HuttCity_TeAwaKairangi_BLACK_AGENDA_COVER

 

 

KOMITI ITI AHUMONI I TŪRARU |
Audit and Risk Subcommittee

 

 

3 November 2021

 

 

 

Order Paper for the meeting to be held in the

Council Chambers, 2nd Floor, 30 Laings Road, Lower Hutt,

on:

 

 

 

 

Thursday 11 November 2021 commencing at 1.00pm

 

The meeting will be held under Alert Level 2.

 

 

Membership

 

 

 Ms Suzanne Tindal (Independent Chair)

Mayor C Barry (Deputy Chair)

Cr J Briggs

Cr S Edwards

Cr A Mitchell

Cr S Rasheed

Cr N Shaw

 

 

 

For the dates and times of Council Meetings please visit www.huttcity.govt.nz

 

Have your say

You can speak under public comment to items on the agenda to the Mayor and Councillors at this meeting. Please let us know by noon the working day before the meeting. You can do this by emailing DemocraticServicesTeam@huttcity.govt.nz or calling the Democratic Services Team on 04 570 6666 | 0800 HUTT CITY


1

 

 

AUDIT & RISK SUBCOMMITTEE
Membership:	                     Independent Chair and 7 Members
	Audit and Risk Subcommittee members should be appointed so that the subcommittee has a diversity of governance skills, experiences and personal qualities. Between them, the members should bring a mix of the following attributes:
1.	Broad governance experience;
2.	Familiarity with risk management disciplines;
3.	Understanding of internal control and assurance frameworks;
4.	 An understanding of financial and non-financial performance reporting;
5.	A good understanding of the roles of internal and external audit; and
6.	A sound understanding of the local government sector.
Use of the matrix below has assisted other councils to consider the best fit for membership of an Audit and Risk Committee.
Quorum:	Half of the members
Meeting Cycle:	Meets on an eight weekly basis or as required
Reports to:	Council

HuttCity_TeAwaKairangi_SCREEN_MEDRES

 

 

OVERVIEW:

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

The Committee is primarily aligned with the Office of the Chief Executive.

Its areas of focus are:

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

§   Internal and external audit and assurance

§   Health, safety and wellbeing

§   Business continuity and resilience

§   Integrity and investigations

§   Monitoring of compliance with laws and regulations

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

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

 

PURPOSE:

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

DELEGATIONS FOR THE SUBCOMMITTEES AREAS OF FOCUS:

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

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

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

 

Risk Management:

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

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

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

Assurance:

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

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

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

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

Fraud and Integrity:

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

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

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

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

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

Statutory Reporting:

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

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

§  Compliance with applicable legal requirements relevant to statutory reporting.

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

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

§  Any decisions involving significant judgement, estimation or uncertainty.

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

§  The disclosures of contingent liabilities and contingent assets.

§  The clarity of disclosures generally.

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

§  Significant adjustments resulting from the audit.

External Audit:

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

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

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

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

Interaction with Council Controlled Organisations and Council Controlled Trading Organisations:

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

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

Matrix of Experience, Skills and Personal Qualities

Experience, Skills and Personal Qualities

Member A

Member B

Member C

Member D

Independent Chairperson

The recommended combination of experience is:

·           financial reporting

 

 

 

 

 

·           broad governance experience

 

 

 

 

 

·           familiarity with risk management disciplines

 

 

 

 

 

·           understanding of internal control and assurance frameworks

 

 

 

 

 

·           good understanding of the roles of internal and external audit

 

 

 

 

 

·           local government expertise

 

 

 

 

 

For an “advisory-oriented” audit committee, particular emphasis should be placed on:

·           Strategy

 

 

 

 

 

·           Performance management

 

 

 

 

 

·           Risk management disciplines

 

 

 

 

 

In determining the composition of the audit committee, the combined experience, skills, and personal qualities of audit committee members is critical. Members should bring:

·           the ability to act independently and objectively

 

 

 

 

 

·           the ability to ask relevant and pertinent questions, and evaluate the answers

 

 

 

 

 

·           the ability to work constructively with management to achieve improvements

 

 

 

 

 

·           an appreciation of the public entity’s culture and values, and a determination to uphold these

 

 

 

 

 

·           a proactive approach to advising the governing body and chief executive of matters that require further attention

 

 

 

 

 

·           business acumen

 

 

 

 

 

·           appropriate diligence, time, effort, and commitment

 

 

 

 

 

·           the ability to explain technical matters in their field to other members of the audit committee

 

 

 

 

 

 


 

HUTT CITY COUNCIL

 

Komiti Iti Ahumoni I Tūraru |Audit and Risk Subcommittee

 

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

 Thursday 11 November 2021 commencing at 1.00pm.

 

ORDER PAPER

 

Public Business

 

1.       APOLOGIES

2.       PUBLIC COMMENT

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

3.       CONFLICT OF INTEREST DECLARATIONS

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

4.       Update on Petone Wharf Refurbishment Project (21/1721)

Report No. ARSC2021/5/246 by the Reserves Asset Manager                             11

Chair’s Recommendation:

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

5.       Eastern Bays Shared Path Project Update (21/1738)

Report No. ARSC2021/5/22 by the Head of Transport                                         17

Chair’s Recommendation:

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

6.       RiverLink Update (21/1740)

Report No. ARSC2021/5/247 by the Project Manager Riverlink                          23

Chair’s Recommendation:

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

 

7.       Holidays Act Remediation Project (21/1730)

Report No. ARSC2021/5/248 by the Finance Project Manager                             33

Chair’s Recommendation:

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

8.       Sensitive Expenditure Disclosures (21/1714)

Report No. ARSC2021/5/135 by the Financial Accounting Manager                   37

Chair’s Recommendation:

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

9.       Hutt City Council Group Annual Report 2020/21 (21/1624)

Report No. ARSC2021/5/249 by the Principal Advisor, Strategic and Business Planning    50

Chair’s Recommendation:

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

10.     Seismic Performance Register (21/1754)

Report No. ARSC2021/5/23 by the Acting Facilities Manager                           302

Chair’s Recommendation:

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

11.     Information Items

a)      Naenae Projects Update (21/1734)

Memorandum dated 20 October 2021 by the Project Manager (Naenae)  305

Chair’s Recommendation:

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

 


 

b)      Audit and Risk Work Programme (21/1621)

Report No. ARSC2021/5/136 by the Democracy Advisor                         314

Chair’s Recommendation:

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

12.     QUESTIONS

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

13.     EXCLUSION OF THE PUBLIC

CHAIR'S RECOMMENDATION:

 

“That the public be excluded from the following parts of the proceedings of this meeting, namely:

          14.     Fraud risk management (21/1703)

The general subject of each matter to be considered while the public is excluded, the reason for passing this resolution in relation to each matter, and the specific grounds under section 48(1) of the Local Government Official Information and Meetings Act 1987 for the passing of this resolution are as follows:

 

(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.

 

 

 

 

 

 

Fraud risk management.

The withholding of the information is necessary to prevent the disclosure or use of official information for improper gain or improper advantage (s7(2)(j)).

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.

 


 

This resolution is made in reliance on section 48(1) of the Local Government Official Information and Meetings Act 1987 and the particular interest or interests protected by section 6 or 7 of that Act which would be prejudiced by the holding of the whole or the relevant part of the proceedings of the meeting in public are as specified in Column (B) above.”

