HuttCity_TeAwaKairangi_BLACK_AGENDA_COVER

 

 

Komiti Iti Ahumoni I Tūraru

Audit and Risk Subcommittee

 

 

23 August 2022

 

 

Order Paper for the meeting to be held

via Zoom,

on:

 

 

 

Tuesday 30 August 2022 commencing at 2.00pm

 

The meeting will be livestreamed on Council’s Facebook page.

Members of the public wishing to speak to an item on the agenda are asked to contact democraticservicesteam@huttcity.govt.nz

 

 

 

Membership

 

 

 Suzanne Tindal (Independent Chair)

Mayor C Barry (Deputy Chair)

Cr J Briggs

Cr S Edwards

Cr A Mitchell

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


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 via Zoom on

 Tuesday 30 August 2022 commencing at 2.00pm.

 

ORDER PAPER

 

Public Business

 

1.       APOLOGIES

No apologies have been received.

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.       Presentation

          Hutt City Council, Growth Study 2022 (22/2121)

The Chief Executive will present a verbal update on the results of the Hutt City Council, Growth Study 2022.

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.       Holidays Act Compliance (22/1855)

Report No. ARSC2022/4/161 by the Finance Project Manager                               9

CHAIR’S RECOMMENDATION:

“That the recommendation contained in the report be endorsed”

6.       Insurance renewal update (22/1898)

Report No. ARSC2022/4/162 by the Treasury Officer                                          12

CHAIR’S RECOMMENDATION:

“That the recommendation contained in the report be endorsed”

 

7.       External audit update, including update on the Hutt City Council Group Annual Report 2021/22 (22/1958)

Report No. ARSC2022/4/163 by the Financial Accounting Manager                   16

CHAIR’S RECOMMENDATION:

“That the recommendation contained in the report be endorsed”

8.       Tupua Horo Nuku Project Update (22/2023)

Report No. ARSC2022/4/164 by the Head of Transport                                       19

CHAIR’S RECOMMENDATION:

“That the recommendation contained in the report be endorsed”

9.       RiverLink Update (22/2036)

Report No. ARSC2022/4/165 by the Project Manager Riverlink                          24

CHAIR’S RECOMMENDATION:

“That the recommendation contained in the report be endorsed”

10.     Update on Petone Wharf Project (22/2048)

Report No. ARSC2022/4/166 by the Head of Parks and Reserves                       34

CHAIR’S RECOMMENDATION:

“That the recommendation contained in the report be endorsed”

11.     Information Items

a)      Naenae projects - progress update (22/2019)

Memorandum dated 10 August 2022 by the Project Manager (Naenae)     43

CHAIR’S RECOMMENDATION:

“That the recommendation contained in the memorandum be endorsed”

b)      Audit and Risk Subcommittee Forward Programme 2022 (22/2002)

Report No. ARSC2022/4/149 by the Democracy Advisor                           70

CHAIR’S RECOMMENDATION:

“That the recommendation contained in the report 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.

 

 

 

Katherine Davey

 

DEMOCRACY ADVISOR


                                                                                       1                                                        30 August 2022

A black and white sign

Description automatically generated with medium confidenceAudit and Risk Subcommittee

03 August 2022

 

 

 

File: (22/1855)

 

 

 

 

Report no: ARSC2022/4/161

 

Holidays Act Compliance

 

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).

 

 

Recommendation

That the Subcommittee notes and receives the report being the sixth update on the Holidays Act Remediation Project, and notes the following:

a)   The remediation calculations were completed by a payroll calculation specialist in mid July 2022, with the results providing a high level of confidence that the calculations are correct,

b)   The first tranche of payments to current staff owed remediation were made on 27 July 2022 covering the period March 2015 to March 2022,

c)   Contact at the last known address of former staff entitled to remediation payments commenced late July 2022, with an advertisement placed in the local newspaper on 11 August 2022,

d)   The new HRIS and Payroll system to be implemented as part of the Go Digital Programme was to go live in mid-2022, however it is now expected to go live in late 2023 to ensure Council is fully compliant with the Act, and

e)   A further tranche of payments to impacted current staff will be required to cover the period from April 2022 until the date the Council achieves full compliance in 2023 (following the implementation of the new HRIS and Payroll system) and it is anticipated that this will be met by the contingency within the original provision made in the financial statements to 30 June 2021.

 

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. Follow up reports were presented to the subcommittee on 9 September 2021, 11 November 2021, 15 February 2022, 19 April 2022 and 28 June 2022.

3.    Compliance with the Holidays Act 2003 (the Act) is a current issue for many organisations in New Zealand. In November 2020 Ernst & Young (EY) was engaged to undertake a review of Council’s compliance with the Act. Following on from EY findings, a Holidays Act Remediation Project (the project) was initiated to calculate and handle remediation calculations and bring Council payroll systems and processes into compliance with the Act.

4.    A Holidays Act compliance provision of $2.5M was recorded in the financial statements for the year ended 30 June 2021. This comprised an estimated $0.5M for project costs and $2M for potential remediation payments to staff.  

Progress update since June 2022 report

5.    Holidays Act remediation calculations, utilising a payroll calculation specialist, concluded in mid-July 2022. Testing of the calculations has been carried out by the specialist, alongside the Holidays Act Remediation Project (HARP) project team at Council. The results of the testing have provided a high level of confidence on the correctness of the calculations. This enabled the HARP Project Steering Group on 20 July 2022, to approve the remediation payments process to proceed.

6.    The first tranche payments to current staff owed remediation were made on 27 July 2022, covering the period March 2015 to March 2022. The second tranche will be to address any remaining remediation owing up to the date at which Council payroll systems and processes become Act compliant.

7.    The total number of current staff who received payments was 372, and the value of the payments was $260,929, before tax and KiwiSaver.

8.    From the last week of July, former staff entitled to remediation payments, are being contacted by last known contact details. They are then requested to lodge personal details via a portal on the Hutt City Council website. Once their details are verified, these former staff will be able to be paid. Every effort will be made to track down former staff owed remediation in order that payment can be made, including an advertisement in the local newspaper on 11 August 2022.

