1                                          1 November 2021

HUTT CITY COUNCIL

 

Komiti Iti Mahere ā-Ngahurutanga / Mahere ā-Tau | Long Term Plan/Annual Plan Subcommittee

Minutes of a meeting held in the Council Chambers, 2nd Floor, 30 Laings Road,
Lower Hutt
on

 Monday 1 November 2021 commencing at 2.00pm

 

 

 

PRESENT:

Mayor C Barry (Chair)

Deputy Mayor T Lewis (Deputy Chair)

 

Cr J Briggs

Cr K Brown

 

Cr B Dyer

Cr S Edwards

 

Cr D Hislop

Cr C Milne

 

Cr A Mitchell

Cr S Rasheed

 

Cr N Shaw

Cr L Sutton

 

APOLOGIES:                  There were no apologies.

 

NON ATTENDANCE:    Cr G Barratt

 

IN ATTENDANCE:        Ms J Miller, Chief Executive

Mr M Boggs, Director Strategy and Engagement (part meeting)

Ms H Oram, Director Environment and Sustainability (part meeting via audio-visual link)

Mr K Puketapu-Dentice, Director, Economy and Development

Ms J Livschitz, Group Chief Financial Officer

Ms W Moore, Head of Strategy and Planning (part meeting)

Mr D Koenders, Manager Financial Strategy and Planning

Mr J Kingsbury, Head of Transport

Ms A Dowdle, Senior Communications Advisor

Ms K Stannard, Head of Democratic Services (part meeting)

Ms K Glanville, Senior Democracy Advisor

Ms H Clegg, Minute Taker

 

 

PUBLIC BUSINESS

 

1.       OPENING FORMALITIES - Karakia Timatanga     

Kia hora te marino

Kia whakapapa pounamu te moana

He huarahi mā tātou i te rangi nei

Aroha atu, aroha mai

Tātou i a tātou katoa

Hui e Tāiki e!

May peace be wide spread

May the sea be like greenstone

A pathway for us all this day

Let us show respect for each other

For one another

Bind us together!

 

 

2.       APOLOGIES

There were no apologies.

3.       PUBLIC COMMENT

Comments are recorded under the item to which they relate.

4.       CONFLICT OF INTEREST DECLARATIONS    

          There were no conflict of interest declarations.

5.       Recommendations to Council |Te Kaunihera o Te Awa Kairangi -
1 November 2021

 

a)

Draft Annual Plan 2022-2023 (21/1595)

 

Speaking under public comment, Mr Max Shierlaw expressed concern about the proposed deficit budget with a rates increase and tabled a document, attached as page 8 to the minutes. He believed the reason for the deficit was a change in the way depreciation was going to be treated.  He considered the change to funding depreciation on the total revaluation of assets was effectively overcharging ratepayers.  He asked that Council return to the previous depreciation practice approved by Audit New Zealand. 

In response to a question from a member, Mr Shierlaw confirmed he had read the 2020 Budget Deficit Review report that Council had commissioned from independent advisors.  He believed the report authors did not give correct advice. 

In response to a question from a member, Mr Shierlaw acknowledged the proposed method of calculating depreciation had also received Audit New Zealand approval.  He was unable to offer an explanation as to why two different ways of dealing with depreciation had received approval. 

 

 

The Manager Financial Strategy and Planning elaborated on the report.  A copy of the presentation can be found here.  He advised that the Long Term Plan 2021-2031 (LTP) provided for a return to a balanced budget in 2028/2029.  In response to the comments made by Mr Shierlaw under public comment, the Manager Financial Strategy and Planning explained Council needed to pay for the renewal of all assets as they came to their end of life.  The Group Chief Financial Officer added that funding for asset renewals was important and that correct maintenance ensured a service was delivered in the future.

The Manager Financial Strategy and Planning advised that a detailed report would be considered by the next Long Term Plan/Annual Plan Subcommittee meeting to discuss the  final Annual Plan budget.