 

 

 

 

 

Toi Lealofi

DEMOCRACY ADVISOR

 


                                                                                       1                                                 11 November 2021

Audit and Risk Subcommittee

19 October 2021

 

 

 

File: (21/1721)

 

 

 

 

Report no: ARSC2021/5/246

 

Update on Petone Wharf Refurbishment Project

 

Purpose of Report

1.    The purpose of this report is to update the Subcommittee on the risk status of the Petone Wharf refurbishment project since the last report on 23 April 2021.

Recommendations

That the Subcommittee:

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

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

(3)   notes that a Conservation plan is being produced for the Petone Wharf to provide greater clarity on heritage values; and

(4)   notes the financial implications and changes to the budget spread.

 

Background

2.    A summary history of Petone Wharf is included in a report to the Long Term Plan/Annual Plan Subcommittee meeting held on 10 February 2021 and updates were presented in reports to the Audit and Risk Subcommittee on 25 February and 23 April 2021. 

3.    Several structural piles were damaged during two minor earthquakes in December 2020 and January 2021, resulting in closure of the wharf to the public and completion of emergency works. 

4.    Calibre Ltd has carried out a detailed condition assessment on the structure of Petone and other wharf structures.  The results of this confirm expectations that there are a number of piles on the wharf head that are in very poor condition and the decision has been made to keep the wharf should closed until these piles are repaired.

5.    A Quantitative Risk Assessment (QRA) was completed on the wharf project.  This has indicated a range of figures with accompanying confidence levels (e.g. P95 indicates a 95% confidence level, indicating that this figure will be exceeded in 5% of the risk scenarios).  This report allocated a P50 of $18,729,000 , a P80 of $19,813,000 and a P95 of $20,939,000

6.    The main risks related to potential retention of the section of wharf head, which is scheduled for demolition.  The requirement to retain this section, either due to heritage considerations or through the resource consent process adds considerable cost to the project.

7.    The Council consulted, through the Long Term Plan (LTP) process, on a recommendation to bring forward the full refurbishment of Petone Wharf to address these concerns in the short term. The decision was to include funding in the LTP over the next three years to complete the wharf refurbishment, including removal of a section of the wharf head. The wharf will therefore remain closed until completion of the refurbishment project.

8.    Officers have been working on scoping the project and making preparations for the Resource consent application.

Discussion

9.    The Petone Wharf currently poses potential health and safety risks related to the structural integrity of the piles and supports. This risk is currently being managed through closure of the wharf and completion of emergency works.

10.  The proposed Petone Wharf refurbishment project holds inherent risks to Council, most notably that of financial uncertainties and reputational risk.  These are recorded in the table in Appendix 1 and discussed in more detail below.

11.  Scope and condition:  The condition assessment details the poor condition of much of the timber wharf structure, however given the variable nature and construction, much of the condition cannot be assessed until the structure is dismantled.  This will be managed by allocating a generous contingency amount in the project contract. This amount has already been accommodated in the project budget allocation.

12.  Heritage values:  Petone Wharf is a heritage structure under the District Plan and has been nominated for Heritage status with Heritage New Zealand Pouhere Taonga (HNZ).  Early indications from HNZ are that greater scrutiny will be applied to the wharf, than to other wharves previously.

13.  HNZ have requested the production of a conservation plan for the wharf, which will advise on the heritage values and areas of interest.  This will also advise the resource consent process.  The production of this plan is underway, with a report due in early December 2021. Once produced, this will give greater certainty over heritage issues, including approval to demolish the outer end.



14.  Resource Consent Process:  Early indications from Greater Wellington Regional Council (GWRC) planners are that the consent will likely be publicly notified, which means there would be submissions and a potential hearing.  This would require additional time and require adjustment to the project timeline. The timeframes for consenting are:

·    Lodge early March 2022

·    Notification early May 2022

·    Hearing late June 2022

·    Decision by late July and appeals period closes mid August 2022

15.  The other top risks associated with this project are:

·    Health and Safety – Given the structural uncertainties associated with the wharf, there is the risk of further loss of piles and localised structural failure.  This risk is very low and easily managed through closure of the wharf.  Contractors completing the repairs will set up procedures to keep staff safe during works, which will be approved by a qualified engineer.

·    Weather – Petone is subject to southerly winds which make conditions unsafe to work in.  This could affect programming and is difficult to plan for.

·    Supply – The work is reliant on supply of large hardwood timbers, generally from South America.  These are becoming more difficult to source and questions are being raised about the ethics and sustainability of this practice.  This can be managed by investigating alternative wood sources such a Australia and alternative products including concrete or composite materials

·    Communications  - Previous communication stated a completion date for re-opening.  This commitment cannot now be met and could lead to loss of trust in Council.  This can be managed through a communications plan supported by evidence and information.

Options

16.  There are no options to discuss

Climate Change Impact and Considerations

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


 

18.  The wharf is a largely timber structure and requires large hardwood timbers.  For Days Bay wharf, these were sourced from South America, however officers are also investigating supply from Australia.  Using timber from large mature trees does raise questions of sustainability.  HNZ are likely to require a significant amount of timber to be used on the refurbished wharf, particularly on external highly visible areas, however there may be options of using concrete or fibre composite materials for some parts.  All decisions on material options will be a compromise between heritage and sustainability values. 

Consultation

19.  In 2017, as part of the annual plan consultation, Council engaged with the community over the future of all four wharves. Additionally public meetings were held in Petone and Eastbourne and wider consultation was carried out. Asa result the decision was made to refurbish Petone Wharf, including the removal of 48m off the outer end.

20.  Consultation was carried out as part of the LTP process in 2021. The submissions were somewhat split between a desire to refurbish the wharf and the cost considerations of the project.

Legal Considerations

21.  There are no legal considerations at this time.

Financial Considerations

22.  Due to the lengthy consent process and likely notification, the construction works will not begin until late in 2022, within the 2022/23 financial year.  The current financial situation with revised budget timings is presented below. Further information on proposed budget changes for this project will be presented to the LTP/Annual Plan Subcommittee on 16 December 2021 as part of the decisions to support the preparation of the Draft Annual Plan 2022/23.

Table 1: Operational budgets

Petone Wharf

2021/22

2022/23

2023/24

2024/25

Total

LTP 2021-2031

$0.8M

 

 

 

$0.8M

Revised budget

$0.1M

$0.7M

 

 

$0.8M

 


 

Table 2: Capital budgets

Petone Wharf

2021/22

2022/23

2023/24

2024/25

Total

LTP 2021-2031

$7M

$7M

$6.1M

 

$20.1M

Revised budget

0

$7M

$10M

 

$3.1M

 

$20.1M

 

Appendices

No.