9.    The total number of former staff who will receive payments is 1,098, and the value of the payments is $914,899, before tax and KiwiSaver. 

10.  A webpage on Council’s external website continues to provide information about non-compliance with the Act. It provides Frequently Asked Questions, and instructions on how to submit questions.

11.  As part of the Go Digital Programme, a HRIS and Payroll system project has been progressing. The new system was originally planned to go-live mid-2022, however due to a delay in the release of a new feature that Hutt City Council requires the date has been pushed out indicatively to late 2023. Officers have negotiated a refund for the project work that has been delayed. Once the new system is live, it will bring Council into compliance with the Act.

 

12.  As a result of the delay in achieving compliance, Council will be required to remediate for a longer period than originally provided for at the time of setting aside the Holidays Act provision in the financial statements at 30 June 2021. It is therefore anticipated that the forecast project costs will be higher due to additional remediation calculation and project costs. This additional cost is expected to be covered by contingency set aside within the remediation provision.

13.  To help reduce the future remediation liability that will be payable, some initial improvements have been implemented within our current Chris21 payroll system and processes. Given the further delays with the HRIS and Payroll system, there will now be investigation undertaken to better understand short term solutions that could be put in place to reduce non-compliance issues.

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.

Consultation

15.  Not applicable.

Legal Considerations

16.  Council has been working with a remediation calculation specialist to traverse risks areas and seeks legal advice as appropriate.

Financial Considerations

17.  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

 

 

Author: Lyndon Allott

Chief Digital Officer

 

 

 

 

Reviewed By: Jenny Livschitz

Group Chief Financial Officer

 

 

 

Approved By: Kara Puketapu-Dentice

Chief Executive (Acting)

 


                                                                                       1                                                        30 August 2022

A black and white sign

Description automatically generated with medium confidenceAudit and Risk Subcommittee

26 July 2022

 

 

 

File: (22/1898)

 

 

 

 

Report no: ARSC2022/4/162

 

Insurance renewal update

 

Purpose of Report

1.    To provide the Subcommittee with a further update regarding Council’s 2022/23 insurance programme renewal and an overview of several work streams currently underway to best protect Council against continued insurance market tightening, both in terms of insurance cover capacity and cost.

Recommendations

That the Subcommittee:

(1)   notes that Council has successfully renewed its Property and Infrastructure insurance programme for policies commencing 1 May 2022 for a 12-month term;

(2)   notes the remaining policies, renewed on 1 November 2021, for a 12-month term;

(3)   notes the insurance renewal challenges as outlined in paragraphs 10 to 12; and

(4)   notes that the insurance costs for 2022/23 are expected to be $260,000 higher than budgeted and that officers will look to find savings and offsets within the approved Annual Plan 2022/23.

 

Background

2.    Council together with Kapiti Coast District (KCDC), Porirua City (PCC) and Upper Hutt City Councils (UHCC), collectively known as the Outer Wellington Shared Services Insurance Group (OWSS), has been purchasing insurance for their respective assets on a combined basis since 2009.

3.    Greater Wellington Regional Council (GWRC) joined the OWSS in 2016 to insure it’s above ground assets only through the collective. For insurance purposes only, the OWSS Councils and GWRC are collectively known as the Wellington Councils Insurance Group (WCIG).

4.    The previous insurance update provided to the Subcommittee, (Report ARSC2021/3/147 on 8 July 2021) provided extensive background information regarding the nature of Council’s insurance programme since October 2017.

5.    Aon New Zealand (Aon) provides advice and support to the collective. Ani Te Whaiti, a representative of Aon, will attend the Subcommittee meeting.

6.    Council’s insurance programme has two annual renewal dates of 1 May and 1 November.

7.    The major policies were renewed on 1 May 2022, being the:

a.   Material Damage and Business Interruption (MDBI) for above ground assets; and

b.   Natural Catastrophe Damage to Infrastructure (NCDI) for underground assets.

8.    The other remaining policies were renewed on 1 November 2021, and include employee and statutory Liability, general liability, professional indemnity, crime, cyber liability, travel, fine arts and vehicles.

9.    This report builds on previous insurance updates and seeks to provide the Subcommittee with detailed information on Council’s 2022/23 insurance renewal challenges and highlight several work streams currently underway to best position Council against continued insurance market tightening, particularly for the Wellington region, and increasing premiums.

Insurance Renewal

Insurance Renewal Challenges

10.  The insurance markets both local and international remain hard. The factors driving this include:

a.   Extreme weather events continue to cause high claim costs and erode insurer profitability. Locally in New Zealand, weather related insurance costs hit a new record high in 2021 totalling $304.9M[1], an increase on the previous record set in 2020, of $274M[2]. Recent weather events across the country in July and August strongly indicate 2022 costs will follow the same trend.

b.   Inflationary pressures particularly in the construction sector. These increases are having an impact on the insurance market through increased claim costs.

c.   The impacts of Christchurch and Kaikoura earthquakes are still present in the minds of underwriters. Most insurers are continuing to maintain their current portfolios but there is little to no competition for new or remarket opportunities in the Wellington region particularly.

11.  Despite this market environment, 2022 renewal rates were relatively static for Council’s insurance. Any cost increases were largely reflective of increases in insured values.

12.  Looking ahead to 2023 it is expected that there will be a continuation of the current market environment where insurers maintain their selective underwriting criteria and price for the increased frequency of weather events.

Summary of Council’s Insurance Programme

13.  As in previous years, Council’s two largest insurance policies (by value of cover and of cost) relate to Material Damage and Business Interruption (MDBI), for above ground assets, and Natural Catastrophe Damage to Infrastructure (NCDI), for below ground assets.

14.  These insurance policies are shared arrangements for the group of Councils known as the Outer Wellington Shared Services collective[3]  and Wellington Insurance Group[4]. The insurance cover is provided by New Zealand and International markets from London, Europe and Bermuda, with more than 20 insurers taking up different risk positions within each programme

15.  The following chart provides a comparison between renewal terms for the renewal periods between 2016/17 and 2021/22.  Percentage wise, the significant cost increases relate to MDBI (+10%) and NCDI (+22%), being Council’s more significant insurances within its total insurance programme.

