Agenda of Regional Council Meeting

Meeting of the Hawke's Bay Regional Council

Date: Wednesday 27 April 2016

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 30 March 2016 and the Extraordinary Regional Council Meeting held on 20 April 2016

4. Matters Arising from Minutes of the Regional Council Meeting held on 30 March 2016 and the Extraordinary Regional Council Meeting held on 20 April 2016

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

6. Call for any Minor Items not on the Agenda 13

Decision Items

7. Affixing of Common Seal 15

8. Recommendations from the Corporate and Strategic Committee 17

9. Proposed Changes to Napier-Hastings Bus Service 19

10. Councillor Remuneration 23

11. Modification to the HBRIC Ltd Statement of Intent 2015-16 (1.30pm) 33

12. Appointment of Regional On-scene Commander 37

13. Dividend Payments by HBRIC Ltd Based on Funds Invested in the (1.30pm) Ruataniwha Water Storage Scheme 39

Information or Performance Monitoring

14. Monthly Work Plan Through May 2016 51

15. HBRIC Ltd April 2016 Update 59

16. Annual Plan Progress Report for the first Nine Months of the 2015-16 (2.30pm) Financial Year and Reforecasting to 30 June 2016 65

17. Minor Items not on the Agenda 67

Decision Items (Public Excluded)

18. Confidential Supporting Documents for Dividend Payments By HBRIC Ltd Report 69

19. Confirmation of Minutes of the Public Excluded Regional Council Meetings held on 30 March and 20 April 2016 71

HAWKE’S BAY REGIONAL COUNCIL

Wednesday 27 April 2016

Subject: Affixing of Common Seal

Reason for Report

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 1

DP 12110

CT L2/235

- Agreement for Sale and Purchase

- Transfer

1.1.2 Lot 486

DP 2451

CT 55/118

- Transfer

1.1.3 Lot 6

DP 14665

CT G3/323

- Transfer

1.1.4 Lot 4

DP 14227

CT G1/24

- Agreement for Sale and Purchase

1.1.5 Lot 1

DP 14592

CT H1/227

- Agreement for Sale and Purchase

1.1.6 Lots 34 & 333

DP 10632 & DP10728

CT B3/180

- Agreement for Sale and Purchase

3917

3920

3919

3921

3923

3924

3925

22 March 2016

6 April 2016

7 April 2016

15 April 2016

18 April 2016

20 April 2016

1.2

Staff Warrants

1.2.1 R. Douglas

(Delegations under Resource Management Act 1991; Civil Defence Emergency Management Act 2002 (s.86-91) and Local Government Act 2002 (s.174).

1.2.2 J. Tetlow

(Delegations under Section 318(1) of the Maritime Transport Act 1994 in accordance with appointments made in Section 2 of the Tier II Oil Spill Contingency Plan adopted by the Hawke’s Bay Regional Council on 21 February 2007; Civil Defence Act 1983 (s.60-64); Civil Defence Emergency Management Act 2002 (s.86-91) and Local Government Act 2002 (s.174))

3922

3918

11 April 2016

29 March 2016

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:

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 Significance and Engagement Policy, and that Council can exercise its discretion 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.

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 27 April 2016

Subject: Recommendations from the Corporate and Strategic Committee

Reason for Report

1. The following matters were considered by the Corporate and Strategic Committee meeting on 13 April 2016 and are now presented for consideration and approval.

Decision Making Process

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

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 Significance and Engagement Policy and that Council can exercise its discretion and make decisions on these issues without conferring directly with the community.

Local Government Elections 2016

2. Reconfirms the appointments of Mrs Leeanne Hooper as the Hawke’s Bay Regional Council Electoral Officer and Mrs Barbara Mear as the Deputy Electoral Officer pursuant to Section 12 of the Local Electoral Act 2001.

