HuttCity_TeAwaKairangi_BLACK_AGENDA_COVER

 

 

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

 

 

9 December 2021

 

 

Order Paper for the meeting to be held in the

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

on:

 

 

Thursday 16 December 2021 commencing at 12.00pm

 

 

Membership

 

 

Mayor C Barry (Chair)

Deputy Mayor T Lewis (Deputy Chair)                                                                                             

Cr G Barratt

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

 

 

 

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

 

 


HuttCity_TeAwaKairangi_SCREEN_MEDRES

 

PURPOSE

To carry out all necessary considerations and hearings, precedent to the Council’s final adoption of Long Term Plans (LTP) and Annual Plans (AP) which give effect to the strategic direction and outcomes set by the Policy, Finance and Strategy Committee through setting levels of service, funding priorities, the performance framework and budgets.

 

Determine:

§  Development of a framework and timetable for the LTP and AP processes.

§  The nature and scope of engagement and public consultation required.

§  Statements to the media.

§  Such other matters as the Subcommittee considers appropriate and which fall within its Terms of Reference.

§  Informal engagement with the community, and the hearing of any formal public submissions.

§  Consideration of submissions on Hutt City Council’s Assessment of Water and Sanitary Services.

 

Consider and make recommendations to Council:

§  Levels of service, funding priorities, performance framework, budgets, rating levels and policies required as part of the LTP or AP, excluding any policies recommended to Council by the Policy, Finance and Strategy Committee.

§  Consultation Documents.

§  Council’s proposed and final LTP.

§  Council’s proposed and final AP.

§  Final content and wording, and adoption of the final Hutt City Council Assessment of Water and Sanitary Services.

 

 

Note:

Extract from the Controller and Auditor General’s October 2010 Good Practice Guide: Guidance for members of local authorities about the Local Authorities (Members’ Interests) Act 1968

 

Appointment as the local authority’s representative on another organisation

5.47       You may have been appointed as the authority’s representative on the governing body of a council-controlled organisation or another body (for example, a community-based trust).

5.48       That role will not usually prevent you from participating in authority matters concerning the other organisation – especially if the role gives you specialised knowledge that it would be valuable to contribute.

5.49       However, you could create legal risks to the decision if your participation in that decision raises a conflict between your duty as a member of the local authority and any duty to act in the interests of the other organisation. These situations are not clear cut and will often require careful consideration and specific legal advice.

5.50       Similarly, if your involvement with the other organisation raises a risk of predetermination, the legal risks to the decision of the authority as a result of your participation may be higher, for example, if the other organisation has made a formal submission to the authority as part of a public submissions process.

 

    


HUTT CITY COUNCIL

 

Komiti Iti Mahere ā-Ngahurutanga / Mahere ā-Tau

Long Term Plan/Annual Plan Subcommittee

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

 Thursday 16 December 2021 commencing at 12.00pm.

 

ORDER PAPER

 

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

3.       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.

4.       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     

5.       Recommendations to Te Kaunihera o Te Awa Kairangi | Council - 16 December 2021

a)      Draft Annual Plan 2022-2023 - Financial Aspects (21/2096)

Report No. LTPAP2021/5/290 by the Manager Financial Strategy & Planning           7

Chair’s Recommendation:

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

 

 

 

b)      Application for funding from the Infrastructure Acceleration Fund (21/2149)

Report No. LTPAP2021/5/291 by the Housing and Development Lead  138

Chair’s Recommendation:

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

 

 

c)      Eastern Bays Shared Path (21/2151)

Report No. LTPAP2021/5/297 by the Head of Transport                         146

Chair’s Recommendation:

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

6.       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.

7.       EXCLUSION OF THE PUBLIC

CHAIR'S RECOMMENDATION:

 

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

8.       Reserve Management Contract (21/2177)

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.

 

 

 

 

 

 

Reserve Management Contract.

The withholding of the information is necessary to enable the local authority to carry out, without prejudice or disadvantage, commercial activities (s7(2)(h)).

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.”

 

 

 

Kate Glanville

SENIOR DEMOCRACY ADVISOR

 


                                                                                       8                                                  16 December 2021

Long Term Plan/Annual Plan Subcommittee

2 December 2021

 

 

 

File: (21/2096)

 

 

 

 

Report no: LTPAP2021/5/290

 

Draft Annual Plan 2022-2023 - Financial Aspects

 

Purpose of Report

1.    The purpose of this report is to further progress finance related decisions in relation to the Draft Annual Plan 2022-2023.

Recommendations

That the Subcommittee recommends to Council:

(1)        notes that following decisions at the LTP/Annual Plan Subcommittee meeting 16 December 2021, officers will be preparing the Draft Annual Plan 2022/23 and engagement material for review by the LTP/Annual Plan Subcommittee on 28 February 2022, refer table 1 contained within the report;

(2)        notes that the public engagement process is planned for April 2022;

(3)        considers the budget matters as detailed in table 7 and provides direction to officers in the preparation of the Draft Annual Plan 2022/23;

(4)        considers the budget matters as detailed in table 8 and provides direction to officers in the preparation of the Draft Annual Plan 2022/23;

(5)        notes the projected capital investment programme over the next ten years which includes significant investment in Three Waters and Transport infrastructure, refer Section F; 

(6)        considers the project schedules as detailed in appendix 3 and provides direction to officers;

 

 

(7)        endorses the proposed increases in targeted rates for Wastewater and Water Supply and notes that these are attributable to decisions to prioritise investment following advice from Wellington Water, refer table 3 contained within the report;

(8)        endorses the proposed targeted rates for Waste Services (refuse, recycling and green waste), refer table 4 contained in this report;

(9)        endorses the proposed fees and charges to be included in the Draft Annual Plan 2022/23, refer Appendix 4 to the report;

(10)      notes the legal requirements regarding a balanced budget and financial prudence, refer Section J in the report;

(11)      agrees to include a rates revenue increase in the draft Annual Plan 2022/23 which aligns with the Long-Term Plan 2021-2031, being an overall rates revenue increase of 5.9% together with a growth-related rates revenue component of 1.1%; 

(12)      notes the detailed rating impact on property categories as detailed in table 2 contained within the report;

(13)      notes that the impact on the average residential property valued at $630,000 will be a rates increase of approximately $135 per annum or $2.60 per week which includes rubbish and recycling;

(14)      notes the projected debt and balance budget results as detailed in Section F;

(15)      considers any further direction and guidance to be provided to officers ahead of preparation of the draft Annual Plan 2022/23 and engagement material.

(16)      agrees that the Annual Plan Working Group (comprising the Mayor and Chairs of standing committees) be delegated the power to make decisions required to prepare the draft plan engagement material; and

(17)      agrees that any such decisions made by the Annual Plan Working Group be reported back to the LTP/Annual Plan Subcommittee.

 

Acronyms

LTP – Long Term Plan 2021-2031

DAP – Draft Annual Plan 2022-2023

Capex – capital expenditure

Opex – operating expenditure

Rates SUIP – separately used or inhabitable part

 

Section A: Overview

2.    The Long-Term Plan 2021-2031 (LTP) was adopted by Council on 30 June 2021. The LTP lays out Council’s strategic intent and direction for the 10 years from 2021-2031.