In response to questions from members, the Manager Financial Strategy and Planning advised there were no specific other revenue streams being investigated.  He said officers were cognisant of various grant funding opportunities and were reviewing Council fees to ensure they were set at the correct levels.  He advised against pushing out the date of obtaining a balanced budget.  He explained any financial impacts arising from the COVID-19 situation would be assessed on a case-by-case basis.  He added the draft budget had been prepared based on all currently known risks and that inflation figures used in the draft budget came from the latest approved information from BERL.

In response to further questions from members, the Manager Financial Strategy and Planning confirmed the depreciation amounts were calculated on the full cost of an asset and not Council’s contribution to the purchase of that asset.  He agreed to provide further information regarding net operating cash flows.  He advised the table contained in the officer’s report relied on assumptions made in the LTP.  He acknowledged these might alter as time progressed.

In response to questions from members, the Group Chief Financial Officer explained that standard practice was for no significant changes to be made to the LTP.  She added that the current economic climate was unusual and that with a large capital investment programme underway, there were uncertainties and risks which officers were constantly monitoring.  She said there was some flexibility for minor changes to the rates increase for 2022/23.  She said any major changes might require a LTP amendment.

Mayor Barry advised that there had always been an Annual Plan consultation process and that the aim was to maintain the existing processes. 

The Chief Executive advised that as well as growth in construction prices, Council was experiencing monetary pressures on a daily basis.  She said that officers were constantly reviewing operating costs. 

In response to a question from a member, the Group Chief Financial Officer advised the 2020 Independent Review Report had been undertaken by two experts who had concluded that Council’s Financial Strategy was an improvement on the previous strategy and better met legislative requirements.  She added the proposed new approach was regarded as best practice in New Zealand and that other local authorities used similar approaches.

In response to questions from a member, the Director Environment and Sustainability clarified that resourcing for all approved climate change initiatives relating to Council facilities and services were included in the draft 2022/23 budget.  She added that any climate change community initiatives, which Council might become involved with in a partnership model, were not included in the draft budget.

In response to concerns expressed from a member, Mayor Barry advised further details would be available at the next Long Term Plan/Annual Plan Subcommittee meeting. 

The Chief Executive advised that some prioritising by Council might be required in order to keep within the LTP framework and that a range of options would be considered at the next Long Term Plan/Annual Plan Subcommittee meeting.

Mayor Barry acknowledged spending in the climate change area might have to increase in the future and this would be discussed when figures were finalised.

 

 

Resolved:   (Mayor Barry/Cr Edwards)           Minute No. LTPAP 21501

“That the Subcommittee recommends that Council:

(1)   agrees to the high level plan as detailed in table 1 outlined in the officer’s report;

(2)   notes the Long Term Plan 2021-2031 Financial Strategy principles;

(3)   agrees that affordability of rates continues to be a key consideration in the preparation of the Draft Annual Plan 2022/23;

(4)   agrees to maintain the balanced budget projection to be achieved by 2028/29, refer section C outlined in the officer’s report;

(5)   agrees to the proposed assumptions as detailed in section E outlined in the officer’s report; and

(6)  directs officers to prepare a draft Annual Plan on the basis that the set rates increase will remain unchanged and that any cost pressures should be dealt with through rephasing and prioritisation of decisions.”

 

b)

Eastern Bays Shared Path Delivery Model (21/1655)

 

Mr Michael Siazon, Project Manager, Waka Kotahi was in attendance for the item.

The Head of Transport and Mr Siazon elaborated on the report.  A copy of the presentation can be found here.

In response to questions from members, the Head of Transport confirmed that if the timing of the Te Ara Tupua project did not align with the timing of the Eastern Bays Shared Path (EBSP) project, Council could become liable for the costs of the EBSP project.  He was confident the two projects could run concurrently especially when using the precast panel method of constructing the seawall.  He added that if Te Ara Tupua was not being constructed, it would be difficult to access the level of expertise required for the EBSP project.  He further added that more detailed costs for the project would be considered at the next Long Term Plan/Annual Plan Subcommittee meeting.

