

Officers are currently delivering several important projects supporting our strategic priorities. The following is a summary:

Project Progress Snapshot

Project progress status indicators are:

Project Financial Summary

Project	Forecast $M	Budget $M	Variance	%	Comment
District Plan Review	12.70	12.70	0.00	0%	The new LTP includes increased project budget to $12.7M (net of internal support costs). This reflects the cost of the full review of Operative District Plan, as well as implementation and monitoring.
Eastern Bays Shared Path	30.00	30.00	0.00	0%	This is a risk adjusted cost estimate for the project, however at this stage there is still a level of cost uncertainty. Further updates will be undertaken regularly as the detailed design develops in the coming months.
Kerbside Collection implementation	1.15	0.99	(0.150)	15%	The project is tracking behind budget for the financial year. However, a requirement for additional resource means that we are forecast and overspend of $150k for the project.
Naenae Pool	67.59	68.00	0.41	0%	The LTP includes $68M for the Naenae Pool and Fitness Centre. The latest risk assessment from AECOM suggests that the current forecast at 90% confidence level is $67.588M.
RiverLink	138.4	138.4	(0.00)	(0%)	The new LTP includes increased project budget to $138.4M. This reflects some key scope changes including improvements to the Riverbank parking area, intersection improvement, promenade and urban improvements, the pedestrian cycle bridge. It also includes increase in revenue from Waka Kotahi subsidies for the increased scope of intersection improvement works and reduction in projected revenue from property sales.
Urban Cycleways - Beltway	7.32	7.29	(0.03)	(0%)	This project is completed. The business as usual budget will be integrated into our Micromobility Works Programme
Wellington Water Programme	24.6	30.5	5.9	19%	This variance is largely due to the pushing out of work the on the Barber Grove to Seaview Main Collecting Sewer project.

Project Status Comments

Project

Status Summary

District Plan Review

The preparation of a new District Plan, as required by legislation, and also aligned with Hāpori Ora - Thriving Communities/City Plan and City Wide Spatial Plan projects.

Technical assessments continue with draft reports due in the next two months. Two recent resignations will negatively affect timing and institutional knowledge – currently recruiting to fill these positions. Next round of community engagement planned for August/September on flood hazard mapping and intensification areas. This engagement increases reputation and timing risks, which could impact next phase of work. Government has further delayed the release of the new National Policy Statement for Indigenous Biodiversity (from July to November 2021), which means indigenous biodiversity topic is unlikely to be included in the new Draft Plan. Improvements in partnering with mana whenua with regular meetings now being held. Have commenced recruitment of a policy planner with expertise in tikanga Maori to assist with managing this matter. Pending RMA reform may create uncertainty for the review, particularly in terms of scope and timing. With staff resourcing challenges and uncertainty of national policy direction, there is increasing risk of completing a full new Draft District Plan by the end of 2021.

Eastern Bays Shared Path

To construct a walking and cycling route, along Marine Drive (between Point Howard and the northern end of Days Bay, and the southern end of Days Bay to Eastbourne).

Successful mediation at the Environment Court and the beginnings of a renewed partnership with Mana Whenua for the project through a Mana Whenua Steering Group is positive. Detailed Design and Management Plans reaching an advanced stage for the first two bays. Budget estimates for construction at this stage still have a level of uncertainty; however further updates will be undertaken regularly as the detailed design develops. A MoU has been signed between Waka Kotahi and HCC which sets the terms of engagement focused in on integrating the Eastern Bays Shared Pathway project with the Alliance which has been established for the Te Ara Tupua Shared Pathway project. The Te Ara Tupua Project Alliance Board (PAB) has approved to the investigation of the possible integration of EBSP project in to the Te Ara Tupua Alliance (the Alliance).

Kerbside Collection

To implement new kerbside collection services following the strategic review of waste management services.