3.    The LTP sets Council’s new strategic direction of getting the basics right to address the challenges that are being faced by the city and achieve the vision for Lower Hutt of a city where everyone thrives.

4.    The LTP focused on six key priority areas:

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

·   Increasing housing supply | Hei āhuru mōwai mō te katoa

·   Caring for and protecting our environment | Tiaki taiao

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

·   Connected communities | Tūhono hapori

·   Being financially sustainable | Whakauka ahumoni

5.    The LTP included a significant increase in investment in core infrastructure, including $587M investment in three waters, $406M investment in transport, and up to $68M for Naenae pool.

6.    The rates revenue increase in 2021/22 was 5.9% (excluding growth and the impact of changes to Council’s waste services).

7.    As part of the LTP officers conducted a base budget review upon request of Council. This process identified $2.2M of savings which were applied in order to reduce the rating impact for the LTP. Council also took a number of decisions which led to savings of $3M as part of the Annual Plan 2020/21. These savings have an ongoing effect and reduce the rating impact. 

LTP Subcommittee meeting 1 November 2021

8.    The LTP/Annual Plan Subcommittee met 1 November to consider the high-level plan for the Annual Plan 2022/23 and provide direction and guidance to officers.  The following resolutions were passed by Council:

(1)     agrees 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.”

9.    Following on from these decisions of Council, officers have been progressing the review and update of Draft Annual Plan 2022-2023 (DAP) budgets in line with these decisions. This has included the update of projected inflation and interest rate assumptions, the update of budgets to reflect unavoidable increases (such as known contractual cost escalations), employee cost changes and other justifiable changes to budgets etc.


 

Section B - High Level Plan for Annual Plan 2022/23

10.  Table 1 sets out the timeline for the Annual plan process as agreed to by Council.

Table 1: High Level Plan

Activity

Date

Status

Officers progress initial planning and preparation

August/September 2021

Complete

Council endorsement of high-level plan and key assumptions.

1 November 2021

Complete

Council meeting – Review of cost pressures, work programme changes and reprioritisation, funding options.

 

16 December 2021

 

Today

Initial DAP and draft engagement material reviewed by Council

28 February 2022

 

Council adopt DAP and engagement material for public engagement

4 April 2022

Public engagement - “light” engagement

April 2022

Community feedback received and considered

May 2022

Council meets to make final decisions

7 June 2022

Council adopts the AP and sets the rates

30 June 2022

 

Section C – Three Waters Reform

11.  The Government announced on 27 October 2021 that it plans to proceed with the proposed Three Waters Reform programme. The four publicly owned water services entities are expected to become effective on 1 July 2024 and will take on the drinking, waste and stormwater assets currently owned by councils. Further information on this has been reported to the Policy, Finance and Strategy Committee 16 November, refer PFSC21/1733.

12.  There is a lot of uncertainty on a number of aspects of the reform programme which will be worked through as the legislation is finalised. For the DAP we will continue to assume, as per the Long-Term Plan 2021-2031, that there are no changes in relation to the Three Waters services delivered by Hutt City Council (HCC) and that the assets and liabilities will remain within the HCC balance sheet.

13.  The Government has indicated as part of this Three Waters Reform programme that each Council will receive ‘Better Off’ funding. Hutt City Council will be allocated $38.7M according to information published by the Department of Internal Affairs (DIA). Further information on this funding from DIA:

“What does the better off component of the support package include?

The better off component of the support package comprises a $2 billion fund that territorial authorities will be able to use to support the three waters service delivery reform objectives and other local wellbeing outcomes in a manner consistent with the priorities of central and local government.

It is an investment by the Crown into the future for local government and community wellbeing.  Territorial authorities will be required to demonstrate that the use of this funding supports the three waters service delivery reform objectives and other local wellbeing outcomes and aligns with the priorities of central and local government, through meeting some or all of the following criteria:

1.       supporting communities to transition to a sustainable and low-emissions economy, including by building resilience to climate change and natural hazards;

2.       delivery of infrastructure and/or services that

·      enable housing development and growth, with a focus on brownfield and infill development opportunities where those are available,

·      support local place-making and improvements in community well-being.

14.  It is unclear at this stage what the process will be to apply for the funding and how much will be available in 2022/23. Given the uncertainty as this stage, it is proposed that the DAP will not assume any additional funding from this source. As more information becomes available further advice will be provided to support Council’s decisions and enable access to this funding as a priority.

Section D – Early indicative rating impact for ratepayers for draft Annual Plan 2022/23

15.  On 1 November 2021 Council set a direction of maintaining rates revenue increases at the levels set in the LTP.  This needs to be considered in light of a number of factors, including the legislative requirement for a balanced budget and financial prudence as well as factoring in the economic environment as a result of COVID-19.  

16.       Long term view of rates increase included the LTP:

 

2022/23

2023/24

2024/25

2025/26

2026/27

2027-2031

Total overall rates revenue increase* 

5.9%

5.9%

7.2%

7.2%

7.2%

7.2%

*Note excludes revenue from growth in the rating base which is assumed at 1.1% per annum.

17.  The rates projections in table 2 is early indicative modelling based on a 5.9% overall rates revenue increase plus 1.1% for growth in the 2022/23 year.

18.  Affordability of rates is a key consideration of Council. The proposed rates rise equates to an average increase of $2.60 per week per household or an average increase of $135 per annum. Investment in our Three Waters infrastructure makes up about half ($65) of the average $135 per annum rise. The remaining $70 covers cost increases for all the other services provided (including transport, parks, community facilities, rubbish, recycling etc.).

Table 2: Early indicative rates impact for DAP 2022/23 by property category

Property Category

Capital Value

2021/22 Rates

2022/23 Rates

$ Change Annual

$ Change Weekly

Change Amount %

Average Residential

$630,000

$2,951

$3,086

$135

$2.60

4.6%

Average Commercial Central

$1,782,000

$15,119

$16,341

$1,222

$23.50

8.1%

Average Commercial Suburban

$1,644,000

$13,135

$14,200

$1,065

$20.48

8.1%

Commercial Queensgate (LTP+$20M estimate)

$315,000,000

$2,300,864

$2,658,782

$357,918

$6,883.04

15.6%

Average Rural (no water or wastewater)

$886,000

$1,954

$2,028

$74

$1.42

3.8%

Utilities

$3,000,000

$18,294

$19,260

$966

$18.57

5.3%

 

19.  Estimated capital value (CV) growth across the city is included based on advice from our valuers Quotable Value (QV) on building consent information. We have been conservative in our estimates at this early stage and as more information becomes available the projected rating impacts will be updated.

20.  The 2021/22 rates for Queensgate are calculated on the current CV of $295M. An assumed estimated increase for Queensgate of $20M for 2022/23 has been applied in the rating projections in table 2. However, note there is still a lengthy process to complete with QV to confirm what the value increase (if any) will be for Queensgate. If Queensgate’s capital value were to increase less than $20M this would result in the average rates increase for other commercial central ratepayers increasing. The rates impact on Queensgate if there was no change in their capital value is included in Appendix 1 as a comparator (option 3).

