Agenda of Corporate and Strategic Committee

Follow-ups from Previous Corporate & Strategic Committee Meetings

Attachment 1

Follow-ups from Corporate and Strategic Committee Meetings

4 September 2013

	Agenda Item	Follow-up / Request	Person Responsible	Due Date	Status Comment
1	Action Items	When was the routine Cadmium monitoring programme established by Council?	IM		Information provided via email, and appended.
2	General Business	Request for an update on progress being made by HB LASS	EL		Paper provided to 25 September Council meeting, and excerpt appended.
3	General Business	Request for an analysis of whether the collection of rates arrears could be coordinated regionally to save debt collection costs	PD		There is not a consistent policy for the collection of rate arrears by the councils (TLAs and Regional) within Hawke’s Bay. Some employ staff to specifically follow up on outstanding rates, whereas in the case of the Regional Council, rates in excess of $150 for any ratepayer are outsourced to a debt collector as this is more economic. If an assessment is to be carried out on whether this service should become a shared service (which would require changes in policy covering debt collection thresholds and mode of collection), then such a shared service initiative would be best analysed by the HB LASS.

From Environment & Services

Agenda Item

Follow-up / Request

Person Responsible

Status Comment

HB Museum funding figures to be clarified

P Drury

2013

Council funded $2,500,000 to the Museum Trust over two years (2010/11 & 2011/12)

This was funded by:

Sale of Land (Non-Investment) Reserve $900,000

Loan (Regional Infrastructure) $1,200,000

Specific Regional Projects Reserve $400,000

Ref Follow-up item 1 above (cadmium monitoring)

From: Barry Lynch
Sent: Wednesday, 4 September 2013 9:44 a.m.
To: Leeanne Hooper
Subject: RE: cadmium monitoring in soils

We have soil quality data going back to about 2000 but the ‘new’ soil monitoring with lots of added measured parameters including pesticides has only been going since 2010.

We look at different landuses every year and the return to the same sites on a 3-5 year basis depending on landuse so we will start revisting some of the previous sites soon. This year we are looking at cropping sites. Last year we looked at dairy and intensive beef and the year before that we looked at sheep and beef.

Hope this helps.

Let me know if there are any other questions.

Barry

Dr Barry Lynch

Principal Scientist - Land
Hawke’s Bay Regional Council

Ref Follow-up item 2 above (HB LASS)

1. HB LASS Ltd was established in December 2012 by the five local authorities within Hawke’s Bay. The company was established to investigate, develop and deliver shared services, where and when that can be done more effectively for any combinations of some or all of the shareholding councils.

2. Since the company was established investigation has commenced into four areas of the activities of some or all of the councils to evaluate the potential of shared services initiatives.

3. The Board issued briefs for investigations into Building Control activity, GIS services, and a Regional Call Centre proposal. The Board also issued a brief for an investigation into the potential Regional Fleet Management opportunity. Each of these investigations has been progressed but not concluded.

Building Control Activity

4. Work on the development of a shared services proposal for building control was initially undertaken by an Advisory Group of officers from each of the territorial local authorities together with an independent chairperson. Progress with this investigation was not entirely to the Board's satisfaction and consequently the Board resolved in June to seek external assistance to address the development of an implementation plan for a Regional Building Control service. This work is well underway.

5. HBRC is not a part of this investigation as we do not undertake building consent functions.

GIS Services

6. The Advisory Group of officers established to undertake this investigation recommended to the Board in June that a detailed implementation plan for a Regional GIS Service should be prepared with a view to the implementation of a regional GIS service within the 2013/14 financial year. The implementation plan is in the process of being developed and is expected to be presented to the Board in September this year. The Advisory Group of officers produced a very professional and forward-looking, positive report that indicated in their view that there are advantages to be gained from implementation. The Board expects a positive outcome from this work stream.

Regional Call Centre

7. The Advisory Group of officers reported initially to the Board in June. The Board has instructed the Advisory Group to undertake further work including obtaining additional information before any decision is made on this opportunity.

Fleet Management

8. One of the opportunities considered in the initial raft of potential activities for shared services was a Regional Fleet Management service. In May the Board resolved that an investigation into the potential for a Regional Fleet Management service should be undertaken. The report into the viability of such a service is to be issued and was presented to the Board in August 2013. It identified total savings excess of $100,000 worth of savings across the councils and recommended collaborative and joint activity structured to achieve these savings.

Further Opportunities

9. The Board has also identified a raft of other opportunities for consideration and more particularly received the report that examined the potential in the asset management area. This is expected to be progressed with some vigour in the next period.

10. Good progress has been made particularly in progressing the GIS opportunities and the Board have gained a greater understanding of the challenges that exist in other areas.

11. The councils had used their combined purchasing power on a number of collaborative and joint activities prior to the establishment of the company; These include:-

11.1. Joint Insurance Procurement

11.2. Joint Electricity Procurement

11.3. Joint Valuation Service Procurement

11.4. Joint Solid Waste Management

12. In many regions these activities have been among the first undertaken by shared services organisations and to that extent are ‘low hanging fruit’ not available to be captured by HB LASS Ltd. Nevertheless, there are many other opportunities available for capture that we will pursue with vigour.

Statement of Intent

13. The Statement of Intent outlines the performance targets against which the company is measured. For the seven month period December 2012 – June 2013 the following targets were set.

*Performance Target*	*December 2012 - June 2013*
Initiate at least three shared services in the first full year of operation and at least one shared service each year and no less than two shared services successfully implemented within the following three years;	Four shared services investigations have been initiated as at 30 June 2013
Implement Shared Services demonstrating best practice and added value to participating councils and stakeholders;	No shared services have been implemented in the reporting period. Significant progress has been made in investigations. An outcome of one of these investigations is the proposed establishment of a Hawke’s Bay Local Authority Collaborative Fleet Management Group.
Explore Joint Procurement initiatives for goods and services from sources offering best value, service, and or continuity of supply;	No joint procurement initiatives have been initiated under the HB LASS umbrella although joint procurement of insurances, electricity and other services is taking place.
Ensure sufficient income is available from activities to sustain a viable company.	Sufficient income was received from membership fees to sustain the company’s overhead costs.
Operate in a manner that conforms with any applicable regulatory requirements	All regulatory requirements have been met.

HAWKE’S BAY REGIONAL COUNCIL

Corporate and Strategic Committee

Wednesday 11 December 2013

SUBJECT: HBRIC Ltd Board of Directors Membership

Reason for Report

1. The purpose of this report is to formalise the membership for the remaining period of the Hawke’s Bay Regional Investment Company Limited (HBRIC Ltd) Transition Board following the retirement of Councillor Directors from this Board as required by its Constitution.

2. After considering legal advice at the 28 August 2013 Regional Council meeting on the issue of perceived Councillor Director conflict of interest, Council resolved that it:

2.1. Notes confirmation from legal advice that there is no actual conflict of interest for Councillor Directors on the Board of HBRIC Ltd at present

2.2. Confirms that it has considered the potential solutions for the perceived conflict of interest issue in line with the request made at the July 2013 Council meeting, and recommends that the incoming Council considers the perceived conflict of interest issue during its consideration of the appointment of Councillor Directors for HBRIC Ltd following the local body elections.

3. This report also provides an overview of the perceived conflict of interest issues for Council’s consideration as set out in paragraph 2.2 above.

Background on HBRIC Ltd Director Appointments

4. On 23 November 2011 Andrew Newman, the Chief Executive of Council, was appointed as an ex officio Director and Managing Director of the HBRIC Ltd Transition Board.

5. On 14 December 2011 Council approved the HBRIC Ltd Constitution, statement of objectives, and the transfer of the Shareholding of the Port of Napier Ltd to HBRIC Ltd. Three Councillors were elected to the HBRIC Ltd Transition Board, being councillors Fenton Wilson, Alan Dick and Christine Scott.

6. On 25 January 2012 Council approved the appointment of Messrs Jim Scotland, Sam Robinson and Dr Andy Pearce as Independent Directors to the HBRIC Ltd Transition Board.

7. The term of the appointments for all seven Directors of the Transition Board was to expire on 31 December 2013.

8. As part of the 2013/14 Statement of Intent approval process Council agreed to change the date in which the Transition Board will be replaced with a permanent Board. This change extended the Transition Board’s term to 30 June 2014, ensuring continuity around the final decision making process for the Ruataniwha Water Storage Scheme (RWSS).

Resignation of Councillor Directors

9. As outlined in the HBRIC Ltd Constitution each Councillor Director is required to retire within three months following the triennial local government elections.