The new kerbside collection services commenced on 1 July, as planned, with around 93% of households able to use the new services. International shipping delays resulted in some households not receiving bins in early July, contingency plans meant that rubbish bags were provided and collected in place of bins. Additional enquiries received by Council necessitated additional staff being employed in the contact centre to deal with the volumes.

As anticipated there have been some teething problems with the new services as the new collection runs have been embedded and residents have become familiar with the services. Communications have been an important element in helping residents to be ready for the changes along with the information available to residents on the toogoodtowaste.co.nz Council website. Pleasingly, recycling contamination levels have been low during the first few weeks of the new service.

Naenae Pool and Spatial Plan

To deliver a new aquatic and fitness facility and agreed wider projects which reflect the Voice of the Community Report and contribute to the rejuvenation of Naenae’s town centre

The Naenae pool design team led by Architecture HDT has completed the Design Brief and Masterplan report. This is the first significant deliverable for the team and the depth of analysis that has gone into the brief is evidence of the hard work put in by the whole project team. It will also ensure that the foundation for the project is correct from this point on. A large effort has also gone into our engagement with the Naenae community in June and July, with three separate meetings held with the Community Advisory Group (CAG) and one combined meeting with the Aquatic Sports User Group. In response to their feedback, we will be increasing our efforts to make the project more visible in the community through poster boards, signage, advertorials and face to face briefings. The Coco pop-up community space in Hillary Court will be a focal point for our communication going forward and staff will be present every week to answers questions from the community. Following lengthy negotiations with Crown Infrastructure Partners, in July they agreed to reset the Naenae Pool project milestones based on a revised project programme and cash flow.

We continue to work with The Property Group to acquire space for community facilities in Hillary Court. Depending on progress made in July, we may need to activate alternative options.

RiverLink

The RiverLink project seeks to achieve the integration of flood protection, transport and urban regeneration works between Ewen Bridge and Kennedy Good Bridge.

Consent lodgment is on track for 2 August 21. The PMO and project partners’ main focus has been on the consent but a significant joint effort is needed to make progress on the actions needed to deliver the project, i.e. start of works on site in late 22, this being the critical path through the programme. First draft whole project cost estimates received from Quantity Surveyor (QS) in mid-March. HCC budget now secured and NZUP funding confirmed in June. Independent review of current estimates and parallel estimate in progress.

Urban Cycleways – Beltway

To develop the cycling network through the provision of safe routes and infrastructure that promoted an increased uptake of cycling for people.

The Beltway is complete, and in use. The official opening was delayed due to a change in Covid 19 alert levels and has now been scheduled for July 2021.

Wellington Water Programme

For the renewal and capital works programme for the Three Waters network.

For the 2020/21 financial year a total of $24.6M was expended on the three waters capital works programme. This represents 80% of the budget allocation. The programme scope and resulting underspend was mainly impacted by a timeline revision for the Barber Grove to Seaview Wastewater Treatment Plant Duplicate Main Collecting Sewer. A carry-over was approved by Council for this project which is now scheduled to commence physical works in December 2021.

Attachment 8

Appendix 8: Treasury Report for the period ended 30 June 2021

Treasury Report for the year ended 30 June 2021

This treasury report provides a summary of how Hutt City Council is complying with Treasury Risk Management Policy limits and the performance of treasury activities against plans.

The focus of treasury management activity has been on:

Ø managing interest rate risk and minimising funding costs,

Ø monitoring cash flow and liquidity,

Ø managing debt requirements and the maturity profile.

Key highlights to 30 June 2021 include:

Ø An average cost of funds of 3.06% was achieved, which is 0.42% lower than budgeted

Ø Interest cost savings of $0.7M were achieved mainly due to the lower interest rate environment, along with savings from “blend and extend” of Interest Rate Swaps (IRS) within the portfolio.

Ø Interest earned on cash holdings is slightly ahead of budget ($0.2M) primarily due to our high cash balances over the period – pre-funding.