21.  Rating policy: the reduction in the residential portion of the total general rate from 62% to 61% in 2022/23 as agreed as part of the LTP and the corresponding increases in the commercial portions are included in the projected rates impacts. Average CV for those categories has been updated as at 30 June 2021.

22.  The next full city-wide revaluation is due to take place before the completion of the next Annual Plan 2023/24.

Wastewater and water supply targeted rates

23.  Continued investment in three waters is proposed in line with the LTP priorities. The proposed increase in targeted rate for 2022/23 to fund the work programme is a 6% increase in both wastewater and water supply.

Table 3: Proposed targeted rates for water supply and wastewater DAP 2022/23

Rate

LTP 2021/22

DAP 2022/23

Proposed change

Wastewater – per SUIP

$559

$593

$34

Water supply – per SUIP

$520

$551

$31

 

Waste Services targeted rates

24.  Forecast costs of the services have been reviewed against actual information from the initial quarter of running the service to ensure forecast costs of the service are accurate based on latest information.

25.  Likely future increases for contract CPI adjustments and costs of disposal increases resulting from waste levy and Emission Trading Scheme (ETS) cost increases have been included in consideration.

26.  The proposed DAP targeted rates for waste services reflect updated cost information and recent modelling completed.  The increases proposed by officers are detailed in table 4. Officers are recommending a 3% increase to the price of a 120-litre bin and 240 litre bin, but no increase to the price of an 80-litre bin to continue to incentivise low waste users. A 6% increase is proposed for both the recycling service and the green waste (opt in) service. Refer section E and appendix 2 (Attachments P, Q and R) for further details.

 

 

Table 4: Proposed targeted rates for waste services DAP 2022/23

Rate

LTP 2021/22

DAP 2022/23

Proposed change

Refuse 80L – per SUIP

$105

$105

$0

Refuse 120L – per SUIP

$144

$148

$4

Refuse 240L – per SUIP

$288

$296

$8

Recycling – per SUIP

$105

$111

$6

Green waste – per SUIP

$95

$101

$6

 

27.  Table 5 provides further detailed breakdown of an average residential property (value of $630,000). This average residential property is assumed to use a 120-litre refuse bin.

28.  The table reflects officers’ recommendations for the refuse services of a 3% increase to the price of a 120 litre and 240 litre bin with no change to the price of an 80L bin. The impact of increasing the price of the 80-litre bin in line with the other bin sizes is included in appendix 1. It has been assumed for this initial modelling that there are no further changes to policy that fall out of the “Rubbish and Recycling appraisal” that is to be undertaken for these services.

Table 5: Early indicative detailed breakdown of average residential property, including details of targeted rates and different rubbish bin size options

Property Category

2021/22 Rates

2022/23 Rates

$ Change Annual

$ Change Weekly

% Change Amount

Average Residential

$2,951

$3,086

$135

$2.60

4.6%

Comprising:

 

 

 

 

 

General rate

$1,623

$1,683

$60

$1.16

4%

Water targeted rate

$520

$551

$31

$0.60

6%

Wastewater targeted rate

$559

$593

$34

$0.65

6%

Recycling targeted rate

$105

$111

$6

$0.12

6%

Refuse targeted rate (120L)

$144

$148

$4

$0.08

3%

 

 

 

 

 

 

Alternative bin sizes for residents:

 

 

 

 

 

Refuse targeted rate (80L)

$105

$105

$0

$0.00

0%

Refuse targeted rate (240L)

$288

$296

$8

$0.15

3%

 

Table 6: Average residential rates impact by suburb:

Residential suburbs

Rateable value as at 1 July 2021

2021/2022 Rates

2022/2023 Rates

$ Change Annual

$ Change Weekly

Alicetown

$661,500

$3,032

$3,168

$136

$2.62

Avalon

$605,500

$2,888

$3,019

$131

$2.51

Belmont

$711,000

$3,160

$3,301

$141

$2.71

Boulcott

$736,500

$3,225

$3,369

$143

$2.76

Days Bay

$990,000

$3,878

$4,046

$168

$3.22

Eastbourne

$930,000

$3,724

$3,886

$162

$3.11

Epuni

$651,500

$3,006

$3,142

$135

$2.60

Fairfield

$617,000

$2,917

$3,049

$132

$2.54

Harbour View

$687,000

$3,098

$3,236

$139

$2.67

Haywards

$405,000

$2,371

$2,483

$112

$2.15

Hutt Central

$858,500

$3,540

$3,695

$155

$2.98

Kelson

$645,000

$2,990

$3,124

$135

$2.59

Korokoro

$786,000

$3,353

$3,501

$148

$2.85

Lowry Bay

$1,270,000

$4,600

$4,794

$194

$3.74

Manor Park

$580,000

$2,822

$2,950

$128

$2.47

Maungaraki

$688,000

$3,100

$3,239

$139

$2.67

Melling

$539,000

$2,717

$2,841

$124

$2.39

Moera

$506,000

$2,632

$2,753

$121

$2.33

Naenae

$493,500

$2,599

$2,719

$120

$2.31

Normandale

$661,000

$3,031

$3,167

$136

$2.62

Petone

$754,000

$3,270

$3,415

$145

$2.79

Point Howard

$905,000

$3,659

$3,819

$159

$3.07

Stokes Valley

$486,000

$2,580

$2,699

$119

$2.29

Taitā

$488,000

$2,585

$2,705

$120

$2.30

Wainuiomata

$461,000

$2,516

$2,633

$117

$2.25

Waiwhetu

$621,500

$2,929

$3,061

$132

$2.54

Waterloo

$696,000

$3,121

$3,260

$139

$2.68

Woburn

$953,000

$3,783

$3,947

$164

$3.16

York Bay

$850,000

$3,518

$3,672

$154

$2.97

 


 

Section E – Budget matters for consideration

29.  There are a range of matters where decisions/direction is sought from Council, in order to progress the development of the DAP.

30.  Budget updates for latest information, such as phasing changes or unavoidable cost escalations, requiring Council confirmation are detailed in table 7. Budget updates requiring direction from Council are detailed in table 8. Council is requested to consider each of the budget matters in table 7 and 8 and provide direction to officers. Further details on each of the budget matters is contained in appendix 2.

31.  Budget matters recommended by officers for approval have been included in the financial modelling completed to-date and indicate provisionally that the balance budget target of 2028/29 as set in the LTP will be retained without any unfavourable impact (refer Section F).

Table 7: Budget matters arising from new and known information requiring Council confirmation

 

Brief Description

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

Further information in Appendix 2

1.           

Waka Kotahi Transport funding gap

Funding approved by Waka Kotahi for our maintenance, operations and renewals work programme over the 2021-24 National Land Transport Programme period was lower than the level tendered for.

Reduced revenue of $2.2M in the 2023/24 year of which $1M relates to opex and $1.2M relates to capex.

Council agreed to reduce the revenue budgets at the 1 November LTP/AP subcommittee. No funding solution was identified to offset this.

Report to Council 1 November 2021

 

LTPAP 2021/5/242

2.           