Title

Page

1

Appendix 1: Petone Wharf Risk Assessment - November 2021

16

 

Author: Janet Lawson

Reserves Asset Manager

 

 

 

 

Approved By: Andrea Blackshaw

Director Neighbourhoods and Communities

 


Attachment 1

Appendix 1: Petone Wharf Risk Assessment - November 2021

 


                                                                                       1                                                 11 November 2021

Audit and Risk Subcommittee

20 October 2021

 

 

 

File: (21/1738)

 

 

 

 

Report no: ARSC2021/5/22

 

Eastern Bays Shared Path Project Update

 

 

 

 

1.    To update the Subcommittee on the Eastern Bays Shared Path Project (the Project).

Recommendations

That the Subcommittee:

 

(1)   notes the alliance delivery model for the Eastern Bays Shared Path Project (the Project) construction;

(2)   notes the increasing construction costs to deliver the Project and that early discussions are on-going with Crown Infrastructure Partners and Waka Kōtahi to seek additional funding;

(3)   notes the project budgets (both capital expenditure and revenue) approved by Council in the Long-Term Plan 2021-2031 following public consultation, as detailed in the “Financial Considerations” section outlined in the officer’s report;

(4)   notes that Council will be required to approve any increase in funding requirements which exceeds the Long-Term Plan 2021-2031 budgeted position; and

(5)   notes that officers will report back to the Long Term Plan/Annual Plan Subcommittee on 16 December 2021 on the updated project cost estimates and advice on the funding options.

 

Background

 

2.    In March 2021, the resource consent was initially granted. Although an appeal was lodged, this was resolved in June 2021, meaning the project is approved to proceed to construction. The project is now shifting from the consenting stage to the delivery stage.

3.    Total funding currently available to the Project is $30m which includes $15m of Crown Infrastructure Partner (CIP) funding, and $7.5m allocated from both Council and Waka Kōtahi.

 

4.    Funding for the Project was included in the draft LTP 2021-2031, which went to public consultation in April 2021. Council confirmed funding for the project in the decisions to finalise the LTP 2021-2031.

Discussion

Alliance integration and next steps

5.    Council has been exploring delivery model options for construction. The Project team have been planning to start main construction works on the Windy Point and Sunshine Bay sections of the Project in the first quarter of 2022.

6.    The traditional contract approach (NZS 3910 Measure and Value Contract model) and the alliance model have been considered and explored for the construction phase of the Project.

7.    The traditional contract model is usually selected for lower scale (size and value) and low risk projects with low opportunity for design flexibility and innovation. There are minimal programme constraints and stakeholder management issues. The traditional contract model was contemplated earlier by the Project team during the consenting phase due to the Project’s value (below $50m) and the Project had no programme constraints, which looked into a staged approach over a six-year construction programme for the six bays.

8.    In contrast, the alliance delivery model is a relationship-style arrangement, that brings together the client (owner participant) and one or more parties (non-owner participants) to work together to deliver the project, sharing project risks and rewards. Alliances are usually suited to large scale and high risks projects, with complex stakeholders’ issues, difficult environment, social issues, and need for design flexibility.

9.    Waka Kōtahi has recently undergone a robust procurement process for the Te Ara Tupua Project, which identified an alliance delivery model and selected Downer, HEB and Tonkin & Taylor team as its partners to deliver the construction of the Ngā Uranga ki Pito-One section of Te Ara Tupua. 

10.  Waka Kōtahi selected an alliance delivery model due to the nature of the works involving reclamation and seawalls, working in a highly constrained environment, high value ecology area and managing multiple stakeholder relationships. All these risks support a shared risk delivery model that is flexible and collaborative.

11.  The Eastern Bays Project is very similar to the Te Ara Tupua project considering the risks highlighted above, thus there is great opportunity to partner with Waka Kōtahi in integrating the Project into the Te Ara Tupua Alliance (the Alliance).

12.  In July 2021, Council and Waka Kōtahi signed a Memorandum of Understanding to explore the benefits of integrating the Project into the Alliance. As project best practice, Council requested the Alliance to carry out an independent review of the work to date to ensure that the Project is in the right track to construction delivery.

13.  The Alliance review was carried out in phases. Phase 1 of the integration process was to have an initial high-level review of the Project design, cost, risks, and programme and understand the benefits and whether the Project is suitable to be delivered through the Alliance. The Alliance Board confirmed in August 2021 that there is great opportunity for integration and recommended to proceed to the next phase.

14.  Phase two of the integration process involved the following tasks:

a.    Complete a design review of the Issue for Tender (IFT) drawings and provide recommendations and plan to get to Issue for Construction (IFC) for Sunshine Bay and Windy Point. Identify risks and forward plan for design of remaining four bays.

b.    Explore and investigate value engineering opportunities to mitigate design, cost and constructability risks.

c.     develop a detailed construction methodology and programme

d.    undertake a detailed parallel estimate and risk quantification for the first two bays and an updated cost estimate to deliver the other four bays

Risks

15.  The key Project risks are:

Risks

High, Med, Low

Risk Mitigation

Construction budget and affordability:

 

There is a threat that the price to deliver the overall EBSP Project (6 bays) is above the $30million budget.

 

Very High

The 2020 project cost estimate of $30 million for the consent design needs to be updated to reflect current cost escalations in line with COVID-19 effects, an overheated market, and the increasing costs of labor/materials. Also, further detailed design and pricing work need to be completed on the other four bays to have a more robust cost estimate. 

 

The cost estimate was based on construction methodology of constructing the seawalls ‘in-situ’ which has constructability, programmer, and traffic management issues.

 

The current design also has a fall from height issue and there may be additional costs associated to resolve this issue; and also need to manage stakeholder expectations.   

 

The Alliance is currently undertaking a parallel estimate based on the review of the current designs and risks. Initial advice indicates that the cost to build the six bays will be higher than the previous $30m estimate. The Alliance will provide updated costings for the 16 December Council meeting.

 

Proposed gravity block seawall design and ‘pre-cast’ construction method. This reduces the risks of work stoppage due to weather events/sea surge and reduces the construction time by at least 25%. This also addresses the constructability and programmer risks. It is also expected to be a reduced risk on the impacts associated with the disruption to residents and the environment.

Stakeholder engagement and communications:

There is a threat that key stakeholders (especially the Eastbourne community) are not satisfied with project communications and engagement.

Medium

The Eastbourne community is critical to the Eastern Bays Project. There are key requirements within the consent conditions that they are to be involved in the detailed design process moving forward. It is critical that the community and key stakeholders are well updated and informed especially with plans on integrating the Eastern Bays Project into the Te Ara Tupua Alliance to achieve earlier delivery, value for money, and minimising construction effects to the community.

Procurement and construction

There is threat a threat that resources will be scarce in line with construction.

Medium

The current construction market is very heated and there is significant demand meaning there is currently low capacity. We are currently in Phase 2 of the Alliance integration process. The Alliance is currently well resourced and has the capacity to deliver the project alongside the Te Ara Tupua project. Open day was held on 2nd of October and follow up engagement to be scheduled in line with LUDP and BSUDP development.

Construction start

There is a threat that construction start is delayed.

Medium

The Project team is currently exploring the opportunity of integrating the Project into the Te Ara Tupua Alliance. The team are looking at starting enable works in early 2022 with main construction starting in March 2022 same time as Te Ara Tupua.

Mana Whenua support

There is a risk that mana whenua does not support the Project

Low

The Project is now fully integrated to the Te Ara Tupua Mana Whenua Steering Group. They have also endorsed the project’s Maori name, cultural narrative, and cultural design overlays for the project at their September meeting. 

CIP Funding Requirements

There is a threat that the Project does not meet CIP funding agreement  milestones  

Low

Ensuring positive relationship with CIP and that reporting, claims and invoices are produced on time and as required.   Council has submitted its first CIP claim for activities incurred during the design and consenting phase. This claim triggers the release of CIP funding to the project.