Chart, bar chart

Description automatically generated

Preparations for the future

16.  An update to the Probable Maximum Loss (PML) modelling for the Material Damage and Natural Catastrophe Damage to Infrastructure is recommended in advance of the 2023 insurance marketing. Aon are investigating scope and costs and will present a proposal to the Outer Wellington Shared Services collective including Hutt City Council.

17.  As weather events will continue to place pressure on insurers, we expect markets to further restrict their capacity and increase premiums therefore Aon recommend a review of the retention/excess capacity of the Outer Wellington Shared Services programme. These discussions and any options agreed by the Council group will be considered for the 2023 renewal.

Significant asset classes not covered by any insurance policy

18.  Roading infrastructure assets are not covered under Council insurance policies.

19.  Wharves have been historically covered for demolition costs only. Subsequent to the refurbishment, Rona Bay and Days Bay Wharves are now covered under the material damage and business interruption policy.  Officers plan to obtain insurance cover for Petone Wharf after completion of its restoration work.

Consultation

20.  There are no consultation matters arising from this report.

Legal Considerations

21.  There are no legal matters arising from this report.

Financial Considerations

22.  The budgeted cost of insurance cover included in the Annual Plan 2022/23 year is $4.06M. The actual cost for 2022/23 is expected to be $4.32M and will exceed the budget by $0.26M. Officers will look to find savings and offset these insurance costs within the approved Annual Plan budgets. The total insurance cost for 2021/22 year was $4.09M.

Appendices

There are no appendices for this report.    

 

Author: Glenn Usoalii-Phillips

Treasury Officer

 

 

 

 

Reviewed By: Darrin Newth

Financial Accounting Manager

 

Approved By: Jenny Livschitz

Group Chief Financial Officer


                                                                                       1                                                        30 August 2022

A black and white sign

Description automatically generated with medium confidenceAudit and Risk Subcommittee

03 August 2022

 

 

 

File: (22/1958)

 

 

 

 

Report no: ARSC2022/4/163

 

External audit update, including update on the Hutt City Council Group Annual Report 2021/22

 

Purpose of Report

1.    The purpose of this report is to provide a further update to the Audit and Risk Subcommittee on the Group Annual Report 2021/22 and the associated external audit process.

Recommendations

That the Subcommittee:

(1)   notes and receives the update on the Group Annual Report 2021/22;

(2)   notes that the interim audit was completed successfully and that there is no interim management report issued by Audit NZ;

(3)   notes that the final audited Group Annual Report 2021/22 is expected to be available for Council adoption in late November 2022;

(4)   notes that the statutory deadline for the adoption of the Group Annual Report 2021/22 is 31 December 2022;

(5)   notes that officers plan to present the draft unaudited Group Annual Report 2021/22 to the Audit and Risk Subcommittee on 28 September 2022;

(6)   notes that the new incoming Council, post the October 2022 elections, will determine the approach and timing of the adoption of the Group Annual Report 2021/22; and

(7)   notes the key financial accounting adjustments to be recorded in the 2021/22 financial statements as detailed in paragraph 10.

 

 

Group Annual Report 2021/22 – audit process and adoption by Council

2.    The external audit plan for the Group Annual Report 2021/22 (GAR) was presented to the Audit and Risk Subcommittee (ARSC) on 28 June 2022. This plan outlined the approach to be taken by Audit New Zealand and the timelines.

3.    The interim audit was completed in early July 2022 in line with these plans. The audit progressed well. Audit NZ have not produced an interim management report as there are no new management recommendations from this audit. 

4.    The final audit will start on 19 September 2022 and the audited GAR is expected to be available for Council adoption in late November 2022. The statutory deadline for the completion of the GAR is the 31 December 2022.

5.    Officers plan to present the unaudited draft GAR to the ARSC on 28 September 2022. The intent will be to seek endorsement of this content subject to the completion of any audit adjustments and receipt of final audit clearance from Audit NZ. 

6.    To further support this process, a briefing of the ARSC is planned for 12 September 2022. This will be an opportunity to review the unaudited draft GAR content and provide feedback to officers. 

7.    Post the elections in October 2022, the new incoming Council will determine the approach and timing of the adoption of the audited GAR. 

8.    A detailed quarterly performance report for the period ended 30 June 2022 will be presented to the Policy, Finance and Strategy Committee on 6 September 2022. This report will follow a similar format to previous quarterly reports to the Committee and will include unaudited performance measure results, financial results and major projects information. 

Progress on the preparation of the Group Annual Report 2021/22 content

9.    The preparation of the draft GAR is progressing on track with interim unaudited results being presented to the Corporate Leadership Team for review and feedback. This is part of the broader quality assurance review process to ensure that risks of accuracy, completeness and reasonableness are mitigated.

10.  To meet accounting standards, there are some key adjustments recorded in the financial statements for this 30 June 2022 year end:

-     An increase in the valuation of property, plant and equipment of $199M across the Group, with Aon New Zealand Ltd providing technical specialist advice and support. This increases the total value of assets of the Group up to $1.8 Billion.

-     An increase to the provision for landfill aftercare of $2.1M, which follows an actuarial assessment by Eriksens Global. This increases the provision to $8.5M.

-     Software as a Service projects (part of the Go Digital Programme) were initially budgeted as capital expenditure, however due to accounting standard changes this has been updated to be operational expenditure resulting in a transfer of $1.5M of costs.

Appendices

There are no appendices for this report.    