10. This is set out in clause 8.8(g) of the Constitution which states that:

In relation to Councillor Directors, each Director is required to retire within three months following the triennial local government elections, but is eligible to be reappointed if re-elected to the Council. Appointed Councillor Directors retain their appointment at the pleasure of the Council during their term(s) as Councillor up until three months, or such later date as the incoming Council may decide, to ensure effective transition from one set of Councillor Directors to another, following the triennial local government elections.

Perceived Councillor Director Conflict of Interest

11. Following concerns raised about the appropriateness of Councillor Directors being part of both the HBRIC Ltd recommendation process around the RWSS and the HBRC decision making process on whether or not to invest in the scheme, Council requested that a paper on options for managing conflicts of interest issues be prepared.

12. This paper was subsequently prepared and presented to Council on 31 July 2013.

13. Supporting this paper was a legal opinion prepared by Stuart Webster of Sainsbury Logan and Williams which is appended as Attachment 1.

14. As outlined in the legal advice there do not appear to be any legal reasons to alter the current governance arrangements for the Board of HBRIC Ltd to address conflict of interest issues. Mr Webster still stands by this legal opinion which was prepared in July 2013.

15. On 28 August 2013 a further paper on the issue of perceived conflict of interest of Councillor Directors on the HBRIC Ltd Transition Board was presented to Council. This paper traversed several options to reduce the perception of conflict of interest. A copy of this paper is appended as Attachment 2.

16. Subsequent to the presentation of this 28 August 2013 paper Council has received, from Audit New Zealand, its management report for the year ended 30 June 2013 which provides significant commentary on the conflicts of interest issue. Appended to this paper as Attachment 3 is the relevant commentary from this report for information purposes. Staff provided comments to Audit New Zealand that the issue of perceived conflicts of interest will be addressed by the incoming Council.

17. Despite there being no legal reasons to alter the governance arrangements for the HBRIC Ltd Transition Board, it has been deemed preferable through various Council workshop discussions to address any perceived conflict of interest issues through the removal of Council Directors during the period in which decisions in relation to the RWSS will be undertaken.

Assessment of Options for HBRIC Ltd Transition Board of Directors Membership

18. Various discussions have been undertaken by the incoming Council and the Chairman of the HBRIC Ltd Board on the preferred membership structure of the Transition Board for the remainder of its term to address perceived conflict of interest issues.

19. Following these discussions, and with the requirement that Councillor Directors retire three months following the triennial local government elections, two options have been identified to address these issues. These options are outlined below:

Option 1 - removal of councillor directors and replacement with two subject matter experts

20. This option would involve the appointment of two of the three subject matter experts currently co-opted to the HBRIC Ltd RWSS Board Committee to replace the Councillor Directors on the HBRIC Ltd Transition Board for the remaining period to 30 June 2014.

21. The HBRIC Ltd Board co-opted three subject matter experts in February and March 2013 to assist the Board’s governance of the RWSS. It is proposed that two of these advisors, Danelle Dinsdale and David Faulkner, replace the outgoing Councillor Directors.

22. Danelle Dinsdale was co-opted as the commercial legal expert to the HBRIC Ltd RWSS Board Committee. Danelle is a specialist in SPV/PPP/BOOT projects and documentation, having worked in London for 16 years which included time as a partner in DLA Piper – the world’s largest law firm.

23. David Faulkner was co-opted to the HBRIC Ltd RWSS Board Committee to provide expertise in the field of large civil works engineering. David is the former Managing Director of Fulton Hogan, with strong experience on complex engineering projects in both New Zealand and Australia.

24. Pros:

24.1. Addresses the perception of conflict of interest and pre-determination for HBRC decision making on the RWSS.

24.2. Is cost neutral.

25. Cons:

25.1. No representation by elected representatives in HBRIC Ltd decision making processes, removing the benefits of appointing Councillors to Boards of Directors as identified by the Office of the Auditor General in 1994.

25.2. Requires a change to the Constitution of HBRIC Ltd.

Option 2 - Removal of councillor directors and no replacement directors be appointed

26. This option would involve the current Councillor Directors retiring from their HBRIC Ltd Directorship, as stipulated in the Constitution, and not being replaced for the remaining period of the HBRIC Ltd Transition Board to 30 June 2014.

27. This would result in four Directors remaining on the HBRIC Ltd Transition Board being the three Independent Directors appointed by Council in January 2012 and Andrew Newman, the Chief Executive of HBRC appointed as a Director ex officio.

28. Pros:

28.1. Addresses the perception of conflict of interest and pre-determination for HBRC decision making on the RWSS.

28.2. Is cost neutral.

29. Cons:

29.1. No representation by elected representatives in HBRIC Ltd decision making processes, removing the benefits of appointing Councillors to Boards of Directors as identified by the Office of the Auditor General in 1994.

29.2. Requires a change to the Constitution of HBRIC Ltd.

29.3. Workload for remaining Directors commensurately increased.

HBRIC Ltd Constitution

30. Should Council resolve to adopt one of the two options outlined in this paper then a resolution would need to be adopted to amend the Constitution as it currently stands.

31. The relevant clauses of the Constitution that would require amendment are clause 8.1 and clause 8.3(a) as set out in a tracked changes version of the Constitution appended as Attachment 4.

32. Clause 8.1 is the relevant clause of the Constitution that stipulates the minimum and maximum number of Directors, and currently reads:

32.1. Unless and until otherwise determined by an ordinary resolution of the Company the maximum number of Directors is seven (7).

33. This clause currently refers to the maximum number of Directors to be appointed to the Board but does not refer to the minimum number. As the proposed wording change to clause 8.3(a) refers to the appointment of a minimum number of Directors to the Board, it is deemed appropriate for completeness purposes for a resolution to be adopted that amends the wording of clause 8.1 as set out in a tracked changes version of the Constitution (Attachment 4).

34. Clause 8.3(a) is the relevant clause of the Constitution which outlines the makeup of the Board and currently reads:

34.1. HBRC shall be entitled to appoint up to seven (7) Directors to the Board of the Company (including the right to appoint and remove and nominate alternates) with three of those Directors being made up of existing Council Members (Councillor Directors), and three Directors who are independent of the Council (Independent Directors) and the Chief Executive of HBRC from time to time being appointed as a Director ex officio;

35. The adoption of either of the two options outlined in this paper would require a wording change to this clause due to the removal of the Councillor Directors for the remaining period of the Transition Board.

36. On the advice of Stuart Webster of Sainsbury Logan and Williams the resolution to be adopted would be to amend the wording of clause 8.3(a) as set out in the tracked changes version of the Constitution (Attachment 4).

37. This proposal is based on the aim of allowing Council the flexibility to appoint Councillor Directors and Independent Directors in whichever proportion it sees fit.

38. This proposal also takes away the automatic appointment of the HBRC Chief Executive, which may have been appropriate at the time of incorporation of HBRIC Ltd but is less relevant now. Nothing prevents Council from appointing the HBRC Chief Executive at some point in the future if it is deemed to be beneficial.

39. For the sake of completeness, the appointment by Council of the Chairman of the Board will remove the previous provision which gave that task to the Directors themselves. This will introduce a level of control by Council over the Chairmanship role.

40. A consequential amendment to clause 2.4 of Schedule 2 of the Constitution (Proceedings of Board Members) is also required to ensure consistency with clause 8.3(a) (to be amended as proposed). This amendment is outlined in the tracked changes version of the Constitution (Attachment 4).

Reappointment of Councillor Directors

41. If Council resolves to adopt one of the two options outlined in this paper then there will be no Councillor Director representation for the remaining period of the HBRIC Ltd Transition Board’s term through to 30 June 2014. Council will have the opportunity to reappoint Councillor Directors to the HBRIC Ltd Board when it appoints a permanent Board from 1 July 2014.

Development of Policy on Appointment and Remuneration of Directors

42. As outlined in the proposed wording of clause 8.3(a) of the Constitution, the appointment of Directors to the Board of HBRIC Ltd is to be undertaken in accordance with Council’s policy regarding Director Appointments.

43. As Council does not currently have a policy in place regarding the appointment of Directors to Council Controlled Organisations (CCOs) or Council Controlled Trading Organisations (CCTOs), it is deemed prudent that prior to the appointment of the permanent HBRIC Ltd Board that Council has a formal policy in place for the appointment of Directors to these organisations.

44. It is proposed that a policy is developed and presented at the next Corporate and Strategic Committee meeting which is set for 12 March 2014. This will provide Councillors with the opportunity to review the policy and provide comment and changes as required in time for the appointment of the permanent HBRIC Ltd Board.