3. Resolves that the order that each candidate’s name will appear on a voting paper is in alphabetical order of surname.

HBLASS Ltd Draft Statement of Intent 2016-17

4. Undertakes to provide any comments on the Draft SOI to HB LASS Ltd by 1 May to enable delivery of the completed Statement of Intent to Council on or before 30 June 2016.

HBRIC Ltd Draft Statement of Intent 2016-17

5. Notes the recommendation included in the report from Deloitte that HBRIC Ltd, in order to meet the dividend required by the shareholder to meet LTP levels, may require HBRIC Ltd to request a modest increase in the level of dividend from Napier Port or to take on some short term borrowing, subject to the amendment of the Statement of Intent to include loans for working capital purposes.

6. Given the need to finalise the forecast HBRIC Ltd dividend for the Statement of Intent 2016-17, that under the authority provided by the Local Government Act, schedule 8 section 5, the Council as shareholder requires HBRIC Ltd to modify the Statement of Intent to include:

6.1. A dividend level for 2016-17 of $11,534,000 (if scenario 1 RWSS proceeds under current timelines) and $9,500,000 (if scenario 2 RWSS does not proceed or scenario 3 RWSS is delayed by approximately 1 year).

6.2. In accordance with requirements of the Local Government Act, the Statement of Intent is to include to be advised (TBA) for the forecast dividends to be paid in the years 2017-18 and 2018-19.

6.3. Under section 4 “Nature and Scope of Activities to be Undertaken”, provides authority for HBRIC Ltd to raise funds and that the purpose of raising of funds includes not only investment, but also working capital.

7. Undertakes to provide any further comments on the Draft Statement of Intent to HBRIC Ltd by 1 May 2016 (LGA Sch8 cl3) to enable delivery of the completed Statement of Intent to Council on or before 30 June 2016.

Reports Received

8. Notes that the following reports were provided to the Corporate and Strategic Committee meeting:

8.1. Health and Safety Update Report for the Period 1 February - 31 March 2016

8.2. April 2016 Public Transport Update

8.3. Update of RWSS Regional Economic Assessment (Butcher Report).

Liz Lambert

Chief Executive

Attachment/s

There are no attachments for this report.

HAWKE’S BAY REGIONAL COUNCIL

Wednesday 27 April 2016

Subject: Proposed Changes to Napier-Hastings Bus Service

Reason for Report

1. This report is to seek Council approval to proceed with some improvements to the Napier Hastings bus service.

Financial and Resource Implications

2. The estimated cost to Hawke’s Bay Regional Council after fares and subsidies is $44,000 (ex GST).This cost can be accommodated from existing budgets in the Long Term Plan.

Background

3. During the development of the Regional Public Transport Plan in 2015, a number of bus improvements were requested by submitters and were included in the Plan as items for further investigation.

4. Investigations are now complete into a number of the proposals, and those which are considered to have merit for trial are outlined below. A number of other minor improvements are also proposed to improve transfer times and for passenger convenience.

Express Services

1. One frequent request has been for the return of an express service running from Napier to Hastings via the Hawke’s Bay Expressway.

2. Route 12 between Napier and Hastings is one of the busiest routes on the service, with almost half of the total Hawke’s Bay patronage travelling on this route. Services run every 20 minutes from each city at peak times and while a significant portion of the patronage is within the urban boundaries (for example, between Napier and EIT), there are also good numbers travelling between cities.

3. Unfortunately, Route 12 takes a circuitous route and is unable to use the Expressway due to right-turning difficulties at Links Road. This results in a journey time of at least an hour between cities, which is not an attractive prospect for those with other transport options.

4. Route 10 was an express service which operated between Napier and Hastings via the Expressway until early 2014. Numbers on this service reached 11,000 trips annually in 2012 but declined thereafter. However, the route taken on this service from Napier did not maximize the catchment area for people travelling to Hastings. It travelled via Taradale Road (industrial/commercial activity on one side) and then took the Expressway from the Taradale Road intersection.