Three Waters – capital achievability challenges and proposed rephasing

Deliverability challenges related to the constrained market and the need to grow capability in Wellington Water have been signalled to council and are proposed to be managed through a growing delivery programme profile over years one to three of the LTP.

 

 

This has resulted in a reduction in capital investment in 2022/23, with a rephasing over the next two years.

Officers recommend the approval of the proposed changes.

 

3.           

RiverLink project phasing updates

The change in consenting pathway to direct referral to the Environment Court has caused a knock-on effect to the procurement programme for the wider RiverLink project with a delay in construction start of potentially 1 year.

Project costs and expected revenue has been rephased to slightly later to align with this revised timeline.  Net project costs are unchanged as a result of the change.

Officers recommend the approval of the proposed changes.

Attachment A

See page 36 of the agenda

4.           

Three Waters – Barber grove sewer cost escalations

Material and contractor costs have seen the expected cost of the project increase.

 

$26M is the latest estimated costs for the project over 2021/22 and 2022/23, versus an LTP budget of $22.4M.

Officers recommend the approval of the proposed changes.

Attachment B

See page 39 of the agenda

5.           

Naenae pool project phasing – updated operating costs

Updated timing of costs to reflect latest information on the progression of the project

No change in overall project costs.

Officers recommend the approval of the proposed changes in timing.

Attachment C

See page 41 of the agenda

6.           

Petone wharf project phasing

Updated timing of costs to reflect latest information on the progression of the project. The project has been delayed by about a year to account for the expected time to complete the resource consent.

No change in overall project costs.

The project is now expected to be completed one year later.

Officers recommend the approval of the proposed changes in timing.

Attachment D

See page 43 of the agenda

7.           

Urban development plan

Development of one ‘Urban Growth Plan’ which sets out how we want urban growth and development to occur throughout our entire city (this would cover elements such as structure and spatial planning)

Proposed bringing forward expenditure from 2023/24 and onwards into 2022/23.

Officers recommend the approval of the proposed timing changes.

Attachment E

See page 45 of the agenda

 

 

 

32.  Council is requested to consider the matters in table 8 and provide direction to officers.

Table 8: Budget matters for consideration by Council requiring a decision

 

Brief Description

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

Further information in Appendix 2

8.           

Three Waters – Opex maintenance

Wellington Water Limited advises that despite a higher investment level for capital renewal in the LTP there is an ongoing risk of asset failures resulting in higher reactive maintenance and repairs.

Stimulus funding from Central Government was used in 2020/21 and is again being applied in 2021/22 to pay for increased in asset maintenance costs. 

There are a range of risks related to this which are detailed in the appendix.

The annual shortfall is estimated to be $2M from what is currently in the budget. There is currently $22.8M in the base budget for this.

This is a large increase which has not been provided for in the LTP and there is no funding offset provided. As this includes reactive maintenance, there is some uncertainty as to whether the full amount of funding is required. 

An option may be to seek an allocation from the Three Waters Reform “Better off funding” to address this (refer Section C). However, the terms of this funding have yet to be confirmed.

Officers recommend that the budget is retained in line with the LTP and no additional funding is allocated for the DAP. The risks related to this approach are to be noted.

Officers recommend that an allocation from the Three Waters Reform funding is considered once the full criteria is made available.

Attachment F

See page 47 of the agenda

9.           

Three waters – Opex emerging risks

Wellington Water Limited advises that the context within which it is operating is changing leading to several emerging risks and cost pressures in relation to:

·          Providing safe water assurance

·          Asset Information and data improvement to inform asset management planning

·          Cybersecurity.

The risks are expected to result in an ongoing annual cost of approximately $1M.

The costs associated with these emerging risks have yet to be fully assessed and quantified. In not making budget provision at this time, risks could be managed through regular monitoring and reporting to Council with the opportunity to respond to resourcing requirements as required at the time.

An option may be to seek an allocation from the Three Waters Reform “Better off funding” to address this (refer Section C). However, the terms of this funding have yet to be confirmed.

Officers recommend that the budget is retained in line with the LTP and no additional funding is allocated in the DAP. The risks related to this approach are to be noted.

Officers recommend that an allocation from the Three Waters Reform funding is considered once the full criteria is made available and further investigation completed on the costs of the emerging risks.

Attachment G

See page 49 of the agenda

10.           

Three Waters – Seaview tank

The purpose of this project is to reduce overflows of treated wastewater to the Waiwhetu Stream, and to reduce the impact of those overflows by extending the current overflow pipeline to the Hutt River.

Material and contractor costs have seen the expected cost of the project increase.

$32M is estimated for the Storage tank over the next four years, versus an LTP budget of $20M.

Additionally, there is also $5.3M estimated for the outfall pipeline (2026/27) and $1.5M estimated to address flooding issues (2023/24).

Officers recommend inclusion of the revised budget in the DAP.

Attachment H

See page 51 of the agenda

11.           

Three Waters – Petone collecting sewer

The project is being submitted for consideration to bring forward due to its criticality.

Investigations and concept design are $0.9M which is being funded in 2021/22.

 

A sum of $21.8M is currently estimated for the project and proposed for inclusion in the DAP, versus an LTP budget of $24.5M in years 2030/31 to 2033/34.

Final design and build is proposed to be undertaken over years 2024 to 2026, versus an LTP budget in years 2030/31 to 2033/34.

Officers recommend the inclusion of the revised timing and budgets.

Attachment I

See page 53 of the agenda

12.           

Transport contract cost escalation Council’s street maintenance contract with Fulton Hogan expired on 30/6/21. To enable the contracts extension provision, we were required to re-negotiate rates to reflect cost escalations in the market. A range of factors have impacted cost escalations including health and safety, wage costs, and costs of materials.

Increases have been proposed to be included for the 2022/23 year.  The transport team will investigate efficiencies to offset the costs prior to further procurement from 2023/24 and onwards.

The cost increases of $0.29M have been proposed to be included in 2022/23.

Officers recommend the approval of the proposed change.

Attachment J

See page 55 of the agenda

 

13.           

Landfill cost/fee impacts

Costs for operating Silverstream landfill are increasing due to:

·          Waste levy increasing from $20/t to $30/t

·          Emissions Trading Scheme prices increasing more steeply than previously forecast (ETU costs currently at $65/t CO2e vs $35/t in May 2021)

·          Operational cost increases, due to changes in operation in line with Council’s focus on diverting more waste and improving management practices.

It is proposed that fees are increased to cover the additional costs.  Fee increases are also proposed to be set to ensure our fees align with others in the region.

Cost increases are $12.4M across the nine years from 2022/23 to 2030/31.

This is proposed to be offset by additional revenue of $12.5M across the 9 years through a proposed increase in the gate fee of $25/t (to $165/t for standard commercial waste).

Officers recommend the approval of the proposed changes

Attachment K

See page 57 of the agenda

14.           

Reserves operational maintenance

The contract expires March 2022. The contract includes mowing, maintenance, reserve gardens, cemeteries, and street and notable trees. There have been cost escalations primarily for materials, equipment and fuel. Specifications have been reviewed, in order to minimise cost increases and promote innovative solutions. Some of the solutions include reducing the maintenance standards of fringe reserves; allowing some reserves to revegetate to a natural state; decreasing the maintenance standards for gardens and retiring other gardens.