45. Some of the key principles that this proposed policy will cover in relation to CCOs and CCTOs are:

45.1. The appointment process for Councillor and Independent Directors

45.2. The process for the appointment of a Chairman

45.3. Length of tenure for Directors

45.4. Remuneration of Directors.

Decision Making Process

46. Council is required to make a decision in accordance with the requirements of the Local Government Act 2002 (the Act). Staff have assessed the requirements contained in Part 6 Sub Part 1 of the Act in relation to this item and have concluded the following:

46.1. The decision does not significantly alter the service provision or affect a strategic asset.

46.2. The use of the special consultative procedure is not prescribed by legislation.

46.3. The decision does not fall within the definition of Council’s policy on significance.

46.4. The persons affected by this decision are Councillor Directors on the HBRIC Ltd Transition Board of Directors.

46.5. Options that have been considered are outlined in the paper.

46.6. The decision is not inconsistent with an existing policy or plan.

46.7. Given the nature and significance of the issue to be considered and decided, and also the persons likely to be affected by, or have an interest in the decisions made, Council can exercise its discretion and make a decision without consulting directly with the community or others having an interest in the decision.

Recommendations

The Corporate and Strategic Committee recommends that Council:

1. Agrees that the decisions to be made are not significant under the criteria contained in Council’s adopted policy on significance and that Council can exercise its discretion under Sections 79(1)(a) and 82(3) of the Local Government Act 2002 and make decisions on this issue without conferring directly with the community and persons likely to be affected by or to have an interest in the decision due to the nature and significance of the issue to be considered and decided.

2. Confirms that it has considered the potential solutions for the perceived conflict of interest, and either:

2.1. Resolves to appoint Danelle Dinsdale and David Faulkner as Directors to replace the three Councillor Directors on the Transition Board of Hawke’s Bay Regional Investment Company Limited for the period to 30 June 2014, noting that the number of Directors will be reduced from seven to six.

Or:

2.1 Resolves to not replace the three Councillor Directors on the Transition Board of Hawke’s Bay Regional Investment Company Limited for the period to 30 June 2014, noting that the number of Directors will be reduced from seven to four.

3. Agrees that Clauses 8.1 and 8.3(a) of the Constitution be amended to:

“8.1 Minimum and maximum numbers: The minimum number of Directors shall be three (3) and the maximum number of Directors shall be seven (7).

8.3 Appointment of Directors and Chairperson:”

a. HBRC shall appoint at least three (3) and up to seven (7) Directors to the Board of the company (including the right to appoint and remove and nominate alternates) in accordance with HBRC’s Policy concerning Director appointments of existing Council Members (Councillor Directors), and Directors who are independent of the Council (Independent Directors). HBRC shall appoint a Chairperson from amongst the Directors so appointed;”

4. Agrees that Clause 2.4 of Schedule 2 of the Constitution be amended to:

“2.4 Chairperson: In accordance with clause 8.3 of the Constitution, HBRC shall appoint a Chairperson of the Board from amongst the Directors.”

5. Notes that a policy on the appointment and remuneration of Directors is to be developed and presented to the next (12 March 2014) Corporate and Strategic Committee meeting.

Heath Caldwell

Management Accountant

Paul Drury

Group Manager

Corporate Services

Liz Lambert

Chief Executive

Attachment/s

1 View	SLW Legal Opinion
2 View	28 August 2013 Council Briefing Paper re Conflict of Interest Options
3 View	Audit NZ Commentary on Conflict of Interest
4 View	Amended HBRIC Ltd Constitution

Reason for Report

1. At its meeting on 31 July Council considered a paper that it had sought from HBRIC Ltd on options for managing perceived conflict of interest and perceived pre-determination issues that had arisen as a result of three elected councillors being Directors of the HBRIC Ltd Board of Directors.

2. As a consequence of the HBRIC Ltd paper and legal advice from Sainsbury Logan and Williams Council deliberated on this issue. Notwithstanding the recommendations Council:

2.1. Determined that action needs to be taken to reduce the perception of conflict of interest and/or pre-determination by councillor directors on the Board of HBRIC Ltd in relation to HBRC decisions on the Ruataniwha Water Storage Project; and

2.2. Requested that a further report on options to reduce the perception of conflict of interest by councillor directors on the Board of HBRIC Ltd, including costs and implications associated with those options, be brought to the August Regional Council meeting for consideration.

3. The purpose of this report is to meet the requirement set out in paragraph 2.2 above.

HBRIC Ltd Constitution

4. The Company Constitution incorporates matters dealing with both appointment and removal of directors. The relevant excerpts can be summarised as follows.

4.1. The maximum number of Directors is seven.

4.2. HBRC shall be entitled to appoint up to seven directors with three of those Directors being existing Council members (“Councillor directors”) and three Directors being independent of the Council (“Independent Directors”) and the Managing-Director.

4.3. HBRC can appoint or remove directors or nominate alternates.

4.4. HBRC can appoint any person who is not already a Director and who is approved by the majority of other Directors to act as an alternate for a Councillor Director, either for a specified period or during the absence or inability to act from time to time of the Councillor Director.

4.5. A quorum for a Board meeting is a majority of the Directors who are entitled to vote at that meeting to include not less than two Councillor Directors or their alternates.

Perceived Councillor Director Conflict of Interest and/or Predetermination Issues

5. Council has requested that a range of options for addressing perception issues presented in the July paper, or identified at the July meeting, be assessed in relation to likely costs and other implications.

6. It is worth noting that the legal advice held that there do not appear to be any legal reasons to alter the current governance arrangements for the Board of HBRIC Ltd. However the July paper also noted that the issue of perception of conflict of interest or predetermination needs to be addressed.

7. A range of options have been identified to address the perception of conflict of issue and/or pre-determination by councillor-directors on the Board of HBRIC Ltd in relation to future decisions on any HBRC investment in the Ruataniwha Water Storage Scheme.

8. After discussion with legal advisers, and taking a pragmatic approach to how this matter may be addressed, there are several principles that are considered fundamental in determining the way forward:

8.1. The avoidance of perception of conflict of interest at a future event (noting that there are no actual conflicts of interest at the present time)

8.2. Maximising the ability for councillors to take part under Local Government Act decision-making processes in decisions regarding whether HBRC should invest in the RWSS, if such investment is recommended by HBRIC Ltd

8.3. In particular in relation to 8.2 ensuring that the Chairman of Council is available to lead the Council through such a significant decision-making process

8.4. The avoidance of risk that councillor-directors of HBRIC Ltd could be deemed to have pre-determined their position on the RWSS.

8.5. Retention of Council oversight and input (as 100% shareholder) into all other decisions of the holding company.

8.6. Establishment of a timetable for managing the role of councillor-directors on the Board of HBRIC Ltd.

Assessment of Options

Temporary Removal of councillor directors

9. Assumption/Description: Councillor Directors would remain as directors of HBRIC Ltd but would abstain from receiving papers, attending, deliberating or voting on matters relating to the RWSS.

10. Pros:

10.1. Addresses the perception of conflict of interest and pre-determination for HBRC decision making

10.2. Is a temporary measure and allows other matters of HBRIC Board business to be conducted using full Board

10.3. Is cost neutral

11. Cons:

11.1. No representation by elected representatives in HBRIC Ltd decision making processes, removing the benefits of appointing councillors to boards of directors as identified by the Office of the Auditor General in 1994

11.2. Requires a change to the Constitution of HBRIC Ltd in relation to the quorum for a Board meeting

11.3. Workload for remaining directors commensurately increased

11.4. Councillor directors would still have liability for any decisions made by the Board in their absence.

Delegate decision making on RWSS to new subsidiary company

12. Assumption/Description: Establishment of a subsidiary entity comprising external independent directors only to undertake the assessment of the RWSS project.

13. Pros:

13.1. Addresses the perception of conflict of interest and pre-determination for HBRC decision making but only if subsidiary company reports directly to Council

13.2. Subsidiary company could comprise completely commercially-focussed directors

13.3. Subsidiary company would be a wholly owned subsidiary company of HBRIC so under direct control of holding company

14. Cons:

14.1. The Holding Company Board has a decreased workload and activity and is not directly involved in the preparation of a recommendation to HBRC

14.2. It will require the re-write of the Statement of Intent for Hawke’s Bay Regional Investment Company Ltd

14.3. It is a very short-term measure for a very high cost – extra layers of costs would include: additional directors, administration, and establishment costs including professional advice. The estimated cost for establishing the subsidiary for an 8 month period is $196,000.

14.4. Time delays while subsidiary company is established

14.5. Loss of benefit of setting up a new Special Purpose Vehicle if and when the RWSS is approved.

Appoint three alternate directors to replace councillor directors

15. Assumption/Description: Appointment of three alternate directors for a specified period – until such time as a recommendation is made by HBRIC Ltd to HBRC on whether or not to invest in the RWSS. It is assumed that the three alternate directors would be independent.

