Meeting of the Hawke's Bay Regional Council

Date:                 Wednesday 25 February 2015

Time:                9.00 am

Venue:

Council Chamber Hawke's Bay Regional Council 159 Dalton Street NAPIER

Agenda

Item       Subject                                                                                                                  Page

1.         Welcome/Prayer/Apologies/Notices

2.         Conflict of Interest Declarations

3.         Confirmation of Minutes of the Regional Council Meeting held on 28 January 2015

4.         Matters Arising from Minutes of the Regional Council Meeting held on 28 January 2015

5.         Follow-up Items from Previous Regional Council Meetings                                         3

6.         Call for any Minor Items not on the Agenda                                                                 9

Decision Items

7.         Affixing of Common Seal                                                                                            11

8.         Recommendations from the Maori Committee                                                          13

9.         Recommendations from the Regional Planning Committee                                      15

10.       Recommendations from Corporate & Strategic Committee                                      17

11.       Establishment of the Permanent Hawke's Bay Regional Investment Company Board 23

Information or Performance Monitoring

12.       HBRIC Ltd February 2015 Update                                                                              37

13.       Tukituki Catchment Proposal – Board of Inquiry Update                                           45

14.       Monthly Work Plan Looking Forward Through March 2015                                       47

15.       Chairman's Monthly Report (to be tabled)

16.       Minor Items not on the Agenda                                                                                   53

Decision Items (Public Excluded)

17.       Confirmation of the Public Excluded Minutes of the Regional Council Meeting held on 28 January 2015                                                                                                               55

HAWKE’S BAY REGIONAL COUNCIL

Wednesday 25 February 2015

Subject: Follow-up Items from Previous Regional Council Meetings

Introduction

1.   On the list attached are items raised at Council meetings that require follow-ups. All items indicate who is responsible for following up, and a brief status comment. Once the items have been reported to Council they will be removed from the list.

Decision Making Process

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 required in terms of the Local Government Act’s provisions, the decision making procedures set out in the Act do not apply.

Recommendation

1.      That Council receives the report “Follow-up Items from Previous Regional Council Meetings”.

Liz Lambert

CHIEF EXECUTIVE

Attachment/s

1	Follow-ups from Previous Regional Council Meetings

Follow-ups from Previous Regional Council Meetings

Attachment 1

Follow-ups from previous Regional Council Meetings

Meeting Held 17 December 2014

	Agenda Item	Action	Person Responsible	Status Comment
1	Update from the Maori Committee	Schedule Robert Consedine Te Reo / Treaty workshop for Councillors	L Lambert	The following dates have been put forward for potential workshop: Tuesday 31 March*; or Tuesday 12 May; or Tuesday 19 May*. *These dates are in councillors diaries as field trip/workshop

Meeting Held 28 January 2015

	Agenda Item	Action	Person Responsible	Status Comment
2	Annual Plan progress report	Clarify timeframes for ‘closure’ re the Mussel Farm consent and Reserve Funds	I Maxwell
3	Looking Forward	Contact office of PCE to schedule date for visit to HB	L Lambert	Invitation sent. Awaiting reply.
4	Looking Forward	Provide dates/times/venues of s36 info Zone meetings to Councillors	I Maxwell	These will be notified direct to Councillors by email when venues have been confirmed for meetings that will now be held in March
5	Minor Matters not on the Agenda	Provide update on contingent liability of office space leased from NCC	L Lambert	To be prepared for March

Follow-ups from Previous Regional Council Meetings

Attachment 1

LGOIMA Requests Received between 15 January and 18 February 2015

Request Status	Request Date	Requested By	Request Summary
Completed	9/02/2015	Louise Wickham	Copy of Pan Pac air discharge consent and AEE
Active	30/01/2015	Ian McIntosh	1. Does anyone on HBRC staff have Qualifications & Technical Expertise to examine the CHBDC WWTPs and determine if they are properly designed and operated? 2. If yes, what are their names? 3. If yes, have they examined and reported on the CHBC WWTPs? 4. If no, has HBRC employed consultants to make such an examination, or is the HBRC relying entirely on what it is told by the CHBDC?
Active	30/01/2015	Ian McIntosh	1. A copy of the "Independent Report" on the CHBDC wastewater treatment proposals and plant design commissioned by HBRC in 2012. 2. A copy of the questions put to the CHBDC by Iain Maxwell and the replies received. 3. A brief list of the actions undertaken by Mr Maxwell as a consequence of the answers he received.
Completed	20/01/2015	Gary Williams	Detail original authority to remove water from Lake Rotokare via a drain.Trace the authority to the present day.
Completed	16/01/2015	Phil Dobson	List of companies in the Hawkes Bay region which have air discharge consents issued to them for the ongoing monitoring of their air discharges
Active	15/01/2015	Ann Revington	Request for information on Affco Wairoa River research as part of their resource consent conditions and what impacts have been found and where to next.

HAWKE’S BAY REGIONAL COUNCIL

Wednesday 25 February 2015

Subject: Call for any Minor Items not on the Agenda

Reason for Report

1.      Under standing orders, SO 3.7.6:

“Where an item is not on the agenda for a meeting,

(a)   That item may be discussed at that meeting if:

(i)    that item is a minor matter relating to the general business of the local authority; and

(ii)   the presiding member explains at the beginning of the meeting, at a time when it is open to the public, that the item will be discussed at the meeting; but

(b)   No resolution, decision, or recommendation may be made in respect of that item except to refer that item to a subsequent meeting of the local authority for further discussion.”

2.      The Chairman will request any items Councillors wish to be added for discussion at today’s meeting and these will be duly noted, if accepted by the Chairman, for discussion as Agenda Item 16.