Debt portfolio performance:

Ø Net debt (which includes cash holdings and CCO investment) increased during the quarter from $178.5M at 31 March 2021 to $194.1M at 30 June 2021, whilst gross debt decreased to $215.7M.

Ø During the quarter, in April, Council issued $20.7M in debt ($10M maturing April 2023 at 0.7% and $10M maturing April 2026 at 1.47%) to pre-fund $10.7M of CCO debt maturing on 30 June 2021 and $10M of Council debt maturing 19 July 2021.

Ø During the quarter Council had a total of $26M of debt mature:

o $12M on 15 May 2021 on behalf of Council

o $0.3M on 30 June 2021 on behalf of Council

o $13.7M on 30 June 2021 on behalf of CCO’s

Ø The revolving credit facility of $35M remained undrawn as at 30 June 2021. Whilst the facility size remained at $35M, it was re-negotiated on 30 June 2021, at a lower cost, to a split of $15M with Westpac and $20M with LGFA.

	Actual YTD	YTD Budget	Variance
Average cost of funds	3.06%	3.48%	(0.42%)
Interest expense – borrowings	($7.2M)	($7.9M)	$0.7M
Interest earned	$0.31M	$0.11M	$0.2M
Fair value gain on derivatives	$13.7M	-	-

The Council has a range of interest rate swap agreements in place to manage interest rate risk and to provide some certainty of future interest costs. Due to fluctuations in the interest rate market the overall mark-to-mark value of these agreements is constantly changing.

The year to date fair value gain of the swap portfolio (derivatives) was $13.7M as at 30 June 2021. This is an accounting adjustment required to be recorded and there are no cash flow implications.

Policy compliance:

Measures	Policy	Actual 30 June 2021	Compliant
Net external debt/total revenue	Maximum 150%	101.0%	Yes
Net interest on external debt/total revenue	Maximum 10%	3.4%	Yes
Liquidity ratio	Minimum 110%	116.5%	Yes

Funding risk control limits:

Period	Minimum %	Maximum %	Actual gross debt Not including Revolving Credit Facility ($35M)	Actual % 30 June 2021	Compliant
0 to 3 years	15%	60%	$95.7M	44%	Yes
3 to 7 years	15%	60%	$85M	39%	Yes
7 years plus	10%	60%	$35M	17%	Yes
		Total	$215.7M	100%

Funding maturity profile:

Interest rate risk control limits:

Interest rate risk is managed through the risk control limits. The graph that follows shows the level of fixed rate cover in place within the minimum and maximum limits of the treasury risk management policy.

After overlaying interest rate swaps, the split between fixed and floating debt is as follows:

269 14 September 2021

Policy, Finance and Strategy Committee

11 August 2021

File: (21/1272)

Report no: PFSC2021/4/202

2021 Standard and Poor's Credit Rating

Purpose of Report

1. The purpose of this report is to inform the committee that on 30 August 2021, Standard and Poor’s (S&P) Global Ratings affirmed council’s credit rating as AA long term with “stable” outlook, and A-1+ short term.

2. The overall credit rating assessment was unchanged from 2020, with the underlying detailed scoring showing no change from 2020 except for liquidity which decreased slightly. The decreased liquidity score is a reflection of the impact of council’s increased capital programme and has not impacted the overall rating.

Recommendations

That the Committee notes and receives the report.

Background

3. There is no legislative requirement for council to have a credit rating, likewise council’s Treasury Risk Management Policy does not require a rating.

4. Across New Zealand there are currently 31 councils that have a credit rating. This includes for example Wellington City Council, Greater Wellington Regional Council, Porirua City Council, Tauranga City Council and Auckland Council. The credit rating is essentially a ‘signal’ to lenders that council can fully meet its borrowing obligations.

5. The credit rating enables council to access multiple debt markets (Local Government Funding Agency, banking institutions, private placements), at a lower cost due to the perceived risk.