Financial considerations

16.  It is important to note that the price to deliver the overall Project (6 bays) is likely to be above the $30m approved funding. The new COVID world has resulted in high cost escalations associated with professional services, labour and construction materials. It is also evident that cost of delivering projects within the region are escalating which can be attributed to an overheated market and high inflation. 

 

17.  Design review, value engineering opportunities and quantification of risks are being undertaken to have greater price certainty for delivering the overall Project. The Project team will also explore additional funding opportunities with CIP and Waka Kōtahi once construction costs have been confirmed by the alliance.

 

18.  Council has made its first claim to CIP totalling to $725,000 (including GST) to CIP. This is line with consenting work and achieving the first milestone on consent approval. Another claim will be submitted in the next month to cover enabling works and detailed design works.

19.    Table 1 and 2 show the budgets in the Long-Term Plan 2021-2031 which were approved by Council following the public consultation process. This shows the timing of the capital investment as well as the funding from Waka Kōtahi and from the COVID response and recovery fund. The Financial Delegations Policy states that Council approval is required to exceed the total LTP budget level. The updated project cost estimates for the Project will be reported to the Long Term Plan/Annual Plan Subcommittee on 16 December 2021, together with advice on the funding options. This will enable Council to then progress any necessary decisions that may be required and consider the implications for the Annual Plan 2022/23 process.  

Table 1: Revenue/Funding sources included in the LTP

Financial year

$M

2020/21

2021/22

2022/23

2023/24

2024 /25

2025-31

Total

LTP 2021-2031

 

0.51

3.78

2.64

4.53

3.78

7.17

22.41

Waka Kōtahi subsidy funding

0.51

1.28

0.89

1.53

1.28

2.42

7.91

CIP funding*

 

2.50

1.75

3.00

2.50

4.75

14.50

*Covid Response and Recovery co-funding pays for up to $15M share of the Capital outlay of $30M – Crown Infrastructure Partners

 

 

 

 

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

Financial year

$M

2020/21

2021/22

2022/23

2023/24

2024/25

2025-31

Total

LTP 2021-2031

1.00

5.00

3.50

6.00

5.00

9.50

30.00

 

Appendices

There are no appendices for this report.   

Author: Jon Kingsbury

Head of Transport

 

Reviewed By: Kara Puketapu-Dentice

Director Economy and Development

 

Approved By: Jenny Livschitz

Group Chief Financial Officer


                                                                                       1                                                 11 November 2021

Audit and Risk Subcommittee

21 October 2021

 

 

 

File: (21/1740)

 

 

 

 

Report no: ARSC2021/5/247

 

RiverLink Update

 

Purpose of Report

1.    The purpose of this report is to update the Audit and Risk Subcommittee on the RiverLink Project (the Project) since the last Subcommittee meeting dated 8 July 2021.

Recommendations

That the Subcommittee:

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

(2)   notes the Project Risk Register attached as Appendix 1 to the report.

 

Project Update

2.    The resource consent was lodged on 30 July 2021. The lodged documentation resides on the regulator’s website. Submissions were open from 25 August 2021 to 22 September 2021. A total of 122 submissions were received.

 

3.    In order to maximise the time available to work with submitters to resolve the matters raised the project team requested that the regulators permit a change in consenting pathway to allow Direct Referral to the Environment Court. This approach was formally accepted by the regulators on 20 October 2021.   

 

4.    Contracts are in place for the post-lodgment activities needed to secure the consent.

 

5.    In parallel with the work needed for the resource consent, work has been progressing on procurement for delivery, i.e. the single principal hybrid alliance. A major step in this process is to appoint a Principal’s Technical Advisor to work with the project partners to produce a reference design, establish our Minimum Requirements and produce the documentation needed for the procurement process. A proposal has been agreed in principle for this role and the contract documents are in the process of being formalized by Waka Kotahi.

6.    Market soundings occurred in February 2021 and the project team has a clear understanding of the consortia who are likely to bid for the alliance. The selection of two proponents will be confirmed by the Registration of Interest Process. The timing for this process is being reviewed by the project team as a result of the change in consenting pathway.

 

7.    Council has submitted an Expression of Interest (EOI) to the Housing Infrastructure Acceleration Fund (IAF) for funding towards new wastewater and stormwater infrastructure to enable housing adjacent to RiverLink and across the valley floor. We have been notified that this EOI was successful and we have now been invited to progress to the Request for Proposal Stage.

 

8.    An independent Quantity Surveyor produced cost estimates for the whole project and worked with the project partners to refine these. These cost estimates have been independently reviewed. The independent reviewer generally agreed with the construction cost estimates but suggested an increased allowance for consultant fees, project management and contingencies.

 

9.    A first principles cost estimate of the design will be prepared in the coming months and this will be used to set affordability thresholds which fit within the approved budgets.

 

Project Governance

 

10.  The Project Governance structure is shown on the proceedings page.

 

11.  The Project is overseen by the RiverLink Project Partner Board which includes representatives from each of the five partner entities (Greater Wellington Regional Council, Hutt City Council and Waka Kōtahi New Zealand Transport Agency, Taranaki Whanui, Ngāti Toa Rangatira

 

12.  The Chief Executive Relationships Board provides a further layer of oversight for the project and provides a forum for strategic and relationship matters and issues within each of the respective organisation to be identified and addressed.

 

13.  The report will be prepared for approval by Council which sets out the appropriate project governance process, delegations and reporting lines as the Project transitions into the delivery phase.

 

Risk

14.  A Project Risk Register is attached as Appendix 1 to the report. A risk workshop for the whole project was held in May 2021 and further risk workshops will be held as we progress through the procurement process. The key HCC risks are as follows:

 

a.   Failure to meet NZUP milestones compromising Waka Kotahi funding. The resulting effect of this could make deliverability of HCC components of the project impossible.

b.   Managing the relationship among partner organisations

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

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

 


 

Project Milestones

Milestone

Date

Submission of resource consent application

30 July 2021 - complete

Appointment of Principal’s Technical Advisor to develop reference design

September 2021- complete

Secure consent

Likely July 2022, subject to confirmation of hearing date and no appeals

Release of project requirements to consortia to develop design and construction proposals

December 2021 – delayed as a result of change in consenting pathway

Identify preferred Design & Construction consortia to join the Alliance

August 2022– delayed as a result of change in consenting pathway

Early Works start on site

Late 2022– delayed as a result of change in consenting pathway

Main construction works start on site

Early 2023– delayed as a result of change in consenting pathway

Construction completion

2026– delayed as a result of change in consenting pathway

Financial Considerations

15.  The draft project objectives for Council are that Te Awa Kairangi between Ewen Bridge and Melling Bridge becomes the centre piece of the city by:

 

·    Turning our city around to face and embrace Te Awa Kairangi;

·    Pedestrian cycle bridge linking new Melling station to Lower Hutt City Centre;

·    Revitalised open space alongside the river to provide various features for rest and play; and

·    Engaging with the private sector to redevelop key sites along the river corridor for residential and leisure use.