Recommendations

That Council accepts the following minor items not on the Agenda, for discussion as Item 16

Leeanne Hooper GOVERNANCE & CORPORATE ADMINISTRATION MANAGER

Liz Lambert CHIEF EXECUTIVE

HAWKE’S BAY REGIONAL COUNCIL

Wednesday 25 February 2015

Subject: Affixing of Common Seal

Comment

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 128           DP 13055           CT  E2/1297 -      Agreement for Sale and Purchase 1.1.2     Lot 83           DP 13055           CT  279074 -      Agreement for Sale and Purchase 1.1.3     Lot 27           DP 6391           CT  E2/442 -      Agreement for Sale and Purchase 1.1.4     Lot 41           DP 4488           CT  55/141 -      Agreement for Sale and Purchase 1.1.5     Lot 128           DP 13055           CT  E2/1297 -     Transfer	3824 3825 3826 3827 3828	26 January 2015 4 February 2015 13 February 2015 16 February 2015 18 February 2015
1.2	Subvention Agreement Port of Napier Limited	3823	18 December 2014

Decision Making Process

2.       Council is required to make every decision in accordance with the provisions of Sections 77, 78, 80, 81 and 82 of the Local Government Act 2002 (the Act). Staff have assessed the requirements contained within these sections of the Act in relation to this item and have concluded the following:

2.1   Sections 97 and 88 of the Act do not apply

2.2   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 due to the nature and significance of the issue to be considered and decided

2.3 That the decision to apply the Common Seal reflects previous policy or other decisions of Council which (where applicable) will have been subject to the Act’s required decision making process.

Recommendations

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.

Diane Wisely Executive Assistant

Liz Lambert Chief Executive

Attachment/s

There are no attachments for this report.

HAWKE’S BAY REGIONAL COUNCIL

Wednesday 25 February 2015

Subject: Recommendations from the Maori Committee

Reason for Report

1.      The following matters were considered by the Maori Committee at its meeting on 17 February 2015 and are now presented for consideration and approval.

Decision Making Process

2.      These items have been specifically considered at the Committee level.

Recommendations

The Maori 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.

Incorporating Tangata Whenua Views

2.      Agrees to undertake a review of HBRC’s practices to incorporate tangata whenua values to determine how HBRC can best incorporate tangata whenua values and how it can best support the Regional Planning Committee.

3.      Agrees to establish a working group of tangata whenua representatives from the Maori Committee (2) and the Regional Planning Committee (2) and Councillors (2) to assist staff in the Review Project, principally:

3.1.      to agree the Terms of Reference for the Phase 1 Review

3.2.      to agree the selection criteria and process for appointment of the consultant.

4.      Endorses the following Maori Committee members for the working group:

4.1     Mr Mike Mohi (Chair of Maori Committee)

4.2     Marei Apatu (Maori Committee member)

5.      Considers provisional funding in the draft Long Term Plan for the implementation of Phase 2

6.     Provides funding for a 2^nd tier position as part of the LTP 2015-25 process and finalises the functions as agreed between Council and the Maori Committee.

Iwi Hapu Management Plans

7.     Notes that iwi/hapu management plans must be received and are considered to be lodged at the moment the document is passed to the Council via a staff member or other duly authorised person (e.g. the Chairman) acting on behalf of the Council; and cannot be declined or returned to tangata whenua if the relevant iwi authority has acknowledged the iwi/hapu management plan.

8.     Amends the Council’s process for receiving iwi/hapu management plans so that any such plans are presented to the Regional Planning Committee and copies of plans are provided to members of the Maori Committee.

9.     Agrees that the Council continues to offer the opportunity for groups to present their iwi/hapu management plan(s) to the Regional Planning Committee at a location of the Group’s choosing or at a Regional Planning Committee meeting.

10.   Compiles and reviews, in association with the Regional Planning Committee and Maori Committee, a list of ‘iwi Authorities’ for the purpose of RMA processes.

Maori Committee Representative on Corporate and Strategic Committee

11. Appoints Dr Roger Maaka as a member of the Corporate and Strategic Committee, replacing Shaun Haraki.

Reports Received

12.    Notes that the following reports were received at the Maori Committee meeting.

12.1        Update on Current Issues by HBRC Chairman

12.2        Parliamentary Commissioner's Update Report on Longfin Eels

12.3        Estuarine and Coastal Water Quality

12.4        February 2015 Statutory Advocacy Update

Viv Moule Human Resources Manager

Liz Lambert Chief Executive

Attachment/s

There are no attachments for this report.

HAWKE’S BAY REGIONAL COUNCIL

Wednesday 25 February 2015

Subject: Recommendations from the Regional Planning Committee

Reason for Report

1.      The following matters were considered by the Regional Planning Committee on 18 February 2015 and are now presented to Council for consideration and approval.

Decision Making Process

2.      These items have all been specifically considered at the Committee level.

Recommendations

The Regional Planning 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.

HBRC Committee Structure

2.      Makes the following changes to its committee structure:

2.1.      Amends the terms of reference for the Regional Planning Committee to incorporate resource management functions currently undertaken by the Environment and Services Committee.

3.      Amends the revised Terms of Reference so that voting on the additional papers that the Regional Planning Committee would be considering as a result of incorporating additional resource management functions is based on:

3.1.      Majority voting (80%); and

3.2.      All members having voting entitlement.

4.      Agrees to the appointment of the Maori Committee Chairman as an ex-officio member of the Regional Planning Committee and amends the revised Terms of Reference accordingly.