6. The table that follows shows how the Local Government Funding Agency (LGFA) provides lending at a range of margins dependent on councils’ credit rating.

Table 1: LGFA lending margins

Credit Rating	Additional Lending Margin
AA & AA+	0.15%
AA-	0.20%
A+	0.25%
Unrated Guarantor	0.35%
Unrated Non-Guarantor	0.45%

7. Hutt City Council has an AA credit rating which reduces the cost of borrowings by up to 0.30% compared to other borrowers. When compared to a local authority with an A+ credit rating, Council’s annual cost of borrowings is $50,000 less for every $50M borrowed.

Outcome of the most recent credit rating review

8. S&P annually review council’s credit rating. The most recent review was completed in early August 2021. The outcome of the review was made publicly available on 30 August 2021.

9. The S&P rating affirmed council’s credit rating as AA long term with “stable” outlook, and A-1+ short term. This is unchanged from the previous year.

10. The S&P detailed review is attached as Appendix 1 to the report. This includes a summary rating score snapshot which is summarised in Table 2. A five-point scale is used for all the rating factors except for the ‘institutional framework’ where a six-point scale is used. One is the strongest score that can be achieved.

11. Table 2 includes a comparison to the prior year assessment showing no change from 2020 except for liquidity which decreased. The decreased liquidity score is a reflection of the impact of council’s increased capital programme and has not impacted the overall rating.

Table 2: Rating score snapshot results

Key rating factor	2021	2020	2019
Institutional framework	1	1	1
Economy	2	2	2
Financial management	2	2	2
Budgetary performance	3	3	4
Liquidity	2	1	2
Debt burden	4	4	4

12. Key messages included in the report to explain the rating outcome:

Overview:

- ‘The council's economic profile, the council's experienced management, and New Zealand institutional settings underpin our ratings.

- We forecast Hutt's financial position to weaken as it embarks on a large capital program over the next few years as part of its 2021-2031 long-term plan.

- While this spending is driving deficits higher, the council is increasing revenues to support its budget. These higher revenues will help slow the increase in its debt-to-operating revenue ratio.

- We are affirming our 'AA' long-term and 'A-1+' short-term issuer credit ratings on Hutt. The outlook is stable.’

Further details:

a. ‘The institutional framework within which New Zealand local governments operate is a key strength supporting Hutt's credit profile. We believe the framework is one of the strongest and most predictable globally. The New Zealand local government system also promotes a strong management culture, fiscal discipline, and high levels of financial disclosure among local councils. The system allows Hutt to support higher debt levels than some of its international peers can tolerate at its current rating.’

b. ‘Hutt's financial management is experienced and relatively conservative. The council was recently restructured to align the bureaucracy with the council's new priorities outlined in the long-term plan. The restructure should help the council to deliver its large capital program, address growth pressures, and ensure environmental and financial sustainability. In our view, financial sustainability will be buoyed by the council's decision to increase rates and contributions from developers. It indicates that the council is aware of the financial pressures its large capital program will bring. ‘

c. ‘Large capital program and borrowing levels are supported by growing revenues and Crown infrastructure funding; prefunding remains a key strength to support liquidity.’

d. ‘Hutt's prefunding of upcoming debt maturities up to 18 months in advance and its NZ$35 million bank facilities support its liquidity position. … We expect the council's liquidity coverage to deteriorate over next 1-2 years, reflecting larger after-capital account deficits. Further, we consider that access to the New Zealand Local Government Funding Agency (LGFA) provides Hutt, along with most of its New Zealand peers, with strong access to a well-established source of external liquidity. In our view, the LGFA benefits from an "extremely high" likelihood of extraordinary central government support and has helped Hutt to lengthen its maturity profile and reduce its interest expenses.’