 

16.  What this means more specifically for Council is an investment in key projects which include:

 

·    Intersections within Lower Hutt City Centre (eligible for Waka Kotahi subsidy);

·    Streetscape improvements;

·    A pedestrian cycle bridge (eligible for Waka Kotahi subsidy);

·    A riverbank park; 

·    A riverbank carpark; and

·    Strategic property purchases to enable future development.

 

17.  The Final 2021 LTP set the expenditure at $138.4M and revenue of $43.5M. This results in a total net budget (total budget minus revenue) of $94.9M. A property settlement payment at the very end of financial year 2020/2021 resulted in a $1.9M surplus no longer being transferred over into the budgets from 2021 onwards. This adjustment has been made in financial years 2021/2022 and 2022/2023. Table 1 below shows the budget in the final LTP 2021-2031 adopted by Council, with the adjustments explained above.

 

18.  The timing of Council’s expenditure is profiled to align with the assumed project programme of works, with completion scheduled for 2026. This programme, and therefore expenditure profile, is in the process of being reviewed as a result of the change in consenting pathway.

 

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

 

 

Table 1: 2021/31 Final LTP Budget for RiverLink (NET), updated to reflect property settlement surplus from 2020/2021”

 

Financial year

$M

2021/22

2022/23

2023/24

2024/25

2025-2031

Total

Expenditure

2.97

35.07

41.30

44.95

12.23

136.5

Revenue

(0.77)

(7.49)

(9.90)

(3.58)

(21.78)

(43.5)

NET

 

2.20

27.58

31.40

41.37

(9.55)

93.0

 


 

20.  A high-level external stakeholders and partners list is provided below:

 

·    Partners

Greater Wellington Regional Council

Hutt City Council

Waka Kōtahi

·    Iwi Partners

Taranaki Whānui

Ngāti Toa

·    Stakeholders

Waka Kōtahi (co-funding of specific transport initiatives)

Residents and business alongside the river edge

Hutt City rate payers and residents

General public regional/national

Community boards

Local Schools

Media

Climate Change Impact and Considerations

 

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

 

22.  The design of the RiverLink project takes into account climate change projections and is partially premised on increasing Lower Hutt City’s resilience to effects of climate change. 

 

23.  The flood defence elements of RiverLink consider the effects of climate change with rising sea levels and changes in rainfall patterns both an integral part of the design.

 

24.  The key outcomes being sought by Council on RiverLink are:

a.       Using the Infrastructure Sustainability Council Australia rating tool and achieving an ‘Excellent’ rating

b.       Establishing a carbon budget, and

c.       Calculating the carbon effect of transport mode shift.

 

 

Consultations

 

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

 

26.  Options for the RiverLink Project budget were included in the consultation for the Long Term Plan which closed on 6 May 2021.

Legal Considerations

 

27.  Council has entered into a RiverLink Project Partner Agreement which sets out each partner’s responsibilities and requirements for the partnership through the consenting phase.

 

28.  A revision to the Project Partner Agreement has been progressed to cover Phase 2a of the project, i.e. up to the point at which Waka Kotahi would enter into an Alliance Agreement and a Memorandum of Understanding with the other project funding partners.

Appendices

No.

Title

Page

1

Appendix 1: Project Risk Register

30

 

Author: Tom Biggin

Project Manager Riverlink

 

 

 

Approved By: Kara Puketapu-Dentice

Director Economy and Development

 


Attachment 1

Appendix 1: Project Risk Register

 




                                                                                       1                                                 11 November 2021

Audit and Risk Subcommittee

22 October 2021

 

 

 

File: (21/1730)

 

 

 

 

Report no: ARSC2021/5/248

 

Holidays Act Remediation Project

 

Purpose of Report

1.    The purpose of this report is to provide an update to the Audit and Risk Subcommittee on Hutt City Council’s compliance with the Holidays Act 2003 (the Act). This follows on from the last report to the Subcommittee on 9 September 2021. 

Recommendations

That the Subcommittee

(1)  receives and notes the report; and

(2)  notes that the next project update to the Subcommittee will be on 17 February 2022.

 

Background

2.    The Audit and Risk Subcommittee received a first formal report on Council Holidays Act 2003 pay compliance at the meeting held on 23 April 2021. A follow up report was presented to the Subcommittee on 9 September 2021.

3.    Compliance with the Holidays Act 2003 is a current issue for many organisations in New Zealand. The Ministry of Business Innovation and Employment, through their Labour Inspectorate, are actively auditing and mandating compliance through a number of instruments including Enforceable Undertakings and Information Notices. An Enforceable Undertaking is a voluntary commitment by an employer to address certain defined breaches within a certain timeframe.  If that does not happen, the Employment Relations Authority (ERA) can issue a compliance order and if that is not followed, then an order for penalties. 

4.    Council run the payroll through the CHRIS21 system.  There are approximately 600 employees being paid through this system.


 

5.    Given that compliance with the Act is a current issue for many organisations across New Zealand, Council officers decided to complete initial discovery work to assess Council’s compliance with the requirements of the Act.  The following areas are widely acknowledged as potential triggers for compliance failures:

a.  Diverse working arrangements (shift work, on-call employees);

b.  Additional remuneration arrangements;

c.  Employees working irregular hours; and employees receiving allowances.

6.    Ernst & Young (EY) have been engaged across a wide range of both public and private organisations to complete payroll remediation work; this includes Auckland Council, Christchurch City Council, Watercare Services Ltd, NZ Post, KiwiRail, Kainga Ora and the Ministry of Justice.

7.    In November 2020, EY was engaged to undertake a review of Hutt City Council’s compliance with the Act. The scope of work involved taking a sample group of 20 employees across the Council group, including casual and terminated staff, along with a mixture of current full time, part time and temporary staff over a payment period of 104 weeks.

8.    EY’s findings were reported to officers in March 2021 and to the Audit and Risk Subcommittee on 23 April 2021. The summary of findings identified areas of risk, and inconsistencies or potential errors in payroll existed when compared to references to the requirements of the Act. Annual leave, BAPSF (Bereavement, alternative, public holiday, sick and family violence) leave, terminations, casual employees and reporting have been identified in the report as the areas of risk. These findings were consistent with similar findings at many other organisations in New Zealand. 

9.    Following on from these findings by EY, a Holidays Act Remediation Project (HARP) was initiated and a Project Steering Group (PSG) established, comprising the Group Chief Financial Officer, Chief People Officer and the Chief Digital Officer. The PSG reports through to the Chief Executive and Corporate Leadership Team. 

10.  There are three key phases to the project:

·    remediation calculations;

·    remediation payments; and

·    payroll system and/or process corrections to ensure compliance.

11.  This is a complex project which requires external specialist support and advice to ensure compliance is achieved. Current processes and policies will need to be reviewed and updated in line with remediation work outcomes.




 

12.  Prior to the end of the financial year 30 June 2021, the PSG engaged EY to complete an initial estimate of the financial liability. This was based on the identified areas of potential non-compliance with the Act, with sample recalculations performed across 550 employees. The EY report was finalised in June 2021 and estimated a liability of $1.4M. Following review by the PSG and Chief Executive a further 40% contingency was added due to the uncertainties and risks, bringing the estimated liability up to $2M. A further cost of $0.5M for the estimated project costs was added to fund resourcing and technical specialists. This resulted in a total Holidays Act compliance provision of $2.5M which was recorded in the financial statements for the year ended 30 June 2021. 