Incorporating Tangata Whenua Views

5.      Agrees to undertake a review of HBRC’s practices to incorporate tangata whenua values to determine how HBRC can best incorporate tangata whenua values and how it can best support the Regional Planning Committee.

6.      Agrees to establish a working group of tangata whenua representatives from the Maori Committee (2) and the Regional Planning Committee (2) and Councillors(2) to assist staff in the Review Project, principally:

6.1.      Agreeing the Terms of Reference for the Phase 1 Review

6.2.      Agreeing the selection criteria and process for appointment of the consultant

7.      Endorses the following RPC members and Councillors for the working group:

7.1.      Cr Fenton Wilson (HBRC Chairman and co-Chair of Regional Planning Committee)

7.2.      Mr Toro Waaka (co-Chair of Regional Planning Committee)

7.3.      Cr Rex Graham (HBRC Councillor)

7.4.      Ms Tania Hopmans (Regional Planning Committee member)

8.      Considers provisional funding in the draft Long Term Plan for the implementation of Phase 2.

Mohaka Engagement Plan

9.      Approves the Mohaka Engagement Plan for the Mohaka Plan Change, subject to:

9.1.      finalisation by staff, including any minor amendments arising from stakeholder feedback; and

9.2.      any major proposed amendments being brought back to the Committee for further recommendation.

TANK Engagement Plan

10.    Approves the TANK Stakeholder Engagement Plan for the Greater Heretaunga / Ahuriri Plan Change development process.

Iwi Hapu Management Plans

11.    Notes that iwi/hapu management plans must be received and are considered to be lodged at the moment the document is passed to the Council via a staff member or other duly authorised person (e.g. the Chairman) acting on behalf of the Council; and cannot be declined or returned to tangata whenua if the relevant iwi authority has acknowledged the iwi/hapu management plan.

12.    Amends the Council’s process for receiving iwi/hapu management plans so that any such plans are presented to the Regional Planning Committee and copies of plans are provided to members of the Maori Committee.

13.    Agrees that the Council continues to offer the opportunity for groups to present their iwi/hapu management plan(s) to the Regional Planning Committee at a location of the Group’s choosing or at a Regional Planning Committee meeting.

14.    Notes that the following report was received by the Committee:

14.1.    February 2015 Resource Management Planning Project Update.

Helen Codlin Group Manager Strategic Development

Liz Lambert Chief Executive

Attachment/s

There are no attachments for this report.

HAWKE’S BAY REGIONAL COUNCIL

Wednesday 25 February 2015

Subject: Recommendations from Corporate & Strategic Committee

Reason for Report

1.      The following matters were considered by the Corporate and Strategic Committee on 11 February and 18 February 2015 and are now presented to Council for consideration and approval.

Finance, Audit and Risk Sub-committee (of the Corporate and Strategic Committee)

2.      Following consideration at the Corporate and Strategic Committee meeting on 11 February it was recommended that the audit and risk functions of a new committee be broadened to include financial reporting, and that the committee be a sub-committee of the Corporate and Strategic Committee.

3.      The proposed Terms of Reference for the Finance, Audit and Risk Sub-committee and the amended Terms of Reference for the Corporate and Strategic Committee are appended as Attachments 1 and 2 respectively.

Decision Making Process

4.      These items have all been specifically considered at the Committee level.

Recommendations

That Council:

1.     Agrees that the following 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.

Establishment of a Finance, Audit and Risk Sub-committee

2.     Establishes a Finance, Audit and Risk Sub-committee of the Corporate & Strategic Committee, and adopts the Terms of Reference including amendments as agreed at the Corporate and Strategic Committee, with the appointees to be determined at the March Council meeting.

5.      Amends the Terms of Reference for the Corporate and Strategic Committee to include the functions that will be carried out by the new Finance, Audit and Risk Sub-committee.

Cranford Foundation

6.      Agrees that Chairman Fenton Wilson enters into further discussions with the Cranford Foundation around the concept of a Partnership between the two organisations.

Napier-Gisborne Rail Group Proposal

7.      Receives the abridged NGR Business Case Report from the Napier-Gisborne Rail Group.

8.      Notes that commendably good progress has been made in a short time, three months less the unavoidable down time for the Christmas break.

9.      Notes that the business case supports the opening of a rail service, initially from Wairoa to Napier, for the principle purposes of moving export logs from a Wairoa hub to the Napier Port, and that the initial findings of the business case provide justification for HBRC to continue work on the proposal to lease the Napier Gisborne railway line.

10.    Advises KiwiRail that, in principle, it agrees to a lease of the line subject to the terms of the lease and a number of operational matters involving KiwiRail and a rail operator being resolved to the satisfaction of both KiwiRail and HBRC.

11.    Seeks from KiwiRail a reasonable extension of the time to resolve the few remaining issues that were unable to be completed due to the compressed time and loss of opportunity with the Christmas break, with the prospect that with continuation of the goodwill and cooperation by all parties a successful conclusion can be arrived at.

12.    Sets the new and final deadline of 30 June 2015 to resolve all outstanding issues between HBRC and KiwiRail to their mutual satisfaction and for an operator to confirm the availability of funding, including equity funding, and for the operator to be able to commence initiating the business of operating the rail service.

13.    Provides adequate resourcing for the remaining investigative tasks, to be under control of the Chief Executive and Chairman, and to be from and within the present budget allocation.

14.    Continues to consider all options for the re-opening of the rail line in the interim.

15.    Authorises the Chairman of HBRC to liaise with all interested parties, including NGR, Port of Napier, HBRIC Ltd, other transport interests and KiwiRail to explore what other configurations would be possible to enhance the prospects of this initiative succeeding.

