Minutes of Regional Council Meeting

1. Welcome/Prayer/Apologies/Notices

The Chairman welcomed everyone to the meeting and covered evacuation and housekeeping matters before offering the prayer.

2. Conflict of Interest Declarations

Councillor Scott tabled an email from April 2013 on her role in Plan Change 5, and confirmed that she did not have a conflict of interest, pecuniary interest, nor had acted as a submitter on any matter before the Council on this agenda.

There were no conflict of interest declarations.

Decision on Ruataniwha Water Storage Scheme Investment

Mrs Lambert introduced the item, and reiterated that the decision being made today is whether or not this Council will invest up to $80M in the Ruataniwha Water Storage Scheme.

Covering the strategic context, Mrs Lambert expressed Council’s development of the water storage scheme as an “and-and” means of achieving the objective of “establishing and managing a key infrastructure resource to improve agricultural production and productivity while enhancing environmental management of the catchment” to meet the needs of people and the needs of the environment using regulatory and non-regulatory solutions.

The milestones or check points through the process leading to today’s decision were outlined. Mrs Lambert stated that this is a defining point in process to send key messages: to farmers to sign their water user agreements and look at investing themselves in the scheme; to institutional investors that HBRC is committed to the process; to HBRC itself it gives certainty around earmarking of funds; and to the regional community coherent and strong regional leadership.

Discussion, queries of clarification and seeking further information traversed:

· Mr Stuart Webster, Sainsbury Logan & Williams, has carried out a legal review of the Concession Deed (CD). The Concession Deed is between HBRC and Ruataniwha Water Ltd Partnership to assure that Council will have some control over the delivery of the Scheme and its objectives. CD originalIy included the Water User Agreement, which was removed as not considered (by Bell Gully, HBRIC Ltd legal advisor) the proper place for that to be. From his review, Mr Webster advised that the amendments he suggested be made to the CD were for improvement only and relate to semantics and interpretation (language in the CD) and that even if those suggestions were not actioned he would not recommend that HBRC not sign the document as it currently stands. Further, more dialogue will continue with Bell Gully about further amendments, but there are no legal ‘show stoppers’ that would change his advice.

· Water User Agreement is between Ruataniwha Water Limited Partnership (RWLP) and the Landowner, not HBRC and will be legally reviewed by Council’s solicitors through the final Due Diligence process. Condition around farm management plan will be a technical requirement and process as a ‘condition subsequent’ and not subject to interpretation.

· It was suggested that recommendations proposed in the paper are unclear about the process of satisfying Council that all conditions precedent have been met, or whether those decisions would be made by HBRIC Ltd and then ‘recommended’ to Council. Wording amendments were suggested, to clarify that the final decision about all conditions precedent being met and Council being satisfied with those would be made by Council before any investment is actually made.

· Nimmo Bell assessed a range of potential alternative investments for HBRC and concluded that “the RWSS remained the most economic alternative and a viable investment for the region considering the importance of the primary industries and the mitigation to the biggest risk to the region’s economy – water shortage for agricultural production”.

· Board of Inquiry draft decisions granted resource consents for the RWSS, subject to conditions, with the final decisions due on or before 28 June. Once the decision is received, HBRIC Ltd will assess the implications for the scheme before bringing its final business case and recommendation back to Council.

· The special consultative procedure included 17 public meetings attended by nearly 500 people, 199 written submissions received and 37 submitters asked to verbally present to Council. Submitters raised a range of points and staff responses to questions from Councillors arising from points made by submitters are attached in the form of additional information attached to the agenda. 945 (petition signers) pro forma submissions received via email from Green Party website counted as a single submission as all exactly the same so no ‘new’ points raised. The purpose of the special consultative process was to tease out and address issues that may not have been previously assessed or examined by Council – not intended to be a ‘popularity contest’.

· Slides and commentary by Mr Paul Drury about funding of the investment covered where funding is being and will be sourced from, returns projected, effects on Napier Port dividends and timing of HBRIC Ltd drawdowns.

