Agenda of Strategic Planning and Finance Committee

HAWKE’S BAY REGIONAL COUNCIL

CORPORATE AND Strategic Committee

Wednesday 13 July 2011

SUBJECT: Shared Services Initiatives

REASON FOR REPORT

1. The purpose of this report is to outline a proposal for moving forward on shared services initiatives.

2. The benefits of shared services were canvassed in a report presented to Council in June 2010 “Local Government Shared Services: Present and Potential Collaboration in Hawke’s Bay.” This report identified existing areas where collaboration occurs between Councils within the region and also identified a range of potential functions for closer collaboration or sharing.

3. Recent and ongoing discussions on amalgamation have pre-empted any further investigations on shared services. This paper brings the matter back to the table for the Hawke’s Bay Regional Council’s consideration and suggests a course of action to potentially include all five Councils within the region in a shared services arrangement.

Progress to Date

4. Initiatives involving all or most Councils within Hawke’s Bay working together have been well canvassed in the Council’s Ten Year Plan and Annual Plan documents. Specific success and cost savings have been achieved in the following areas:

4.1. Purchasing of Insurance: The four Territorial Local Authorities (TLAs) in Hawke’s Bay commenced an insurance buying group with a view to reducing insurance premiums. The first year of the programme was 2010/11 and the Hawke’s Bay Regional Council (HBRC) alone made savings of $26,000 in insurance premiums. This initiative continues each year to secure insurance premiums for the group. Given the difficulties of placing insurance to cover damage to infrastructure subsequent to the Christchurch earthquake, the Council brokers have advised that there have been substantial advantages in seeking the cover for this insurance under bulk insurance arrangements for the region.

4.2. Aerial Photography: In 2002 the Hastings District Council and Hawke’s Bay Regional Council collaborated to share the cost of colour imagery at a cost of approx $65,000. Then in 2008, Wairoa, Hastings and Central Hawke’s Bay District Councils and the HBRC became a Partner Agency in the All of Government Imagery (KiwImage) project. This has resulted in getting consistent resolution colour imagery for the whole region. Total cost $150,000.

4.3. GIS: The Hawke’s Bay Regional GIS Forum has had a number of conversations about using common GIS software. As a result HBRC and Hasting District Council (2011/2012) will have the same GIS desktop and server technology (ESRI). The installation of the FX fibre network will provide the added benefit for the two Councils to share data more efficiently and provide opportunities for data redundancy (backup/data recovery). Extending the fibre network to Wairoa and Central Hawke’s Bay may provide the impetus for those Councils to share the same GIS desktop software, thereby reducing software licensing costs. Wairoa and Central Hawke’s Bay District Council’s and Napier City Council will continue with their present GIS (MapInfo).

For Web GIS, the four TLAs have decided to use the same technology, with HBRC remaining with their existing solution. This has provided the impetus to develop a prototype regional GIS Portal which will be presented to Councils in September this year.

4.4. Regional Rating and Valuation Data: The five Councils within the Hawke’s Bay region grouped together to negotiate with providers of valuation property information to secure the optimum service/cost for all Councils within the region. As a result of this group negotiation the contract for service delivery was given to Quotable Values New Zealand for a period of six years.

4.5. Over the Counter Payments Made by Ratepayers: All the Councils in the region have had discussions covering the issue of facilitating over the counter payments from ratepayers. These discussions resulted in each Council accepting over the counter rate payments on behalf of HBRC.

4.6. Proposed Shared Service Computer Systems Integration Initiative: At this meeting Council will be considering a paper covering computerised systems integration projects which proposes that the final software systems be implemented to upgrade and modernise HBRC’s computerised solutions. Part of this systems integration project is for the implementation of data management software and it is recommended in that paper that this solution will be implemented in Central Hawke’s Bay District Council along with the HBRC implementation. This paper also sets out the potential for shared services in relation to the chosen software solution Microsoft Sharepoint. There is an opportunity to work closely with Wairoa and Hastings District Councils in this regard as both of these Councils either have, or are proposing to, implement Sharepoint.

5. The June 2010 report to Council identified a range of potential further areas for collaboration and broke these down to “front office” and “back office” functions. It recognised that “back office” function are more likely to be appropriate for shared services, and indeed TAs noted that the Regional Council performs significantly different functions from them. While the Regional Council acknowledges our fundamental front office differences, there remains common functions and opportunities for use of Council specialist expertise which provide opportunities for efficiencies.

6. Two recent examples indicate the proactive attempts made by HBRC and the push-back that was encountered.

6.1. Resource Consent Monitoring

6.1.1. All four TLAs hold a growing number of resource consents from HBRC including for stormwater discharges, water takes and wastewater discharges. This involves them being required to monitor the environmental performances of their consents.

6.1.2. HBRC staff undertake state of the environment monitoring and in most, if not all of these cases, travel to or drive past the consents locations while carrying out their required SoE monitoring.

6.1.3. HBRC can see synergies and cost efficiencies for a shared service arrangement involving the use of trained and competent Regional Council staff to carry out the monitoring of resource consent conditions on behalf of a TLA. This is also a better outcome for combined ratepayers.

6.1.4. A proposal based on this approach was put to the TLAs in 2010. One TLA declined the offer, the other three indicated support in principle. However HBRC staff are still waiting for responses from the three TLAs to allow further progress to be made.

6.2. Civil Defence

6.2.1. In its 2011/12 draft Annual Plan HBRC demonstrated its commitment to strengthening leadership and performance of the Hawke’s Bay Civil Defence and Emergency Management Group at a cost of $360,000. This commitment includes appointing a professional Group Controller, aligning emergency management officer reporting lines across the region to the Group Controller, better resourcing of Wairoa and Central Hawke’s Bay District Councils by creating full-time roles there and relocating the Group office from HBRC building to a dedicated centre at Hastings District Council.

6.2.2. It has been recognised publicly at a TA political level that an amalgamation of authority would bring a far more effective and cohesive approach to civil defence planning and recovery operations. Yet there is still no commitment from Napier City and Hastings District Councils to have anything other than a “dotted line” linkage to the Group Controller.

7. Moving along in this ad-hoc way is not serving the region’s ratepayers well and HBRC is investigating options for advancing shared services to achieve costs savings for its ratepayers. A particularly promising option for HBRC is outlined below. This option has the additional benefit of providing for the inclusion of any or all of the four TLAs should they so choose.

A Shared Services Company

8. These initiatives, and others, can be enhanced and expanded by setting up a Local Authority Shared Service (LASS) company as has happened in Bay of Plenty, Waikato and Manawatu/Wanganui regions.

9. The costs of establishing and maintaining a shared services company can be significant. Establishment costs include the costs of a special consultative procedure and the preparation of a company constitution (which is lodged with the companies’ office).

10. Ongoing costs mainly relate to staffing. Two of the Local Authority Shared Services companies identified above operate with full-time Executive Officers and the third with a part-time Executive Officer. The Chief Executive Officers of member Councils are the Board Directors and are required to attend Board meetings regularly. In addition staff from participating Councils may be required to lead or be part of project teams formed for specific shared services projects. However the involvement of staff from the various Councils is critical to gaining mutual trust and respect among the participants.

11. Given these costs it may be more efficient for HBRC (and other Hawke’s Bay Councils) to consider joining an established LASS, rather than undergoing the expense of creating a LASS in Hawke’s Bay.

Manawatu/Wanganui LASS

12. A Local Authority Shared Service (LASS) company was established in 2008 and involves all Councils within the Manawatu/Wanganui region with the exception of Palmerston North City.

13. The Manawatu/Wanganui LASS (MWLASS) is operated by a part time Executive Officer, who is also the Group Manager Corporate Services at Horizons Regional Council. MWLASS has been in existence for approximately three years. During that time it has had successes in a number of project areas including: regional archives, aerial photography, debt recovery, contract works, regional rating and valuation, and insurance. These projects have resulted in significant savings to the ratepayers of the contributing Councils. MWLASS is currently investigating human resources legal services, a regional call centre and Closed Circuit Television (CCTV) opportunities.