Reports Received

16.    Notes that the following reports were received at the 11 and 18 February Corporate and Services Committee meetings:

16.1.    Follow-ups from Previous Corporate and Strategic Committee meetings

16.2.    February 2015 Public Transport Update

16.3.    Cranford Foundation

16.4.    HB Tourism Quarterly Update Report

16.5.    Business Hawke's Bay Six Monthly Update

Liz Lambert

Chief Executive

Attachment/s

1	Draft Terms of Reference F, A & R Sub-committee
2	Proposed Amendments to Corporate and Strategic Committee Terms of Reference

Draft Terms of Reference F, A & R Sub-committee

Attachment 1

Proposed Amendments to Corporate and Strategic Committee Terms of Reference

Attachment 2

HAWKE’S BAY REGIONAL COUNCIL

Wednesday 25 February 2015

Subject: Establishment of the Permanent Hawke's Bay Regional Investment Company Board

Reason for Report

1.      On 30 July 2014 HBRC resolved:

1.1.   To retain councillor directors on the permanent Board of HBRIC Ltd

1.2.   That the Board of the Hawke’s Bay Regional Investment Company Ltd comprises a maximum of four independent directors and a maximum of three councillor directors, with a minimum of three independent directors

1.3.   To instruct staff to engage a consultancy to undertake the identification and assessment of independent and councillor directors of the Board of HBRIC Ltd and recommend the preferred directors to HBRC.

2.      At its meeting on 28 January 2015 HBRC considered a commencement date for the permanent Board for the guidance of the consultants appointed to undertake director recruitment and resolved to

2.1.   Leave the matter to lie on the table

2.2.   Instruct staff to investigate the costs and legal requirements of ensuring that any subsidiary of HBRIC Ltd that holds RWSS assets can be independent of future Councillor directors.

3.      The purpose of this report is provide the additional costs and legal information requested.

Discussion

Conflict of interest/Pre-determination

4.      The Council is mindful of the potential for legal challenges to decisions made on RWSS by councillors who are also councillor direction of HBRIC Ltd on the basis of perceived conflict of interest or pre-determination.

5.      This issue has been raised in the past and Council has received legal advice on this. This legal opinion, dated 23 July 2013, is appended as Attachment 1.

6.      The legal opinion notes that much of the case law around conflict of interest focuses on pecuniary interest. This is not the case in this instance where it relates specifically to decision making on a potential Council investment.

7.      An option to manage this suggested by Sainsbury Logan and Williams (SLW) is to limit involvement of Councillor directors at either Council or HBRIC Ltd Board meetings.

8.      SLW’s view is that these options are extreme and likely unnecessary because they remove the benefits of appointing councillors to boards of directors as identified by the Office of the Auditor General in 1994.

9.      The Office of the Auditor General, in advising on governing issues involving subsidiary companies, continues to recommend that the boards of holding companies include councillor directors.

10.    SLW’s legal advice (paras 20-24) discusses the issue of pre-determination where councillor directors may appear to have pre-determined their Council decision on the basis of their participation in the HBRIC Ltd process. For example councillor directors could abstain from voting at HBRIC Board meetings on matters related to the development of the RWSS.

11.    The legal advice also notes that the appointment of Councillor directors is positively encouraged by the OAG, again as a means of producing a better informed decision in the interests of Council.

12.    The view provided in the attached legal advice is that the management of conflict of issues and pre-determination does not require any response from either legal or compliance aspects.

13.    It is worth noting that since this legal opinion was prepared HBRC has made its substantive decision on an investment in the RWSS.

Separate legal entity

14.    At some point HBRIC Ltd will need to form a specific legal entity to manage the assets of RWSS. The sensible time to do this is before the formation of the permanent Board.

15.    A copy of the legal advice from Sainsbury Logan and Williams outlining the legal steps for the establishment of such an entity is appended as Attachment 2.

16.    In terms of the make-up of this entity the principle applying to the membership in the Constitution is that all directors are independent directors (as is the case with the Port of Napier Ltd.).

Conclusion

17.    Council has resolved to retain councillor directors on the permanent Board of HBRIC ltd.

18.    An ongoing level of uncertainty around the period of operation of the Transition Board is not a satisfactory arrangement for HBRC, nor for the HBRIC Board, and does not deal responsibly with the succession of directors.  A definitive date at which the Transition Board of HBRIC Ltd is replaced with a permanent Board should be put in place by HBRC prior to the recruitment and appointment process commencing.

19.    The only potential area of uncertainty is around any Council decision making relating to the RWSS. The option is available for any councillor directors to reduce the risk of perception of pre-determination by abstaining from voting on relevant maters at the HBRIC Board.

Decision Making Process

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

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

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

20.3.   The persons affected by this decision are councillors and independent directors on the HBRIC Ltd Board.

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

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

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

Recommendations

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.      Agrees that the Transition Board of the Hawke’s Bay Regional Investment Company will be replaced by a permanent Board of Directors to take effect from 1 July 2015.

Liz Lambert

Chief Executive

Attachment/s

1	Conflicts Opinion
2	SLW Legal Opinion Feb 2015

Conflicts Opinion

Attachment 1

SLW Legal Opinion Feb 2015

Attachment 2

HAWKE’S BAY REGIONAL COUNCIL

Wednesday 25 February 2015

SUBJECT: HBRIC Ltd February 2015 Update

Reason for Report

1.      Attached is the report of HBRIC Ltd to Council on its activities over the January, early February 2015 period.

2.      The HBRIC Ltd Chief Executive Andrew Newman, Company Manager Heath Caldwell, and Board of Directors Chairman Andy Pearce will be present at the meeting to speak to the Update.