5. It is therefore proposed to trial a revised Napier-Hastings express service travelling via Kennedy Road and out to Taradale before accessing the Expressway at Meeanee Road, continuing on the Expressway and travelling up Omahu Road to the Hawke’s Bay Hospital and then on to central Hastings. The service would have two morning and two afternoon/evening return services.

6. The service would not pick up passengers past Taradale, eliminating the need to travel via EIT and Pakowhai Road. With an estimated journey time of 35-40 minutes, it would be considerably quicker than the normal Route 12. Exact stop locations are still to be determined, but it is likely that there would be limited stops to ensure the express nature of the service.

7. The 6.55am arrival and 3.45pm return services would meet early nursing shift times at the Hawke’s Bay hospital, which has been requested by hospital staff during development of the District Health Board’s travel plan for staff, patients and visitors.

8. All current Route 12 services will continue to operate, with services every twenty minutes at peak times. Route 11, the current express service via Clive, has reasonable patronage and travels between Havelock North and Napier in 35 mins.

Bay View Service Trial

9. During the preparation of the Regional Public Transport Plan, HBRC received a number of submissions from Bay View residents requesting a bus service.

10. Investigations into the nature of the desired service included a postal survey and a public meeting. On the basis of feedback received, it is proposed to trial extending the Westshore route to Bay View on some runs. The proposed timetable would provide one daily return trip suitable for workers or students, and one shopper’s service. A minor route change to the service in Ahuriri is also proposed, to simplify the route and cut dead running.

11. Apart from some minor timing changes, Ahuriri residents would see little change to their service. Westshore residents would have a longer journey home on the Bay View trips, but also have the option of getting off the bus in Meeanee Quay on the way to Bay View, and walking into Westshore.

12. This service would be on a trial basis, and if usage was low, would revert to the Ahuriri -Westshore route at all times. It is proposed to trial the service for a year initially.

Saturday Flaxmere and Havelock North Services Timetable Adjustment

13. A timetable adjustment to Saturday services to Flaxmere and Havelock North is proposed to ensure all services depart on the hour, and have better connections to services between Napier and Hastings, enabling easy transfer. The change also provides Havelock North with one extra service.

Early Trip Havelock North and Flaxmere

14. An early trip is proposed from both Flaxmere and Havelock North to provide an arrival at the Hawke’s Bay Hospital before the 7am shift start, and also allow for an early transfer to the Route 12 service to Napier.

Sunday Service For Flaxmere and Havelock North

15. After Route 12, Route 20 between Hastings and Flaxmere is the next busiest service. Currently Sunday services only operate on Route 12 but it is proposed to trial Sunday services between Flaxmere and Hastings, and Havelock North and Hastings. The two services operate with one bus, alternating between routes. There would be three return services to each area.

16. We consider that this would provide a significantly improved level of service for both Flaxmere and Havelock North residents, enabling access for shopping and other activities in Hastings on Sundays. Passengers could also transfer onto the Route 12 service to travel to Napier for a day out.

Route 16A, 16B, 17 Improvements

17. Route 16A operates in the Camberley and Raureka areas of Hastings (9 daily services), 16B covers Mahora (6 daily services) and 17 covers Parkvale and Akina (3 daily services).

18. All services are currently operated by one bus and have low patronage. This is likely to be due in most cases to the timing of services and low frequency, although 16A has shown some growth this year and carries the most passengers of the three.

19. Route 16B and 17 are long and winding routes. It is proposed to simplify and combine these two routes into a more direct route. Residents in this area will still have good access to this service, which will be more attractive as it provides a quicker route into town. Route 16A would be unchanged.

20. We are investigating the addition of a second bus at peak time only, which will allow the new route to service three high schools at the correct time of day. This scenario would provide the following level of service:

20.1. Route 16A – 8 weekday services

20.2. New combined route – 7 weekday services.

21. This scenario has been included in the costings outlined in Paragraph 22. However, if the addition of a second bus proves prohibitive, 7 and 6 services respectively would be provided.