16. Pros:

16.1. Addresses the perception of conflict of interest and pre-determination for HBRC decision making on the RWSS

16.2. Can be flexible and allow for separate Board meetings – (i) those dealing with RWS (in which alternate directors would take part) and (ii) those dealing with other Board matters (in which councillor directors would take part)

16.3. Could be cost neutral if three current Board advisers – Danelle Dinsdale, David Faulkner, Roger Maaka - replaced councillor directors as alternate directors

16.4. Can be done without changing Company Constitution on assumption that, for quorum purposes, alternates are deemed to be councillor directors.

17. Cons:

17.1. No representation by elected representatives in HBRIC Ltd decision making processes, removing the benefits of appointing councillors to boards of directors as identified by the Office of the Auditor General in 1994

17.2. Can enhance complexity of Board processes if separate meetings required with separate groups of directors for separate matters

17.3. Additional costs possible if alternate directors are not current Board advisers

Appoint two alternate directors and retain one councillor director

18. Assumption/Description: Appointment of two alternate directors for a specified period – until such time as a recommendation is made by HBRIC Ltd to HBRC on whether or not to invest in the RWSS. One councillor director would remain on the Board and would receive papers, attend and deliberate BUT abstain from voting on the RWSS at any HBRC meeting.

19. Pros:

19.1. Retains some Council oversight /input/control into the decision making processes by the holding company

19.2. More cost effective than replacement of all three councillor directors, as only two alternate directors would need to be paid

19.3. The one remaining councillor director can take part in deliberations at Council meetings, while abstaining from voting

19.4. Can be done without changing Company Constitution on assumption that, for quorum purposes, alternates are deemed to be councillor directors.

20. Cons:

20.1. Reduction in representation by elected representatives in HBRIC Ltd decision making processes, reducing the benefits of appointing councillors to boards of directors as identified by the Office of the Auditor General in 1994

20.2. Additional costs possible if alternate directors are not current Board advisers.

Total abstention of councillor directors at Council meetings

21. Assumption/Description: Councillor directors would remain on the Board but they would all abstain from attending, deliberating or voting (or any combination of these) at any Council meeting when the RWSS is being considered.

22. Pros:

22.1. Addresses the perception of conflict of interest and pre-determination for HBRC decision making on the RWSS

22.2. Would be cost neutral

22.3. No changes required to Company Constitution

23. Cons:

23.1. Only six people would be able to vote through the HBRC decision making process for the RWSS and electors would expect that all elected representatives could vote on significant decisions.

Retain status quo until after local body elections

24. Assumption/Description: Retain Board as currently identified in Company Constitution. Review this when considering appointment of councillor-directors to HBRIC Ltd for the new term of Council.

25. Pros:

25.1. Cost neutral

25.2. Retains Council oversight for the appointment of new Napier Port directors

25.3. Ensures Council input into final process for confirmation of investor consortium

25.4. Ensures Council input into ensuring that the final design and construction bid meets criteria important to the values of HBRC

25.5. Representation by elected representatives in HBRIC Ltd decision making processes, removing the benefits of appointing councillors to boards of directors as identified by the Office of the Auditor General in 1994.

26. Cons:

26.1. Perception of conflict of interest and pre-determination for HBRC decision making on the RWSS remains, although with a clear pathway to resolution

Discussion

27. If Council considers that it needs to address the perceived conflict of interest issue now, then it is considered that the most pragmatic approach is to appoint two alternate directors and the retention of one councillor-director for a period until the recommendation is made by HBRIC ltd on either to invest or not invest in the RWSS. The benefits of this option outweigh the negatives especially if two existing board advisers are appointed as alternate directors.

28. Alternatively Council may be of a mind to acknowledge that the management of perception of conflict of interest issues should be the prerogative of the incoming Council. The Company Constitution requires that Council determined the appointments for councillor-directors on HBRIC Ltd within a 3 month period from the date of the local body elections. If it would be of assistance to Council a timetable to manage the role of councillor-directors could be prepared and recommended to the incoming Council.

Decision Making Process

29. Council is required to make a decision in accordance with the requirements of the Local Government Act 2002 (the Act). Staff have assessed the requirements contained in Part 6 Sub Part 1 of the Act in relation to this item and have concluded the following:

29.1. The decision does not significantly alter the service provision or affect a strategic asset.

29.2. The use of the special consultative procedure is not prescribed by legislation.

29.3. The decision does not fall within the definition of Council’s policy on significance.

29.4. The persons affected by this decision are Councillor and Independent Directors on the HBRIC Ltd Transition Board of Directors.

29.5. Options that have been considered are outlined in the paper.

29.6. The decision is not inconsistent with an existing policy or plan.

29.7. Given the nature and significance of the issue to be considered and decided, and also the persons likely to be affected by, or have an interest in the decisions made, Council can exercise its discretion and make a decision without consulting directly with the community or others having an interest in the decision.

HAWKE’S BAY REGIONAL COUNCIL

Corporate and Strategic Committee

Wednesday 11 December 2013

SUBJECT: HBRC Staff Accommodation - Guppy Road Operations and Wairoa

Reason for Report

1. At the 10 June 2013 meeting, Council resolved to carry forward the budgeted $630,000 for the Operations Group office refurbishment to the 2013/2014 financial year, subject to a business case at the appropriate time.

2. In 2011 HBRC entered into an agreement with Department of Conservation (DoC) for the sharing of the HBRC Wairoa office and associated storage and yard space. In 2013 DoC increased the number of staff operating from their Wairoa office from 2 to 3. This increase has been unable to be accommodated within the current building. A proposal to increase the size of the office accommodation by utilising one bay of the garage attached to the office has been investigated and priced. This option includes provision of a meeting room which will increase the flexibility of the current office as well as providing additional office space.

3. This report presents:

3.1. Options for refurbishment work of the Guppy Road office accommodation.

3.2. A proposal for the expansion of the Wairoa office accommodation.

Background

Guppy Road Office Accommodation

4. The Operations Group Office has operated out of the current office space since 1991. This office was relocated onto the site at that time. The building was originally constructed in the 1970s. The building has had little improvement (other than 2 extensions) since it was relocated. The office houses ten Operations and Works Group staff.

5. The office is regularly visited by ratepayers, Iwi, contractors, white baiters and general public to meet with staff to discuss matters dealt with by staff based in this office. The office serves as an alternate civil defence centre for the management of flood events. It also houses monitoring equipment which enhances the management of the 24 HBRC pump stations.

6. In 2010/11 architectural drawings were obtained for additions and alterations to the Operations office with the expectation that ten extra staff would be relocated to the Guppy Road site from Council’s Dalton Street offices. At that time it was noted that the existing building required significant investment to bring it up to current building code requirements and to provide reasonable accommodation for staff.

7. Extra accommodation is now no longer needed as HBRC’s office building at 159 Dalton Street continues to provide sufficient capacity for current staff numbers.

8. In September Koru VSL was engaged to assess the building and report on the current condition, and provide recommendations and estimates for work necessary to bring the office up to current Building Code requirements and provide appropriate accommodation for the services delivered from the office.

9. Koru VSL has provided a report which states:

9.1. “The overall internal condition of the building is dated and the building suffers from lack of meeting rooms, storage and sufficient toilet facilities. This, together with the lack of any accessibility for people with disabilities, means that works are required not only to maintain the structural integrity of the building, but also its functionality as an office space to provide suitable accommodation for employed staff.”

9.2. “Our site inspection confirmed that the building has been maintained, but has over time been affected by moisture penetration, particularly through the roof, which has affected its use. Cracking to both the internal and external wall linings has also occurred and overall the building is in need of refurbishment to bring it in line with the current recommended standards for accessibility and usability.”

10. A copy of the report will be provided on request.

11. Four options for improvement are set out in the report. The conclusions and recommendations provided in the Koru VSL report dated 6 November 2013 are provided as Attachment 1 for Council’s reference. A 15% allowance has been provided for professional fees and building consent costs in the estimates presented in this briefing.

Option	Description	Estimated cost
1	Retains separate offices but includes bare minimum to comply with the current building code requirements. Works proposed are renewal of the main roof and guttering, added insulation, replacement of cracked exterior panels, removal of damaged ceiling panels, fitting of a plasterboard ceiling, provision of appropriate access for disabled persons including widening all corridors and enlarging existing toilet, and the creation of a ramp leading into the entrance of the building. 2 of the existing offices, the store room and the utility room would reduce in area under this option as a result of the need to widen the corridors.	$315,000
2	Includes the majority of option 1 works plus alterations suggested by the Works Group Business Development Manager that he considers necessary to make a fit for purpose office. The number of individual offices will reduce from 10 to 8. Alterations proposed include an extension to the rear of the building to increase the size of the existing store room, creation of a meeting room, extension of the reception area, and additional toilet block and shower facilities.	$410,000
3	Includes all works proposed in option 2 plus the addition of 2 offices. The additional two offices are not required for the current staffing numbers based in this office.	$540,000
4	Demolition of the existing building and the construction of a new office on the current site. (Note: The estimate is based on architectural drawings prepared in 2011 when Council had planned to relocate ten Dalton Street staff to the Guppy Road Office.)	$975,000

12. Note that the above estimates exclude GST.

13. The reduction in size of 2 offices, store room and utility room which would result if option 1 were pursued will result in those spaces being too small to provide effective office and storage facilities to meet the needs of that office.