Decision Making Process

3.      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 Council receives the “HBRIC Ltd and RWSS February 2015 Update” report.

Heath Caldwell Management Accountant

Liz Lambert Chief Executive

Attachment/s

1	HBRIC Ltd February 2015 Update

HBRIC Ltd February 2015 Update

Attachment 1

HAWKE’S BAY REGIONAL INVESTMENT COMPANY LIMITED (HBRIC Ltd)

Report to Hawke’s Bay Regional Council

25 February 2015

Summary

This report covers the following issues:

·        Progress report on each RWSS work stream

·        The RWSS work programme through to 31 March 2015

·        HBRIC Ltd January 2015 Financial Report

RWSS development

Consent Work-stream

Justice Collins released his decision on appeals earlier than expected. On December 18 Justice Collins further confirmed the High Court granting of the RWSS consents.

In February Council and other parties proposed various forms of rewriting of permitted activity rule TT1 (J). The Board of Inquiry ruled that all of the proposed changes were out of scope of what has been referred back to the Board.  It is our view that the issues at play are now extremely narrow. In regards to the consents the key point is whether there should be any changes to land use conditions to reflect the rewritten rule TT1(j), or not.

The HBRIC Ltd Board believes that it is important that in our actions we re-affirm strongly the genuine intent of the Scheme to improve environmental parameters in streams where the RWSS can have a direct influence. Accordingly we have proposed insertion of an “Augier” (volunteered) condition relating to monitoring of ecological health in streams within the RWSS footprint, through use of a macro invertebrate index method to measure the health of aquatic life and related trends and we have proposed an adaptive management regime to ensure these trends improve where necessary. This approach has long underpinned ecological health monitoring in Taranaki Region and good techniques are available to use this method to monitor and respond to any environmental issues that may arise, which have not been anticipated to date. It is our understanding that the Board is not able to impose such a condition because it ruled Council’s proposal for MCI out of scope for rule TT1(j). 

An Augier condition is an offer that whilst outside of scope or the power of the Board to insert, is voluntarily offered up by the applicant and in so doing creates an additional obligation on the consent holder. We consider this is a responsible embellishment of the already strongly environmentally focused consent package that HBRIC Ltd has developed and promoted. We note that two appellants – Fish & Game and the Environmental Defence Society have, and continue to, seek to have MCI incorporated into the National Objectives framework of the National Policy Statement for Freshwater Management.

Given the consents are granted under a Discretionary Activity rule not under the Permitted Activity rule a key issue for the Board of Inquiry will be whether or not any adjustments in consent conditions (if there are any) frustrate the application of those consents.

Design and Construction

The outstanding issue in this work stream is whether or not to progress with geotechnical work on the dam foundations, diversion tunnel and headrace. This work is a precursor to detail design and needs to be initiated now if we are maintain a 2018/19 irrigation season timeline. This matter is discussed in more detail under the heading Budget & Financial close.

Water uptake

Progress in this area is steady but slower than we would like due to uncertainty about plan change 6 and the consent conditions.

We are running the following detailed process

We have built a Client management database built on a FMI (Farm management ID) Process

Each property has been allocated a FMI number unique to that property. This means that parties with multiple properties will have a multiple FMI’s. Since December we have added some 58 FMIs to our database with the total now being 380 properties.

Status as at February 25

Stage 1 and above – 51.7 million m³ in the whole pipeline

Stage 3/ 4 – 9 million m³.

Stage 5 - 4.83 million m³

Stage 6 – 9.62million m³ confirmed and countersigned.

Over this early new year period we have focused on ensuring we continue to close deals with countersigned contracts building a larger potential customer base (pipeline). Progress in both areas is steady. In regards conversion of deals from stage 3 to 6 we note we have a number of large transactions i.e., water volumes above the 1 million m3 range that require Board approval by the Counterparty. The volume of water in this bracket is approximately 10 million m3.

Uncertainty around the appeals process is a barrier with some farmers as they would prefer to have the regulatory regime (consents and plan change) confirmed prior to completing a contract.

Of the properties visited some 33 or approx 8%  have indicated that they are not proceeding with the reasons either being they are looking to change the property tenure or in a couple of cases, simply due to physical constraints associated with irrigation, i.e., property shape etc.

Financing

As advised in December, due diligence (DD) work is underway and will be in part relied on by other investors such as CIIL and Institutional and Banks (in the event of debt finance). The DD process is scoped for the most demanding of financiers – bank debt.

Contrary to our December report we have not yet progressed the Investment Memorandum as we are awaiting clarity on the BoI outcome, and Investment terms currently being worked up by other parties.

We have active interest from three Institutional parties all capable of funding the institutional tranche in their own right.

In our financial forecast we are assuming a 30 June 2015 financial close based on an assessment that we get a BoI decision in early March. This is as realistic a position as we can forecast at this point and in our view sensible given that given the consents are granted and that the granting of consent is no-longer under appeal of able to be appealed further.

Budget & Financial Close

As noted under design and construction there is now some urgency to undertake geotechnical work to enable final design to be completed for a September start to construction. This is an important critical path element to water being available.

We have had a number of discussions with CIIL and MPI in regards this subject. The advice we received was that we should submit an application to the Irrigation Acceleration Fund (IAF).  We have been advised that our application does not meet the IAF criteria.  CIIL officials are working constructively with us to find an alternative means of funding this activity (subject to CIIL Board approval).  We expect to be able to update Council at the 25 February meeting.

The geotechnical work element specifically is $2 million.

HBRIC Ltd Financial REPORT

Table 1 sets out the January 2015 Financial Report for HBRIC Ltd.