22. This improvement will be contingent on Hastings District Council agreement for the rerouting of the services, as these will require the placement of new bus stops. If this proves difficult to achieve, more minor changes will be made to the existing service.

Funding of Service Improvements

23. The new bus contract contains fixed rates for the variation of services both in terms of extra kilometres operated, and extra bus hours. These have been used to cost the improvements, the gross cost of which will average $128,000 (ex GST) per year over the next three years.

Average annual gross cost to provide the improvements	Estimated fare revenue (30%)	Net cost before NZTA subsidy	NZTA subsidy	Cost to HBRC
$128,000	$38,400	$89,600	$45,700	$43,900

24. HBRC and NZTA budgets for public transport have more than sufficient funding available to meet this cost, due to the lower than budgeted tender price received for the new contract. This will be the case even if fare revenue on the service improvements is less than expected. (Overall, the bus service recovers around 38% of its cost through fares. 30% fare recovery has been conservatively estimated for the new services). While the budget has been reduced in the draft Annual Plan 2016-17 (as a result of the lower contract price), some funding was retained in anticipation of service changes with the new contract. This will be more than sufficient for what is proposed.

Consultation

25. The larger changes to the bus service were proposed in the draft Regional Public Transport Plan 2015-2025, and received considerable support through public consultation.

Next Steps

26. If Council approves these changes, new timetables will be printed and an extensive marketing campaign will be put in place to ensure that existing and potential new passengers are aware of the changes.

27. We are required to conduct an annual fare review and intend to have this ready for Council by June at the latest.

Discussion

28. HBRC has agreed, through the development of the Regional Public Transport Plan, to investigate a revised Route 12 Express service and a Bayview service. Investigations have since determined that there is potential for these, but as is always the case with public transport services, a trial is the only way to really determine the demand. These services (and the proposed Sunday services for Flaxmere and Havelock North) are additional to the existing timetable and can be modified or discontinued if they prove unsuccessful in the longer term.

29. The Route 16A, 16B and Route 17 alterations are necessary to try to improve the low patronage on this service and make it more user friendly.

30. The remaining changes are minor alterations which should make the service more user friendly and improve patronage.

31. The additional cost of the changes is relatively modest because the existing bus fleet is largely used.

Decision Making Process

5. Council is required to make every decision in accordance with the requirements of the Local Government Act 2002 (the Act). Staff have assessed the requirements in relation to this item and have concluded:

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

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

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

5.4. The persons affected by this decision are existing and potential new public transport users, and urban ratepayers.

5.5. Options that have been considered include doing nothing.

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

5.7. Given the nature and significance of the issue, 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:

2. Agrees to the proposed changes to the Napier-Hastings Bus Service being implemented from 1 August 2016.

Anne Redgrave

Transport Manager

Liz Lambert

Chief Executive

Attachment/s

There are no attachments for this report.

HAWKE’S BAY REGIONAL COUNCIL

Wednesday 27 April 2016

Subject: Councillor Remuneration

Reason for Report

1. The Remuneration Authority has written to Council outlining the process for determining elected members’ remuneration for the period from 1 July 2016 to 30 June 2017. This letter is appended as Attachment 1.

2. While the base remuneration calculations are consistent with previous years there are some proposed changes to the provision allowed for payments of additional duties which we use to fund additional payments to the Deputy Chairman and Committee Chairman.

3. This paper covers the changes proposed by the Remuneration Authority in their letter dated 17 March 2016. The level of payment for the Chairman of the Council and councillors without an additional duties are prescribed by the Remuneration Authority and have been set out in their letter. The Remuneration Authority requested that councils determine the level of payment to be made to positions with additional duties, and this paper provides the options available to Council.

Background

4. Each year the Remuneration Authority determines the base remuneration for elected members. They have indicated the following increases to the Chair and Councillors’ positions for the 2016-17 year.