14. Staff believe that the work to the Guppy Road office building is required to prevent its deterioration in the future, and therefore recommend that Option 2 is approved by Council.

Wairoa Office

15. HBRC’s Wairoa office was purpose built for the Catchment Board in the 1980s. It includes 2 separate offices, a common open space area, and a substantial area for garaging machinery. The garage space has not been fully utilised since the HB Catchment Board reduced the size of its staff presence in the area in the late 1980s and HBRC withdrew from animal pest control service delivery work in the mid 1990s.

16. The office currently houses 3 HBRC staff (1 Hill Country Land Management Advisor, a Plant Pest Officer and a Roadsafe Coordinator), a Forestry Consultant, 2 Department of Conservation (DoC) staff, and an ex HBRC staff member who currently operates as a consultant involved in the HBRC initiated and supported Whangawehi Catchment Group.

17. DoC commenced sharing the office in September 2012. The arrangement was ideal because at the time the lease on their Wairoa accommodation was expiring and the HBRC office offered considerable space for safe storage of equipment associated with DoC’s operation. In addition the arrangement was a practical example of increased collaboration with HBRC through the Nature Central initiative.

18. DoC and the consultants pay a total annual rental of approx $23,325. (DoC rental is $17,700 annually). HBRC Wairoa staff report significant operational benefits of the current office sharing arrangement with DoC and the consultants. A number of joint projects have been initiated between HBRC and DoC particularly since the current arrangement commenced in September 2012.

19. The arrangement does however mean that the small tea room which is part of the office is too small to enable all staff to be comfortably seated, and it is now the only space available as a meeting room.

20. As a result of the recent DoC restructuring they now wish to increase the number of staff in Wairoa from 2 to 3. Two of the Wairoa staff are managed from Gisborne and 1 from Napier.

21. While DoC would like to commit to continuing this lease arrangement long term, they will only do this if HBRC agree to extend the building to accommodate an additional staff member, and provide a meeting room.

22. Options staff have considered are set out in the table following.

	Description of option	Discussion
1	HBRC staff and consultants only	Total staff numbers would be 5. Current office accommodation and storage space is adequate. No capital expenditure required. Annual rental income $5,625. Little requirement for separate meeting room.
2	HBRC and DoC staff only	Staff (including DoC) numbers would be 6. Current storage space is adequate, however DoC require a meeting room as they have frequent visits from managerial staff from Napier and Gisborne and need space for team discussions and for dealing with individual staff issues. Current tea room facilities are too small to house all staff and visitors. An estimated capital expenditure of $285,000 is required to meet these needs. Annual rental will increase to approx $23,000.
3	HBRC, DoC staff and consultants	Total staff (including DoC and consultants) would be 8. Current storage space is adequate, however DoC require a meeting room as they have frequent visits from managerial staff from Napier and Gisborne and need space for team discussions and for dealing with individual staff issues. Current tea room facilities too small to house office occupants and visitors. Capital expenditure as for option 2 is required to meet these needs. Annual rental will increase to approx $28,500.

23. The estimated capital expenditure for options 2 and 3 is $285,000 excluding GST. There is no change in the estimated capital expenditure because the proposed alteration would be the same for both options (i.e. provision of an enlarged tea room and a separate meeting room)

24. DoC has agreed to an increased rental if the alterations are undertaken. The increased rental would be negotiated with DoC on the basis of a valuation report which would be obtained were Council to agree to proceed with the work. Staff expect that annual rental would increase by approx $5,000.

25. DoC has indicated that if the accommodation at the Wairoa office was not expanded to meet their requirements then they would need to seek alternative accommodation that provided them with the space required for their operations. In this case Council would be foregoing rental revenues of approximately $23- 25,000 per annum. On the other hand if Council did not proceed with the renovation estimated to cost $285,000 then the costs related to this extension of the Wairoa office which would cover funding costs, depreciation, additional power etc estimated to total between $28- 30,000 per annum would not be incurred by Council.

26. Staff have discussed the possibility of DoC meeting a portion of the capital cost. DoC has advised that they would be unwilling to commit expenditure to development on land that was not owned by DoC.

27. If the Local Government Commission’s proposal for reorganisation of local government in Hawke’s Bay released on 26 November 2013 becomes effective, then this reorganisation may result in a change in staffing numbers accommodated in the HBRC Wairoa office. However there will be short term operational and strategic benefits of sharing office space with DoC, and a long term tenancy arrangement with DoC in the Wairoa office will enhance its value should it become surplus to local government requirements.

28. While the financial case for the expansion of the Wairoa office is not strong there are other short and long term benefits if the work is done. This briefing paper therefore presents two options for the Committee’s consideration.

Financial and Resource Implications

29. If Council agrees to proceed with both projects, staff expect that the total cost, including professional fees and building consent costs will exceed the financial provision of $630,000 included in the 2013/14 annual plan budget. If both projects are approved then the cost is estimated at $695,000.

30. The provision of $630,000 is sourced from Asset Replacement Reserves built up from annual depreciation provisions for assets. Current reserves are adequate to meet this provision and the increase of that provision, should Council agree that both projects should proceed.

Decision Making Process

31. Council is required to make a decision in accordance with the requirements of the Local Government Act 2002 (the Act). Staff have assessed the requirements contained in Part 6 Sub Part 1 of the Act in relation to this item and have concluded the following:

31.1. The decision does not significantly alter the service provision or affect a strategic asset.

31.2. The use of the special consultative procedure is not prescribed by legislation.

31.3. The decision does not fall within the definition of Council’s policy on significance.

31.4. The persons affected by this decision are HBRC staff.

31.5. Options that have been considered are set out in the briefing paper.

31.6. The decision is not inconsistent with an existing policy or plan.

31.7. Given the nature and significance of the issue to be considered and decided, and also the persons likely to be affected by, or have an interest in the decisions made, Council can exercise its discretion and make a decision without consulting directly with the community or others having an interest in the decision.

Recommendations

The Corporate and Strategic Committee recommends that Council:

2. Agrees to proceed with refurbishments to the office accommodation building at HBRC’s Guppy Road site as outlined in Option 2 of this briefing paper at an estimated cost of $410,000 plus GST, building consent cost and professional fees.

Either

3. Agrees to proceed with improvements of the HBRC Wairoa office to satisfactorily accommodate DoC Wairoa staff at an estimated cost of $285,000 plus GST, subject to agreement being reached with DoC prior to committing to the commencement of work for a 10 year lease with the annual lease amount being based on the advice of a professional valuer.

3. Does not proceed with improvements of the HBRC Wairoa office.

Stacey Rakiraki

Facilities Administration Coordinator

Paul Drury

Group Manager

Corporate Services

Mike Adye

Group Manager

Asset Management

Attachment/s

1 View

Conclusions and Recommendations from Koru VSL Report

HAWKE’S BAY REGIONAL COUNCIL

Corporate and Strategic Committee

Wednesday 11 December 2013

SUBJECT: Hawke's Bay Local Government Reorganisation Draft Proposal

Reason for Report

1. The Local Government Commission has presented a draft proposal for reorganisation of local authorities within Hawke’s Bay. It is calling for submissions on the draft proposal and submissions close on 7 March 2014.

2. The purpose of this report is for Council to consider if it wishes to make a formal submission to the Draft Proposal and, if so, to consider the content of that submission.

Discussion

3. On 26 November 2013 the Local Government Commission presented a Draft Proposal for the reorganisation of local government in Hawke’s Bay. The key point of the draft proposal is the creation of a single unitary authority replacing Wairoa, Hastings and Central Hawke’s Bay districts, Napier City and the Hawke’s Bay Regional Council.

4. Prior to the issuing of the Draft Proposal the Local Government Commission had sought Alternative Proposals to consider alongside its assessment of the proposal from Better Hawke’s Bay.