Climate Change Impact and Considerations

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

Consultation

14. There are no consultation requirements arising from this report.

Legal Considerations

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

Financial Considerations

16. There are no further financial considerations apart from those noted in the report.

Appendices

No.	Title	Page
1 ⇩	Appendix 1 - S&P Rating Report - 30 August 2021	270

Author: Daniel Koenders

Manager Financial Strategy & Planning

Approved By: Jenny Livschitz

Group Chief Financial Officer

280 14 September 2021

Policy, Finance and Strategy Committee

18 August 2021

File: (21/1319)

Report no: PFSC2021/4/203

Sale and supply of alcohol (fees) regulations 2013 - Regulation 19(1) - reporting by territorial authorities

Purpose of Report

1. To advise the Committee on Council’s responsibilities to annually prepare and make publicly available a report showing all income from fees payable in relation to, and costs incurred for all, activities related to alcohol licensing and enforcement under the Sale and Supply of Alcohol Act 2012.

Recommendation

That the Committee approves the publication of a ‘table of income versus expenditure’ on Council’s website showing the alcohol licensing income received from fees payable in relation to, and costs incurred, in:

(a) the performance of the functions of Council’s District Licensing Committee under the Sale and Supply of Alcohol Act 2012 (the Act);

(b) the performance of the functions of Council’s Inspectors under the Act; and

For the reasons outlined in the report.

Background

2. The Sale and Supply of Alcohol Act 2012 (the ‘Act’) came into force on 18 December 2012 and became effective in December 2013.

3. The Act’s focus is on alcohol harm reduction, requiring that Licensing Inspectors enquire into and report on applications, and also monitor the performance of licensees. The team works in collaboration with the New Zealand Police and the Medical Officer of Health.

4. The Act requires Territorial Authorities to report annually as follows:

Regulation 19(1) Reporting by territorial authorities

(1) Every territorial authority must, each year, prepare and make publicly available a report showing its income from fees payable in relation to, and its costs incurred in:

(a) the performance of the functions of its licensing committee under the Act; and

(b) the performance of the functions of its inspectors under the Act; and

5. Council approved the Alcohol Fees Bylaw (the bylaw) on 17 September 2019. Both the application and annual fees are to be increased over three years with the aim of recovering 90% of the costs of alcohol related work. This is unlikely to be realised for the reasons outlined further below.

6. The amounts received through application and annual fees are detailed in the table below. Total revenue has increased from last year by $47,122 (19%).

7. This reason for the increase is due to the scheduled increase in fees that occurred on 1 January 2021, in accordance with the bylaw.

8. The cost of licensing inspectors’ functions has increased due to salary increases within the team. Operating and support costs have decreased due to a reduction in internal overhead costs.

9. The percentage of costs Council has recovered from fees for carrying out its functions under the Sale and Supply of Alcohol Act 2012 for the 2020/21 financial period is 49%.

10. This is less than was estimated when the fees were set which is due to two factors:

· As the fee increases are occurring half way through each financial year, the full effect of the fee increases will not be realised until 2023.

· The original expenditure of $464k against which the 90% was measured has not sufficiently taken into account the increase in the cost of the function over time, particularly in relation to personnel costs, which have risen 29% over the last three years. If the cost of the function did not increase from the 2020/21 level, the increase in income over the next two years would need to be $190k to reach 90% cost recovery.

TABLE OF INCOME VS EXPENDITURE (GST EXCLUSIVE)

Required under Regulation 19 (1) of the Sale and Supply of Alcohol (Fees) Regulations 2013

Revenue	2020/2021	2019/2020	2018/2019
- Fees	$291,638	$244,516	$242,501

Expenses
- Alcohol Regulatory Licensing Authority (ARLA) Fees	$17,684	$15,440	$16,465
- District Licensing Committee Functions	$26,132	$27,433	$30,736
- Licensing Inspectors Functions	$332,205	$311, 988	$351,791
- Licensing Inspectors Operating & Support Costs	$159,314	$191,100	$252,703
- Administration and Sundry	$57,626	$56,775	$51,005
Total Expenses	$592,961	$602,736	$702,700
Surplus/Deficit	-$301,323	-$358,220	-$460,198
Cost Recovery Rate	49%	41%	35%

Climate Change Impact and Considerations

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

Consultation

12. There are no consultation requirements arising from this report.

Legal Considerations

13. This report is prepared in accordance with the Sale and Supply of Alcohol Act 2012.

Financial Considerations

14. This report is based on revenue and expenses for the 2020/21 financial year.

Appendices

There are no appendices for this report.