The projected budget impact for the revised contract is an increase from $1.7M to $2.2M per annum.

The cost increase of $0.5M is proposed by officers to be included in 2022/23 and not future years.

As discussedduring the development of theLTP,there is currently an affordability issue with our assets in general, both green and built. Officials have been directed to undertake a piece of strategy work to map our assets, consider each community’sneeds andcome back with options fora future planthat is affordablefor the next LTP. The assets covered by this contract will be included in this work.

Officers recommend the approval of the proposed budget change for 2022/23 only.

Attachment L

 

See page 59 of the agenda

15.           

Three Waters/RiverLink – Valley floor growth projects

Investment in wastewater and stormwater to enable housing growth across the valley floor.

We have applied for funding for this work through the Infrastructure Acceleration Fund (IAF). We have been accepted into the ‘Request For Information’ stage of this process.

Council’s intention to fund projects (even if unsuccessful) is a consideration of the IAF process.

Officers are proposing to include funding of $57.5M for construction of wastewater elements and concept design of stormwater elements across years 2021-2026.

It is proposed that for the DAP purposes that it is assumed that IAF funding will be received for an equivalent amount. IAF funding will contribute up to a maximum of 50% of the Eligible Costs of Eligible Infrastructure Project(s) in the pre-construction stages.

Further information will be reported to Council once clarity is received on the success of our IAF bid.

Officers recommend the approval of the proposed changes.

Attachment M

See page 62 of the agenda

16.           

Eastern Bays shared path project

Costs have been updated to reflect information reported to Council on 1/11/21.

Council agreed to proceed with the Alliance approach to the project.

It has been indicated that the $30M currently budgeted for the project will not be sufficient.

 Refer to the separate report on this agenda for updated cost indications.

Timing for the $30M included in the LTP has been condensed into 2021-2024 the estimated time to spend the current budget.

Officers recommend the approval of the proposed changes.

Attachment N

See page 65 of the agenda and refer to the separate report on this agenda for updated cost

17.           

Regulatory fee and cost increases

We are facing increasing costs of delivering these regulatory functions. This is due to consistently high demand for consents, a nationwide shortage of skilled staff, and increased quality assurance costs.

Cost increases are about $5M over the ten years of the LTP.

The increase in costs is proposed to be offset through an increase in the consenting hourly charge of $5 per hour.

Officers recommend the approval of the proposed changes.

Attachment O

See page 67 of the agenda

18.           

Rubbish and recycling services

Council implemented a new waste services system in 2021/22 which is funded by targeted rates for the rubbish and recycling services delivered.

Costs of these services have been reviewed to reflect latest information on tonnage of waste, increased ETS, and waste levy costs.

Costs of the refuse service are projected to increase by about $0.4M in 2022/23 to $5.6M.

Costs of the recycling service are projected to increase by $0.5M in 2022/23 to 3.9M

Out year costs are affected proportionally.

Officers are recommending increases to the targeted rates revenue in line with this latest cost information. Refer to Section D of this report.

Officers recommend the approval of the proposed budget changes and the rates funding changes.

Recycling

Attachment P

See page 70 of the agenda

Rubbish

Attachment Q

See page 72 of the agenda

 

 

19.           

Green waste

A new opt in service was implemented in 2021/22 and is funded by a targeted rate for this service. Costs of this service have been reviewed to reflect latest information on tonnage of waste, increased contract cost.

Costs of the green waste service are projected to be slightly lower than had been budgeted in the LTP, from the latest modelling completed. However, the service is projected to run at a deficit.

Proposed changes to the targeted rates for this service ensures an improved cost recovery level. The proposed changes to charges are an increase to $101 from $95 in 2021/22.

Officers recommend the approval of the proposed budget changes and the changes to the targeted rate for this service to be included in the DAP.

Attachment R

See page 74 of the agenda

Section F – Impact of budget changes

33.  Based on financial modelling completed of the impacts of the DAP budget review process, the following information provides early indicative impacts of the changes. Further work is still to be completed to review and analyse changes including further updates to be made to depreciation costs to reflect the updated capital programme.

34.  Information has been presented below in line with key metrics in council’s financial strategy covering the projected balanced budget position, projected debt and the projected capital programme compared to the LTP forecasts.

35.  The modelling includes the changes recommended by officers in table 7 and 8 above. The proposed increase for Eastern bays Shared Path has not been included in the modelling due to the timing of receipt of the latest cost indications.

36.  Greater Wellington has signalled bulk water charges are expected to be higher than expected in future years as a result of cost escalations for capital projects. Officers will report to Council once further detail is received on updates to bulk water charges. 

37.  The initial financial projections including the proposed rates revenue level are:

·        A projected balanced budget position in 2022/23 of $21.5M deficit, being an improved result from the LTP projection of a deficit of $24.6M.

·        A balanced budget is projected to be achieved in 2028/29, which is in line with the LTP,

·        The slight improvement in the balanced budget position compared to the LTP (refer graph 1) is primarily because of rephasing of projects (e.g., RiverLink, Petone wharf pushed out) and updated interest rate and inflation assumptions which are overall lower levels over the ten years of the DAP.

Graph 1: Projected balanced budget target, comparison of DAP and LTP

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

·        Net debt is projected to peak at $598M in 2028/29, which is $25M higher than the LTP which peaked at $573M.

Graph 2: Projected net debt, comparison of DAP and LTP

·        Net debt to revenue ratio peaks in 2026/27 at 197%, which is within the financial strategy limit approved for the LTP of 250%. The LTP debt to revenue peaked at 191%

Graph 3: Capital investment plan, comparison of DAP with LTP

 

38.  Graph 3 shows the updated capital programme (after inclusion of the table 7 and 8 matters recommended by officers for approval). The 2022/23 to 2025/26 capex has increased to $731M in the DAP compared to the LTP capex of $644M. This is largely due to increased costs of the Barber Grove sewer and Seaview storage tank, the bringing forward of the Petone collecting sewer and the addition of the valley floor growth projects.

39.  The achievability of this capex programme appears to be high risk, due to a range of factors including uncertainties due to COVID-19 impacts and organisational capacity to deliver. Council is requested to consider further action required to review this. Appendix 3 provides the detailed capital programme for the DAP.

40.  User fees and charges are an important aspect of how we fund Council facilities and services. Setting fees and charges at an appropriate level is important to pay for cost of Council’s activities and achieve a balance budget. The key aspects of the Council’s Financial Strategy that has been considered in reviewing fees are:

a.       The importance of a balanced budget so that the projected operating revenue is set at a level to meet expected operating expenses; and

b.       Ensuring the distribution of benefits is fair. Where there are direct identifiable benefits, the proportion of costs associated with those benefits should be recovered by the users.

41.  At the LTP/AP subcommittee meeting on 1 November 2021 Council endorsed the following expectation around fees and charges:

The starting assumption for all fees and charges set through the LTP was for them to increase by a minimum of inflation each year to ensure revenue through fees and charges kept pace with rising costs. Officers propose that this assumption remains appropriate for the DAP.