5. In submitting an alternative proposal for an East Coast Regional Council, the Hawke’s Bay Regional Council’s underlying rationale was to ensure that the functions of regional councils retain a similar focus and priority in any new local government entity to that which currently exist. The principal reasons for this are that such an option would provide:

5.1. A focus on regional council functions, including catchment management, resource management and natural hazards management, at economies of scale that will achieve enhanced efficiencies

5.2. Stronger, more effective leadership across natural resource management functions

5.3. Better representation across communities of interest, including Māori;

5.4. Simplified planning processes;

5.5. Appropriate and affordable infrastructure and services;

5.6. Improved regulatory efficiencies;

5.7. Specialist expertise to focus on economic development opportunities based upon maximisation of primary production outputs;

5.8. More integrated economic development based upon natural resource and primary production.

6. The Draft Proposal for a single unitary authority has been released and is now available for submissions. Without doubt there will be strong representations from a wide range of views around the structure and the adequacy of representation of communities of interest in the Draft Proposal.

7. It is not the intention of staff to recommend that Hawke’s Bay Regional Council attempts to agree an approach around the future structure of local government. Instead we will suggest that any submission from the Hawke’s Bay Regional Council clearly reinforces the important role of natural resource management, in particular, in any local government structure given the underlying drivers of the Hawke’s Bay economy both now and in the foreseeable future.

8. It is noted that in its discussions on good quality services, etc, the Draft Proposal focuses on a range of functions traditionally carried out by territorial authorities. It is less specific about functions carried out by the regional council.

9. For reference the following table sets out the range of activities a unitary authority should reasonably expect to have to deal with.

Activity		Activity
Air quality control (environmental and health)		Dog control
Animal control, impounding, welfare		Economic development
Art Galleries		Education and employment advocacy
Arts and Culture		Entertainment and cultural venues
Asset and liability management		Environmental health control
Regional investments		Environmental monitoring
Beach control		Events promotion
Beautification		Farming in parks
Biosecurity		Film facilitation
Broadband		Fire protection
Brothels – control of location and signage		Flood protection
Building consents processing, advice and compliance		Food premises licensing
Business support		Forests
By-laws (wide variety) and enforcement		Gambling and gaming machine policy
Cemeteries		Gardens
Citizen and customer contact		Graffiti control and removal
Citizen Advice Bureaux		Grants
Citizen services		Harbourmaster
Civil defence emergency management		Hazard Register
Climate change		Hazardous substances controls
Coastal environment dev. Control		Hazards management
Coastal planning and management		Health – advocacy and programmes
Community centres, halls and facilities		Holiday parks
Community development, partnerships, services and support		Land development
Community grants and levies		Land drainage
Community notice boards		Land Information Memoranda(LIMs)
Community planning		Land management
Corporate services		Land use planning
Council-controlled organisations		Landfills
Crematoria		Libraries
Crime prevention		Liquor licensing
Cultural heritage conservation		Māori relations
Democracy services		Marina operations
District Planning		Migrant settlement facilitation
District promotion		Museums
Natural heritage conservation		Safety in public places
Noise control		Shareholdings and investments
Parking control		Sister city programmes
Parking places		Sports grounds and venues
Parks and reserves		Stormwater management
Passenger transport policy and facilities		Street furniture and trees
Pensioner housing		Swimming pools
Planning		Toilets – public
Playgrounds		Tourist facilities and information
Pollution response		Town centre and business precincts promotion
Pounds		Transport network management
Property information memoranda (PIMs)		Transport policy and planning
Property Management		Treasury and debt management
Public Information		Urban and rural design
Public transport planning		Vehicle testing station
Quarries		Visitor services
Rating		Walking and cycling strategy
Recreation and sport programmes		Walkways/cycleways
Recreation centres		War memorials
Recycling		Waste management
Refuse transfer stations		Wastewater
Regional and district leadership		Water quality monitoring
Regional growth planning		Water supply
Regional parks		Wharf management
Activity		Activity
Regional Planning		Council owned housing
Regional Social development strategy		Revenue collection and management
Resource consents processing and monitoring		Road maintenance
Road construction		Road safety
Road asset management

10. Natural resource knowledge and management, providing an integrated approach and specialist expertise to natural resource management is a core function of the regional council. This is particularly essential given the region’s significant natural resource base including large areas of land suitable for intensive agriculture or horticulture and given that the region’s economy is driven by primary production.

11. The region needs to retain a core focus on ensuring the investment funds deliver intergenerational work in the complex natural resource areas and the investment capital is used for critical regional scale infrastructure which unlocks sustainable economic opportunities. A dedicated focus on assisting the primary sector to build resilience, and if possible to expand, also needs to be retained in any future structure.

Potential Submission

12. The Local Government Commission is accepting submissions on its draft proposal for Hawke’s Bay up until 7 March 2014. The Commission will be expecting to receive a large number of submissions expressing a wide range of views. Many of these will be on the local government structure proposed by the Commission for Hawke’s Bay.

13. It has been the previously expressed view of the regional council, through its alternate proposal, that the form or structure of local government is secondary to the functions carried out. The preferred form from the Local Government Commission is now out in the public arena but it is very light on the detail of the functions of a regional authority. This council should give serious consideration to preparing a submission that seeks continuity of the importance of managing natural resources given the region’s strong linkages to the primary production sector.

14. While it is accepted that any regional council regulatory functions would need to continue irrespective of structure the arguably more important contribution of the regional council is in undertaking scientific investigations of natural resources, particularly freshwater, and in adding value through the use of investment capital for critical regional scale infrastructure which unlocks sustainable economic opportunities.

Decision Making Process

15. Council is required to make a decision in accordance with the requirements of the Local Government Act 2002 (the Act). Staff have assessed the requirements contained in Part 6 Sub Part 1 of the Act in relation to this item and have concluded the following:

15.1. The decision does not significantly alter the service provision or affect a strategic asset.

15.2. The use of the special consultative procedure is not prescribed by legislation.

15.3. The decision does not fall within the definition of Council’s policy on significance.

15.4. The persons affected by this decision are the ratepayers in the region.

15.5. Options that have been considered are canvassed in the paper.

15.6. The decision is not inconsistent with an existing policy or plan.

15.7. Given the nature and significance of the issue to be considered and decided, and also the persons likely to be affected by, or have an interest in the decisions made, Council can exercise its discretion and make a decision without consulting directly with the community or others having an interest in the decision. Those with an interest in this decision have the opportunity also to lodge an alternative proposal with the Local Government Commission.

Recommendations

The Corporate and Strategic Committee recommends that Council:

Either:

2. Decides to lodge a submission to the Local Government Commission on its Draft proposal for the reorganisation of local government in Hawkes Bay, based upon reinforcing the need for any local government structure within Hawke’s Bay to have a specific focus on the management of natural resources in recognition of the region’s strong linkages to its primary production sector

2. Decides not to lodge a submission to the Local Government Commission on its Draft proposal for the reorganisation of local government within Hawke’s Bay.

3. If Council resolves to lodge a submission, Council will consider the final submission for lodging with the LGC at the Regional Council meeting on 26 February 2014.

Liz Lambert

Chief Executive

Attachment/s

There are no attachments for this report.

HAWKE’S BAY REGIONAL COUNCIL

Corporate and Strategic Committee

Wednesday 11 December 2013

SUBJECT: Appointment to the HB Tourism Board

Reason for Report

1. Hawke’s Bay Tourism is the official Regional Tourism organisation (RTO) for Hawke’s Bay.

2. Hawke’s Bay Tourism is governed by a Board, which includes a representative from the Hawke’s Bay Regional Council. A Council appointment to the Board is now required and the making of this appointment is the reason for this paper.

Financial and Resource Implications

3. Hawke’s Bay Tourism is jointly funded by the Hawke’s Bay Regional Council and the local tourism industry through the Hawke’s Bay Tourism Industry Association.

4. Hawke’s Bay Regional Council contributes $850,000 (excl GST) per annum to HBT. This is funded by a targeted economic development rate totalling $1.284M (2013/14 Annual Plan). This targeted rate is a fixed amount for residential properties ($16.64) and for commercial/industrial properties is based upon capital value.

Discussion

5. Hawke's Bay Tourism Industry Association is the sole shareholder of Hawke's Bay Tourism Limited. It is a membership based organisation and offers two partnership programme models.

5.1. Industry Partner – for businesses with a direct relationship to the visitor industry e.g. accommodation, transport operators, attractions, retailers, hospitality industry and wineries.

5.2. Support Partner – for support service businesses, industry and sector associations and those with a genuine desire to support economic development in Hawke’s Bay through tourism initiatives.