· Formal due diligence process will be carried out by all investors prior to financial close and will include technical matters (geotechnical, hydrological, capital cost for example), insurance, legal, land ownership, and taxation matters, and a review of the financial model. Council will ask Deloitte to review the outputs from the Due Diligence process.

· Note that the assumptions will be re-evaluated by HBRIC Ltd with conditions set by the final Board of Inquiry decisions on Plan Change 6 as part of the due diligence process.

In moving the recommendations, Councillor Hewitt emphasized that this is a legacy project that affects everyone, from the source of the river to the sea, and is only able to provide environmental benefits due to the regional council’s involvement.

Speakers to the motion made points of:

· Tamatea taiwhenua approached 4 years ago when pre-feasibility embarked upon and have been involved throughout entire process. CHB Maori supportive of the project as long as ecological requirements are met. Concern for mokopuna – the project will result in more skilled, technical jobs that Maori can be upskilled to fill.

Meeting adjourned at 10.50am and reconvened at 11.05am

Further speakers to the motion made points of:

· Process defective because Councillors not permitted to engage with independent peer reviewer and remain unsure of impacts of Board of Inquiry’s final decision due to be released within 72 hours.

Councillor Barker moved an amendment, seconded pro forma by Councillor Dick, that being to add “and that the RWLP has committed to supply a minimum of 40 million cubic metres” to resolution 8.3.2; this is proposed to ensure that the supply side of the equation is assured. Cr Barker also emphasised need to be satisfied of the long term future of the investment.

In seconding the amendment, Councillor Dick queried whether the mover was prepared, if the amendment was carried, to support the substantive motion and received a positive response. He then spoke of the inception of project being brought about with the introduction of the NPS for Freshwater Management requiring regional councils to improve water quality and increase minimum flows. Further, in his experience, he couldn’t recall a project or plan change that was as thoroughly analysed, studied, re-studied, peer reviewed and contested – risking being over cooked or over complicated.

Further speakers to the amendment made points of:

· Amendment contradictory to the condition precedent, and should stay within the conditionality of that actual condition.

· Additional language to address the point that even if 40 million cubic metres was signed up to be taken, it may be that some of those may not practically/affordably be able to be supplied.

Further speakers to the substantive motion made points of:

· Support for water storage and support for the amended motion. Clear from amended motion that the final decision lies with Council once satisfied for itself that all conditions precedent have been met or waived. Further, that water storage of some form is critical for CHB.

· Project will ignite HB economy with wide reaching implications, and has been immersed in information about the project (reports, research, studies, comments and peer reviews by experts including the Board of Inquiry) since being elected 8 months ago. Further, this investment could be sitting in an account earning interest but this investment makes the money work for environmental improvements in the region at the same time it increases returns to Council from RWSS as well as increased returns from Napier Port.

· Business case for water storage compelling and acknowledges community support, however does not support this particular project as not satisfied that he has sufficient detailed financial and construction contract information to make this decision.

· Paid tribute to Ross Bramwell who initiated the project 11 years ago in response to IPCC report calling for urgent action to respond to climate change. This is a decision to be made by the HB community for the HB community. Further, this ‘community’ storage scheme has stringent conditions so that we can monitor the cumulative effects on the environment, which wouldn’t be possible with smaller, on-farm schemes.

· Incredible process that the regional council has gone through, while carrying out all its other business. This is a big, complex organisation filled with some of the country’s best staff, and best on show with HBRIC Ltd Board, some of Australia’s best also helping and an incredible amount of work and analysis still to be done. Either you support water storage or you don’t. Sending competent, coherent message to the rest of New Zealand. For others to now make the commitment to make sure the project proceeds. Tasking some of the best people in the Nation to go away and tick all the boxes.

· Acknowledged contributions of all Councillors and the work and effort put in. Need to lead from the front for the community and continue to be part of the process as a corner stone investor.