 

 

 

 

 

Author: Darrin Newth

Financial Accounting Manager

 

 

 

 

 

 

Reviewed By: Jenny Livschitz

Group Chief Financial Officer

 

 

 

Reviewed By: Jarred Griffiths

Director Strategy and Engagement

 

 

 

Approved By: Kara Puketapu-Dentice

Chief Executive (Acting)

 


                                                                                       1                                                        30 August 2022

A black and white sign

Description automatically generated with medium confidenceAudit and Risk Subcommittee

11 August 2022

 

 

 

File: (22/2023)

 

 

 

 

Report no: ARSC2022/4/164

 

Tupua Horo Nuku Project Update

 

Purpose of Report

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

Recommendations

That the Subcommittee:

(1)   notes the key risks and updates on the Tupua Horo Nuku (Eastern Bays Shared Path) Project;

(2)   notes the increasing construction costs to deliver the overall Tupua Horo Nuku (Eastern Bays Shared Path) Project and that discussions are on-going with Crown Infrastructure Partners (CIP) and Waka Kotahi to seek additional funding and that the costs for the remaining four bays will go to Council for approval in November or December 2022;

(3)   notes the Tupua Horo Nuku (Eastern Bays Shared Path) Project budgets (both capital expenditure and revenue) approved by Council in the Long-Term Plan 2021-2031 following public consultation and updated for Council decisions made in the preparation of the Annual Plan 2022-23, as detailed in the “Financial Considerations” section of the report; and

(4)   notes that Council will be required to approve any increase in funding requirements which exceeds Council’s approved budgeted position and that the impact of the significance of increases on requirements for Council to consult on changes will be considered alongside the outcome of discussions with funding partners.

 

For the reasons outlined in this report.

 

 

Background

2.    Total funding currently available to the Project is $30M which includes $15M of Crown Infrastructure Partner (CIP) funding, and $7.5M allocated from both Hutt City Council and Waka Kotahi.

3.    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 Long Term Plan 2021-2031.

4.    Last December 2021, Hutt City Council (HCC) approved to proceed with the Te Ara Tupua Alliance (the Alliance) to undertake design and construction for the first two bays of the Project – Sunshine Bay and Ma Koromiko (Windy Point).  Council agreed cost to construct the first two bays at $17m.

5.    CIP funding of $8.5m, Waka Kotahi funding of $4.335m (NLTF share), and HCC local share of $4.165m has been approved for Bays 5 and 6.

Discussion

6.    Project Alliance Agreement (PAA) and the Waka Kotahi-HCC Partners Agreement have been signed.  

7.    Issue for Construction (IFC) drawings have been completed for the first two bays and issued to the construction team along with job packs. Construction management plans submitted to councils for approval.

8.    Pre-cast sub-contract awarded, and pre-cast moulds are underway. Installation of the first pre-cast seawalls is expected to start later in the year at Ma Koromiko. 

9.    Service investigations for the six bays currently in progress and relocation of power poles at Sunshine Bay to follow. Geotechnical investigations planned for bays 1 to 4 in September. Opportunity to deliver the renewal of 900 metres of wastewater mains (which are Wellington Water Ltd assets) at Sunshine Bay also being considered by the Alliance.

10.  Development of the Target Outturn Costs (TOC) underway for design and construction of the four northern bays (Point Howard/Sorrento Bay, Lowry Bay, York Bay, and Mahina Bay).

11.  Discussions with CIP and Waka Kotahi officers to discussions on additional funding opportunity for the other four bays. Funding approvals from the Council and Waka Kotahi Board are expected to take place in November and December 2022, respectively.

Options

12.  The key Project risks are appended to this report.

Climate Change Impact and Considerations

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

Consultation

14.  Community Information Session on 11 August at 7:30pm at St. Ronan’s church to provide update on upcoming construction works.

15.  Sod turning and site blessing event on the 24 August at Bishop’s Park, Eastbourne.

Legal Considerations

16.  There are no legal considerations to this report.

Financial Considerations

17.  Current approved costs by HCC for the construction of Ma Koromiko (Windy Point) and Sunshine Bay:

Item

Note

Value

Alliance design, construction, and risk

Risk still to be validated

$15,143,832

Client managed costs (3%)

Salaries, Advisors, comms/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

 

18.  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 higher than currently budgeted for.

19.  A key risk to the overall project delivery is the rising costs in the construction sector due to Covid-19. Design and value engineering/management initiatives to minimise the increase in cost are being investigated.

20.  The Alliance has also started the development of the target outturn cost (TOC) to deliver the other four bays of the Project. This work is due to be completed in late 2022 and will inform additional funding discussions with Waka Kotahi and CIP.

21.  Discussions with CIP and Waka Kotahi officers are on-going to request for additional funding required to deliver the other four northern bays.

22.  Table 1 and 2 show the budgets in the Long-Term Plan 2021-2031 which were approved by Council following the public consultation process and updated for Council decisions made in the preparation of the Annual Plan 2022-23. This shows the timing of the capital investment as well as the funding from Waka Kotahi and from the COVID response and recovery fund. The Financial Delegations Policy states that Council approval is required to exceed the total budget level. A detailed report presented to the Long-Term Plan/Annual Plan Subcommittee on 16 December 2021 confirmed Council approval to proceed with the construction of the first two bays. Further decisions will be progressed when the costing information for the other four bays has been completed in Q4 2022.

23.  The significance of impact of any future budget decisions will be considered alongside the outcomes of discussions with our funding partners. This will include the consideration of whether there is any need for Council to consult on a Long Term Plan amendment.

Table 1: Revenue/Funding sources 

Financial year

$M

2021/22

Forecast

2022/23

2023/24

2024 /25

2025-31

Total

Annual plan 2022/23

 

(1.89)

(15.48)

(4.57)

-

-

(21.94)

Waka Kotahi subsidy funding

0.64

5.23

1.57

 

 

7.40

CIP funding*

1.25

10.25

3.00

 

 

14.50

 

 

 

 

 

 

 

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

Financial year

$M

2021/22

Forecast

2022/23

2023/24

2024/25

2025-31

Total

Annual Plan 2022/23

2.50

21.0

6.00

 

 

30.00

 

Appendices

No.

Title

Page

1

Tupua Horo Nuku Risk Register - August 2022

23

 

 

Author: Jon Kingsbury

Head of Transport

 

 

 

 

 

Approved By: Kara Puketapu-Dentice

Director Economy and Development

 


Attachment 1

Tupua Horo Nuku Risk Register - August 2022

 

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                                                                                       1                                                        30 August 2022

A black and white sign

Description automatically generated with medium confidenceAudit and Risk Subcommittee

11 August 2022

 

 

 

File: (22/2036)

 

 

 

 

Report no: ARSC2022/4/165

 

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 30th June 2022.