There will be some exclusions, such as fees and charges set by bylaw or other legislative means. Further changes may also be required following detailed budget review for fee funded activities.

42.  Proposed fees and charges included in appendix 4 have been prepared taking into account this expectation.

 

Section G – Community engagement

43.  As reported to the LTP/Annual Plan Committee 1 November 2021, officers are proposing a light touch engagement (not formal consultation) for the DAP.  This recommendation is based on:

·        The assumption that there will not be any significant changes to the budget or rates planned and agreed for the LTP; and

·        the success of the LTP engagement and consultation, the high level of community support that the vision and investment in the six priorities received and the importance of ensuring delivery of the capital investment and operational programme over the next three years. 

44.  Offers will prepare an appropriate communications and engagement plan to support the approach outlined above. This will be confirmed early in the new year and is likely to include a large digital element.

Section H – Next steps

45.  Following decisions by the LTP/Annual Plan Subcommittee at this meeting, officers will be preparing the DAP and the engagement material. The initial draft of the engagement material will be presented at the next subcommittee meeting on 28 February 2022.

46.  Officers propose that an Annual Plan Working Group comprising the Mayor and Chairs of standing committees is established. This Working Group could progress decisions in the preparation of the engagement material for the DAP as well as any other matters that may arise in the preparation of the DAP. Any decisions made by the Working Group would be reported back to the next LTP/Annual Plan Subcommittee. This is the same approach as was taken in the preparation of the LTP.

47.  The financial projections included in this report are indicative and require further review and analysis. There are likely to be other updates to the budgets due to new information.

Section I - Climate Change Impact and Considerations

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

49.  The DAP directly responds to the need to achieve emission reductions, by embedding emission reductions in a range of initiatives. For example, Council’s investment in Naenae Pool includes that the new building would not use natural gas for heating and instead utilise alternative low-carbon energy sources. The DAP also includes a number of projects to reduce emissions, including the decarbonisation of Council facilities (including pools and the Dowse).

Section J - Legal Considerations

50.  There are several factors to consider in relation to the rates revenue funding levels for the DAP. The LTP Financial Strategy ensures that rates affordability is front of mind in these decisions.  It is important to consider the legislative requirement to have a balanced budget and manage finances in a prudent manner.  There was significant consideration given to this in the development of the LTP.    

1.       Section 101 of the LGA requires all local authorities to “manage its revenues, expenses, assets, liabilities, investments, and general financial dealings prudently and in a manner that promotes the current and future interests of the community.”

2.       Section 100 subsection 1 of the LGA states:

A local authority must ensure that each year’s projected operating revenues are set at a level sufficient to meet that year’s projected operating expenses.

Section 100, then goes on to say:

2) Despite subsection (1), a local authority may set projected operating revenues at a different level from that required by that subsection if the local authority resolves that it is financially prudent to do so, having regard to—

(a) the estimated expenses of achieving and maintaining the predicted levels of service provision set out in the long-term plan, including the estimated expenses associated with maintaining the service capacity and integrity of assets throughout their useful life; and

(b) the projected revenue available to fund the estimated expenses associated with maintaining the service capacity and integrity of assets throughout their useful life; and

(c) the equitable allocation of responsibility for funding the provision and maintenance of assets and facilities throughout their useful life; and

(d) the funding and financial policies adopted under section 102.

51.  Through the LTP process, the Council considered these various factors and resolved that it was financially prudent to have an unbalanced budget until 2028/29, as revenues increase over the ten-year period of the LTP and repayment of debt is occurring to avoid a significant impact on future ratepayers. The projected balanced budget position does not impact on Council’s ability to maintain its levels of service, undertake asset renewals and is consistent with the Revenue and Financing Policy.  The Draft Annual Plan 2022/23 is proposing to maintain this approach, with a balanced budget position projected to be achieved in 2028/29. 

 

Section K - Financial Considerations

52.  No other financial considerations other than those contained in this report.

Appendices

No.

Title

Page

1

Appendix 1 - Detailed rating impacts information on options

30

2

Appendix 2 - Detailed project information to support budget decisions

35

3

Appendix 3 - Detailed project list for review

76

4

Appendix 4 - Proposed fees and charges

82

    

 

 

Author: Daniel Koenders

Manager Financial Strategy & Planning

 

Reviewed By: Wendy Moore

Head of Strategy and Planning

 

Reviewed By: Jenny Livschitz

Group Chief Financial Officer

 

Approved By: Jo Miller

Chief Executive


Attachment 1

Appendix 1 - Detailed rating impacts information on options

 






Attachment 2

Appendix 2 - Detailed project information to support budget decisions

 










































Attachment 3

Appendix 3 - Detailed project list for review

 







Attachment 4

Appendix 4 - Proposed fees and charges

 

























































                                                                                       1                                                  16 December 2021

Long Term Plan/Annual Plan Subcommittee

01 December 2021

 

 

 

File: (21/2149)

 

 

 

 

Report no: LTPAP2021/5/291

 

Application for funding from the Infrastructure Acceleration Fund

 

Purpose of Report

1.    This report provides an update on the Valley Floor Infrastructure Acceleration Fund (IAF) application, currently at Request for Proposal (RFP) stage and due for submission to Kāinga Ora on 17 December 2021. It has been prepared in conjunction with the content included in the agenda item “Draft Annual Plan 2022/23 – Financial aspects” and is intended to accompany information on the items funded by that budget, and overall context and next steps.

 

Recommendations

That the Subcommittee recommends that Council:

(1)   notes that Council has progressed to the Request For Proposal stage for the Infrastructure Acceleration Fund;

(2)   notes that following the submission of this Request For Proposal, Kāinga Ora are expected to notify outcomes by the end of April 2022. Following this, negotiation is expected to commence in May 2022 to define and formalise Funding Agreements and Housing Outcomes Agreements before going for Ministerial approval;

(3)   notes that there is no current funding in the Long Term Plan 2021-2031 for the projects proposed in the Request For Proposal and initial part funding has been sought through the Long Term Plan/Annual Plan Subcommittee, refer to the ‘Annual Plan 2022-2023 – Financial Aspects’ report included in this agenda;

(4)   notes that this report outlines the key elements of the Infrastructure Acceleration Fund Request For Proposal at a high level;

(5)   notes that officers will provide further advice to Council to support future funding decisions in relation to the projects once the outcomes of the Request For Proposal process are understood; and

(6)   delegates to the Chief Executive the authority to sign off the Infrastructure Acceleration Fund Request For Proposal application due for submission on 17 December 2021.

 

Background

2.    In June 2021, Kāinga Ora opened their Expressions of Interest (EOI) phase for the Infrastructure Acceleration Fund (IAF), a $1B fund intended to support the delivery of infrastructure to accelerate housing delivery across the country. Hutt City Council submitted two applications: i) RiverLink and the valley floor, and ii) Wainuiomata. Over $5B worth of applications were made to the fund.

3.    In October 2021, Kāinga Ora confirmed that the RiverLink IAF EOI has been invited to progress to the Request for Proposal (RFP) stage, due on 17th December 2021. Less than half of the projects that applied were invited to progress.