14. HBRC staff have met with the CEO of Horizons Regional Council (as Chairman of MWLASS) and the Executive Officer of MWLASS to gauge the willingness of MWLASS to consider Hawke’s Bay Councils joining MWLASS. The response received was very positive. HBRC could consider putting forward funding equivalent to a 0.5 FTE resource if Hawke’s Bay joined MWLASS to support the Executive Officer role being increased to a full-time position. This would have the benefits for all members of the company of the level of activity being undertaken, and the reporting of Company requirements, being able to be moved forward at an accelerated rate. At present MWLASS restricts itself to a maximum number of projects at any one time due to resourcing constraints.

Proposal for Way Forward

15. The most significant benefits to the region of either establishing a shared services company or joining an existing one would occur if all, or at least the majority of, the five Councils within Hawke’s Bay were committed to joining the company. It is essential that potential members have an understanding of the advantages and costs of a formal shared service arrangement. The opportunity is currently available for progress to be made on this.

16. A proposal which would lead to the opportunity for Hawke’s Bay Councils to consider joining a LASS is set out as follows:

16.1. HBRC engages McGredy Winder & Co to provide a report on the advantages of shared services and how best this should be structured with reference to advantages, if any, in joining another LASS, specifically the Manawatu/Wanganui LASS. (McGredy Winder & Co is suggested as they are presently undertaking a report on the advantages and achievements of the LASS model for Bay of Plenty LASS). The report would cover, among other matters, potential savings that could be made which would be of benefit to ratepayers.

16.2. The funding of the report could come from the $50,000 set aside by Council for Local Government matters, and specifically to “provide funding for efficiency and effectiveness studies in relation to Regional Council activities.” (Minutes of Hawke’s Bay Regional Council meeting, 8 June 2011).

16.3. Once the report is completed it is proposed that it would be presented to the Chair/Mayors and Chief Executives of all five Councils with a view to securing the agreement of those Councils interested in joining MWLASS. If required MWLASS would also make a presentation at that meeting. The opportunity is thus provided to all five Councils to commit to the formalising of shared services and to joining MWLASS collectively or individually.

17. Irrespective of whether or not any of Hawke’s Bay’s four territorial authorities would choose to join MWLASS the HBRC will give serious consideration to the findings of the McGredy Winder report and look at the potential savings to ratepayers as well as improved levels of service possibilities.

DECISION MAKING PROCESS

18. 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 the following:

18.1. Sections 97 and 98 of the Act do not apply as these relate to decisions that significantly alter the service provision or affect a strategic asset.

18.2. Sections 83 and 84 covering special consultative procedure do not apply.

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

18.4. The persons affected by this decision are the region’s ratepayers.

18.5. The options considered are to undertake investigations into the advantages of the Local Authority Shared Services model or to remain at status quo.

18.6. Section 80 of the Act covering decisions that are inconsistent with an existing policy or plan does not apply.

18.7. Council can exercise its discretion under Section 79(1)(a) and 82(3) of the Act and make a decision on this issue without conferring directly with the community or others having given due consideration to the nature and significance of the issue to be considered and decided, and also the persons likely to be effected by or have an interest in the decisions to be made.

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. Engage McGredy Winder & Co to prepare a report on the advantages of shared services and how best this should be structured with reference to advantages, if any, in joining another LASS, specifically the Manawatu/Wanganui LASS.

3. Allocate the sum of $10,000 from Project 840 001 (cost code 2380) for the preparation of McGredy Winder & Co report.

Liz Lambert

Group Manager

External Relations

Paul Drury

Group Manager \

Corporate Services

Attachment/s

There are no attachments for this report.

HAWKE’S BAY REGIONAL COUNCIL

CORPORATE AND Strategic Committee

Wednesday 13 July 2011

SUBJECT: Shared Systems Integration Project

REASON FOR REPORT

1. The purpose of this report is to set out for Council’s consideration, the implementation of the remaining solutions that this Council needs to undertake to complete the systems integration project that was included in the 10 Year Plan. This paper sets out the objectives to be accomplished through the implementation of these remaining solutions, the recommended software products, the opportunity for sharing portions of the software solutions with neighbouring territorial local authorities, and the funding required.

Background

2. At the Council meeting on 28 October 2009, Council considered a proposal to, over the next 3-4 year period, update Council’s computer software systems which would provide the platform for ensuring the integrity and efficiency of Council’s information systems into the future. At that meeting Council approved the funding required for the systems to be upgraded to be included in the 10 Year Plan 2009-19.

3. Significant progress has been made in implementing the solutions for the systems integration initiative and, up to the end of this financial year, financial systems have been replaced, customer relation management software has been implemented, and consents and compliance in-house software has been enhanced to meet the business needs of Council’s regulatory group. This enhancement of Council’s in-house software has enabled the funding set aside for Consents and Compliance in the 10 Year Plan ($500,000) to assist in the funding of the shift in emphasis to provide systems that promote improved public interface and sharing of services.

4. Set out below is a diagram illustrating the software introduced to date together with the remaining software solutions to be implemented.

Solutions Remaining to be Implemented

5. This implementation needs to achieve the following objectives:

5.1. Ensure Council operates within a modern, robust and adaptable framework.

5.2. Deliver a customer focussed single-view platform that makes information transparent and accessible to all users via Website, Intranet and Extranet services.

5.3. Ensure Council has a system that is capable of providing a solution for, or integration with, future ‘shared service’ initiatives.

5.4. Provide good value for money and cost-effectiveness long term.

5.5. Be implemented by industry experts who are market leaders in their specialisations.

5.6. Be supported by a large national vendor to ensure resiliency and longevity.

5.7. Satisfy a wide range of functionality that would have, until recently, required many disparate systems.

5.8. Be flexible and customisable, ensuring evolving business needs can be satisfied without additional licensing, hardware or maintenance costs.

Further detail on the more key objectives are set out below.

Community Focussed Solution

6. Microsoft SharePoint 2010 is an intuitive interface that will provide a seamless interactive experience for the end users of the Hawke’s Bay Regional Council (HBRC) Website.

7. The community will be able to easily discover, use and share Council information with the confidence that it is complete and accurate.

8. Data and information created by Council staff will, with discretion, be able to be classified as public which will in turn publish it seamlessly onto the Website without the risk of duplication or incorrect versions.

9. The community will be able to interact with Council through e-services by engaging in online activities such as paying bills, submitting compliance data, providing feedback, etc.

Shared Service Capacity

10. Discussions with the Territorial Local Authorities within the Hawke’s Bay region have revealed that there is strong interest in how SharePoint 2010 can satisfy future business requirements. There is particular interest around how HBRC achieves a compliant ‘document management’ solution. The views of these TLAs are set out below:

10.1. Hastings District Council (HDC) use Microsoft SharePoint for both an Intranet and also as a Call Centre Knowledge Base solution with good success but they have an alternate solution to SharePoint for their ‘document management’ requirements. Although HDC have a ‘document management’ system that is currently meeting their requirements, they are still very interested in how this Council implements SharePoint 2010 as a ‘document management’ solution, specifically in the areas of usability and integration.

10.2. Wairoa District Council (WDC) are very interested to attend our initial project scoping workshops to further familiarise themselves with the software and to assess how we may be able to synergise during the implementation of SharePoint 2010 - ie, potentially sharing configuration and development efforts.

10.3. Central Hawke’s Bay District Council (CHBDC) acknowledge a need to implement a ‘document management’ solution but do not have funding or resourcing to undertake an adequate investigation. It has been agreed that this Council will include, within the scope of this project, the implementation of SharePoint 2010 into CHBDC as a ‘document management’ solution. This will be provided as a fully hosted ‘shared service’. Refer to a letter from the CHBDC Chief Executive appended as Attachment 1.

10.4. Napier City Council (NCC) is in the process of investigating potential solutions for ‘document management’. NCC has not yet made any decisions on a preferred solution but is interested in, and will keep discussing with us how we will achieve ‘document management’ with SharePoint 2010.

11. Microsoft SharePoint 2010 is a flexible platform which lends itself to shared service initiatives by being very compatible and accessible. This enables seamless integration with other systems and even to the extent of acting as a host for ‘shared service’ applications.

Modern, Robust and Flexible Framework

12. Many of this Council’s systems are in urgent need of modernising – ie, the Council Website recently ranked 67 of 78 Council websites around the areas of compliance with Government Web Standards, accessibility, online features and enquiry response times. Three of our four regional counterparts scored in the top 20.