Positions with Additional Duties

5. The second part of the remuneration process is to allocate additional payments to those councillors who are required to perform additional duties.

6. Our current positions that have additional duties are:

6.1. Deputy Chairman of Council

6.2. Corporate and Strategic Committee Chairman

6.3. Environment and Services Committee Chairman

6.4. Regional Planning Committee Chairman

6.5. Regional Transport Committee Chairman

6.6. Hearings Committee Chairman

6.7. NB: We currently only pay for four of these positions as the Deputy Chairman of Council is also the Hearings Committee Chairman, and the Chairman of Council is also the Regional Planning Committee Chairman

7. A further Council committee was established by Council on 11 February 2015. This is the Finance Audit and Risk Sub-committee, which is a subcommittee of the Corporate and Strategic Committee. The Chairman of the Corporate and Strategic Committee is also the Chairman of the sub-committee.

Funding Pool to Cover Additional Duties

8. Previously the Remuneration Authority allowed for a pool of 150% of the base councillor remuneration to be available to fund positions that have additional duties. For example the 2015-16 pool was $72,750 ($48,500 x 150%).

9. This pool had then been divided by the number of positions with additional duties and added to the base salaries ($72,750 ¸ 6 = $12,125) therefore the 2015/16 payments to the Deputy Chairman and Committee Chairs was $60,625 ($48,500 + $12,125 = $60,625).

10. The Remuneration Authority has advised that this pool can now be up to 200% of the base councillor remuneration, giving a pool of $98,940 for the 2016-17 year.

11. The table below illustrates the extent of the changes.

Item	Current $	Proposed $
*Maximum payment for additional duties*	*72,750*	*98,940*
If six positions, maximum payment per position	12,125	16,490
Councillor payment	48,500	49,470
Total Maximum Payment	60,625	65,960	+8.8%

12. The total pool does not have to be used and it should be noted that these payments are funded through Council budgets.

13. The Remuneration Authority requires the Council to submit the additional payments for each position by the 16 May 2016 so that they can release their determination prior to 1 July 2016.

14. This determination will remain effective for the financial year 2016-17 unless the new Council after the October 2016 elections requires amendments to be made to the payments for additional duties. Further Council approval will be required at that time for any change proposed and any change would also need to be submitted to the Remuneration Authority for approval. The determination would have to be amended, and backdated to when the new arrangements began.

Option 1

15. Retain the current pool 150% of the base councillor remuneration (viz pool of $74,205). This includes a 2% cost of living increase. This is the current budgeted position in the 2016-17 Annual Plan.

Option 2

16. Revise the pool to 200% of the base councillor remuneration (viz pool of $98,940). This increase in the pool also includes a 2% cost of living adjustment.

17. Any variations in the payment for additional duties between $61,838 and $65,960 are acceptable as long as it does not exceed the total pool limit. Also, the various positions that have additional duties can have different allocations. The above options assume six positions with additional duties and includes the Deputy Chair.

Decision Making Process

18. 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:

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

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

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

18.4. The persons affected by this decision are the representatives elected to the Hawke’s Bay Regional Council.

18.5. Options to be considered are outlined in this paper and refer to the discretion provided by the Remuneration Authority to Council to determine the payments to be made for the positions with additional duties.

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

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

18.8. Council is required to respond to the Remuneration Authority with its recommendation for the distribution of the funding pool to positions with additional duties.

Recommendations

That Council:

2. Notes the level of remuneration to be paid to the Chairman and councillors (without additional duties) as set out in the Remuneration Authority’s letter to councils dated 17 March 2016.

3. Approves one of the following options:

3.1 That the current payment for additional duties continues to be paid but is increased by 2% for cost of living. This would be a payment of $61,838 effective from 1 July 2016; or

3.2 Revises the payment to councillors who hold one of the six positions that have additional duties to the maximum allowable by the Remuneration Authority. This would be a payment of $65,960 effective from 1 July 2016; or

3.3 That a payment be made to councillors who hold one of the six positions that have additional duties, such payment to be at a sum to be determined between $61,838 and $65,960. This payment would be effective from 1 July 2016.