Author: Dean Bentley

Environmental Health Manager

Author: Karl Eagle

Senior Management Accountant

Reviewed By: Derek Kerite

Head of Regulatory Services

Approved By: Helen Oram

Director Environment and Sustainability

Attachment 1

PFS Work Programme 2021-22

Policy, Finance and Strategy – Work Programme 2021-22

Description	Author	Cycle 5 16 Nov 2021	Cycle 1 Feb 2022	Cycle 2 Apr 2022	Cycle 3 July 2022	Cycle 4 Sept 2022	Nov 2022	Pending 2022
Work Programme	Democracy Advisor	√	√	√	√		√
Three Waters Reform	J Livschitz/B Hodgins	√	√	√	√	√	√
Wellington Water Half year Performance Annual Report	B Hodgins	√
CCO Annual Reports	D Newth/J Livschitz	√
District Plan Review Subcommittee Report Back	H Wesney	√
Encroachments Policy	W Moore/C Taylor/C Agate	√
Naming Policy	M Jennings/J Pritchard/W Moore	√
HCC Group Annual Report	D Newth/M De Boer	√
Urban Form and Development – Greenfield Development	H Wesney	√
Council performance overview quarterly report (including health and safety update)	K Eagle/C Taylor/ C Ellis/J Livschitz/ K Shaw		√		√		√
Procurement Policy – proposed changes to financial thresholds/financial delegations	P Cameron/J Livschitz		√
Māori Freehold Land	J Pritchard/W Moore/M Jennings/J Livschitz			√
Water Supply Bylaw	TBC			√
Proposed Remits to LGNZ	W Moore/K Stannard				√
Te Reo Policy	M Jennings/J Pritchard/W Moore					√
Sale and supply of alcohol (fees) regulations 2013 (Annual reporting)	D Bentley					√
Parking Policy Review	J Pritchard/C Agate							√
Review of Local Alcohol Policy	TBC							√
Housing Plan	J Pritchard							√

[1] Under the Gambling Act 2003, Clubs are allowed to retain gaming machine proceeds to promote the purposes of the club.

[2] Note that this requirement refers to the whole community of New Zealand not Te Awa Kairangi

Cr S Edwards (Chair)

Mayor C Barry	Cr J Briggs
Cr K Brown (Deputy Chair)	Cr B Dyer
Cr D Hislop	Deputy Mayor T Lewis
Cr C Milne	Cr A Mitchell
Cr S Rasheed	Cr N Shaw
Cr L Sutton

(A)	(B)	(C)

General subject of the matter to be considered.	Reason for passing this resolution in relation to each matter.	Ground under section 48(1) for the passing of this resolution.


Land Sale Proposal - 2 Miromiro Road.	The withholding of the information is necessary to maintain legal professional privilege (s7(2)(g)). The withholding of the information is necessary to enable the local authority to carry on, without prejudice or disadvantage, negotiations (including commercial and industrial negotiations) (s7(2)(i)).	That the public conduct of the relevant part of the proceedings of the meeting would be likely to result in the disclosure of information for which good reason for withholding exist.