13. Currently Council’s systems for accessing and managing data and information are outdated and not meeting business needs. Systems are unstructured and carry a high risk of poor or inadequate decision making.

14. Microsoft SharePoint 2010 provides a structured, intelligent system for creating, managing and accessing information.

15. Microsoft SharePoint 2010 is a modern, robust and flexible platform upon which to build, or integrate with, all future business systems and applications.

16. Microsoft SharePoint 2010 is in the same product family as the recently implemented financial system and customer relationship system, ensuring seamless integration resulting in lowered development and integration costs.

17. Microsoft SharePoint 2010 integrates seamlessly with the current office productivity suite we use Council wide.

18. Microsoft SharePoint 2010 has been assessed as the only financially and functionally viable solution to implement and integrate into our current technology environment.

Efficiency and Statutory Compliance

19. Current systems are exposing this Council to a high risk of poor or inadequate decision making due to information being potentially incomplete, inaccurate and/or inaccessible. Furthermore, these uncertainties in completeness, accuracy and accessibility of information are making staff less productive.

20. Microsoft SharePoint 2010 will provide architecture, rules and workflows that will ensure data and information is managed from point of creation through to its eventual disposal ensuring it is verifiably complete, accurate and accessible.

21. Currently the public Website does not comply with e-Government 2.0 accessibility standards.

22. Currently Council is not meeting its statutory obligations as defined by the Public Records Act 2005 (PRA) and the Local Government Official Information and Meetings Act 1987 (LGOIMA).

23. Microsoft SharePoint 2010 will achieve compliance and also meet best business practice in alignment with all statutory obligations and best practice guidelines.

Value Added

24. There will be considerable added value to Council through the implementation of SharePoint 2010 when compared to business solutions and information delivered by the current systems of this Council.

25. The unique value of SharePoint 2010 is its ability to satisfy a large range of business needs on a single platform. Not only does this provide a cost-effective solution for the current requirements but it will significantly reduce future capital costs of evolving business needs that require new solutions. This will result in significant cost reductions in the areas of hardware, software, training, maintenance and support.

26. Set out in Attachment 2 are a number of areas that will show improved benefits to Council due to such an implementation.

27. The expected Council wide value added is clearly expressed by specific business units in the following attachments:

- Attachment 3: Support paper for Shared Systems Integration Project –

Resource Management Group

- Attachment 4: Support paper for Shared Systems Integration Project –

External Relations Group

- Attachment 5: Support paper for Shared Systems Integration Project –

Information Management Working Party

Risks to Council if this Implementation Does not Proceed

28. The risk to Council if a decision is made to not proceed with this project is that it would remain in a state where:

28.1. The outdated Website fails to provide to the community and other stakeholders, the information they should have readily available. For example, the community should have easy access to key environmental data for this region’s natural assets such as water, land and air.

28.2. Council is unable to respond or act effectively on any initiatives or activities for ‘shared services’. SharePoint 2010 provides the platform to engage in ‘shared services’ opportunities.

28.3. Disparate systems and applications continue to compromise the quality of data and information we disseminate, leading to a high risk of poor or inadequate decision making.

28.4. The number of disparate systems will continue to grow as teams or units work in isolation to meet their business needs, resulting in data and information being even more incomplete, inaccurate and inaccessible.

28.5. Council continues to fail to comply with its statutory obligations as defined by the Public Records Act 2005 (PRA) and the Local Government Official Information and Meetings Act 1987 (LGOIMA).

28.6. Investment in the recent Financial Management and Property/Customer Relationship Management systems is not maximised and momentum for ‘systems integration’ is severely compromised.

28.7. Our public Website would remain sub-standard and not meet the demands of both the community and internal business units, in particular the Resource Management team. The Website will continue to:

28.7.1. Give Council no online presence or mechanism to effectively collect and share data and information with the community and other stakeholders;

28.7.2. Receive low national rankings – (refer to section 12 above).

28.7.3. Display only static text and imagery. The sites do not support video - ie, YouTube clips that can inform or educate, or other relevant multi-media applications that are now business as usual expectations.

28.7.4. Be non compliant with e-Government 2.0 accessibility standards.

28.7.5. Have entirely manual management of Website and Intranet content. It is currently difficult to manage and maintain content, monitor delegated content editors or proactively manage tasks.

Evaluation of Software Solution

29. An analysis of current and imminent business requirements resulted in a clear finding that Microsoft SharePoint 2010 was the most viable solution particularly with regards to integration, cost-effectiveness and flexibility. Furthermore, it is a solution that provides the best opportunity for any future ‘shared services’ initiatives.

30. Council issued a Request for Proposal in March 2011 for the Implementation of Microsoft SharePoint 2010. Due to the specific product requirement, the evaluation was predominantly a ‘Vendor Selection’ process. From the four responses, two companies were selected to present their proposals in early May 2011, Datacom Systems Limited and Intergen Limited. After a thorough evaluation process, the User Group considered all information available and selected a preferred Vendor.

31. The User Group considered Intergen Limited to be the preferred Vendor based on their demonstration of competence, proposed approach to implementation and their understanding of Council’s unique needs. The costs to deliver the final solution was lower than the other proposals received.

32. The User Group determined that to ensure a cost-effective and ‘fit for purpose’ implementation, a multi-Vendor approach must be adopted. Therefore, a secondary vendor, Information Leadership Consulting Limited, will be engaged to deliver the Document Management functionality. This multi-Vendor approach is consistent with other implementations in Local Government.

33. Information Leadership Consulting Limited is the leading specialist in New Zealand with extensive experience in implementing SharePoint 2010 as a Document Management solution into local and central government agencies. It was paramount that Council chose the best solution to ensure effective change management and statutory compliance with the Public Records Act 2005 (PRA) and the Local Government Official Information and Meetings Act 1987 (LGOIMA).

Timeline

34. This implementation of SharePoint 2010, under the larger Systems Integration Project, is projected to run for a 3 year period commencing July 2011.

July 2011 to June 2012

July 2012 to June 2013

July 2013 to June 2014

Costs of remaining Software Solutions

35. The projected costs below are for the implementation of the remaining software solutions.

Phase	2011/12	2012/13	2013/14
Software	$40,000	$80,000		$120,000
Resource & Disbursements	$150,000	$105,000	$40,000	$295,000
Contingency	$40,000	$25,000		$65,000
Solution Design	$150,000	-	-	$150,000
Configure & Build Platform	$50,000			$50,000
Website	$220,000			$220,000
Intranet & Extranet	-	$130,000	-	$130,000
Document Management	-	$100,000		$100,000
Roll-out Sharing of Solution	-	$80,000	$85,000	$165,000
	$650,000	$520,000	$125,000	$1,295,000

36. The 10 Year Plan 2009-19 provided the following funding for Systems Integration:

10 Year Plan	2009/10	2010/11	2011/12	2012/13
Systems Integration Project	$550,000	$520,000	$520,000	-	$1,590,000
SharePoint Software Purchase	-	-	$70,000	-	$70,000
Document Management	-	-	-	$300,000	$300,000
Total	$550,000	$520,000	$590,000	$300,000	$1,960,000
Cost of implementation to 30 June 2011	$550,000	$300,000	-	-	$860,000
Remaining Provisions	-	$220,000	$590,000	$300,000	$1,110,000

37. The reason why the revised costs for the systems still to be implemented are $1,295,000, an increase of $185,000 over what the 10 Year Plan provided, is due to the project scope being increased to allow for this Council to take a leadership role in rolling out systems to TLAs within the Hawke’s Bay region, specifically Central Hawke’s Bay District Council and the monitoring of opportunities to synergise with Wairoa District Council.

38. The 10 Year Plan and Annual Plan establish that this project will be funded from loan funding.

DECISION MAKING PROCESS

39. 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 the following:

39.1. Sections 97 and 98 of the Act do not apply as these relate to decisions that significantly alter the service provision or affect a strategic asset.

39.2. Sections 83 and 84 covering special consultative procedure do not apply.

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

39.4. The effects of this decision will impact on Council’s organisational efficiency and will also affect the delivery of Council services to the members of the regional community.