RC40/14

Resolutions

Councillor Barker moved an amendment, seconded by Councillor Dick:

8.3.2. Agreements to purchase a minimum of 40 million cubic metres of water per annum (Water User Agreements) and that the RWLP has committed to supply a minimum 40 million cubic metres;

Barker/Dick

CARRIED

The amendment was CARRIED and therefore became part of the SUBSTANTIVE MOTION

That Council:

1. Notes the proposal to invest up to $80million in the RWSS was submitted for public consultation through the Council’s Special Consultative Procedure which revealed majority support for RWSS amongst public respondents.

2. Notes the Deloitte Peer Review of the current business case supports it in principle but that material elements of the case remain to be finalised, including the construction contract, capital structure and water user uptake, and therefore the final version of the business case upon which Financial Close is predicated could differ from the current case.

3. Notes Deloitte’s view that investment by both HBRC and Crown Irrigation Investments Ltd (CIIL) in RWSS is critical to it proceeding, and that terms for CIIL investment have yet to be agreed.

4. Notes Deloitte confirms that there are no circumstances under the current business case where HBRC would be called upon to fund returns to other equity investors.

5. Notes Nimmo Bell’s view that RWSS is likely to generate a greater benefit for the regional economy and higher financial returns to HBRC than other available alternative investments.

6. Notes the Draft Decision of the EPA Board of Inquiry grants consents for RWSS but the final conditions set for Plan Change 6 may impact adversely on affected farmers and the viability of RWSS. A Final Decision is expected from the Board of Inquiry by 28 June 2014.

7. Notes HBRIC Ltd has extended Financial Close and the requirements for satisfaction of its Conditions Precedent to 30 September 2014.

8. Resolves to invest up to $80 million in RWSS subject to Council being satisfied with:

8.1. its own legal advice on the RWSS documents and all related legal matters;

8.2. a further review of the final RWSS business case as at the new Financial Close and Council being satisfied with its advice and the steps taken (if any) by HBRIC Ltd to resolve key issues of concern (if any) then identified in the course of Deloitte’s review;

8.3. advice from HBRIC Ltd that all Conditions Precedent to Financial Close of the investment by all investing parties in the Ruataniwha Water Storage Scheme Limited Partnership (RWLP) have been either satisfied or waived by agreement of the parties. These Conditions Precedent are:

8.3.1. The EPA granting satisfactory resource consent conditions for RWSS infrastructure and operations, which in turn are recommended as being workable by all investors;

8.3.2. Agreements to purchase a minimum of 40 million cubic metres of water per annum (Water User Agreements) and that the RWLP has committed to supply a minimum of 40 million cubic metres;

8.3.3. Securing the funding required to build and operate the RWSS infrastructure; and,

8.3.4. Obtaining a bankable construction contract which adequately addresses construction risk allocation through a fixed-time, fixed-cost arrangement.

8.4. a Certificate issued by HBRIC Ltd’s legal advisers:

8.4.1. summarising the terms of all executed Water User Agreements;

8.4.2. identifying the water user parties who executed the Agreements; and,

8.4.3. explaining the enforceability or otherwise of the Agreements.

8.5. HBRIC Ltd increasing its annual distributions to HBRC to provide a 6% return to HBRC on the funds HBRIC Ltd draws down from HBRC from time to time to invest in the RWSS, up to a maximum investment of $80 million.

9. Requires HBRIC Ltd to keep the Council informed on progress toward meeting the conditions stipulated in Recommendation 8.3 over the period to the new Financial Close.

10. Advises all submitters to the Special Consultative Procedure of its decisions, in writing, and thanks them for their input.

Hewitt/Pipe

For: Dick, Hewitt, Scott, Pipe, Beaven, Wilson

Against: Graham, Barker, Belford

CARRIED

The Chairman excused himself and Councillor Scott assumed the Chair at 11.58am

3. Confirmation of Minutes of the Regional Council Meeting Held on 4 and 5 June 2014

RC41/14

Resolution

Minutes of the Regional Council Meeting held on 4 and 5 June 2014, a copy having been circulated prior to the meeting, were taken as read and confirmed as a true and accurate record.

Pipe/Graham

CARRIED

Confirmation of Minutes of the Regional Council Meeting Held on 16 and 17 June 2014

RC42/14 Minutes of the Regional Council Meeting held on 16 and 17 June 2014, a copy having been circulated prior to the meeting, were taken as read and confirmed as a true and accurate record.