6. The Board of HB Tourism meets approximately every six weeks and undertakes the following principal tasks:

6.1. Governance of HB Tourism, including progress towards achieving key performance indicators

6.2. Extensive stakeholder engagement with tourism operators, central and local government and other agencies

6.3. Consideration of new initiatives for tourism in Hawke’s Bay (for example, F.A.W.C! Food and Wine Classic)

Decision Making Process

7. Council is required to make a decision in accordance with the requirements of the Local Government Act 2002 (the Act). Staff have assessed the requirements contained in Part 6 Sub Part 1 of the Act in relation to this item and have concluded the following:

7.1. The decision does not significantly alter the service provision or affect a strategic asset.

7.2. The use of the special consultative procedure is not prescribed by legislation.

7.3. The decision does not fall within the definition of Council’s policy on significance.

7.4. The persons affected by this decision are all persons with an interest in the Council’s governance of tourism.

7.5. Options that have been considered include not making any appointment to the Board of Hawke’s Bay Tourism.

7.6. The decision is not inconsistent with an existing policy or plan.

Recommendations

The Corporate and Strategic Committee recommends that Council:

2. Appoints a representative to the Board of Hawke’s Bay Tourism; being Councillor ….

Liz Lambert

Chief Executive

Attachment/s

There are no attachments for this report.

HAWKE’S BAY REGIONAL COUNCIL

Corporate and Strategic Committee

Wednesday 11 December 2013

SUBJECT: Oil and Gas Exploration Policy Development (3.15pm)

Reason for Report

1. At its meeting on 6 November 2013, Council considered its draft submission to the Government’s 2014 Block Offer identifying areas to be made available by the government for oil and gas exploration. During discussion on this item a request was made that staff “present a report outlining possible processes that Council might undertake to engage with the public on the development of policy for petroleum exploration in the Region”.

2. This report presents a proposal for Council to consider and to then provide direction to staff on its possible implementation.

Discussion

3. Council’s existing work programme (as adopted in the 2012-22 Long Term Plan and 2013/14 Annual Plan) does not currently provide budgets for the establishment and servicing of a new stakeholder engagement process to consider oil and gas policy development. Designing any such initiative for stakeholder engagement requires consideration of a number of matters, including:

3.1. considering and confirming the precise nature of the Council’s role in the process

3.2. capacity, resourcing and relative priorities (of the ‘sponsor’ agency/agencies)

3.3. capacity and availability of stakeholders to participate and contribute in a meaningful manner

3.4. deliverables/desired outputs

3.5. timeframes for deliverables.

4. The notion of forming a multi-stakeholder group to explore issues regarding the petroleum and mineral industry in Hawke's Bay is not new. The idea of such a group had its origins during preparation of the ‘East Coast Oil and Gas Development Study’^{^[1]} (published in March 2013). The notion also emerged in New Zealand Petroleum and Minerals’ (NZP&M) preliminary discussions during August-September 2013 involving over twenty Hawke's Bay stakeholder organisations, and again more recently at the one-day Oil and Gas Symposium hosted by Hastings District Council.

5. The Chief Executive has recently been liaising with NZP&M officials who have previously expressed a willingness to partner the Council in a multi-stakeholder process (not too dissimilar from the process to develop the region’s Land and Water Management Strategy). NZP&M are also willing to contribute some of their own staff time, expertise and resource for a group facilitator. Based on NZP&M’s recent discussions with 20+ stakeholders, NZP&M officials have prepared draft versions of the following documents as set out in Attachment 1.

5.1. A draft public engagement proposal

5.2. A draft memorandum of understanding (MOU)

5.3. Draft Terms of Reference for a multi-stakeholder group (MSG)

6. NZP&M officials will be in attendance at the 11 December 2013 Committee meeting.

7. The draft ‘public engagement proposal’ provides some background to the matters and outlines a recommended two-step approach for oil and gas matters and also renewable energy resources.

8. Other possible processes that Council could undertake to engage with the public on petroleum exploration include:

8.1. Council drafts a document, releases it for general public comment and then Council finalises it

8.2. Several councils jointly prepare a draft document (involving relevant government agencies), then release document for general public comment (as in 7.1 above), and then councils finalise and each adopt the document

8.3. ‘Sponsoring’ agencies assemble a group of stakeholders (as representatives of diverse interests or as participants and contributors to group’s discussions and outputs); group’s outputs are then presented to sponsoring agencies for endorsement or similar

8.4. The multi-stakeholder group’s outputs (as in 7.3 above) are published and wider public feedback is invited before the group finalises its report(s) and presentation to sponsor agencies.

9. At this stage, it is recommended that the Committee consider endorsing in-principle the public engagement proposal set out in Attachment 1, plus the associated draft MOU and draft terms of reference for a multi-stakeholder group (MSG). If the public engagement proposal were to be endorsed in-principle then Council staff, along with NZP&M officials, could progress discussions with other would-be project sponsors and participants before any formal steps are taken to make appointments to the MSG, finalising timeframes and confirming outputs/deliverables from the MSG.

10. A further report could be presented to the Corporate and Strategic Committee meeting in March 2014 which would provide greater details about the group’s make-up, timeframes and deliverables, as well as further details on resourcing and budget implications and potential impacts on existing programmes.

Financial and Resource Implications

11. As noted above, Council’s existing commitments in the 2012-22 Long Term Plan and 2013/14 Annual Plan do not currently provide budgets for the establishment and servicing of a new stakeholder engagement process for oil, gas and renewable energy issues. The draft proposal, MOU and terms of reference set out in Attachment 1 clearly anticipate some resources will be provided by the Hawke's Bay Regional Council. These include:

11.1. Staff time for:

11.1.1. establishing the MSG

11.1.2. convening and administration of the MSG

11.1.3. reporting to the MSG (including potential commissioning of relevant information requested by the MSG)

11.1.4. assisting the MSG prepare report and publication/publicity costs

11.2. HBRC nominee membership on the MSG (1 councillor)

11.3. MSG meeting expenses (venue, catering, travel reimbursement, Chair remuneration)

11.4. MSG expenses for site visit to ‘live’ operation (if deemed necessary)

11.5. MSG facilitation for Phase 2 - renewable energy resources (Phase 1 facilitation expenses proposed to be covered by NZP&M contribution).

12. Furthermore, in relation to HBRC’s capacity and ability to contribute resources to a new stakeholder group, prioritisation would be required having regard to the number of existing stakeholder engagement processes currently underway, which include the Greater Heretaunga/Ahuriri Catchment Plan Change collaborative stakeholder group (TANK Group), the Taharua and Mohaka Stakeholder Group, the Biodiversity Strategy Steering Group, the Pan Sector Group, and the Upper Tukituki Facilitation Group.

13. Ultimately, the Council will need to decide if a process for developing policy for the region on petroleum exploration and renewable energy resources is indeed a priority and how that ‘fits’ with its existing programmes, other priorities and resource constraints.

Decision Making Process

14. Council is required to make a decision in accordance with the requirements of the Local Government Act 2002 (the Act). Staff have assessed the requirements contained in Part 6 Sub Part 1 of the Act in relation to this item and have concluded the following:

14.1. The decision does not significantly alter the service provision or affect a strategic asset.

14.2. The use of the special consultative procedure is not prescribed by legislation.

14.3. The decision does not fall within the definition of Council’s policy on significance.

14.4. The persons affected by this decision are all persons with an interest in the region’s management of natural and physical resources.

14.5. Options that have been considered include doing nothing, and a variety of different process designs for engaging the public on petroleum exploration policy development for the Hawke's Bay region.

14.6. The decision is not inconsistent with an existing policy or plan, although the Council’s existing commitments in the 2012-22 Long Term Plan and 2013/14 Annual Plan do not currently cater for the establishment and servicing of a new stakeholder engagement process for oil, gas and renewable energy issues and therefore provisions for a ‘new programme of work’ will be subject to the 2014-15 Annual Plan public consultation process.

14.7. Given the nature and significance of the issue to be considered and decided, and also the persons likely to be affected by, or have an interest in the decisions made, Council can exercise its discretion and make a decision without consulting directly with the community or others having an interest in the decision.

Recommendations

The Corporate and Strategic Committee recommends that Council:

2. Endorses, in-principle, the draft public engagement proposal for oil, gas and energy policy development set out in Attachment 1, including any amendments arising at the Committee meeting.

3. Notes that staff will present a further report to the Corporate and Strategic Committee meeting in March 2014 (including a revised memorandum of understanding; revised terms of reference for multi-stakeholder group; stakeholder group composition; and details of resourcing and budget implications) about a public engagement proposal for oil, gas and energy policy development in Hawke’s Bay.

Gavin Ide

Team Leader Policy

Tom Skerman

Economic Development Manager

Liz Lambert

Chief Executive

Attachment/s

1 View

Draft Public Engagement Proposal for Oil, Gas & Renewable Energy Policy

HAWKE’S BAY REGIONAL COUNCIL

Corporate and Strategic Committee

Wednesday 11 December 2013

SUBJECT: Approach/Timelines for Annual Plan 2014/15

Reason for Report

1. This report outlines the approach to be taken to the development of the Annual Plan 2014/15, the recommended timelines for the development of the Plan, Council workshops and some of the major issues that need to be addressed in the Plan.