Progress Update

13.  As part of the Go Digital Programme a HR and Payroll system review project is underway. This project has synergies with HARP. The HARP business case aims to achieve the outcomes sought from the Go Digital programme whilst also ensuring any future payroll system is compliant with the Holidays Act. The HR and Payroll system review process is progressing as planned and a decision is anticipated to be confirmed by the Chief Executive and Corporate Leadership Team by the end of November 2021.

14.  Investigation work was completed in October 2021 by the current payroll vendor CHRIS21 to better understand the technical Holidays Act compliance aspects and to identify potential changes that would be required to bring the payroll system into a compliant state.  The potential changes have been summarised in a report by the vendor, and should Council decide to continue using this system to manage the payroll, an upgrade to CHRIS21 would take place in the last quarter of FY2022.

15.  A key stage in the HARP project is to secure the services of a consultancy experienced in the calculation of payroll remediation.  During September and October 2021, a closed tender process was run with three experienced participants on the “All of Government” panel.  With adherence to Council’s Procurement policy and HARP’s governance processes, a vendor has been selected as the preferred remediation calculation consultancy.

16.  The period for which remediation will be calculated, will be from 1 March 2015, until the time payroll systems and processes are made compliant – at this time we predict this date to be 30 June 2022.  Legislation requires Council to go back six years from the time it first became aware of the potential non-compliance issues, which was March 2021.

17.  The sourcing of all the datasets for the remediation period and calculations have been started.  The payroll remediation calculations are estimated to take until the end of March 2022 to complete, after which time Council will work as quickly as possible to make payments to staff. It is estimated that payments will be made in the first quarter of FY2023.

18.  The HARP Business Case has been established and approved by the Chief Executive.  The Business Case outlines high level project scope, costs, risks, benefits and project governance.

19.  Recruitment of HARP project resource is in progress.  A Project Manager was onboarded in October.  As the project will heavily impact the Payroll team’s systems and processes, recruitment of a Senior Payroll Specialist is underway to provide additional support for business-as-usual payroll as well as HARP functions.

20.  A HARP Communications Plan has been documented to ensure that relevant stakeholders are kept informed of project progress.  Current staff will be kept informed at regular intervals via appropriate channels.  Affected former staff will be contacted once they have been identified through the remediation calculations and, the process for collecting former staff information has been set up.

21.  A further report and update to the Audit and Risk Subcommittee will be presented on 17 February 2022. 

Climate Change Impact and Considerations

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

Consultation

23.  No Applicable.

Legal Considerations

24.  EY have advised that there are a number of risk areas in our compliance with the Holidays Act 2003.

Financial Considerations

25.  There are a range of financial matters raised in this report.

Appendices

There are no appendices for this report.   

 

 

Author: Angela Leong

Finance Project Manager

 

 

 

Reviewed By: Jenny Livschitz

Group Chief Financial Officer

 

 

 

Approved By: Jo Miller

Chief Executive

 


                                                                                       1                                                 11 November 2021

Audit and Risk Subcommittee

19 October 2021

 

 

 

File: (21/1714)

 

 

 

 

Report no: ARSC2021/5/135

 

Sensitive Expenditure Disclosures

 

 

 

 

1.    The purpose of this report to provide the Subcommittee with a listing of Sensitive Expenditure incurred by Elected Members, Chief Executive and Directors for the period 1 April 2021 to 30 September 2021.

 

Recommendations

That the Subcommittee:

(1)   receives and notes the report; and

(2)   notes the Sensitive Expenditure disclosure information attached as Appendix 1: June 2021 quarter and Appendix 2: September 2021 quarter to the report. 

 

Background

2.    Information has been extracted from our financial system from relevant cost centres and expenditure codes where sensitive expenditure is highly likely to be coded to.

3.    The list of transactions for the quarter from 1 April 2021 to 30 June 2021 is attached as appendix 1 to the report and transactions for the quarter from 1 July 2021 to 30 September 2021 is attached as appendix 2 to the report.

4.    This information will also be published on Council’s website: http://www.huttcity.govt.nz/Your-Council/sensitive-expenditure/

 


 

 

Appendices

No.

Title

Page

1

Appendix 1: Summary of Sensitive Expenditure 1 April 2021 to 30 June 2021

39

2

Appendix 2: Summary of Sensitive Exepnditure 1 July to 30 September 2021

47

 

 

Author: Darrin Newth

Financial Accounting Manager

 

 

 

Approved By: Jenny Livschitz

Group Chief Financial Officer

 

 

 

 

 


Attachment 1

Appendix 1: Summary of Sensitive Expenditure 1 April 2021 to 30 June 2021

 









Attachment 2

Appendix 2: Summary of Sensitive Exepnditure 1 July to 30 September 2021

 




                                                                                       1                                                 11 November 2021

Audit and Risk Subcommittee

20 October 2021

 

 

 

File: (21/1624)

 

 

 

 

Report no: ARSC2021/5/249

 

Hutt City Council Group Annual Report 2020/21

 

Purpose of Report

1.    The purpose of this report is to progress the review and approval of Council’s Group Annual Report and Summary Annual Report for the year ended 30 June 2021 towards adoption.

2.    Specifically, the Audit and Risk Subcommittee (ARSC) is asked to review and provide feedback on the draft Group Annual Report 2020/21, with a focus on the audited content of the report.  Your endorsement of the content and recommendation to the Policy Finance and Strategy Committee is sought.

Recommendations

That the Subcommittee:

(1)   endorses and recommends to the Policy, Finance and Strategy Committee’s
2 December 2021 meeting the adoption of the Group Annual Report for the year ended 30 June 2021 (attached as Appendix 1 to the report), subject to satisfactory resolution of the following outstanding items:

(a)     completion of final design and minor editorial changes;

(b)     completion of any external audit adjustments; and

(c)     receipt of final audit clearance from Audit NZ;

(2)   notes that the Annual Report and Summary will be available within one month of adoption by Council, to be sought at their 16 December 2021 meeting, including:

(a)     published on Council’s website;

(b)     hard copies available in the City’s libraries Community Hubs and at the main administration building; and

(c)     accompanied by public notices and social media collateral.

 

For the reason of meeting legislative requirements and to inform and engage with the community.

 

Background

Legislative framework

3.    The Local Government Act 2002 requires local authorities to prepare, complete and adopt (by resolution) an Annual Report within four months after the end of the financial year to which it relates.  The Annual Report, and a summary of the information it contains, must be made publicly available within one month after its adoption.  The statutory deadline for adoption of the Annual Report has been extended this year to 31 December 2021 due to audit resourcing constraints.

4.    There is a requirement to prepare both a Full Annual Report (FAR) and a Summary Annual Report (SAR). Both these documents are required to be audited, although not the full reports but rather parts of each of the FAR and SAR.  The auditor’s opinion will state exactly what pages of the FAR and SAR have been audited.  The SAR includes the front section of FAR, which includes the summary sections of non-financial and financial performance results.

5.    The final FAR must contain the Auditor-General’s (audit) report and the SAR must contain the Auditor-General’s report on whether the summary represents, fairly and consistently, the information regarding the major matters dealt with in the Annual Report.