Dick/Pipe

CARRIED

4. Matters Arising From Minutes of the Regional Council Meeting Held on 4 and 5 June 2014

There were no matters arising from the 4 and 5 June 2014 minutes.

Matters Arising From Minutes of the Regional Council Meeting Held on 16 and 17 June 2014

There were no matters arising from the 16 and 17 June 2014 minutes.

Follow-ups From Previous Council Meetings

Mr Drury provided an update on the status of the follow-ups from previous meetings.

Mr Adye confirmed that a date for the first Coastal Strategy Joint Committee meeting will be set once Hastings has advised its representation.

In relation to LGOIMA requests, it was reiterated that all requests are ‘registered’ as part of a Council process to assure that requests are responded to appropriately and within statutory requirements and timeframes.

RC43/14

Resolution

1. That Council receives the report “Follow-ups from Previous Council Meetings”.

Dick/Pipe

CARRIED

Call for any Minor Items Not on the Agenda

Recommendations

That Council accepts the following minor items not on the agenda, for discussion as item 16:

Cr Dick – proposed rail fieldtrip to Wairoa

Cr Beaven – environmental flows in RWSS

Cr Scott – Huatokitoki research report back

Maori Committee Chairman's Report From 24 June Maori Committee Meeting

Mr Mohi advised the main discussions held at the meeting related to the continuation of the Maori Committee and options going forward (including doing away with the Committee, replacing the Committee with a Maori Liaison Officer); the result of the discussions being a recommendation to continue the committee as it exists leading up to the next triennial election. Further discussions recommended a more concerted effort by Council to employ Maori staff and possible employment of a senior taiwhenua staff member in a Maori Liaison type role.

Chairman re-joined the meeting at 12.15pm

The meeting also discussed RMA s35a and who the appropriate Maori are for staff to consult with on different issues; the advice to HBRC staff being to contact the claimant groups and ask them which hapu to contact.

It was agreed that further consideration and development of strategies for engaging with Maori in meaningful ways need to be teased out and discussed through the upcoming Long Term Plan processes.

RC44/14

Resolution

1. That the Maori Committee Chairman’s verbal update from the 24 June Maori Committee meeting be received.

Scott/Belford

CARRIED

Affixing of Common Seal

1. The Common Seal of the Council has been affixed to the following documents and signed by the Chairman or Deputy Chairman and Chief Executive or a Group Manager.

Seal No.

Date

1.1

Leasehold Land Sales

1.1.1 Lot 65

DP 12780

CT E1/743

- Transfer

1.1.2 Lot 8

DP 13037

CT E2/1160

- Agreement for Sale and Purchase

- Transfer

3785

3786

3787

3 June 2014

6 June 2014

1.2

Memorandum of Agreement

Part Kakiraawa 2B2X CT 349400

(Awanui Stream Stopbank reconstruction - left bank Crystall Road to Pakipaki)

3788

11 June 2014

It was noted that some detail about the location of properties would be helpful.

RC45/14

Resolutions

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 the action to affix the Common Seal.

Scott/Beaven

CARRIED

10.

Recommendations from Environment and Services Committee

Councillor Graham, as Environment and Services Committee Chairman, provided an overview of the discussions held at the meeting and recommendations arrived at.

RC46/14

Resolutions

That Council:

Biosecurity Operational Plans

2. In accordance with the requirements of the Biosecurity Act 1993 adopts, including any amendments made as a result of the Committee’s consideration, the:

2.1. Animal Pest Operational Plan 2014-15

2.2. Plant Pest Operational Plan 2014-15

2.3. Phytosanitary Operational Plan 2014-15.

Update on Open Space Area Plans

3. Notes that the development of Individual Park Plans for Pakowhai, Pekapeka and Waitangi Regional Park areas is well advanced and that the final plans are programmed to be brought to Council for endorsement following public consultation later in 2014.