4. Resolves that the level of remuneration for the Chairman of the Maori Committee be set at the same level as the payment to councillors who carry out additional duties. This payment will be the same amount as adopted by Council in resolution 3 above. The payment will be effective from 1 July 2016.

Manton Collings

Corporate Accountant

Paul Drury

Group Manager Corporate Services

Liz Lambert

Chief Executive

Attachment/s

Remuneration Authority Letter re Elected Members Remuneration from 1 July 2016

HAWKE’S BAY REGIONAL COUNCIL

Wednesday 27 April 2016

Subject: Appointment of Regional On-scene Commander

Reason for Report

1. This paper seeks Council’s appointment of a new Regional On-Scene Commander, and to reaffirm the appointments of the current Regional On-Scene Commanders pursuant to Section 318 (1) of the Maritime Transport Act 1994.

Approval Process

2. Section 2.1.1 of the Hawke’s Bay Regional Marine Oil Spill Contingency Plan (Tier 2 Plan) names the Regional On-Scene Commanders (ROSC) as Ian Lilburn, with Iain Maxwell and Don Scott as the Alternate Regional On-Scene Commanders, it also notes only Regional On-Scene Commanders with appropriate current Maritime New Zealand (MNZ) qualifications are able to act in this role.

3. Jim Tetlow recently joined the Hawke’s Bay Civil Defence Emergency Management Group as an Emergency Management Adviser, and holds the MNZ qualification of Regional On-Scene Commander effective from 16 February 2015.

4. Under Section 318 of the Maritime Transport Act 1994 regional councils must from time to time appoint a regional on-scene commander, subject to the approval of the Director of Maritime New Zealand.

Financial and Resource Implications

5. Hawke’s Bay is provided with sufficient equipment, training and other resources to allow it to effectively respond to small and larger spills (Tier 2) within the coastal marine area. In the event of a larger, or more catastrophic spill, we can expect the support of Maritime New Zealand.

6. The plan provides financial authority for the appointed Regional On-Scene Commanders to expend up to $250,000 in a response, subject to Plan requirements and MNZ qualifications.

7. Costs are recovered from the spiller or the Marine Pollution Fund administered by Maritime New Zealand.

Next Steps

8. We recommend that Jim Tetlow is appointed as an alternative Regional On-Scene Commander, supporting the existing three appointments.

Decision Making Process

9. Council is required to make every decision in accordance with the requirements of the Local Government Act 2002 (the Act). Staff have assessed the requirements in relation to this item and have concluded:

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

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

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

9.4. The persons affected by this decision are the Regional On-Scene Commanders themselves, all Hawke’s Bay ratepayers, coastal communities and the maritime industry.

9.5. Council has a statutory responsibility under Section 318 of the Maritime Transport Act 1994 to appoint a regional on-scene commander from time to time, subject to the approval of the Director of Maritime New Zealand. Therefore no alternative options have been considered.

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

9.7. Given the nature and significance of the issue to be considered and decided, 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 Significance and Engagement Policy, 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.

2. Appoints Jim Tetlow as Regional On-Scene Commander in accordance with Section 318 of the Maritime Transport Act 1994, and subject to the approval of the Director of Maritime New Zealand.

3. Reaffirms the appointments of Ian Lilburn, Iain Maxwell and Don Scott as Regional On-Scene Commanders.

Iain Maxwell

Group Manager
Resource Management

Liz Lambert

Chief Executive

Attachment/s

There are no attachments for this report.