6.    Information to be included in the Annual Report includes:

Groups of activities;  Capital expenditure for groups of activities;  Statement of service provision;  Funding impact statement for groups of activities;  Internal borrowing; · Council-controlled organisations;  Financial Statements;  Funding impact statement;  Rating base information;  Reserve funds;  Key person remuneration (includes elected members);  Employee staffing levels and remuneration; · Severance payments;   Statement of compliance;  Activities undertaken to establish and maintain processes to provide opportunities for Māori to contribute to the decision-making processes of the local authority.

(Note that some of these aspects may not be relevant and therefore will not be reported on).

Discussion

Outline of high level process

7.    ARSC’s role, from the terms of reference of the Subcommittee, is to review and monitor the integrity of the Annual Report including statutory financial statements and any other formal announcements relating to the Council’s financial performance, focussing particularly on: compliance with accounting and legal requirements, consistency of application of accounting policies and changes to these; disclosures; significant adjustments resulting from the audit.

8.    Policy, Finance and Strategy Committee’s (PFS) role is to monitor the integrity of reported performance information at the completion of Council's Annual Report process. They review and recommend to Council the adoption of the Annual Report.  Council’s role is the adoption of the final Annual Report.

9.    The planned order of governance review and sign-off processes for the Group Annual Report 2020/21 is as follows:

·    Endorsed and recommended by ARSC to PFS; review of FAR key auditable content on 11 November 2021;

·    Endorsed and recommended by PFS to Council; review of SAR and FAR content on 2 December 2021;

·    Following receipt of audit opinion, Council approve and adopt the Group Annual Report 2020/21; both FAR and SAR on 16 December 2021.

10.  Ahead of this process, the interim unaudited performance results were presented to PFS on 14 September 2021 (refer PFS 2021/4/201).

Risk and mitigations

Risk of error, omission and non-compliance in preparation

11.  There is a risk that errors or non-compliance with legislation and accounting standards could occur in the preparation of the Annual Report.  To mitigate this risk, quality assurance reviews were performed on the results and commentary.  The reviews focused on accuracy, completeness and reasonableness of disclosures and legislative compliance.

12.  External specialist advice has been sought where deemed necessary.  This included in relation to the wind-up of Hutt City Community Facilities Trust and the Holidays Act compliance and Remediation liability provision.

Reviews of accuracy, completeness and fairness

13.  Several reviews of the annual report take place by officers with differing levels and areas of involvement in reporting.

14.  The following table summarises the level of review over the draft Annual Report.


 

Reviewer

Statement of Service Performance

Financial Statements

Corporate Leadership Team

 

 

Director Strategy & Engagement (Project Sponsor)

ü

ü

Group Chief Financial Officer

ü

ü

Head of Chief Executive's Office

ü

ü

Head of Communications & Engagement

ü

ü

Head of Strategy & Planning (Project Owner)

ü

ü

Manager Financial Strategy & Planning

ü

ü

Financial Accounting Manager

ü

ü

Principal Advisor Research and Evaluation

ü

 

 

15.  All the technical quality assurance reviewers who perform reviews from a financial perspective are Chartered Accountant qualified or equivalent and have the appropriate technical accounting skills and knowledge.

Delay in Audit New Zealand’s final clearance

16.  The timing of the external audit of the Annual Report has been confirmed by Audit New Zealand to take place from 25 October to 22 November 2021. This is very tight timeline ahead of the publication of agenda papers for the Council meeting 16 December 2021.

17.  There is a risk of delay in Audit New Zealand’s final clearance due to resourcing constraints or unresolved technical matters.  Council’s Finance business unit will work with Audit New Zealand to address any risk areas as a top priority as the audit progresses.

Options

18.  There are no options to consider.

Publicity considerations

Communication plans for the Annual Report

19.  We intend to deliver relevant and concise messages to the community via a variety of appropriate channels.  These messages will highlight Council’s achievements in 2020/21, reflecting our focus for the year and reinforcing our plans for the future.

20.  The plan to achieve this will be developed further in the next few weeks once the draft content has been reviewed and the design process underway.  The plan is expected to cover:

·    Key messages (as reflected in the draft content)

·    Public notices (via press releases, council website and social media) advising the availability of the Annual Report and Summary

·    Hard copies of the report available in council libraries, community hubs and our main administration building

·    Provision of both documents to the Secretary, the Auditor General and the Parliamentary Library within one month of adoption (as required by Local Government Act 2002)

·    Sharing of key council highlights via social media (including relevant photos, video and infographics)

·    Updates to Council’s website.

Accessibility

21.  We note the initial brief provided to designers included a requirement to ensure print and online versions of the report meet New Zealand accessibility standards, through adherence to the Accessibility Charter and Accessibility Guide.

22.  Design review will include considering the accessibility of specific sections, external sources and email addresses in the digital versions of the FAR and SAR.

Climate Change Impact and Considerations

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

24.  The Annual Report provides an opportunity to highlight 2020/21 climate change responses.

Legal Considerations

25.  The Local Government Act 2020 sets out the information and timing requirements for the Annual Report.  The 2020/21 Annual Report and Summary must be completed and adopted by 31 December 2021, and then made publicly available within one month.

Financial Considerations

26.  The financial results are in line with those presented to PFS on 14 September 2021, with one exception being the accounting for the wind-up of Hutt City Community Facilities Trust (CFT).

27.  This change was recommended by PricewaterhouseCoopers in its advice to us which reflected the amalgamation of assets directly into the “Statement of changes in equity” rather than appearing in “Comprehensive revenue and expenses”.  Due to the complexity of this transaction and the high value ($37M) we sought external specialist advice to mitigate risks.

28.  The final audited group results will be presented to the Council meeting on 16 December 2021, together with commentary about any changes that have been made.


 

Appendices

No.

Title

Page

1

Appendix 1: Draft Group Annual Report 2020/21

56

 

 

Author: Marty De Boer

Principal Advisor, Strategic and Business Planning

 

 

Reviewed By: Jenny Livschitz

Group Chief Financial Officer

 

 

 

Approved By: Matt Boggs

Director, Strategy and Engagement

 


Attachment 1

Appendix 1: Draft Group Annual Report 2020/21

 















 





























































 


















































































 




 





 





















































































                                                                                       1                                                 11 November 2021

Audit and Risk Subcommittee

22 October 2021

 

 

 

File: (21/1754)

 

 

 

 

Report no: ARSC2021/5/23

 

Seismic Performance Register

 

 

 

 

Purpose of Report

1.    To provide a six- monthly update to the Subcommittee on Council’s programme of work to assess the seismic strength of Council-owned buildings.

Recommendation

That the Subcommittee receives and notes the information contained in the report.

 

Background

2.    Six-monthly reporting to the Audit and Risk Subcommittee is now in place. No matters have arisen since the last report that would require more regular reporting. Note a separate report on Petone Wharf Refurbishment is included on the agenda for this meeting.

3.    Council published a seismic performance register in November 2019 which lists Council-owned buildings, identifies their seismic rating and links to the latest engineering assessment report. The register was developed to ensure a whole of organisation view of Council buildings and that information was readily available to the public. A link to the register can be found here: http://huttcity.govt.nz/seismicregister

4.    An operational management policy is in place to provide staff with a framework for undertaking engineering assessments for Council buildings. A copy of the policy can be viewed here. Discussions are underway with CCOs on the status of the buildings they own and occupy.