Project	Next Major Milestones	Date
District Plan Review	Notification of ‘Draft’ District Plan (if applicable)	Late 2021
Eastern Bays Shared Path	Construction Starts (Main Works)	Oct-21
Kerbside Collection	Project Closure and hand over to BAU	Sept 21
Naenae Pool and Spatial Plan	Demolition preparation – disconnection of utilities, substation relocation and diversion of HV cables, asbestos removal	May–Aug 21
	Demolition underway	Late Aug 21
	Blessing of old Pool and new site Led by Mana Whenua	Sept 4
RiverLink	Design/construction contract awarded	Late 2022
Wellington Water Programme	Seaview WWTP Wastewater Discharge & Storage - Preliminary Design/Consents	Q3 2021 - Q1 2022
	Petone Collector Sewer - Concept	Q3 2021 - Q2 2022
	Naenae No2 Reservoir - Concept	Q3 2021 - Q2 2022
	Barber Grove to Seaview WWTP WW Trunk Main - Detailed Design	Q4 2021 - Q1 2022

Project	top risk	mitigation / comments
District Plan Review	Lack of internal resource to prepare District Plan, including loss of internal staff or external advisors	Manageable workloads planned in advance. Team approach to policy development ensures gaps can be bridged if necessary.
	Aligning or avoiding conflict with engagement on other Council activities to avoid consultation fatigue for the community.	Coordination with Communications and Engagement Team on engagement activities.
Eastern Bays Shared Path	Managing and meeting the funding requirements and milestones of CiP	A risk adjusted programme though to construction start has been produced by the Consultant. The consent hearing was held in December 2020 and the consent was granted on 5 March 2021. Pre-Implementation risks are substantially reduced as a result of the progress made with consenting. Covid funding was dependent on the consents being obtained.
	Procurement and Construction	The current construction market is very heated and there is significant demand meaning there is currently low capacity. We are currently working with Waka Kotahi to explore how we could possibly partner with them on their Te Ara Tupua Shared Path Project. The Consultant Team have also been asked to develop a Plan B for procurement and construction if the partnership with Waka Kotahi is not successful.
Naenae Pool	Managing the uncertainties around having sufficient budget to deliver Naenae programme of projects and desired outcomes.	Early engagement of Main Contractor to provide as much certainty of cost as possible. Workshop to discuss project scope, risk areas and identify all project related costs. Progress design process in stage gates to provide project board visibility of projects and outcomes
RiverLink	Partner organisations fail to reach legal agreement	Continue proactive best-for-project outcomes focus
	Partner organisations do not have adequate funding to deliver	Challenge cost estimates, value engineer the designs
	Current project team is primarily focused on consent submission date, not quality or deliverability of project	Use influence at project board and steering group
Wellington Water Programme	Deliverability of the programme due to available resources.	WWL is managing with consultants and contractors as a three year graduated programme to better ensure resources are geared up over the medium/longer term.

Project	top issue	mitigation / comments
RiverLink	Inadequate HCC resources	Communications support and engagement support have been strengthened, further project management support in consideration

	Description	Date Scheduled
District Plan Review	Community engagement on flood mapping in conjunction with Greater Wellington Regional Council and Wellington Water.	August/September 2021 (Valley floor areas)
	Community engagement on potential areas of intensification (six storey buildings) around central city and railway stations.	August/September 2021
	Targeted engagement with property owners of buildings/sites with potential heritage value – advised results of draft heritage assessment	August 2021
Eastern Bays Shared Path	Community Open Day to announce collaboration with Mana Whenua and the wider links with Te Ara Tupua	August 2021
Kerbside Collection	Engagement over next few weeks will be largely to communicate required behaviours; eg bins out before 6 am and latches being used	August 2021
Naenae Pool and Spatial Plan	Project flyer handed out at Kokiri Marae blessing event	August 2021
	Signs erected – timelines x 2 on Pool hoardings; Signboard Avalon, Signboard Naenae.	July 2021
	Media Release on appointment of planner, demolition contractor and QS	August 2021
	Advertise opportunity for the public to retrieve items of heritage and community value	August 2021