Recommendations

That the Subcommittee:

(1)   receives the report and notes the following:

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

(3)   notes that the Resource Consent was lodged in July 2021 and a decision is expected in mid-August 2022;

(4)   notes a Project Design Liaison Group is being established;

(5)   notes GHD have been working as Principal’s Technical Advisor and preparing documentation needed for the procurement process; and

(6)   notes that the procurement route has changed from a Hybrid Alliance to a Pure Alliance.

 

Project Update

2.    The resource consent for RiverLink was lodged on 30 July 2021. The lodged documentation resides on the regulator’s website.

 

3.    The Environment Court hearing was held 26 – 29 April 2022, where the team presented a strong, compelling and balanced case. A decision regarding the consent is anticipated mid-August.   

 

4.    A Project Design Liaison Group (PDLG) is being established with membership from key submitters and project partners to provide a mechanism to resolve outstanding matters regarding the consent.

 

 

5.    In parallel with the work needed for the resource consent, work has been progressing on procuring an alliance to deliver the RiverLink works. GHD have been appointed as Principal’s Technical Advisor and have been working with the project partners to produce a reference design, establish Minimum Requirements and produce the documentation needed for the procurement process.

 

6.    Market soundings occurred in February 2021 and March 2022 and the project team has a clear understanding of the consortia who are likely to bid for the alliance. 

 

7.    The project has moved from a Hybrid Alliance to a Pure Alliance which has changed the procurement process. This change has the key advantages that         (i)         it will allow an earlier commencement of works and

     (ii)        there will be a collaborative process to refine the project requirements and costs. 

 

8.    There is a delay to the release of the Request for Proposal (RFP) as Waka Kotahi is required to brief relevant Ministers and obtain necessary approvals ahead of RFP release. This is a requirement of the Waka Kotahi component of the RiverLink works which is funded through the New Zealand Upgrade Programme (NZUP).

 

9.    The RFP will now be issued to interested parties in September/October 2022, and a preferred contractor will be selected at the conclusion of the RFP period. The project team and the preferred contractor will then work together (under an Interim Project Alliance Agreement (IPAA)) to further develop the Minimum Requirements, agree the Target Outturn Cost and programme before signing the Project Alliance Agreement (PAA) which the alliance works will be delivered under.

 

10.  An independent Quantity Surveyor produced cost estimates for the whole project and worked with the project partners to refine costs. 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. The independent Quantity Surveyor is updating their estimate following comments from Project Partners.

 

11.  A first principles cost estimate of the design will be used to set the Target Outturn cost which fits within the approved budgets during the IPAA phase. The Target Outturn Cost is the value that will be taken forward into the Project Alliance Agreement.

 

12.  Risk workshops have been held and a costed risk register is being produced in conjunction with the updated cost estimate. Risk allocation discussions are also in progress.

 

13.  A team of commercial advisers has been reviewing the commercial model necessary to recognise the relationship between the three funding partners and the PAA. A set of commercial principles will be in place before the PAA commences.

 

14.  Negotiations are underway with Kāinga Ora regarding the Infrastructure Acceleration Fund (IAF) for funding towards new wastewater and stormwater infrastructure to enable housing adjacent to RiverLink and across the valley floor. A draft agreement has been received from Kāinga Ora and an HCC legal review is underway. HCC are collating a pack of information to support the negotiations and final contract documentation. A report on the IAF negotiations is being presented to the Policy, Finance and Strategy Committee 6 September 2022.

 

15.  The Programme has appointed an Advanced Works Project Manager to progress discrete packages of work ahead of the main Alliance commencing. The works are a part of the RiverLink scope but are independent from it and, amongst other things, will show the community a commitment to the Programme, and begin to build construction momentum. The Advanced Works are:

a.   Skate Park relocation

b.   Ewen Bridge Intersections

c.   Mill St Stopbank

d.   Lower Hutt CBD Streetscape

 

Project Governance

 

16.  The Project Governance structure has been redeveloped with the RiverLink Project Partner Board to better serve the needs of the Programme.  The revised Governance structure is provided below.

 

17.  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 Whānui and Ngāti Toa Rangatira).

 

18.  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.

 

19.  A 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.

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Risk

20.  A Project Risk Register is attached as Appendix 1 to the report.


 

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 August 2022, subject to no appeals

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

August / September 2022

Release of RFP to consortia

September / October 2022 

Identify preferred Design & Construction consortia to join the Alliance

Likely early 2023

Advanced Works start on site

January 2023

Main construction works start on site

2023

Construction completion

2027

 

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

 

   Partners

o    Greater Wellington Regional Council

o    Hutt City Council

o    Waka Kōtahi

   Iwi Partners

o    Taranaki Whānui

o    Ngāti Toa

   Stakeholders

o    Waka Kōtahi (co-funding of specific transport initiatives)

o    Residents and business alongside the river edge

o    Hutt City rate payers and residents

o    General public regional/national

o    Community boards

o    Local Schools

o    Media


 

Financial Considerations

22.  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.

23.  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 (potentially eligible for Waka Kotahi subsidy in part);

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

·    A riverbank park; 

·    A riverbank carpark; and

·    Strategic property purchases to enable future development.

24.  Table 1 below shows the budget in the final Annual plan 2022-2023 adopted by Council.

 

25.  The timing of Council’s expenditure is profiled to align with the assumed project programme of works, with completion scheduled for 2027.

 

26.  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: 2022/23 Final Annual Plan Budget for RiverLink (NET)

 

Annual plan 2022-23

$M

2022/23

2023/24

2024/25

2025-2031

Total

Expenditure

17.9

24.3

30.5

39.6

112.3

Revenue

(1.6)

(6.0)

(7.2)

(10.1)

(24.9)

NET

16.3

18.3

23.3

29.5

87.4

 

Climate Change Impact and Considerations

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

 

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

 

29.  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.

 

30.  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.

Consultation

31.  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.

 

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

Legal Considerations

33.  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.

 

34.  Council has entered into a revised RiverLink Project Partner Agreement 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. This is discussed in paragraph 9.

 

 

Appendices

No.