The report sets out the actual costs incurred for both the month and the year to date against the full year budget and reforecast to 30 June 2015 (operating) and project budget to 31 March 2015 (RWSS phase 2 development expenditure).

A summary of the key elements outlined in the report for the month of January is as follows:

OPERATING INCOME & EXPENDITURE

There was a total of $31,019 of operating expenditure in the month of January with a breakdown of these costs set out as follows:

-        $14,500 for Board Fees for the Chairman and four non-executive Directors.

-        $7,772 for Management Services provided by HBRC staff.

-        $4,000 for Consultancy Fees which includes taxation services provided in relation to the preparation of the HBRIC Ltd 2014 Income Tax Return as well as fees for the independent RWS Board Committee member for the month of January.

-        $4,747 for other expenditure which includes meeting expenses, travel and expenditure for Directors and the independent RWS Board Committee member, and accruals for audit fees and insurance.

RWSS PHASE 2 DEVELOPMENT EXPENDITURE

The total RWSS Phase 2 Development Expenditure budget to 31 March 2015 reflects the most recent reforecast budget approved by Council on 27 August 2014.

Details of the expenditure for the month of January are set out below:

RWSS Phase 2 Costs ($190,958)

The $50,909 of HBRC internal staff time for January covers a number of work streams including:

-        Ongoing landowner liaison meetings with dam, reservoir and Zone M landowners.

-        Ongoing investor negotiations.

-        Ongoing negotiations with OHL-Hawkins with respect to condition of contract and Principals requirements.

-        Work associated with new consent applications and the Tranche 2 groundwater consent.

-        Work associated with identifying and quantifying downstream user opportunities.

-        Ongoing project management.

$7,559 for Commercial Legal & Tax Advisory services for the month of January.

An accrual of $25,000 for work associated with due diligence studies which will be in part relied on by other investors.

The $107,490 of Other Consultants costs covers off a number of pieces of work including:

-        Various landowner negotiations which includes meeting and negotiating with landowners and receipts of letters of intent.

-        Development of phase 3 construction and commissioning work programme for Technical Advisor role.

-        Review of construction contract conditions.

-        Water contract and sales advisory costs.

-        Work associated with new consent applications and Tranche 2 groundwater consent.

-        Other miscellaneous expenditure including meeting and travel expenses.

EPA Process Costs ($20,000)

An accrual of $20,000 for the month of January that relates to the costs associated with the High Court’s decision to refer the matter back to the Board of Inquiry. The budget provision for this work stream reflects additional external consultant costs to undertake the process through the BOI and costs from the EPA. At this point in time this is just an estimate with no indication provided from the EPA as to the level of fees expected.

RWSS Project Reforecast

As outlined in an earlier section of this report the financial close for the project is now assumed to be 30 June 2015 based on an assessment that we get a BoI decision in early March. On this basis a project reforecast through to 30 June 2015 has been provided in Table 1.

HBRIC Ltd February 2015 Update

Attachment 1

HAWKE’S BAY REGIONAL COUNCIL

Wednesday 25 February 2015

Subject: Tukituki Catchment Proposal – Board of Inquiry Update

Reason for Report

1.      The purpose of this report is to provide a brief update on the process and progress of the Board of Inquiry’s review of Rule TT1(j) and consequential amendments.

Background

2.      Staff gave the last update at the January Council meeting.  At that time the Board has issued directions for parties to submit indicative proposed wording for Rule TT1(j) by Thursday 29 January 2015 and for a Procedural Hearing to be held on Monday 2 February 2015 to hear submissions on those proposed rewordings and procedural matters.

Procedural Hearing – 2 February 2015

3.      The following partied submitted proposed wordings for Rule TT1(j) and were represented at the Hearing:

3.1.      HBRC and HBRIC

3.2.      Primary Producers Interest Group

3.3.      Fertiliser Association of New Zealand

3.4.      Hawke’s Bay and Eastern Fish and Game Council (Fish and Game)

3.5.      Royal Forest and Bird Protection Society (Forest and Bird)

3.6.      Environment Defence Society (EDS)

3.7.      Paul Bailey

3.8.      David Renouf.

4.      A number of other submitters also attended the hearing.

5.      Parties represented submissions in support of their wordings and where they opposed other wordings.  All parties sought clarity from the Board as to what it considered to be ‘out of scope’ to help narrow the elements to be debated.

Board’s latest directions (Minute 34 and 35)

6.      The Board’s direction on 4 February 2015 provided the Board’s findings as to scope as set out the timetable for the next part of the process, including requiring HBRC to co-ordinate and facilitate a meeting by 27 February to endeavour to reach consensus on outstanding matters.

7.      HBRIC submitted a further memorandum seeking more clarity for the timeline in relation to comments on the RWSS conditions.

8.      A further timetable was provided by the Board and is summarised as:

8.1.      Thursday 12 February 2015 – proposals for the amendment of Rule TT1(j), including supporting reasons and comments; information on number of resource consents that might be required and information on consent costs and benefits

8.2.      Monday 16 February 2015 – proposal for amendment to the RWSS conditions consequential to the proposed amendments to Rule TT1(j), including supporting reasons and comments

8.3.      Thursday 19 February 2015 - any responses to the information submitted on 12 February (point 8.1 above)

8.4.      Friday 20 February 2015 - any responses to the information submitted on 16 February (point 8.2 above)

8.5.      Thursday 26 February 2015 – meeting on Outstanding Matters including any necessary changes to the RWSS consent conditions.