4. Notes that the development of an Individual Park Plan for Tutira will be progressed in conjunction with Maungaharuru-Tangitu Trust later in 2014.

Reports Received

5. Notes that the following reports were received at the Environment and Services meeting:

5.1 River Gravel Update

5.2 The Tukituki, Waitangi and Ahuriri: Assessment of the Extent of Saltwater Influence in Hawke’s Bay Estuaries

5.3 Ahuriri Estuary: Contact Recreation and Food Gathering Review

5.4 Statutory Advocacy Update.

Graham/Beaven

CARRIED

The meeting adjourned at 12.30pm and reconvened at 1.10pm

11.

Adoption of the Hawke's Bay Regional Council 2014-15 Annual Plan

There were queries in relation to borrowing to fund operations, or consultation as proposed in relation to Oil and Gas Policy Development. Clear direction from the Parliamentary Commissioner for the Environment (PCE) that a National Policy Statement is required and any Regional Policy would need to give effect to that. Challenge is to initiate the process and find an appropriate funding source. Mrs Lambert advised that the PCE report is being considered across the sector in addition to in-house.

There were suggestions that some financial figures and also the commentary on the Napier-Gisborne Rail proposal should be updated to reflect the current situation, rather than being left where they were at the draft stage.

Ms Codlin explained that there will likely be a National Policy Statement to set rules for Gas & Oil Development and that a proper plan change process will need to be gone through along with the required section 32 analysis. There is no resource within current budgets to provide for this work. Because staff workloads are fully allocated it would likely mean that consultant assistance would be engaged.

RC47/14

Resolutions

That Council:

1. Agrees the decision is to be made under Section 95 of the Act which specifies the adoption of the Annual Plan, and also under sections 83 and 85 requiring a special consultative process which includes consideration of submissions on the Plan from members of the community, and that this process has been undertaken.

2. Adopts the Annual Plan 2014-15 in accordance with section 95 of the Local Government Act 2002 being the Draft Annual Plan issued for public consultation and amended:

3.1 by Council at the Annual Plan hearings held on 4 and 5 June 2014

3.2 by Council at its meeting on 25 June 2014.

3. Agrees to fund the underlying deficit from cash operating balances which are estimated to be at a level which is sufficient to provide such funding.

4. Adopts the following resolutions pursuant to Section 12 of the Local Government Act 2002:

4.1 Raises a loan or loans or facilitates loan funding through banks to fund the borrowing set out in the 2014-15 Annual Plan for the purposes of funding clean heat and insulation advances to householders, funding of solar hot water advances to householders, flood and drainage schemes, technical equipment, buildings, public good capital assets and the systems integration programme. These loans to be drawn down when required, to fund the approved capital programmes.

4.2 Delegates to the Chief Executive, authority to negotiate and agree on the terms of the loan including:

4.2.1 Any future financing needs within the overall terms of borrowing, the interest rate payable by Council.

4.2.2 The frequency of interest payments.

4.2.3 The timing of drawdown.

4.2.4 The institution(s) that will provide the loans.

4.2.5 The number of loans which will make up the borrowing.

4.2.6 All other terms and conditions of such loans and facilities as may be necessary in obtaining such loans and facilities in accordance with Council’s Liability Management policy to execute any agreements, documents, and certificates in respect of such loans and facilities on behalf of Council.

6. Approves, in accordance with sections 83 and 150 of the Local Government Act 2002, the resource consent and user charges as adopted in Part 3 on pages 51 - 61 of the Draft Annual Plan issued for public consultation and amended by Council at the Annual Plan hearings on 4 & 5 June 2014 and today, 25 June 2014.

7. Instructs staff to make any necessary final amendments and then to issue the published Plan in its final form.

8. Instructs staff to amend the Policy Handbook, Section 1.1.2 – Annual Planning to read:

“That the Council adopts the 2014-15 Annual Plan being the draft Annual Plan issued for public consultation and as amended:

- By Council at the Annual Plan hearings held on 4 & 5 June 2014.

- By Council at its meeting on 25 June 2014.”