Comment

2. Significant work was undertaken for the Long Term Plan (LTP) 2012-22 to include strategies and projects, including both financial and performance management information, therefore it is proposed to use the third year of the LTP (2014/15) as the basis for the development of the Annual Plan 2014/15.

3. There are a number of additional issues that may require reconsideration by Council and these issues will either be the subject of separate papers to Council over the next few months or as part of the Council workshop on the Annual Plan which is scheduled for 11 February 2014. Some of the more important issues that are known at this time are:

3.1. The current year 2013/14 Annual Plan deficit of $864,000 needs to be addressed. If the carried forward items of $633,000 are adjusted from the $864,000 deficit, Council is still left with $230,000 to be funded if it is to achieve a break even for the 2014/15 year. It is worth noting that the draft Annual Plan for 2013/14 proposed a 4.6% rate increase, however this was reduced to 2.8% by Council when it adopted the final Plan in June 2013. This rate decrease required $258,000 to be reduced from the budget.

3.2. During the 2013/14 Annual Plan development Council approved a reduction in overhead and consultancy costs of $1 million (summarised details of these reductions will be included in the Annual Plan workshop in February 2014). This large increase in costs which have been permanently deleted from Council budgets has resulted in very tight cost structures going forward into 2014/15.

3.3. A 4% increase in rates was proposed in the LTP for the 2014/15 year.

3.4. Cost of inflation pressures need to be calculated and provided for where appropriate as part of this Annual Plan exercise.

3.5. Interest rates need to be estimated for the 2014/15 financial year. The LTP stated that the interest rate would be an average of 5.25%, however interest rates have been slow to recover from their current lows of between 4% - 4.2% (based on a 12 month investment term) and there is uncertainty over when these interest rates will rise and to what extent they will rise.

3.6. At the commencement of the Annual Plan year Council will have approximately $73 million in the Sale of Land Investment reserves, therefore the interest rate used for projection purposes will be of major importance to the Plan.

3.7. There will be a need to model scenarios for the proposed investment in the Ruataniwha Water Storage Scheme (RWSS) if approved by Council. Council will need funding to replace the interest earned on these investment funds. Therefore if funds are paid to Hawke’s Bay Regional Investment Company Limited (HBRIC Ltd) for an equity stake in the RWSS, these scenarios will need to include an increase in dividends from HBRIC Ltd.

3.8. Over the next month the Executive will be analysing programmes and policies of Council which could give rise to pressure points in increased costs. An example here is the resourcing required to deliver Plan Change 6 implementation. There is a possibility that most of these cost pressures resulting from Plan Change 6 will affect the next LTP as these costs could commence during 2015/16.

Proposed Timelines

Task	Timing
Annual Plan compilation/scrutiny by Executive	December 2013/January 2014
Workshop papers to be distributed to Council	Wednesday 5 February 2014
Summary of Annual Plan proposals and strategy to be submitted to Council workshop	Tuesday 11 February 2014
Any follow up issues required by Council	Wednesday 12 March 2014 - Corporate & Strategic Meeting
Adoption of Draft Annual Plan	Wednesday 26 March 2014 (papers out Thursday 20 March 2014).
Special consultative period of five weeks’ duration	Monday 7 April 2014 – 12 May 2014
Staff responses and submissions to be sent to Council	Wednesday 28 May 2014
Council hears submissions	Wednesday 4 & Thursday 5 June 2014
Council adoption of final Plan	Wednesday 25 June 2014 (papers out 19 June 2014)

Decision Making Process

4. Council is required to make a decision in accordance with Part 6 Sub-Part 1, of the Local Government Act 2002 (the Act). Staff have assessed the requirements contained within this section of the Act in relation to this item and have concluded that, as this report is for information only and no decision is to be made, the decision making provisions of the Local Government Act 2002 do not apply.

Recommendations

1. The Corporate and Strategic Committee receives this Approach/Timelines for Annual Plan 2014/15 report and notes the relevant Council meeting dates for the Annual Plan 2014/15 process.

Paul Drury

Group Manager

Corporate Services

Liz Lambert

Chief Executive

Attachment/s

There are no attachments for this report.

HAWKE’S BAY REGIONAL COUNCIL

Corporate and Strategic Committee

Wednesday 11 December 2013

SUBJECT: Public Transport Update

Reason for Report

1. This agenda item provides the Committee with an update on Council’s public transport services, including trends since the previous update in September 2013. The report contains patronage and other relevant public transport graphs which are provided to this Committee and the Regional Transport Committee.

General Information

2. Public transport is administered by the regional council. Services are jointly funded by fare paying passengers, regional ratepayers (through a targeted rate) and the New Zealand Transport Agency (NZTA).

3. The Hawke’s Bay goBay network consists of 12 routes, providing 950 trips a week across Napier and Hastings. Currently the fleet consists of 28 vehicles.

4. The bus service is run under contract by Go Bus (Go Bus) Transport Ltd. In July 2013 NZTA approved a 30 month contract extension which means Go Bus will continue to operate the urban bus contract until 30 June 2016. It is anticipated that the contract for the urban bus services will be released for tender in July 2015. The contract extension was necessary to ensure that new legislative requirements are able to be met – these include producing a new Regional Public Transport Plan and Procurement Strategy by 30 June 2015.

Total Passenger Trips

5. The following graph shows total passenger trips from February 2009 to October 2013. Passenger trips from January to October were approx 9% higher than during the same period last year.

Diagram 1 – Total Passenger Trips – February 2009 – October 2013

6. Since 2009 the total numbers of trips per year and monthly averages have steadily trended upwards, as follows.

Total Yearly Trips Monthly Average

2009 434,231 36,186

2010 512,657 42,721

2011 616,198 51,350

2012 726,373 60,531

2013 (Jan-Oct) 671,453 67,145

SuperGold Card Trips

7. SuperGold cardholders, who travel free of charge between 9am and 3pm on weekdays and anytime at weekends/public holidays, continue to make very good use of this scheme. The graph below shows the number of SuperGold cardholder trips made from October 2012 to October 2013.

Diagram 2 – SuperGold Card Trips – October 2012 - October 2013

Infrastructure

Bus Stops

8. Unique goBay bus stop signage has been installed at all Hastings bus stops and feedback from passengers and drivers has been very positive. Regional Council staff will work with Napier City Council roading staff to implement a staged programme of signage installation at Napier bus stops.

Bikes on Buses

9. The uptake of bikes on buses continues to increase, with over 2400 bikes carried this year.

Other

10. In line with the three-year fare increase programme the Regional Council approved last year, the second stage of increases was introduced on 1 September. The increase was widely publicised and as a result it was readily accepted by passengers, with no negative feedback.

11. A bus service review is currently underway. Ratepayers in Napier and Hastings were invited to ‘Have Your Say’ on public transport through the Regional Council “Our Place” publication as well as local media. Around 200 people responded and feedback from this review will be considered and form part of the new Regional Public Transport Plan which must be adopted by the end of June 2015.

12. The mobile bus timetable application for smartphone users and the on-line bus timetable continues to be very popular, making up approximately 22% of all hits on the HBRC website.

Total Mobility Update

13. The Total Mobility Scheme, which is funded by regional council, local councils and the NZTA, provides subsidised taxi transport for people who have a permanent illness or disability which prevents them from using their own or public transport.

14. The following table shows the Total Mobility Scheme statistics and expenditure since October last year.

Diagram 3 – Total Mobility Statistics – October 2012 – September 2013

Decision Making Process

15. Council is required to make a decision in accordance with Part 6 Sub-Part 1, of the Local Government Act 2002 (the Act). Staff have assessed the requirements contained within this section of the Act in relation to this item and have concluded that, as this report is for information only and no decision is to be made, the decision making provisions of the Local Government Act 2002 do not apply.

Recommendation

1. That the Corporate and Strategic Committee receives the Public Transport Update.

Megan Welsby

Sustainable Transport Coordinator

Carol Gilbertson

Transport Manager

Attachment/s

There are no attachments for this report.

[1] A Study intended to support informed dialogue between councils, communities and iwi about the potential benefits, impacts and risks of petroleum (oil and gas) development across the East Coast of the North Island, if such a development were to eventuate. The Study partners were Ministry of Business, Innovation and Employment; Gisborne District Council; Tararua District Council; Central Hawke's Bay District Council; Hastings District Council; Wairoa District Council; Napier City Council; Horizons Regional Council; Hawke's Bay Regional Council; and support from Business Hawke's Bay.

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