Information on number of resource consents that might be required and consent costs and benefits

9.      In order to provide this information, water quality experts representing HBRC, Fish and Game and EDS met to agree on the water quality data set that should be used to determine exceedences of the Dissolved Inorganic Nitrogen limit and then determine the state of over allocation based on the ‘whole of catchment’ approach being proposed by HBRC/HBRIC and the ‘sub-catchment’ approach being proposed by Fish and Game and supported by EDS and Forest and Bird.

10.    Using that information HBRC staff used information held on HBRC database to determine the likely number of farms that might require consent based on the two approaches.  Staff met with a Fish and Game representative to explain the process for extracting the data and the limitations and assumptions associated with the data.

Decision Making Process

11.    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

That Council receives the ‘Tukituki Catchment Proposal – Board of Inquiry Update report

Helen Codlin

Group Manager
Strategic Development

Attachment/s

There are no attachments for this report.

HAWKE’S BAY REGIONAL COUNCIL

Wednesday 25 February 2015

SUBJECT: Monthly Work Plan Looking Forward Through March 2015

Reason for Report

1.      The table below is provided for Councillors’ information, to provide them with an indication of issues and activities coming up over the next month in each area of Council.

Group	Area of Activity	Activity Status Update
External Relations/  CE’s office		-  Negotiations with KiwiRail on Lease Agreement for Napier-Gisborne Rail line. -  Finalisation of Consultation Document for release to Audit NZ
Corporate Services		- LTP consultation document to be provided to Audit on Monday 2 March 2015. - LTP approval for financial accountability documents and consultation document at the Council meeting on 25 March 2015.
Civil Defence & Emergency Management	Emergency Readiness & Response Reduction	-  Review of the region’s control and coordination facilities including TLA emergency operations centres and Group emergency coordination centre. -  Group Structure and Resourcing Review being considered by CEG. -  In conjunction with these reviews develop detailed Group Work Programme to implement Group Plan. -  Planning for major Group exercise November 2015. -  Developing project plan for East Coast LAB - multi-agency community resilience initiative -  Development of publicly accessible GIS regional web-based ‘home of hazards’ as a platform for both public and inter-organisational sharing
Asset Management & Biosecurity	Coastal Biosecurity	-  Coastal strategy development continues, programme of technical work will be commenced following consideration by the governance Group in early March. -  A review of tendering and contracting procedures has been completed and is being implemented.  -  The Cape to City widescale predator control project is underway with a range of activities across the project workstreams. -  HBRC staff will be participating in a collective Regional Pest Management Plan process with other RC staff -  The National Policy Direction under the Biosecurity Act 1993 will be promulgated in early May 2015
Asset Management & Biosecurity	Engineering Land Management	-  Asset Management Plans to be updated following peer review.  AMP’s will include programmes of work set out in draft LTP and 30 year infrastructure strategy.  Further work needed on budgets and long term programmes before able to be considered by Council for adoption.  Now programmed for May or July E&S meeting. -  The gravel resource and supply and demand assessment reports expected end of February.  These will be circulated to gravel extractors once they are to hand. -  A programme for levels of service reviews for the Heretaunga Plains drainage areas will be progressed. -  Upper Tukituki Scheme review programme being developed. Report proposed to March E&S Committee.  Public meeting outlining proposed review to be arranged in CHB during March or early April. -  Catchment characterisation and stakeholder engagement in the Porangahau Stream and Maharakeke sub-catchments is being initiated to assist in the formation of a Priority sub-catchment management group. -  Meetings with Horizons Regional Council and Greater Wellington Regional Council to gauge support and commitment for the wider East Coast Hill Country proposal are being organised for March. -  A steering group has been formed and a “program of activities” will be developed to co-ordinate awareness raising and community engagement around recognising 2015 as the International Year of the Soil
Resource Management	Compliance	-  The Central Hawke’s Bay District Council Wastewater Treatment plants at Waipawa and Waipukurau are non compliant with their resource consents Abatement Notices have been issued for each plant with timelines outlined to install new equipment. We will continue working closely with CHBDC on this matter. -  Work will continue on a region wide risk assessment and review of the current navigational safety work programme due for completion by 1 July 2015.
Resource Management	Science	-  HAWQI coastal buoy has been upgraded and successfully redeployed with marine environmental data streaming back to Council in real time. -  The weekly Recreational Water Quality monitoring program continues and will run through to mid‑March. Results are being published on the LAWA website as well as Council’s website on a weekly basis. -  Faecal Source Tracking has been undertaken successfully on the Clive and Porangahau estuaries. Results will be reported in the annual Rec H20 report. -  Analysis and reporting on the ecological health and life supporting capacity of the Karamu Stream nears completion with components of the report being externally reviewed. The report will be finalised by mid-2015. -  Development of the Heretaunga Plains model continues. -  University of Waikato is progressing well with development and calibration of the Lake Tutira model. Lake management scenario testing should be possible by mid-2015. -  A web cam has recently been installed and tested at Lake Tutira. The webcam is located on the grounds of the Lake Tutira Memorial Church and takes a picture on an hourly basis looking out over the lake towards the campground. Te images will be able to be accessed via the HBRC website in the coming months. -  Five yearly ‘State of the Environment’ detailed technical reporting continues, with the summary report expected to be published March 2015 and detailed technical reports being available around mid-2015. -  Environet Ltd will undertake an Air Emissions Inventory this winter and a contract for the work is being prepared. PM10 monitoring at Port Ahuriri School will commence as soon as the school’s Board of Trustees grants permission to monitor on the school’s grounds. -  The Mohaka Catchment characterisation report is being completed in sections and reviewed. -  Ngaruroro terrestrial biodiversity report will be reviewed. -  Satellite mapping of Heretaunga plains continues. -  Wetland assessment training workshop being run by HBRC in March -  Internationally rare frost-flats (ecosystems) being surveyed in March
Resource Management	Consents	-  NCC application for coastal protection structure at Whakareri Ave remains on hold. -  NCC Thames Tyne stormwater consent application process – 13 submissions received. Prehearing scheduled for 26 February. -  TAG application for an oil exploration bore at Boar Hill remains on hold. -  “Tranche 2” water. Applications from HBRIC, Bostocks and Te Awahohonu Forest Trust (Gwavas Station), Ingleton Farms for Tuktuki Tranche 2 water lodged and are on hold. -  Replacement and review of Ruataniwha groundwater consents in process. 10 have requested review of annual volumes calculated. This is now being carried out. -  Twyford Global consent applications. Raupare semi-confined global issued. Ngaruroro – unconfined aquifer limited notified received 2 submissions. Prehearing being organised for early March. -  Panpac application to extend their outfall from 440m to 2,000 m off shore limited notified and received 3 submissions. Prehearing being organised for early March -  CHBDC, Waipukurau and Waipawa wastewater treatment consents change of conditions and review in process but awaiting detail on additions to treatment.
Strategic Development	Resource Management Planning	-  Environment Court hearing held 3 & 4 December 2014 on two outstanding appeal points by NKII against Change 5.  Court gave no indication as to when the decision might be issued. -  Work is continuing on PC6 Implementation Plan across Council groups. -  The next TANK Group meeting is scheduled for 10 March 2015. -  Setup phases continue for project funded by MfE’s Community Environment Fund ($80K) to develop criteria and methodology for the identification of ‘outstanding freshwater bodies’ in the context of the NPSFM2014. -  Regional Biodiversity Strategy Steering Group has worked through public feedback received on the Draft strategy and the document is being finalised. -  Whakatu arterial roading designation hearing held on 2 February by commissioner appointed by Hastings DC.  Decision is pending. -  Hastings DC’s district plan hearings continue into the first quarter of 2015. - Napier CC District Plan Change 10 hearings still have not been scheduled. - Energy Futures – Council has received proposals from external parties to support and facilitate first stage of proposed regional engagement process. In addition, we are reviewing a stakeholder management tool that has the potential to support the wider engagement process
Strategic Development	Transport	-  Hearings for the draft Regional Public Transport Plan and the Regional Land Transport Plan took place on 13 Feb and deliberations on the draft RLTP were completed on the same day.  A further RTC meeting on 6 March will deliberate on the RPTP and consider the proposed Plans for lodgement with the Council in late March. Thirty – two submissions were received on the RLTP and 27 were received on the RPTP. -  The draft Regional Cycle Plan will be signed off by the governance group in March and then presented to the respective councils before the final version is adopted in May 2015. -  Work is underway to complete the HBRC Transport Procurement Strategy, which needs to be approved by NZTA before we can commence re-tendering the bus service in mid-2015.
Strategic Development	Economic Development	-  Business Hub – Establishment project for April launch, including on-site matters and membership of Governance Group. -  REDS – Maori Economic Development. Following receipt of BHB recommendations HBRC is considering options for developing -  Energy Futures – Council has received proposals from external parties to support and facilitate first stage of proposed regional engagement process. In addition, we are reviewing a stakeholder management tool that has the potential to support the wider engagement process -  Wairoa Agribusiness - Ata Milk market validation study due shortly. -  Non-bovine dairy – building towards BHB-led ‘symposium’ later in the year. -  As required and where appropriate, support RWSS work-streams.