Title

Page

1

RiverLink Risk Register

32

    

 

 

 

 

 

 

Author: Tom Biggin

Project Manager Riverlink

 

 

 

 

 

 

Reviewed By: Jenny Livschitz

Group Chief Financial Officer

 

 

 

Approved By: Kara Puketapu-Dentice

Chief Executive (Acting)

 


Attachment 1

RiverLink Risk Register

 

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                                                                                       1                                                        30 August 2022

A black and white sign

Description automatically generated with medium confidenceAudit and Risk Subcommittee

12 August 2022

 

 

 

File: (22/2048)

 

 

 

 

Report no: ARSC2022/4/166

 

Update on Petone Wharf Project

 

Purpose of Report

1.    To update the Sub-committee on the Petone Wharf Project and associated risks.

Recommendations

That the Subcommittee:

(1)   notes and receive the information in this report;

(2)   notes that three options for Petone Wharf have been progressed to the stage of detail design and costing and that Council will be asked to identify a preferred option in early 2023;

(3)   notes that Calibre Consulting Ltd’s most recent report confirms a substantial amount of work is required in the rebuild and that the extent of this will not be known until the structure is taken apart; and that due to this the overall residual risk rating remains high; and

(4)   notes a communication plan has been developed for the project which includes signboards on site which will provide background information, key dates and updates as work progresses.

For the reason that no decisions are required at this time.

 

Background

2.       As part of the Long Term Plan 2021-2031, Council agreed to proceed with the Petone Wharf (the wharf) rebuild over the next three years and budgeted $21M for the project. A summary history of the wharf was included in a report to the Long Term Plan/Annual Plan Subcommittee meeting held on 10 February 2021 and updates have been presented in reports to the Audit and Risk Subcommittee in April and November 2021 and April 2022. This report updates on progress since then.

Discussion

3.    In June and July 2022 six rebuild options were presented to the Petone Community Board and Communities Committee. Board and Committee members were advised that three options would be progressed to the stage of detail design and costing. The Board and Committee will identify a preferred option in early 2023.  All three options being progressed anticipate shortening the wharf.

4.    The three options are summarised below.

Option

Description

Trimmed Heritage

Shortened wharf (head removed) using same form, salvaged materials where practical and new hardwood

Semi-heritage

Shortened wharf (head removed) using same form.  Mixture of traditional and modern materials

Heritage Beach end with modern south end

Shortened wharf (head removed). Limited area of wharf at north end restored using original fabric where practical.  Outer wharf uses same form with mixture of traditional and modern materials

 

5.    The three options are being progressed to detailed design and costing stage.  The Communities Committee will be required to make a decision on which option to progress in early 2023. Once a design and budget has been confirmed, the project will additionally report in regularly to the Major Projects Board during the detailed design and delivery phases.

6.    The commitment to heritage and sustainability varies and accordingly costs will also vary. Estimated future maintenance costs for each option will be included in the report in February 2023. It should be noted that options which include more salvaged components are likely to cost more to maintain in future years.

7.    In deciding on a final option, there will be a number of factors to consider. 

8.    Through the rebuild there is potential to increase amenity and use of the wharf.  The opportunities identified include adding a swimming platform, better provision for fishing and facilities that enable wharf jumpers to exit the water and return to the deck easily. Improving accessibility for people with disabilities will also be a consideration.

9.    While there is currently no commercial imperative for a ferry service to operate from the wharf, with additional work all options could support ferry operations should that be required in the future. Each option includes a jetty for berthing smaller vessels.  None of the rebuild options would enable larger vessels to berth at the wharf. 

 

10.  The hut and gates have been removed from site because they were unstable and presented health and safety issues. They are in safe storage. Neither the hut nor the gates are believed to be original features. The rebuild options could include building a replacement hut based on the 1907 drawings. This design differs from the hut that was removed in 2017.

11.  There are groups and individuals who will have a view on how the wharf is rebuilt. The wharf is a heritage structure under the District Plan and has been nominated for heritage status with Heritage New Zealand Pouhere Taonga (HNZ). A Conservation Plan for the wharf has been produced to provide greater certainty over heritage issues. 

12.  There have been questions around building sustainably. The wharf is predominantly a timber structure constructed from large dimension hardwood timbers.  For Days Bay wharf, these were sourced from South America, however officers are also investigating supply from Australia.  Using timber from slow growing, mature trees does raise questions of sustainability and environmental degradation.  HNZ or Greater Wellington Regional Council may prefer 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 composite materials for some parts.  All decisions on material options will be a compromise between heritage, sustainability values and cost.

Current Condition of the wharf

13.  Calibre Consulting Ltd (Calibre) most recent report confirms a substantial amount of work is required in the rebuild. 

14.  The wharf is a very long, predominantly timber, structure and it is exposed to winds, tidal movement and wave action. The bracing timbers are in poor condition and some bracing is missing. The poor condition of the bracing means that the wharf moves more that it should, causing bracing and whaler beams to break and pile wraps to fail. Movement of the wharf is shortening the lives of components. Piles are decaying and losing structural integrity, especially at the intertidal zone. Infestation by marine borer such as Toredo Worm is problematic and has been found along the length of the wharf. In summary, the wharf is in poor condition.  

15.  Most of the existing piles need to be repaired regardless of which option is chosen. Many components need to be replaced. Only a small proportion of the material is in good enough condition to salvage for reuse on the wharf. 

16.  There will be many issues that have not been quantified by Calibre because they cannot be seen until the wharf structure is unpicked. It should be noted that in the risk register the overall residual risk rating remains high because of this.

17.  Technical reports are being prepared to inform design and the resource consent application.


 

18.  A communication plan has been developed for the project which includes signboards on site which will provide background information, key dates and updates as work progresses. The sign boards are expected to be in place by September 2022.

Climate Change Impact and Considerations

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

20.  The wharf was designed in 1907 with the deck approximately 3 metres above the high water line. The deck sat 10 feet above the high water line because it was designed for berthing large, commercial vessels. It is unlikely that sea level rise will affect the recreational function or structural integrity of the rebuilt wharf within 50 years.