4.    RFP Applicants will be notified of the outcome in April 2022. Successful applicants will be invited to participate in a negotiation process to refine the details of the deal. Successfully negotiated projects are expected to have two binding documents - which would be explored during this phase and confirmed through council decision - agreed through this negotiation:

a.   Financing Agreement.

b.   Housing Delivery Agreement.

5.    From October to December 2021, Council officers (with support from Wellington Water and other technical specialists) have been refining both the technical and financial details of the IAF application. This report outlines the final IAF RFP due for submission to Kāinga Ora.

6.    In total, the RFP is seeking a total of $147M in funding as a contribution to total additional infrastructure costs of $204M. If integrated with the RiverLink Alliance, this is in addition to RiverLink’s 700M total capital budget (funded jointly by GWRC, Waka Kotahi and Council). In the Council’s LTP funding of $138M is committed to the RiverLink project.

7.    The infrastructure we are seeking IAF funding for is intended to deliver:

a.    Stormwater alleviation: A series of pump stations, new stormwater rising mains and extensions to existing stormwater mains. Collectively these will alleviate flooding across Melling and Woburn in the catchment area shown in Figure 1.

b.    Wastewater bypass: A 2km gravity main conveying flows to a new pump station and storage near the roundabout at Ewan Bridge, and a new rising main from the pump station across Ewan Bridge to Railway Avenue (as show in Figure 2). The majority of this pipework follows the RiverLink corridor.

 

8.    The Project’s objectives are to:

·      Enable development within the catchment area highlighted in Figure 3, providing the opportunity for up to 17,500 new homes in that area. This figure represents the calculated Maximum Development Potential (MPD) of the area, for which the infrastructure is sized to ensure the works cater to potential future growth.

Figure 1:


 

 

Figure 2:


 

 

Figure 3:

Discussion – Delivery Model

9.    Hutt City Council has been exploring delivery model. If the projects are to proceed, the majority of the infrastructure delivery is intended to be integrated within the Alliance for RiverLink. We understand that this is a core part of the appeal of our bid to Kāinga Ora.

10.  It’s likely that smaller projects may be completed under contract separate from the RiverLink Alliance. The delineation and procurement of works will be refined in 2022.

11.  An indicative Procurement Plan will be included within our RFP submission outlining measures that need to be included and considered to incorporate IAF requirements.

12.  Also core to this is the Development Outcomes Framework, which outline specific requirements around urban design, architecture and built form, services delivery, sustainability, affordability and more.

13.  The Development Outcomes Framework Guidelines and Procurement Plan noted above provide an outline of mechanisms to incentivise preferred design, development and urban outcomes in the city and tracking progress towards these outcomes through a Monitoring and Evaluation (M&E) framework.

14.  This M&E framework plus the Development Outcomes Framework ensure that developments taking place within Hutt Central and the area served by the IAF catchment demonstrate the holistic impact of their development at Resource Consent stage.

Sustainability and Climate Change Considerations

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

16.  The proposed works will mitigate the impact of flooding events throughout the catchment area shown in Figure 1, above.

17.  The Development Outcomes Framework (which still needs to be developed in full) will incentivise design and development decisions that support the sustainability aspirations for Hutt City and the surrounding area by:

a.    Encouraging development that integrates with and supports health in the local water cycle.

b.    Encouraging waste and energy minimisation in design, construction and operation.

c.     Encouraging high-quality public realm space and community amenity (including food production).

d.    Encouraging integration of passive design principles early in design.

e.     Encouraging tree planting, habitat restoration and biodiversity enhancement measures.

f.     Minimising hard-scaping and maximising soil water infiltration.

g.    Maximising soil quality.

18.  The Development Outcomes Framework will align with the regional outcomes sought by the Wellington Regional Leadership Group, which reflects sustainability goals for the region.

19.  RiverLink is intending to adopt the Infrastructure Sustainability Council of Australia (ISCA) sustainability framework to inform design, construction and procurement.

Community Involvement and Participation

20.  The Project intends to support and work with the City Centre team within Hutt City Council’s Urban Development Team to ensure that the outcomes sought through the delivery of IAF infrastructure are both informed by and integrated with the community on the ground.

21.  The Project has engaged with Taranaki Whānui and Ngāti Toa with respect to their development aspirations in the area and has received written letters of support from both parties outlining their development aspirations for Hutt Central. We will continue to engage with them throughout the process to support their development aspirations resulting from this infrastructure.

22.  The Project has engaged with Community House Providers (CHPs), including Kahungunu Whānau Services and Community Housing Aotearoa to understand the aspirations and intentions of the Community Housing sector in the area, and how we may be able to support those aspirations through delivery.

Developer Commitments

23.  On 1 December 2021, officers hosted a Developer Forum inviting developers from across the region to a workshop exploring ways that delivery of the Project can support the outcomes sought in the IAF. As a key outcome of this, we asked developers to provide us with a formal letter of support outlining their development intentions for the region served by the infrastructure.

24.  This forum has informed our Development Outcomes Framework and the strategy to incentivise high-quality development in the parts of Hutt City most suited to supporting a thriving community.

Legal Considerations

25.  At present, the measures outlined within the IAF application are non-binding and are not legally integrated with the RiverLink procurement process. The team leading the IAF application are closely integrated with the RiverLink team and will continue to work throughout early 2022 to understand how best to integrate the outcomes sought through the IAF into the RiverLink alliance without impacting the project should the fund application be unsuccessful.

Financial Considerations

26.  There is currently no funding for these projects in the Long Term Plan 2021-2031.

27.  As part of the RFP process, Kāinga Ora are looking for a commitment from Council to progressing the projects.

28.  A funding request for $57.5M to be included in the Draft Annual Plan 2022-2023 has been sought in the separate report in this agenda “Draft Annual Plan 2022-2023 – Financial aspects. This funding of $57.5M comprises the wastewater project and design elements of the stormwater projects.

29.  Should we be successful in our application, we will need to progress detailed design in a way that integrates the RiverLink and IAF outcomes. Kāinga Ora have flagged that they expect this to be funded by Hutt City Council, and are open to reimbursing this out of the money awarded retrospectively should the two parties reach a negotiated position on funding.

30.  The current cost estimates have been prepared in partnership with Wellington Water Ltd using their standard pricing approach for the level of design detail. As such, they have included a significant contingency (100%) within the current price estimate due to the early stage of design (as part of their standard practice).

31.  The current cost estimates assume standalone projects. They do not consider potential savings resulting from integration with the RiverLink alliance.

32.  In total, the RFP is seeking a total of $147M in funding as a contribution to total infrastructure costs of $204M.  If successful in the RFP process it is proposed that the balance of funding for the costs of the project be met from Development Contributions.  An update to the Development Contributions Policy would be required for this.

33.  Officers will report back to the LTP/Annual Plan Subcommittee following the outcome of the RFP process being received, to present options for timing and funding of the full valley floor growth projects that takes into account the outcome of the RFP process. 

Appendices

There are no appendices for this report.   