39.5. This paper clearly sets out the options available to Council for alternative proposed systems. Specifically four systems have been analysed and details are included in the attachments to this paper.

39.6. Section 80 of the Act covering decisions that are inconsistent with an existing policy or plan does not apply.

39.7. Council can exercise its discretion under Section 79(1)(a) and 82(3) of the Act and make a decision on this issue without conferring directly with the community or others having given due consideration to the nature and significance of the issue to be considered and decided, and also the persons likely to be effected by or have an interest in the decisions to be made.

RECOMMENDATIONS

That the Corporate and Strategic Committee recommends Council:

2. Approve the funding of $1,295,000 over the three years 2011/12 – 2013/14 to enable the remaining software solutions of Council’s systems integration project to be completed, noting that these remaining solutions include the upgrading of Council’s Website, Intranet, document management system and also provides for the roll out of some of these solutions to Central Hawke’s Bay District Council. It is further noted that the software solutions to be implemented are those proposed by Intergen in response to a request for proposal sent out by this Council.

3. Note that $165,000 of the funding for the Council’s systems integration project is related to the roll out of the document management SharePoint solution to Central Hawke’s Bay District Council.

4. Note that the funding required for the implementation of the remaining software solutions for the systems integration project is consistent with the financial provisions as set out for these projects in the 10 Year Plan 2009-19 with a small increase required to fund shared service initiatives in relation to the software.

5. Note that funding for these projects is to be through loan funding as set out in the 10 Year Plan.

Kahl Olsen

Systems Integration Project Manager

Paul Drury

Group Manager

Corporate Services

Attachment/s

1 View	Letter from CHBDC Chief Executive
2 View	Expected Benefits
3 View	Support Paper Resource Management Group
4 View	Support Paper External Relations Group
5 View	Support Paper Information Management Working Party

Expected Benefits

Attachment 2

EXPECTED BENEFITS FROM THE IMPLEMENTATION OF

SHAREPOINT 2010

The table below details the key expected benefits from the proposed implementation of SharePoint 2010:

Function/ Deliverable	Current State	SharePoint 2010 Benefit
Internet (HBRC Website)	Software platform not currently in use by any other NZ local government agencies. Does not comply with: · Public Records Act; · Web Standards; or · E-govt guidelines. Poor, unsatisfactory content management. Inadequate audit capability. Out-dated look ‘n’ and feel with poor ‘unfriendly’ navigation. Recently ranked 67 of 78 in the 2011 ALGIM Local Authority website evaluations. Does not satisfy the business needs of the Resource Management team with respect to public information being transparent and accessible.	Modern, industry standard platform in use by many NZ local and central government agencies – particularly beneficial for ‘shared services’ initiatives. Common platform ensuring integration with other Council systems, data and information is seamless and cost-effective. Out of the Box content management customisable to suit any environment, built-in audit capabilities and the implementation will cater for a completely refreshed look ‘n’ feel and navigation style. Will satisfy the Resource Management Groups ‘full story’ requirements for ‘front-room’ functionality.
Intranet	Software platform not currently in use by any other NZ local government agencies. Not satisfactorily addressing any true business needs.	Mainstream platform in use by many NZ local and central government agencies – particularly beneficial for ‘shared services’ initiatives. The Intranet and Website will be able to seamlessly share the same data and information ensuring there is no risk of duplication and/or incorrect versions of information. The Intranet will be the ‘single-view’ platform for access to all Council data.
Extranet	Currently non-existent.	Staff will be able to access the intranet environment from anywhere. This functionality will also allow secure access for external parties to access/share appropriate data and information.
Document and Information Management	Currently only physical records are managed within a structured system. This accounts for only a small portion of Council’s data and information. All other non-physical data and information, i.e. e-mail, word documents, excel spreadsheets, photos, audio visual records, etc are not currently managed appropriately. Council is not meeting statutory obligations of the Public Records Act 2005 as defined by Archives NZ. Council cannot confidently fulfil requests made under the Local Government Official Information and Meetings Act 1987 (LGOIMA). Current information management practices are not meeting business needs.	Council will comply with the Public Records Act 2005. Able to confidently fulfil requests made under the Local Government Official Information and Meetings Act 1987 (LGOIMA). Complete, accurate and accessible source of data and information. Collaboration of search results from Alchemy, Windows folders, SharePoint libraries and other key systems. This will lead to significant staff efficiencies and excellent decision making. Ability to share data and information with relevant internal or external audience without duplication.
Singe-view/ Collaboration Platform	No collaboration of system front-ends leading to incomplete and/or inaccurate data or information. This renders key information difficult to access and in some cases it is not accessible at all.	Most Council data and information will be collaborated and accessible from a ‘single-view’ platform. This will result in only one true source of given data ensuring it is complete, accurate and accessible.
Systems Integration	There is no single view of HBRC data. In many cases there is no true source of data and information. Council has many versions of a given dataset that should only have one authoritative version. This inevitably leads to poor or inadequate decision making and staff inefficiencies.	Council data and information will be able to be surfaced within a single interface, a ‘single-view’ platform. This will be a mechanism for integrating/linking other systems to ensure complete retrieval of data and information.
Fosters ‘shared services’ concept	Disparate systems, databases and information stores currently render HBRC data unviable for any move towards ‘shared services’.	Collaboration and ‘single-view’ platform will ensure Council data is accessible and in a viable format for any future ‘shared services’ initiatives. The environment will also support data coming into the HBRC environment. The potential for Council hosting complete ‘shared services’ for other organisations is viable.
Multi-use Platform	New business requirements generally require the purchase of new, additional or upgraded software and hardware.	Sharepoint 2010 can be customised to satisfy most new business requirements and applications. Council would realise significant saving on software licensing, maintenance, IT training, IT administration and staff training costs due to the ‘re-usability’ of SharePoint 2010.
Common Platform	Most systems, databases and information stores are currently built in-house and are not industry standard solutions or at least in an industry standard, compatible format.	Sharepoint 2010 provides a common platform that lends itself to both simpler in-house upgrades and developments and also provides a compatibility factor that is essential for any future ‘shared services’ initiatives.
Extend the shelf life of the Consents and Compliance system	The current Consents and Compliance system meets internal business needs of the Resource Management team but the current environment does not satisfactorily support the dissemination of the data and information to a wider audience including the community.	By providing a single-view platform, SharePoint 2010 will provide both a more accurate and complete view of internal data. It will seamlessly disseminate relevant information to the appropriate audience via the Intranet, Extranet and website, particularly key public information from the Consents and Compliance systems.

Function/

Deliverable

Current State

SharePoint 2010 Benefit

Internet (HBRC Website)

Software platform not currently in use by any other NZ local government agencies.

Does not comply with:

· Public Records Act;

· Web Standards; or

· E-govt guidelines.

Poor, unsatisfactory content management.

Inadequate audit capability.

Out-dated look ‘n’ and feel with poor ‘unfriendly’ navigation.

Recently ranked 67 of 78 in the 2011 ALGIM Local Authority website evaluations.

Does not satisfy the business needs of the Resource Management team with respect to public information being transparent and accessible.

Modern, industry standard platform in use by many NZ local and central government agencies – particularly beneficial for ‘shared services’ initiatives.

Common platform ensuring integration with other Council systems, data and information is seamless and cost-effective.

Out of the Box content management customisable to suit any environment, built-in audit capabilities and the implementation will cater for a completely refreshed look ‘n’ feel and navigation style.

Will satisfy the Resource Management Groups ‘full story’ requirements for ‘front-room’ functionality.

Intranet

Software platform not currently in use by any other NZ local government agencies.

Not satisfactorily addressing any true business needs.

Mainstream platform in use by many NZ local and central government agencies – particularly beneficial for ‘shared services’ initiatives.

The Intranet and Website will be able to seamlessly share the same data and information ensuring there is no risk of duplication and/or incorrect versions of information.

The Intranet will be the ‘single-view’ platform for access to all Council data.

Extranet

Currently non-existent.

Staff will be able to access the intranet environment from anywhere.

This functionality will also allow secure access for external parties to access/share appropriate data and information.

Document and Information Management

Currently only physical records are managed within a structured system. This accounts for only a small portion of Council’s data and information.