Consultation

21.  The proposal to refurbish Petone Wharf was consulted on as part of the Long Term Plan process in 2021-2031. 

22.  Advice from Heritage New Zealand and Greater Wellington Regional Council (GWRC) will be included in the report to be considered by the Petone Community Board and the relevant committee in early 2023. 

Legal Considerations

23.  The wharf rebuild works will require resource consent from both GWRC and Hutt City Council. 

24.  Under the Resource Management Act, GWRC controls activities in the coastal marine area (i.e. below the high tide line) including occupation of space, cultural and heritage effects and ecological disturbance. GWRC’s Proposed Natural Resources Plan is the main planning document controlling coastal activities. The wharf is listed in Schedule E2 Historic heritage wharves and boatsheds. This affects the consenting requirements. Planners have signalled that an application to rebuild the wharf is likely to be publicly notified.

25.  Hutt City Council controls the landward activities required to undertake the rebuild project (i.e. above the high tide line). This will include the works required to create the construction laydown area on the turf between the wharf entrance and The Esplanade. It will also include management of construction traffic, public access, noise, dust and any associated effects of the works on cultural and heritage consents. The Hutt City District Plan is the relevant planning document. The wharf is listed in Heritage Appendix 2 – Heritage Buildings and Structures. The laydown area is in the Special Recreation Activity Area – Petone foreshore. This affects the consenting requirements.


 

 

Financial Considerations

26.  The $21M funding approved in the Long Term Plan 2021-2031 was derived from a quantitative risk assessment dated 18 May 2021. This 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).  Based on P95, the cost estimate was calculated at $20,939,000 excluding GSTThis was based on the wharf being shortened by 61 metres.

27.  The 2022-23 Annual Plan has approved Capital funding to rebuild the wharf over three years:

2022/23   $2M

2023/24   $12M

2024/25   $6.1M

                 $20.1M

 

28.  In addition, $700,000 for demolishing the head is funded as an Operating Project in 2022/23. There is further funding of $100,00 in 2021/22 which is intended to be carried over to 2022/23.

29.  $91k of capital expenditure was spent on advice and investigation in 2021/22.

30.  It should be noted that the cost estimate provided in early 2021 assumes that no piles will be completely replaced and that all those needed can be repaired. The condition of piles may not be understood until the rebuild work begins. This represents a significant risk to the project in terms of cost, project programme and consenting. Officers are working with Calibre to determine how this risk can be better understood and managed.

31.  The design life for the wharf renewal is expected to achieve approximately 50 years.  The wharf will deteriorate following renewal. Detailed wharf inspections every five years would continue and survey results would determine the extent of repairs and maintenance. This work would include replacing bracing and bolts, dealing with piles (extending wraps or replacing piles) and other works. Although it would depend on which option is selected, over a 50 year period the amount required to maintain and renew the wharf will ramp up. Options that include salvaged components are likely to require more maintenance.

32.  It should also be noted that the construction market has changed since the cost estimate was prepared. Updated estimates will be provided when officers report back on the options in February 2023.

Appendices

No.

Title

Page

1

Petone Wharf Risk Register

40

    

 

Author: Kelly Crandle

Head of Parks and Reserves

 

 

 

 

 

 

Reviewed By: Andrea Blackshaw

Director Neighbourhoods and Communities

 

 

 

Reviewed By: Jenny Livschitz

Group Chief Financial Officer

 

 

 

Approved By: Kara Puketapu-Dentice

Chief Executive (Acting)

 


Attachment 1

Petone Wharf Risk Register

 

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1                                                           30 August 2022

 

A black and white sign

Description automatically generated with medium confidenceOur Reference          22/2019

TO:                      Chair and Members

Audit and Risk Subcommittee

FROM:                Andrew Quinn

DATE:                10 August 2022

SUBJECT:           Naenae projects - progress update

 

 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 28 June 2022.

 

Recommendation

That the Subcommittee receives the memorandum and notes the following progress that has been made on the Naenae projects:

 

a)   Approval of the resource consent application for the Naenae Pool and Fitness Centre;

b)   Off-site procurement, design activity and building consent processing is proceeding in line with the programme agreed with co-funder Crown Infrastructure Partners;

c)   Commencement of the groundworks in July 2022 and the completion of the first stage of ground remediation;

d)   Procurement of the major components for the building are progressing to plan and local suppliers are involved in the tendering process;

e)   Design activity for the refurbishment of the old Naenae Post Office continues and an application for a change of use to a community centre is being processed by Council planners.

f)    Tenders for the refurbishment of the Old Naenae Post Office will be sought in September 2022.

g)   The cost for the Naenae Pool and Fitness Centre continues to be reviewed at regular intervals and remains within the $68M budget cap.

h)   Council has been successful in its application to the Local Government Funding Agency’s Green, Social and Sustainability Lending Programme for the Naenae pool and fitness centre project.      

 

 

Naenae Pool and Fitness Centre

2.    Since the last report in June 2022, there continues to be favourable progress on the Naenae Pool and Fitness Centre. Following the completion of design development in April 2022 and a two-stage tender process, a construction contract has been awarded to Apollo Projects to build the new pool.

3.    Apollo are an experienced builder of aquatic sports facilities having worked on numerous projects throughout New Zealand with Architecture HDT including Taiora: QEII Recreation and Sport Centre and the Linwood Pool both in Christchurch; and the Kiwa Pool in Gisborne. 

4.    The construction contract contains social procurement outcomes such as the use of local suppliers for the build and the design includes all the environmental efficiencies that will contribute to a reduction of the carbon emissions when compared to the Naenae Olympic Pool. The design will also provide for 22% less energy usage (kWh/year), even though the building is now 20% bigger than before.

5.    Work has now commenced on site and the first stage of earthworks and ground remediation is complete.

6.    The application for resource consent has now been approved and conditions agreed. The submission and approval of building consent applications is being staged to suit the construction timeline and is proceeding to plan.

7.    As advised previously the design for the pool now features two hydro-slides or zoom tubes and two bulkheads for the main pool. The latest images of the pool and of the various aquatic sports mode set ups are at Appendix 1.    