In response to questions from members, Mr Michael Siazon advised the costs included in the officer’s report were for work on Sunshine Bay and Windy Point.  He said that detailed design for another four bays was required before costs could be shared.  He said the proposed precast panel construction method had also been successfully used in the SH2/Dowse and SH2/SH58 interchanges.

In response to a question from a member regarding the possibility of delaying the project to wait for potential cost reductions, the Head of Transport explained that with all the extensive roading projects occurring in the wider region at present, it would be a long time before the demand for products reduced, if at all.  He added that the condition of Marine Drive was such that immediate work was required to protect its integrity and to protect against the effects of climate change.  He noted the EBSP project would provide an alternative transport option for  people which would help to meet Council’s carbon emissions targets. 

In response to questions regarding the Crown’s infrastructure funding, the Head of Transport advised that construction was required to commence by March 2022, otherwise the Crown funding would be forfeited.

Mayor Barry and Crs Mitchell, Hislop and Briggs expressed support of the recommendations and the alliance approach.  Crs Hislop and Briggs expressed concern with delaying the project as that would have consequences for the coastline, roading and the ability of the public to have choice in transport options.

Cr Dyer expressed concern with the possibility of liability passing to Council, should the timings for the EBSP and the Te Ara Tupua projects not align.  He expressed support for the alliance approach. 

Mayor Barry thanked officers for their work on the EBSP project.  He said the alliance approach was a good model for future projects.  He expressed concern in delaying the project as it would result in a loss of $7.5M in government funding. 

 

Resolved:   (Mayor Barry/Deputy Mayor Lewis) Minute No. LTPAP 21502

“That the Subcommittee recommends that Council:

(1)     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;

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

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

(4)     notes the nationwide increase in construction costs and that early discussions are on-going with Crown Infrastructure Partners and Waka Kotahi to seek additional funding;

(5)     approves the alliance delivery model for the construction of the first two bays (Sunshine Bay and Windy Point);

(6)     delegates to the Chief Executive the authority to sign the Hutt City Council and Waka Kotahi Agreement (the Agreement) to integrate the Eastern Bays Shared Path Project into the Te Ara Tupua Alliance;

(7)     notes that the Agreement will be for construction of the first two bays (Sunshine Bay and Windy Point), with construction of the remaining bays being conditional on Council approval of any increased funding, if necessary; and

(8)     agrees that this Chief Executive’s delegation is limited to the Eastern Bays Shared Path project budget in the Long Term Plan 2021-2031.”

 

c)

Transport Programme 2021-2024 (21/1462)

 

The Head of Transport elaborated on the report.

In response to questions from members, the Head of Transport confirmed this was the funding shortfall which was forecast by Waka Kotahi earlier in the year.   He advised that prioritising transport funding might be influenced by weather events.  He said the priority was to keep the roading network functioning. 

In response to a question from a member, the Group Chief Financial Officer advised that if an operating cost increased in the Annual Plan, the Long Term Plan was adjusted simultaneously.  She confirmed that a $1M increase in budget costs equated to an approximate 1% rates increase.

Cr Dyer expressed support for Option C contained in the officer’s report.  He expressed concern with any further rate increases.  

Mayor Barry and Crs Edwards and Briggs expressed support for the officer’s recommendations.  

 

Resolved:   (Mayor Barry/Cr Shaw)                    Minute No. LTPAP 21503

“That the Subcommittee recommends that Council:

(1)     notes and receives the report;

(2)     notes that there is no proposed reduction in the transport operating and capital expenditure as included in the 2021-31 Long Term Plan;

(3)     agrees that the revenue shortfall in operating subsidies estimated at $1.0M in 2023-24 will be considered as part of the Draft Annual Plan 2022-23 funding review process; and

(4)     agrees that the revenue shortfall in capital subsidies estimated at $1.2M in 2023-24 be met through increased borrowings.”

For the reasons outlined in the report.

 

6.       QUESTIONS

          There were no questions.

 

There being no further business the Chair declared the meeting closed at 3.21 pm.

 

 

 

C Barry

MAYOR

CONFIRMED as a true and correct record

Dated this 16th day of December 2021