 

 

Update on status and key actions taken

5.    Walter Nash corridor: The work on the corridor has been completed with a new rating of 34%. The website has been updated and the building has been removed from the EPB Register.

6.    War Memorial Library: The War Memorial Library is rated at 40-45% NBS which means it is not earthquake prone. The engineering assessments have identified parts of the building that could be improved by strengthening work.

7.    Discussions with the structural engineer and primary contractor concluded that the works cannot be strengthened separately as they are not independent of each other.

8.    The Corporate Leadership Team considered a report on the timeframe for undertaking strengthening and other remedial work and confirmed a programme of works to repair and refurbish five of Hutt City Council’s libraries.

9.    Work on Petone, Moera, Naenae, Eastbourne and the War Memorial Libraries is expected to take around two years, and planning is underway to ensure library services continue to be available to every community over that time.

10.  The original scope had planned to undertake all of the work required at War Memorial Library during one period of closure.  However we are now splitting this into two work programmes to enable the most urgent work to get underway.

Lower Hutt Strong Motion Station Site Characterisation

11.  Following on from the University characterising the soil profiles across the country, they have developed profiles of soil stiffness (shear wave velocity) at all of the sites that were tested. The profiles are currently being fed into the new National Seismic Hazard Model to help understand observed ground shaking on the seismometers.

Consultation

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

Legal Considerations

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

Climate Change Impact and Considerations

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

Financial Considerations

15.  There are financial considerations arising from this report.  See section 12 above.

 

Appendices

There are no appendices for this report.   

 

Author: Alannah Laban

Acting Facilities Manager

 

 

 

Reviewed By: Andrea Blackshaw

Director Neighbourhoods and Communities

 

 

 

Approved By: Kara Puketapu-Dentice

Director Economy and Development


MEMORANDUM                                                  1                                                 11 November 2021

Our Reference          21/1734

TO:                      Chair and Members

Audit and Risk Subcommittee

FROM:                Andrew Quinn

DATE:                20 October 2021

SUBJECT:           Naenae Projects Update

 

Recommendation

That the Subcommittee notes and receives the memorandum.

 

Purpose of Memorandum

1.    To provide an update to the Subcommittee on the progress and management of the Naenae Project (pool and town centre development) since the last meeting held on 08 July 2021.

Project Update

2.    Since the last report in July 2021, there has been good progress on the designs for the new pool and with the demolition of the old Pool. The design team headed up by HDT architects have completed the master plan and concept design stages and are currently progressing with the preliminary design stage.

3.    At the conclusion of the current stage, there will be sufficient information to prepare an application for resource consent. Meantime we are seeking feedback from Naenae residents and Lower Hutt ratepayers on the concept design. This feedback will be important to shape the design of the facility and so reflect community needs.  

4.    There has also been good progress with demolition of the old pool and Community Hall. In August 2021, a contract was awarded to McMahon Services Limited for the demolition works and possession of site was given on 30 August 2021. Initially the focus has been on the salvage operation and the removal of asbestos containing material. Mechanical demolition of the main structures is planned to start on 20 October 2021.   

5.    The contractor proposes to divert up to 80% of the waste material that would normally go to a clean fill site, thus making a significant contribution towards Council’s climate change policy to be carbon-neutral by 2050. The recovery and re-use of salvage material from the Pool building also contributes to the project’s Greenstar rating


 

6.    Negotiations with Crown Infrastructure Partners (CIP) have concluded satisfactorily and a new timeline with progress milestones linked to funding drawdown agreed. The updated funding agreement is attached as Appendix 1 to this memorandum. The changes to dates previously agreed with CIP are in the early stages of the project; the end date and the opening of the pool remains mid-2024.

7.    We have taken up CIP’s suggestions to explore accelerated procurement methods and we are looking to engage a Main Contractor to work with the design team to provide construction and procurement advice.

8.    This innovative and collaborative way of working is known in the construction industry as ‘Early Contractor Involvement’ and provides Council early advice on the key risks to successful delivery.

9.    The major risks currently faced by the construction industry is the supply of building materials, particularly imported goods. By engaging with a Main Contractor during the design phase, we will be able to explore the procurement of materials and the potential use of alternatives. 

10.  Tenderers shortlisted for the Main Contract works have submitted final proposals and evaluation is underway. Recommendation and final selection of a preferred contractor will consist of a presentation and interview. It is hoped to confirm the preferred contractor by mid-November 2021.            

Naenae Town Centre development

11.  Work continues to activate the Naenae Town Centre. In this area we have two major successes; firstly, the pop-up community space at 11 Hillary Court is now open, providing the ability to host community events and operate as a project space for community engagement meetings and presentations. Through a partnership with Council, Kokiri Marae has set up in the adjoining office offering health and well-being services to the community.

12.  Secondly Council has been successful in securing the Naenae Post office for use as a Community Centre. A sale and purchase agreement has been signed by the vendors Seki Investment Ltd and settlement for the property is due 15 December 2021.   

13.  Discussions are also progressing to identify additional community space in Hillary Court, with a focus on spaces that can host larger gatherings. As part of this we are investigating potential partnerships.    

Financial Considerations

14.  The project team is currently reviewing the current financial profile of the project against the Long-Term Plan 2021-2031 (specifically for the 2022/23 Annual Plan) and will report to the Major Projects Board any variances. The project is currently tracking well to the budget cap of $68M.

 

 

Risk

15.  At the mid-point of the preliminary design phase, the project QS Barnes, Doherr and Baegley have carried out a quantified risk analysis which confirms that the project is tracking well to the budget cap of $68M. The Quantified Risk Assessment is Appendix 2 to this memorandum.

16.  The updated Risk Register is attached as Appendix 3 to this memorandum. Since the last report the risk profile of the project has not changed significantly.

Climate Change Impact and Considerations

17.  The design team are developing environmentally sustainable technologies working in conjunction with Callaghan Innovation. It is hoped that the building once completed will achieve a Greenstar rating of 5 which is New Zealand Excellence.      

Legal Considerations

18.  There is no change to the legal position of the project.

 

 

Appendices

No.

Title

Page

1

Appendix 1: Updated CIP Agreement

308

2

Appendix 2: Naenae Pool Quantitive Risk Assessment

311

3

Appendix 3: Naenae Pool Risk Register

312

 

 

Author: Andrew Quinn

Project Manager (Naenae)

 

 

 

Approved By: Andrea Blackshaw

Director Neighbourhoods and Communities


Attachment 1

Appendix 1: Updated CIP Agreement

 





Attachment 2

Appendix 2: Naenae Pool Quantitive Risk Assessment

 


Attachment 3

Appendix 3: Naenae Pool Risk Register

 



                                                                                       1                                                 11 November 2021

Audit and Risk Subcommittee

22 October 2021

 

 

 

File: (21/1621)

 

 

 

 

Report no: ARSC2021/5/136

 

Audit and Risk Work Programme

 

 

 

 

 

Recommendation

That the work programme be received and noted.

 

 

Appendices

No.

Title

Page

1

Appendix 1: Audit and Risk Subcommittee Work programme

315

 

 

Author: Toi Lealofi

Democracy Advisor

 

 

 

 

Approved By: Kathryn Stannard

Head of Democratic Services

 


Attachment 1

Appendix 1: Audit and Risk Subcommittee Work programme