9. Through the Chief Executive and Chairman, immediately commences exploration of options, with KiwiRail and Government, to secure the Napier to Gisborne rail corridor and report back to Council.

Wilson/Dick

CARRIED

12.

Request for Extension of Secondment

HBRIC Ltd has requested an extension of the Secondment Agreement for Andrew Newman in the role of HBRIC Ltd Chief Executive Officer for the period up to financial close of the RWSS project.

RC48/14

Resolutions

That Council:

2. Accepts the request of the Hawke’s Bay Regional Investment Company Ltd to extend the secondment of Andrew Newman in the role of CEO of HBRIC Ltd until financial close, with the right of review thereafter.

3. Extends the delegation of the responsibilities of the CEO to the interim CEO as determined on 26 June 2013, until financial close, with the right of review thereafter.

Scott/Wilson

CARRIED

13.

Notice of Motion: Cr P Beaven

Councillor Beaven explained the rationale for his notice of motion.

There was general discussion about the Notice, and individual councillor’s interpretation of the issues Cr Beaven raised.

Through discussions, there was general agreement about focussing on the process for these types of decisions going forward.

Further the Chairman gave an undertaking to be available to respond to queries prior to meetings once the Agenda has been distributed.

RC49/14

Resolution

That Council:

1. Receives the Notice of Motion; being:

1.1 Notes that the Council decision on the CE’s salary passed on 29 January 2014 was made without the new councillors being made aware that the previous Council had:

received an independent assessment of the CE performance and

had awarded a wage adjustment

At its last meeting on 25 September 2013.

Beaven/Wilson

CARRIED

14.

Monthly Work Plan Looking Forward Through July 2014

In relation to PM₁₀ monitoring of Road Dust in Tuai, it was suggested that the results would be valuable to the Regional Transport Committee and requested that the results be provided to the Transport Manager for forwarding to the Committee.

In regards to an application from TAG Oil, Mr Maxwell explained that it is still in the decision making process and expected to be issued. Mr Maxwell also advised that there is a website up and running to provide information to the public about Oil & Gas exploration application processes under way.

Plan Change 5 mediation last week resulted in two memorandums - one relating to significant wetlands and the other is a summary of all other agreements reached. Still outstanding appeal points from NKII relating to objectives 21 and 22.

RC50/14

Resolution

1. That Council receives the Monthly Work Plan Looking Forward Through July 2014 report.

Dick/Graham

CARRIED

15.

Chairman's Monthly Report

The Chairman tabled his report, listing various meetings he attended throughout June, and the subject of those. He highlighted the Helicopter Trust AGM he attended and noted his respect for the Trust and their delivery of the services they provide.

Councillor Scott mentioned the HB Fruitgrowers Awards Dinner she attended and the high quality of the young competitors. She further suggested that Council write to the finalists to wish them luck for the National competition.

RC51/14

Resolution

That the Chairman’s monthly report for June 2014 be received.

Barker/Beaven

CARRIED

16.

Minor Items Not on the Agenda

Item	Topic	Councillor / Staff
1.	Proposed rail fieldtrip to Wairoa Offer received – to take Councillors on a fieldtrip to inspect the condition of the rail line on 11 or 18 July. It was suggested that 11 July would be preferable.	Cr Dick
2.	Environmental Flows with RWSS Interested in flushing flows and the relationship to minimum flow rates. Key impact that the RWSS will have is that water will be left in the river because it’s not being taken for irrigation – so higher residual flows. Groundwater takes have permanent ongoing drawdown effects on the river and if those takes are stopped then there will be more water in the river, resulting in fewer instances of minimum flow being reached.	Cr Beaven
3.	Huatokitoki research report back Research carried out over several years and over a number of variables has relevant implications for dryland farming.	Cr Scott
4.	Dredging at the Port Dredging programme has been very effective in giving Napier Port more flexibility when scheduling ship movements during different tidal conditions.	Cr Wilson

Closure:

There being no further business the Chairman declared the meeting closed at 3.00pm on Wednesday 25 June 2014.

Signed as a true and correct record.

DATE: ................................................ CHAIRMAN: ...............................................