All other non-physical data and information, i.e. e-mail, word documents, excel spreadsheets, photos, audio visual records, etc are not currently managed appropriately.

Council is not meeting statutory obligations of the Public Records Act 2005 as defined by Archives NZ.

Council cannot confidently fulfil requests made under the Local Government Official Information and Meetings Act 1987 (LGOIMA).

Current information management practices are not meeting business needs.

Council will comply with the Public Records Act 2005.

Able to confidently fulfil requests made under the Local Government Official Information and Meetings Act 1987 (LGOIMA).

Complete, accurate and accessible source of data and information.

Collaboration of search results from Alchemy, Windows folders, SharePoint libraries and other key systems. This will lead to significant staff efficiencies and excellent decision making.

Ability to share data and information with relevant internal or external audience without duplication.

Singe-view/

Collaboration Platform

No collaboration of system front-ends leading to incomplete and/or inaccurate data or information.

This renders key information difficult to access and in some cases it is not accessible at all.

Most Council data and information will be collaborated and accessible from a ‘single-view’ platform.

This will result in only one true source of given data ensuring it is complete, accurate and accessible.

Systems Integration

There is no single view of HBRC data.

In many cases there is no true source of data and information.

Council has many versions of a given dataset that should only have one authoritative version. This inevitably leads to poor or inadequate decision making and staff inefficiencies.

Council data and information will be able to be surfaced within a single interface, a ‘single-view’ platform.

This will be a mechanism for integrating/linking other systems to ensure complete retrieval of data and information.

Fosters ‘shared services’ concept

Disparate systems, databases and information stores currently render HBRC data unviable for any move towards ‘shared services’.

Collaboration and ‘single-view’ platform will ensure Council data is accessible and in a viable format for any future ‘shared services’ initiatives. The environment will also support data coming into the HBRC environment.

The potential for Council hosting complete ‘shared services’ for other organisations is viable.

Multi-use Platform

New business requirements generally require the purchase of new, additional or upgraded software and hardware.

Sharepoint 2010 can be customised to satisfy most new business requirements and applications.

Council would realise significant saving on software licensing, maintenance, IT training, IT administration and staff training costs due to the ‘re-usability’ of SharePoint 2010.

Common Platform

Most systems, databases and information stores are currently built in-house and are not industry standard solutions or at least in an industry standard, compatible format.

Sharepoint 2010 provides a common platform that lends itself to both simpler in-house upgrades and developments and also provides a compatibility factor that is essential for any future ‘shared services’ initiatives.

Extend the shelf life of the Consents and Compliance system

The current Consents and Compliance system meets internal business needs of the Resource Management team but the current environment does not satisfactorily support the dissemination of the data and information to a wider audience including the community.

By providing a single-view platform, SharePoint 2010 will provide both a more accurate and complete view of internal data.

It will seamlessly disseminate relevant information to the appropriate audience via the Intranet, Extranet and website, particularly key public information from the Consents and Compliance systems.

HAWKE’S BAY REGIONAL COUNCIL

CORPORATE AND Strategic Committee

Wednesday 13 July 2011

SUBJECT: Regional Economic Development Strategy - 10.30am

REASON FOR REPORT

1. At the Council meeting on Wednesday 25^th May an early draft of the Regional Economic Development Strategy was received by Council with an undertaking to give the Strategy further consideration following its review by the Reference Group. The Reference Group and Steering Group have now signed off the Strategy document and it is presented for adoption.

Background

2. The Draft Strategy in Appendix 1, is presented for your consideration with the aim of having a final plan adopted for implementation as soon as practicable.

3. The strategy has been developed through a thorough process of consultation and deliberation over the past few months.

4. Preparation was tasked to a Steering Group comprising Economic Development practitioners from the Hastings, Napier, and Hawke’s Bay Regional Councils, Hawke’s Bay Tourism, Hawke’s Bay Chamber of Commerce and the private sector.

5. A wider Stakeholder Reference Group including TLA representatives, participants from industry, the rural sector, iwi, environmental interests and key institutions such as Port of Napier, Eastern Institute of Technology and New Zealand Trade and Enterprise provided initial identification of key issues and then subsequent feedback to a developed draft plan. That feedback has been taken into account in this last iteration of the plan.

6. The underlying philosophy of the Strategy and its point of difference from earlier approaches is “Active Collaboration” by all significant players – communicating and working with the common goal of achieving the objectives of the Strategy.

DECISION MAKING PROCESS

7. 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 the following:

7.1. Sections 97 and 98 of the Act do not apply as these relate to decisions that significantly alter the service provision or affect a strategic asset.

7.2. Sections 83 and 84 covering special consultative procedure do not apply.

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

7.4. The persons affected by this decision are agencies associated with the delivery of economic development initiatives and the business sector.

7.5. The options considered are 1 – to support the adoption of the Regional Economic Development Strategy, 2 – to support the adoption of the Regional Economic Development Strategy contingent on suggested changes being made, or 3 – to not support the adoption of the Regional Economic Development Strategy. Given that the Strategy has undergone extensive consultation with other agencies during its development, that its aim to stimulate collaboration with these other agencies, and that it provides a guiding framework that can be periodically reviewed that option 1 presents the best option for collaborative implementation of the Regional Economic Development Strategy. Should option 2 be decided it would be necessary to take suggested changes back to the Reference Group, Steering Group and other Councils for further consultation.

7.6. Section 80 of the Act covering decisions that are inconsistent with an existing policy or plan does not apply.

7.7. Council can exercise its discretion under Section 79(1)(a) and 82(3) of the Act and make a decision on this issue without conferring directly with the community or others having given due consideration to the nature and significance of the issue to be considered and decided, and also the persons likely to be effected by or have an interest in the decisions to be made.

RECOMMENDATIONS

That the Corporate and Strategic Committee recommends Council:

2. Receive and adopt this Regional Economic Development Strategy.

3. Instruct staff to further progress adoption of the Strategy by Hawke’s Bay Councils together with the Steering Group.

4. Socialise and progress implementation of the Strategy in collaboration with regional stakeholders then review the Strategy in 12 months.

Michael Bassett-Foss

Economic Development Agency Manager

Andrew Newman

Chief Executive

Attachment/s

1 View

REDs Development Document

HAWKE’S BAY REGIONAL COUNCIL

CORPORATE AND Strategic Committee

Wednesday 13 July 2011

SUBJECT: Options to Maximise the Value of the Council's Investment in Napier Leasehold Land

REASON FOR REPORT

1. The purpose of this paper is to:

1.1. Provide background to the range of possible options available to the Council for maximising cash from its investment in Napier leasehold land.

1.2. Evaluate these options in terms of their likely financial outcomes for the Council, their impact on leaseholders and the ease or otherwise of executing each of them, taking into account the obligations and constraints of the Hawkes Bay Endowment Land Empowerment Act 2002 (“the Act”).

1.3. Identify the option most likely to achieve the Council’s objectives for maximising the values in the leasehold portfolio for the Council’s further consideration.

Background

Council Objectives

2. To generate cash from the Council’s Napier leasehold land portfolio within the next twelve-eighteen months to:

2.1. Maximise the value of the portfolio to the Council

2.2. Reinvest the funds yielded from realising the portfolio in alternative higher yielding investments

2.3. Reinvest the funds in appropriate investments that will also generate economic, environmental, social and cultural benefits for the Hawke’s Bay region as a whole.

2.4. Encourage current leaseholders to freehold their properties, and for those leaseholders who do not freehold, to provide continuing security of their rights under their existing leases.

Profile of the Council’s Investment in Napier Leasehold Land

3. As at 31 March 2011, the portfolio comprised 1,026 leases owned by 746 individuals, trusts, incorporations and businesses.

4. All leases are currently classified by the Council as being leases of residential property.

5. Some 585 of these leases were held by owner-occupiers and 441 were held by investors.

6. The total number of leases included 490 cross leases and 536 stand-alone leases.

7. The value of the portfolio was $80.3 million as recorded in the Council’s Financial Statements for the year ended 30 June 2010.

8. According to the Council’s 2010/2011 Annual Plan, gross rents expected to be received for the year ended 30 June 2011 are estimated to be $2.6 million.