Naenae Town Centre development

8.    Design activity for the conversion of the old Naenae Post Office to a community centre continues and the team are currently progressing design plans ready for tender and for building consent.

9.    Meantime our application for a change of use has been lodged with Council planners. The building is listed as a Category 1 historic place by Heritage NZ and whilst our proposal to modify the building is sympathetic to their expectations, there is an ongoing conversation with the Council appointed heritage consultant over some aspects of the design. Once this has been resolved, processing of the application can resume.

10.  The removal of asbestos and soft strip of redundant ceilings and wall linings will commence at the end of August 2022. Tenders for the construction contract will be sought in September 2022.

11.  Updated images for the community centre are attached to this paper at Appendix 2.

 

Risk

12.  The cost of the Naenae Pool and Fitness Centre continues to be reviewed at regular intervals and remains within the $68M budget cap.

13.  The ten (10) top-rated risks for the Naenae Pool and Fitness Centre project are reported to this Subcommittee and included at Appendix 3 of this report.

14.  There are no major changes in the risk profile to report, although the risk of disruption to worksite productivity due to COVID19 sickness remains high.

15.  We continue to monitor construction market conditions, specifically the availability of construction materials and have already taken delivery of some of the materials that will be required for later stages of the build. 

Financial Considerations

16.  The project team reviewed and updated the current financial profile of the project against the Long-Term Plan 2021-2031 (specifically for the 2022/23 Annual Plan). As reported above, the project is still tracking well to the capital expenditure budget of $68M.

17.  Crown Infrastructure Partners (CIP) are providing co-funding of $27M through the COVID-19 response and recovery fund. Following completion of the site establishment and the commencement of construction; Council will be able to drawdown the second milestone payment of $1.35M in August 2022. 

18.  Council has been successful in its application to the Local Government Funding Agency’s Green, Social and Sustainability Lending Programme for the Naenae pool and fitness centre project.

Climate Change Impact and Considerations

19.  The Naenae Olympic Pool was a major contributor to greenhouse gas emissions. The old Pool ran on natural gas and produced 546T of carbon emissions from its electricity and gas-powered pool heating and ventilation systems.

20.  HCC plan to use solely electricity from the national grid, thus reducing emissions by around 45% to around 275T. The Naenae project team is also working with Crown Agency Callaghan Innovation who is assisting the development of the desired sustainability features.

21.  Design features that will reduce energy consumption in the Naenae Pool and Fitness Centre include:

 

·    High level of maintenance and serviceability of services and structure

·    A building that is resilient to the impacts of a changing climate and natural disasters

·    Metering and monitoring of energy and water use

·    Re-cycling of demolition waste products and ability to separate operational waste

·       High quality indoor air quality; high standards of acoustic, lighting, visual and thermal comfort

·       50% reduction in carbon emissions compared to the previous pool and reduced energy consumption

·       EV parks with charging points and secure bike stands

·       The use of Glu-laminated timber for the main pool hall structures

·       High efficiency heat recovery air-handling units providing dehumidification and air-conditioning

·       A reduction in heat gain by using sun-shading or smaller windows which means in turn lower costs to cool the building in summer. Also, high efficiency window and glazing suites using low-E glass and thermally broken framing.

·       Centralised heating, cooling and electrical systems. 

·       Energy efficient LED luminaires

·       Stainless steel tank construction – less embodied carbon than concrete base/walls

 

22  In addition to these initiatives, the project team has reduced the amount of demolition material that would otherwise go to landfill; up to 70% by weight of waste material has been either recycled or re-purposed into the new pool.

23  Concrete from the pool and bleachers have been crushed on site and will be re-used to fill the pool void. Recycling contributes towards the Green Star rating. Items of heritage and memorabilia have been salvaged and stored safely for recycling and community distribution.   

Legal Considerations

24   There are no legal considerations to report.

 

Appendices

No.

Title

Page

1

Images of Naenae Pool & Fitness Centre

48

2

Images of Naenae Community Centre

58

3

Naenae Pool risk register (top ten)

69

    

 

Author: Andrew Quinn

Project Manager (Naenae)

 

 

 

 

 

 

Approved By: Andrea Blackshaw

Director Neighbourhoods and Communities


Attachment 1

Images of Naenae Pool & Fitness Centre

 

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Images of Naenae Community Centre

 

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Naenae Pool risk register (top ten)

 

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                                                                                       1                                                        30 August 2022

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Description automatically generated with medium confidenceAudit and Risk Subcommittee

09 August 2022

 

 

 

File: (22/2002)

 

 

 

 

Report no: ARSC2022/4/149

 

Audit and Risk Subcommittee Forward Programme 2022

 

 

 

 

 

Recommendation

That the Subcommittee receives and notes the Forward Programme for 2022 attached as Appendix 1 to the memorandum.

 

Purpose of Memorandum

1.  To provide the Audit and Risk Subcommittee (the subcommittee) with a Forward Programme of work planned for the subcommittee for 2022.

Background

2.  The Terms of Reference for the subcommittee requires the subcommittee to have 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.

3.  The Forward Programme for 2022 provides a planning tool for both members and officers to co-ordinate programmes of work for the year.  The forward programme is attached as Appendix 1 to the memorandum.

Forward Programme

 

4.    The Forward Programme is a working document and is subject to change on a regular basis.

 

Appendices

No.

Title

Page

1

Audit & Risk Subcommittee Forward Plan

72

 

Author: Katherine Davey

Democracy Advisor

 

 

 

 

 

 

Reviewed By: Kate Glanville

Senior Democracy Advisor

 

 

 

Approved By: Kathryn Stannard

Head of Democratic Services

 

 

 

 

 

 

 

 

 

 

 

 

 


Attachment 1

Audit & Risk Subcommittee Forward Plan

 

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[1] Insurance Council of New Zealand

[2] Insurance Council of New Zealand

[3]  This is an arrangement between this Council, Kapiti Coast District Council, Upper Hutt City Council and Porirua City Council to share insurance cover and save on insurance premium cost

[4]  This is an arrangement between this Council, Greater Wellington Regional Council, Kapiti Coast District Council, Upper Hutt City Council and Porirua City Council to share insurance cover and save on insurance premium cost.