 

 

 

 

 

Author: Ben Preston

Housing and Development Lead

 

 

 

 

 

 

Reviewed By: Jenny Livschitz

Group Chief Financial Officer

 

 

 

Approved By: Kara Puketapu-Dentice

Director Economy and Development

 


                                                                                       1                                                  16 December 2021

Long Term Plan/Annual Plan Subcommittee

02 December 2021

 

 

 

File: (21/2151)

 

 

 

 

Report no: LTPAP2021/5/297

 

Eastern Bays Shared Path

 

Purpose of Report

1.    This report provides a progress update on the alliance integration work for Eastern Bays Shared Path Project (the Project) and updates the Council on the costs for the first two bays.

Recommendations

That the Subcommittee recommends that Council:

(1)     notes the cost of $16,848,146 for the construction of the first two bays (Windy Point and Sunshine Bay) of the Eastern Bays Shared Path Project (the Project) and agree for the Project to proceed;

(2)     notes that the costs for the first two bays fall within the delegation of the Chief Executive but the costs to deliver the whole project will exceed the delegation that was previously limited to the budget in the Long-Term Plan 2021-2031;

(3)     notes that Council at the November 1 meeting approved the alliance delivery model for the construction of the first two bays (Sunshine Bay and Windy Point) and that the Chief Executive was delegated 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;

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

 

Background

2.    The Project, a walking and cycling route, has been an aspiration for Council and its residents for decades and is proposed to extend along a distance of 4.4 km on Marine Drive, a coastal road, between Point Howard and the northern end of Days Bay, and the southern end of Days Bay (Okiwi Bay) to Eastbourne (Muritai Road / Marine Parade intersection).

3.    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 construction stage.

4.    In November 2021, Council approved an Alliance delivery model and integration with the Te Ara Tupua Alliance to deliver the construction phase of the Project. 

5.    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 Kotahi.

Project Status Update – Costs of Windy Point and Sunshine Bay

6.    The Te Ara Tupua Alliance (the Alliance) has completed a price reconciliation with an independent estimator for the current design and in-situ construction methodology.

7.    The updated costs are for the construction of Windy Point and Sunshine Bay. The costs are shown in the table below.

Item

Note

Value

Alliance design, construction and risk

Risk still to be validated

$15,143,832

Client managed costs (3%)

Salaries, Advisors, Stakeholders, Events

$454,314

Insurance (estimate based on $952,000 for 6 bays)

Contract works, indemnity etc

$250,000

Client retained contingency

Estimate

$1,000,000

Cost for Windy Point and Sunshine Bay

 

$16,848,146

 

8.    The updated increased costs are due to having to redesign large sections of the first two bays, increasing costs of labour and materials, and addressing the fall from height issue which was not adequately addressed in the original design.

9.    The previous estimate was done by Stantec in 2019 and assumes 2019 dollars (pre-COVID-19). This estimate was based on a consenting design and did not fully capture and quantify construction risks. Pricing now is based on an 80% detailed design and involved key experts to capture and quantify the risks.

10.  It is also important to note that the previous costs were based on a draft programme whereas the updated cost is now based on a definitive programme.

11.  Further, we are seeing significant cost pressures associated with Covid 19. In particular, this relates to the cost of materials and the availability of a skilled labour force and consultancy services. Moreover, the high level of inflation within New Zealand is unhelpful when it comes to the purchase of materials offshore as the New Zealand dollar is being under valued in comparison to other markets.  In addition, there is a highly volatile insurance market.

12.  The current budget of the Project ($30M) is sufficient to complete construction of Windy Point and Sunshine Bay, complete detailed design of the remaining four bays and potentially commence construction of a third bay.

13.  With the costs of the first two bays being higher than they were originally budgeted for, this will mean that the costs for completion of the remaining bays will also be significantly higher than currently budgeted for.

14.  The Alliance will need to undertake detailed design and pricing for the construction of the four bays to confirm the cost to deliver the whole project and required additional funding. This work is estimated to be completed by March 2022.

15.  Once the detailed costs have been prepared and independently reviewed, the total costs for the project will be known.

Fall from height

16.  The Building Code and new guidelines on Health and Safety in Design requires that structures address fall from height greater than one metre. The Alliance team is currently completing the design incorporating the pre-cast gravity block seawall design and addressing the fall-from-height safety requirement. Two options have been considered further to address the fall from height issue, these are:

a.    Option A: 1.4m high balustrades which maintains 3.5m path at most locations

b.    Option B: Wider step seawall with a reduced, 2.5m path at some locations, where footprint cannot be extended seaward.

17.  As a way forward, Option B was recommended by Council’s officers, wherein design outcomes on safety, ecology, stakeholder feedback on visual amenity, and costs where carefully considered. 

18.  Option B incorporates wider steps with a reduced path width to 2.5m at most locations. This avoids encroachment into the coastal marine area thus not requiring additional consents. This design approximately covers 2.2 kilometres or 45% of the overall shared path length. 

19.  Approximately 2.3 kilometres or 47% of the overall shared path length does not require any fall from height treatments; and 409 meters or 8% of the overall shared path length will require a balustrade at areas of highest fall risk.

20.  The Alliance proposed earliest start of construction is March 2022, involving early works. Seawall construction would be able to commence mid-May 2022. Construction programme for the first two bays is estimated to take one year. Prior to construction, the Alliance will complete the Management Plans and Bay Specific Urban Design Plans for the first two bays.

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 activities and responses to climate change as it relates to this project were noted and have not changed since the report provided to the Long-Term Plan/Annual Plan Subcommittee meeting on 1 November 2021.

Consultation

23.  Council officers with the Alliance team engaged with the Eastbourne Community Board, Mana Whenua Steering Group, resident associations, East Harbour Environmental Association, and Council’s Park and Reserves team on the Landscape and Urban Design Plan throughout the month of November. The Project team will be consulting on the Bay Specific Urban Design Plans with the Eastbourne Community Board and the resident associations in the new year. 

Legal Considerations

24.  A Partner Agreement between Waka Kotahi and Council covers the integration of the Project into the Te Ara Tupua Alliance and is currently being finalised between Council and Waka Kotahi legal teams. The final draft will be ready by mid-December 2021 for Council’s sign-off if the proposal TOC for alliance integration is accepted by Council.

Financial Considerations

25.  We have signaled to Crown Infrastructure Partners that we likely have an increase in the cost of the project.  Once the costs are known for the remaining four bays, we will work with Crown Infrastructure Partners on a paper to go to Ministers seeking further funding.

26.  Officers have also started discussions with Waka Kotahi on additional National Land Transport Programme (NLTP) funding for the Project and looking at opportunities to cashflow additional costs in the 2023/24 year where it is expected that additional funds may become available from the NLTP.

27.  Council will need to consider how any cost increase will be met together with the funding impacts of CIP or Waka Kotahi.  The cost of capital projects is generally met through an increase in debt and the cost of servicing this debt through ratepayer funding. The full financial impact, including the impact of the Council’s projected debt position, funding requirements and balanced budget position will need to be considered as part of the Annual Plan 2023-24 process. 

Appendices

There are no appendices for this report.   

 

 

 

Author: Jon Kingsbury

Head of Transport

 

 

 

Reviewed By: Jenny Livschitz

Group Chief Financial Officer

 

 

 

 

 

Approved By: Kara Puketapu-Dentice

Director Economy and Development