9. This level of rents shows a return on portfolio value ($80.3 million) of around 3.2% for the 2010/2011 year.

10. Some leases have been sold to leaseholders during the year which means actual rent and valuation figures for the 2010/2011 year will be marginally different from the figures above, but these changes are not material in terms of the Council’s objective and the size of the portfolio as a whole.

Options Considered

11. A number of options to maximise value from the portfolio were evaluated and discussed by Council at its workshop on 13 April 2011. These options, below, are included in this paper.

11.1. Option 1: To sell the portfolio to existing leaseholders.

11.2. Option 2: To sell the portfolio to external investors.

11.3. Option 3: To sell the cash flows from annual rents to external investors.

11.4. Option 4: Sell the Freeholds to Leaseholders by Assisting Leaseholders to Secure Mortgage Finance from a Registered Bank.

11.5. Option 5: To implement a mix of Options 1 and 3 by a phased process of offering leaseholders the opportunity to buy the freeholds of their properties at a discount for a limited time followed by sale of residual cash flows to external investors once the offer period has expired.

These options are evaluated in the following section of this report.

Evaluation of Options

12. The following section outlines the evaluation of each of the feasible options identified above and finishes with a summary/conclusion of the results of the evaluation.

13. Option 1: Sell the Portfolio to Existing Leaseholders at Current Market Value

13.1. This is a continuation of current policy.

13.2. It could achieve the Council’s objective to maximise value from the portfolio. Previous experience of encouraging purchase of freeholds, when a 5% discount from lessor’s interest was offered to leaseholders in addition to the discount from market value showed a marked lift in sales to leaseholders as illustrated in the following Figure 1 below.

Figure 1: Sales to Leaseholders 2002-2011

13.3. Figure 1 shows the substantial lift in sales to leaseholders in 2003/2005 period (shaded in the chart) from 431 over the two year 2003-2005 period when an additional 5% discount was offered, but have since fallen away to 20 in the year ended 30 June 2011.

13.4. Although these sales were achieved when the economic environment was more positive than it is today and purchase was easier to arrange, it is clear that the incentive of a discount increased the number of sales materially

13.5. This paper therefore supports the view that a substantial discount offered now will increase the number of sales (further discounts are discussed as part of Option 5 in this paper).

13.6. However major difficulties face the successful implementation of this option within the objective time frame. For example, sales to cross leaseholders are unlikely to be successful because, in the current circumstances, all parties to the cross leases need to agree to purchase their freeholds. In effect any one leaseholder can veto the purchase of the freehold of any property subject to cross lease.

13.7. This means this approach will still result in very slow progress towards the Council’s objectives (as presented in Section 2 above) – possibly requiring up to 20 years to execute successfully.

14. Option 2: Sell the Portfolio to External Investors

14.1. Here a “package” of the portfolio plus its administration would be sold to an external investor or investors.

14.2. However Section 6(2) of the Act prevents sale of the freeholds by the Council to external investors.

14.3. This option is therefore cannot be taken further.

14.4. The limitation on sale of freehold under the Act has been confirmed by the Council’s solicitors, Sainsbury Logan & Williams. Their advice is contained in Attachment 1 to this report.

15. Option 3: Sell the Cash Flows From Annual Rents Paid by Leaseholders

15.1. In this case the Council would sell the stream of rents to an external investor for an agreed period ranging from, say, 21 years (which is the rent review cycle), to perpetuity at a market yield to the investor. Council would receive a lump sum from an investor interested in purchasing these cash flows.

15.2. This option is permitted by the Act and the proceeds from the sale of the leasehold cash flows can be utilised for any purpose specified in Council’s 10 Year Plan. This has been confirmed by Sainsbury Logan & Williams (see Attachment 1).

15.3. The Council would retain the ownership of the underlying freeholds in compliance with the Act and would continue to sell to leaseholders that requested to freehold.

15.4. This option:

15.4.1. Achieves Council objectives (see Section 2 above).

15.4.2. Ensures leaseholders are still able to freehold their properties in accordance with the terms of the Act.

15.4.3. Continues Council ownership of the underlying properties in the portfolio and future capital growth (if any).

15.5. It is believed this approach will interest potential investors because it offers them:

15.5.1. Attractive market running yields.

15.5.2. Good security investments.

15.5.3. Diverse portfolio.

15.5.4. No administration.

15.6. If the Council accepts this option in principle, then a considerable amount of further work will need to be done before Council can finally approve the value at which the cash flows will be sold including:

15.6.1. Discussions with Council’s valuers about future rental levels and the likely cash flows arising from them.

15.6.2. Exploration of the market for this type of investment and the yields likely to be realised from sale of cash flows.

15.6.3. Evaluation of potential investor interest to a detailed sale offer, including the likely terms and conditions of sale.

15.7. All such issues will need to be reported back to the Committee and Council for their consideration and approval

15.8. Given the detailed planning required to implement this option, sale of the cash flows, if approved by Council, is likely to take effect during the six months ending 31 December 2012.

16. Option 4: Sell the Freeholds to Leaseholders by Assisting Leaseholders to Secure Mortgage Finance from a Registered Bank

16.1. Lessees fall into one of three categories, which are:

16.1.1. Those who are able to obtain loans to finance their purchase on ordinary financier terms because they can provide sound security and can service their loans (ie, repay loan principal and interest).

16.1.2. Those who cannot get a loan because they are unable to repay loan principal and interest on terms satisfactory to a lender.

16.1.3. Those who don’t want to freehold their property in any event.

16.2. This means that those leaseholders that cannot secure a loan from a bank on ordinary commercial terms would require Council to provide to the bank, an interest and principal repayment subsidy or, at the very least, to be guarantor for the interest and principal repayments of loans. Preliminary indications from discussions with potential financiers are that subsidies and guarantees would be required from Council if mortgage finance was to be provided on non-commercial terms.

16.3. There would also be a number of leaseholders that would not want to be responsible for loan commitments as such commitments would be in excess of the 5% of land value that they currently pay.

16.4. This paper therefore considers failure to achieve the Council’s objective combined with increased risks and costs as outlined above mean this option is not to be recommended.

17. Option 5: Implement a phased process of offering freeholds for sale at a discount for limited term and then selling residual cash flows to external investors. Initially offer the leaseholders the opportunity to purchase the Council’s freehold at a discount to current market value. This offer to be available for a limited period. At the expiry of the offer, sell the cash flows from rents generated by the remaining unsold freeholds to external investors. This is a mix of options 1 (modified by offering to sell at discount) and 3 above and can achieve all the Council’s objectives by 31 December 2012.

17.1. Recommendations under this option are:

17.1.1. The Council encourages existing leaseholders to freehold their properties by granting a discount (in the range of between 15% - 20%) from the lessor’s interest in determining a purchase price for each freeholding, such discount to apply for all sale and purchase agreements made and settled between the Council and leaseholders by 30 June 2012. This discount is in addition to the current sale price of lessor’s interest being less than the market value of the land.

17.1.2. The Council approves the sale of residual cash flows generated from freeholds not sold by 30 June 2012 to investors on terms and conditions to be approved by the Council.

How is the Proposed Discount on Sale Calculated?

18. As noted in Section 7 above the lessor’s interest value of the portfolio was recorded in the Council’s 30 June 2010 Financial Statements to be $80.3 million.

19. Assessments have been made of the value of the cash flows to be received by Council from the Napier leasehold portfolio. These cash flows range from $2.8 million (estimated in 2010/11) to an estimated $6.5 million in 21 years’ time.

20. Assessments have also been made of the value investors would be prepared to pay for these cash flows at different yield expectations.

21. The proposed discount range of between 15% - 20% reflects the extent to which these calculations establish that the likely price paid by an investor for the cash flows would be less than the Council’s current book value.

Impact of the Discount Offer

22. It is difficult to estimate the extent to which leaseholders would avail themselves of Council’s discount offer. Many cross leased properties have a mix of elderly, low income and landlord/tenant occupancy where freeholding is more difficult. Furthermore, lessees who could afford to freehold may have already done so.

23. Section 5 of this paper establishes that 441 leases are held by investors. If, for example, 200 of these investors decided to proceed with freeholding and take the benefit of the discount, then the value of the discount based on 20%, would be in the order of $3 million.