Decision Making Process

2.      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 required in terms of the Local Government Act’s provisions, the decision making procedures set out in the Act do not apply.

Recommendation

1.      That Council receives the Monthly Work Plan Looking Forward Through March 2015 report.

Mike Adye Group Manager Asset Management	Helen Codlin Group Manager Strategic Development
Paul Drury Group Manager Corporate Services	Ian Macdonald Group Manager/Controller  Hawke's Bay Civil Defence Emergency Management
Iain Maxwell Group Manager REGIONAL RESOURCES	Liz Lambert Chief Executive

Attachment/s

There are no attachments for this report.

HAWKE’S BAY REGIONAL COUNCIL

Wednesday 25 February 2015

Subject: Minor Items not on the Agenda

Reason for Report

This document has been prepared to assist Councillors note the Minor Items Not on the Agenda to be discussed as determined earlier in Agenda Item 6.

Item	Topic	Councillor / Staff
1.
2.
3.
4.
5.

HAWKE’S BAY REGIONAL COUNCIL

Wednesday 25 February 2015

SUBJECT: Confirmation of the Public Excluded Minutes of the Regional Council Meeting held on 28 January 2015

That Council excludes the public from this section of the meeting, being Agenda Item 17 Confirmation of the Public Excluded Minutes of the Regional Council Meeting held on 28 January 2015 with the general subject of the item to be considered while the public is excluded; the reasons for passing the resolution and the specific grounds under Section 48 (1) of the Local Government Official Information and Meetings Act 1987 for the passing of this resolution being as follows:

GENERAL SUBJECT OF THE ITEM TO BE CONSIDERED	REASON FOR PASSING THIS RESOLUTION	GROUNDS UNDER SECTION 48(1) FOR THE PASSING OF THE RESOLUTION
Confirmation of the Public Excluded Minutes of the Regional Council Meeting held on 28 January 2015	7(2)(g) That the public conduct of this agenda item would be likely to result in the disclosure of information where the withholding of the information is necessary to maintain legal professional privilege.	The Council is specified, in the First Schedule to this Act, as a body to which the Act applies.

Paul Drury

Group Manager
Corporate Services