24. If a 20% discount had applied during the 2010/11 financial year, then the 20 properties freeholded at $2.1 million would have attracted a further discount of approximately $400,000.

Special Situation – Cross Leases

25. As noted in Sections 3-10 above, around 490 of the leases were cross leases (as at 30 June 2010). These range from properties which have two to eight cross lease holders all holding one property in common.

26. In order to freehold a property subject to cross lease, all leaseholders in common must agree for it to happen.

27. Where only one or more cross leaseholders don’t want to purchase the freehold of their cross leased property they can nominate the remaining leaseholders (or a third party) under the Act to freehold their share of the property. This would mean the “purchaser group” of leaseholders would then become the landlord of the whole property in the same way as the Council is now.

28. Cross leaseholders who didn’t purchase their freehold would therefore become tenants of the purchaser group and continue to pay rent to these new landlords.

29. Council Solicitors, Sainsbury Logan & Williams in their opinion (see Attachment 1) stated that there is no legal impediment to this Council discounting the leasehold land portfolio by applying different discount rates for freeholding cross leased interests. They further note that in their opinion the only restriction would appear to be the possibility that leaseholders could expect even-handed treatment across the portfolio without demarcation.

30. This paper recommends that in recognition of the additional special and unique difficulties cross leaseholders have in freeholding their properties, the Council would contribute up to a total of up to $1,000 per property to the legal costs incurred by all the parties in successfully concluding the purchase of their cross leased property from the Council.

Summary/Conclusion

31. Given the analysis above, this paper recommends the Committee consider the implementation of:

31.1. Option 5 together with;

31.2. Special provisions and conditions for dealing with cross leases as outlined in sections 27-30 above.

DECISION MAKING PROCESS

32. Council is required to make a decision in accordance with Part 6 Sub-Part 1, of the Local Government Act 2002 (the Act) and the provisions of the Hawke’s Bay Endowment Land Empowering Act 2002. Council’s Solicitors, Sainsbury Logan & Williams, have set out the recommended approach to consultation (refer to Attachment 1) in relation to the recommendations included in this paper

33. This opinion states that there is no obligation to consult on the proposed discount to be offered to lessees for the freeholding of leasehold property, however in relation to the selling of the cash flows, this proposal will need to be included in the Long Term Plan 2012-22 where details of the use of the capital proceeds need to be stated along with revisions to Council’s investment policy.

RECOMMENDATIONS

The Corporate and Strategic Committee recommends to Council that:

1. Agrees that there is no requirement to consult on the decision to offer a discount to lessees on freeholding, however the proposal to sell the cash flows from the leasehold portfolio and the purposes for which the sale of proceeds might be used needs to be covered in Council’s Long Term Plan 2012-22.

2. Agrees that to achieve the objectives of maximising value from the Napier leasehold land portfolio, and consequently having funds available to invest in alternative higher yielding assets within the Hawkes Bay Region the following steps are to be taken:

2.1. The Council encourages existing leaseholders to freehold their properties by granting a discount of between 15% - 20% from the lessor’s interest in determining a purchase price for each freeholding, such discount to apply for all sale and purchase agreements made and settled between the Council and leaseholders by 30 June 2012.

2.2. The Council agrees to meet the legal costs of all cross leaseholders of up to $1,000 per property where an agreement for sale and purchase of a cross leased property has been reached and settled by 30 June 2012 in recognition of the additional special and unique difficulties cross leaseholders have in free holding their properties

2.3. The Council approves the sale of residual cash flows generated from freeholds not sold by 30 June 2012 to investors on terms and conditions to be approved by the Council.

3. Agree that a target for completion of these processes to maximise value from the Napier leasehold land portfolio be set at 31 December 2012.

Paul Drury

Group Manager

Corporate Services

Andrew Newman

Chief Executive

Attachment/s

1 View

Sainsbury Logan & Williams - Opinion

HAWKE’S BAY REGIONAL COUNCIL

CORPORATE AND Strategic Committee

Wednesday 13 July 2011

SUBJECT: Public Transport Update

REASON FOR REPORT

1. This agenda item provides the Committee with an update on public transport services, including trends since the previous update in March 2011. This report contains patronage and revenue graphs which are updated each month and provided to this Committee and the Regional Transport Committee.

General Information

2. The overall performance of the bus service continues to be positive with good passenger growth and fare recovery levels. Patronage continues to grow on the Sunday Route 12 Napier-Hastings service, and May saw record patronage on the Commuter Express services.

Total Passenger Trips

3. Since 2009 average monthly trips have trended upward as follows:

2009 – 33,758

2010 – 42,888

2011 – 48,123

The following graph outlines total passenger trips from February 2009 to May 2011.

Diagram 1 – Passenger Numbers – February 2009 – May 2011

Patronage and Financial Trends

4. The graph below shows a comparison of fare revenue from January 2009 to May 2011.

Diagram 2 – Total Revenue – February 2009 – May 2011

Farebox Recovery (total fares as a percentage)

5. The following graph shows the farebox recovery trend (i.e the total amount of fares), as a percentage, for each month from May 2010 - May 2011. The average farebox recovery for this period was 40.1%.

Diagram 4 – Farebox Recovery May 2010 – May 2011

Capacity

6. Total capacity on Council’s bus fleet is 107,968 seats, this graph shows the seat capacity utilised on a monthly basis from May 2010 - May 2011. The average utilised capacity for this period was 43%.

Diagram 3 – Capacity May 2010 – May 2011

SuperGold Card Trips

7. The following graph shows the number of SuperGold cardholder trips from May 2010 - May 2011. SuperGold cardholders continue to make very good use of this concession.

Diagram 5 - Number of SuperGold Card Trips

Proposed Improvements to Bus Services

8. Following a large number of requests, staff and Council’s service provider Go Bus have investigated and costed a Napier-Ahuriri-Westshore-Napier trial service. If approved by Council this service could be implemented in September for a trial period of 6-months.

9. Service improvements were due to be introduced on the Route 12 Napier-Hastings/Hastings-Napier service in July. In order to deliver this improved timetable, service provider Go Bus ordered four new buses from Design Line in Christchurch. Unfortunately Design Line has been placed into receivership and the revised date for the delivery of the new buses is likely to be some time mid August. Once the new timetable is in operation Route 12 will be running every 15 minutes in peak times and every 30 minutes in off-peak times. Minor improvements are also being made to the Route 13 Napier-Tamatea-Taradale-Napier service and staff are currently updating the bus timetable booklet and bus stop timetable information to reflect the upcoming service improvements.

Infrastructure

10. Bus Stops:

10.1. Two new timetable units have been installed on Te Mata Road, Havelock North.

10.2. The south-bound bus stop on Lee Road has been relocated to a new site south of the Meeanee Road intersection. HBRC and NCC have agreed to jointly fund a new bus shelter for this well-used bus stop.

Travel Plans

11. School travel plans are underway at St Mary’s School, Hastings and Lucknow School, Havelock North. St Mary’s have initiated ‘Walking/biking Wednesday’ and Lucknow is planning to introduce a ‘Walk Once a Week’ day from next term. Both schools are keen to introduce a ‘kiss’n’drop zone’ to help alleviate congestion and improve safety at the school gate.

12. HBRC’s workplace travel plan ‘public transport trial’ was successful, with 12 of the 17 participants stating that they would continue to use public transport to get to and from work. The travel plan team continue to work on initiatives to encourage more staff to use active modes of transport on their journey to and from work, with an emphasis on public transport.

Other

13. The draft Regional Public Transport Plan (RPTP) will be presented to Council at their meeting on 27 July, for adoption for public consultation. An initial discussion document was sent to key stakeholders in March. Responses have been collated and included into the Draft Plan. The RPTP is required to follow Council’s special consultative process under the Local Government Act.

Total Mobility Update

14. Below is a table showing details of Total Mobility client numbers and expenditure to date for the 2010/11 financial year.

Diagram 6 – Total Mobility Statistics

DECISION MAKING PROCESS

5. 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.

Carol Gilbertson

Governance and Public Transport

Manager

Paul Drury

Group Manager

Corporate Services

Attachment/s

There are no attachments for this report.

HAWKE’S BAY REGIONAL COUNCIL

CORPORATE AND Strategic Committee

Wednesday 13 July 2011

SUBJECT: Ngaruroro Pre-Feasibility Presentation

REASON FOR REPORT

Water storage opportunities have been investigated to identify potential options for the long term sustainable development of irrigation supply for the Ngaruroro and Upper Karamu (Awanui & Karewarewa) catchments in Hawke’s Bay. This prefeasibility study is focussed on surface water harvesting and the ability to service potentially irrigable land as well as improving security of supply for existing irrigated areas. The project has been jointly funded by Hawke’s Bay Regional Council (HBRC) and the Ministry of Agriculture and Forestry’s Sustainable Farming Fund (SFF). The principal requirements of the study brief were to scope out potential water storage sites that appear to produce the most cost effective storages and are suitable for integration into a community based irrigation scheme or schemes. This report presents the findings of the completed Prefeasibility report prepared by Tonkin & Taylor consultants.

Background

A significant portion of irrigable land within the study area, predominantly relatively flat land in the proximity of the Ngaruroro River, is already irrigated. However, in dry summers, the maintenance of minimum flows in the river leads to periods of restricted takes from the river and tributaries, and also reduction in groundwater takes within riparian zones. On top of that, consideration is being given to a potential increase of environmentally based minimum low flows in the lower reaches of the Ngaruroro.

Within the Ngaruroro Water Augmentation Study area, land currently consented for irrigation totals 14,184 hectares, of which 5892 hectares are based on takes that are subject to low flow restrictions. There is an area of up to 10,000 hectares in the 0 – 3° slope class that is not currently irrigated but is potentially irrigable. However, unlike the broad and expansive Ruataniwha or Heretaunga Plains, the remaining potentially irrigable areas are mainly located on terraces separated by high ground or dissected by incised valleys. Therefore, there are significant challenges to service these areas cost effectively, particularly in the distribution system.

By excluding potential irrigable areas at high elevations in the western part of the study area and other areas which are better served by local farm schemes, there is a net new irrigable area of about 6345 hectares to be serviced from community scale schemes. In addition, HBRC have identified a seasonal flow volume of about 6 million m3 for providing security of supply to current irrigation against a scenario of an enhanced minimum flow of 3.4 m3/s at Fernhill Bridge. This allowance is equivalent to servicing approximately 2575 net hectares of current irrigation in a design drought.

An irrigation demand of 3500 m3/ha in a design drought for new irrigation is considered an appropriately conservative demand for prefeasibility design. On this basis, a gross storage requirement of 4000 m3/ha has been adopted for assessment of storage options, the larger figure allowing for dead storage to cover long term sediment infill in reservoirs and potential system losses and inefficiencies. A lesser storage requirement of 2660 m3/ha has been estimated for providing drought security to current irrigation; the balance of the demand would be met from existing sources. Thus, the total storage capacity sought is 32 million m3 for servicing 6345 hectares of new irrigation and 2575 hectares of current irrigation.

The first stage of this prefeasibility study developed an initial shortlist of 13 potential storage sites, which was reduced to 6 sites following stakeholder consultation, review by HBRC and project Team members, and exclusion of the potential service areas better suited to local farmer development. All storages, apart from one storage (F3), may be considered on-river storages as they have reasonably sized catchments (30 km2 to 64 km2) and substantial local flow yield. However, these storage sites would also be subject to large

flood flows and significant sedimentation.

A community scheme based on two storage dams: E2, located on the Otamauri Stream on the north side of the Ngaruroro River, and F2 on the Mangatahi Stream on the south side of the Ngaruroro River, is proposed to meet the identified new and current irrigation needs. E2 will be an earthfill dam approximately 45 m high with a gross storage capacity of 21.5 million m3, and F2 will be an earthfill dam about 35 m high with a gross storage capacity of around 10.7 million m3. Unlike E2, which is self-sufficient, F2 will likely require a pumped infill transfer of about 0.16 m3/s capacity from the Maraekakaho River to supplement refill from local runoff. However, this infill transfer is proposed to operate only in the winter months and may be deferred until close to full uptake of the scheme. An appropriate environmental flow (7-day MALF) will be retained in the river below each dam and below the infill intake for protection of in-stream values.

When the scheme is fully developed, the average volume of surface water abstracted from the Ngaruroro River on an annual basis is estimated to be no more than 2% of the average annual flow volume that would otherwise exit to the sea.

Preliminary estimates indicate a development cost of around $5100 (excl. GST) per hectare for new irrigation for headworks alone, i.e. excluding distribution, storage infill pumping charges and on-farm costs. Given the prevalent landforms, a relatively expensive fully piped distribution system to the farm gate, with an indicative cost of around $6400 (excl. GST) per hectare for new irrigation, is more realistic and practical than a system incorporating extensive open races. Pumping will be required to service particular areas, and an annual energy charge of about $106 (excl. GST) per hectare for new irrigation has been estimated.

Preliminary estimates indicate a cost of about $3400 (excl. GST) per hectare to provide security of supply in a drought to currently consented irrigation, assuming that the storage required for this purpose is integrated into the overall development to service new and current irrigation. Distribution systems associated with current irrigation has not been considered or costed as it is assumed that these areas will continue to be served by existing abstraction and distribution infrastructure.

It is emphasised that water storage and distribution costing is at prefeasibility level only, and more accurate costing will derive from higher accuracy topographic data and feasibility level study, which will enable a better assessment of cost-benefit.

Direct environmental effects of the proposed scheme arise from the presence and operation of storage dams and reservoirs, including alteration to the downstream flow regime; capture of local catchment flow and abstracting other flow (for F2) to fill storages; and pipelines, pump stations and a stream intake for distribution to the farm gate. While effects are not anticipated to be severe, further studies will be required on various aspects, particularly native fisheries.

Indirect impacts of the overall development, particularly in relation to water quality, may be mitigated through implementation of on-farm best management practices related to accountable, monitored performance standards.

The storages create potential for increased recreational opportunities for the local community, either upon the reservoirs themselves or through the augmentation of summer low flows. Irrigation would provide significant opportunity for increasing productivity and income to individual landowners and to the local and regional economy. Landowners would also benefit from a significant increase in asset values.

Hydro-electric power generation potential at the storage dams will be modest, of the order of several hundred kW at most, being a function of the relatively small flow yield of the dammed catchments and moderate dam heights. The economic viability to develop this as part of the scheme is unconfirmed at this stage.

Feasibility level investigations, including water resource studies, geotechnical site investigations, engineering design, environmental and cultural assessments, economic/ governance studies, and community and stakeholder consultation are recommended to confirm feasibility of the proposed scheme.

DECISION MAKING PROCESS

1. 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 receive the report “Ngaruroro Water Augmentation Scheme Prefeasibility Study Report” prepared by Tonkin & Taylor Ltd.

Graeme Hansen

Group Manager Water Initiatives

Andrew Newman

Chief Executive

Attachment/s

Under Separate Cover - Ngaruroro Pre-feasibility Report

	Agenda Item	Action	Person Responsible	Due Date	Status Comment
1	Visit to Shanghai	Report back on this visit to a future meeting	AD/AN	May11	Update to be provided in early 2011.
2	Business Hawke’s Bay	Councillors would like details of how many ‘members’ the Hawke’s Bay Chamber of Commerce has and how may of those would be directly involved in the proposed entity.
2	HB Tourism Ltd	Quarterly report on KPIs to Council	RTO		First report will go to Council 3 months after company establishment
3	HB Tourism Ltd	A statement of strategic position, finalised KPIs and a Plan of Engagement with Local Authorities to be prepared for Council’s information	RTO
4	Regional Events Strategy	Copy of the complete Regional Events Strategy report distribution to Councillors	A Dundas	Immed
5	Rates Relief - CHB	Report to be prepared	AN	July 11

GENERAL SUBJECT OF THE ITEM TO BE CONSIDERED	REASON FOR PASSING THIS RESOLUTION	GROUNDS UNDER SECTION 48(1) FOR THE PASSING OF THE RESOLUTION
Purchase of Property	7(2)(i) Enable the local authority holding the information to carry out, without prejudice or disadvantage, negotiations (including commercial and industrial negotiations)	The Council is specified, in the First Schedule to this Act, as a body to which the Act applies.

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