HAWKE’S BAY REGIONAL COUNCIL

Wednesday 27 April 2016

Subject: Dividend Payments by HBRIC Ltd Based on Funds Invested in the Ruataniwha Water Storage Scheme

Reason for Report

1. This paper demonstrates that, based on a range of uptake scenarios that are modelled in the financial model used by HBRIC and reviewed by Deloitte for Council, that HBRIC will able to make dividend payments to Council at a level that is a flat 6% return on funds invested in the RWSS, as required by Council’s June 2014 resolution.

Background

2. As part 8.5 of its resolution of 25 June 2014, approving the investment by Council in the RWSS, subject to Conditions Precedent and other matters being satisfied, Council required that:

“8 ….. subject to Council being satisfied with:

[8.1 to 8.4, covering Conditions Precedent and other matters which will be addressed in other papers to Council in due course, and]

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

3. HBRIC has been provided with a copy of legal advice (dated 12 April 2016) that Council has sought and received from Sainsbury Logan and Williams as to the meaning of part 8.5 of its 25 June 2014 resolution.

4. That legal advice says, in paragraph, 7 ‘We consider the words “HBRIC Ltd increasing its annual distributions to HBRC to provide a 6% return” as used in Council’s 2014 resolution clearly means a 6% flat rate of return on the funds invested by Council in the RWSS’.

5. In paragraphs 4 and 5, that legal advice considers whether average returns, reflecting smaller dividends paid earlier and larger dividends paid later, providing an average return of 6%, fall within the meaning of Council’s resolution, and concludes that “…. consistent instalments reflecting a flat rate of return.” are required.

6. It is therefore clear, and confirmed by Council’s legal advice, that consistent instalments, reflecting a flat 6% rate of return on funds invested in the RWSS, of dividend payments to Council are required.

7. HBRIC has also been provided with a copy of advice that Council has sought and received from Deloitte (dated 7 April 2016) regarding HBRIC Ltd dividend projections, including the requirement to pay dividends that provide a 6% return on any RWSS investment. That advice makes recommendations about how HBRIC Ltd might be enabled to make dividend payments that are consistent with a 6% rate of return by making a small change to the HBRIC Statement of Intent (SoI) to permit HBRIC to borrow for working capital as well as for investment. (At present, HBRIC does not have that ability, and it has no debt.)

8. Such borrowing ability is normal for a company, for a range of working capital purposes, including funding its operating expenses. It will enable HBRIC to partly fund a flat 6% rate of return via dividends in the event that, in any specific year, it has a shortfall of cash available from dividends received from the RWSS.

9. HBRIC has been advised that, on 13 April, the Corporate and Strategic Committee approved recommendations regarding the HBRIC SoI that reflect the Deloitte advice, including a recommendation to modify HBRIC’s SoI in section 4 to enable HBRIC to borrow for working capital as well as for investment. Borrowing at a level exceeding 5% of HBRIC’s value will continue to require Council approval – as in the current (2015-16) and previous SoIs.

10. HBRIC has supported the recommendation for a change to its SoI in order to enable HBRIC to assist Council with its current LTP forecasts in the short term, and to help provide a flat 6% return on the RWSS investment in the future.

11. HBRIC Ltd has, therefore, evaluated its ability to fund dividend payments of $4.8 million/year to Council that will provide a 6% flat rate of return on the funds invested in the RWSS, in addition to dividend payments that are funded by ordinary dividends from Napier Port.

Analysis undertaken

12. This report analyses how HBRIC would be able to fund only the RWSS-related component of its total dividend payment to Council. (Total dividends to be paid in any year are not projected here, and will include funds received as dividends from Napier Port).

13. The way in which cash flows from the RWLP to HBRIC is described in Confidential Attachment 1 at a level of detail which shows how the financial model operates but does not disclose the detail of other parties returns. The information disclosed is, however, still under negotiation and not yet confirmed, thus it remains Confidential at this time.

14. HBRIC has focused the analysis on the period to year 15 of operations because that is the latest date at which CIIL will exit from the project. At that time (or earlier if CIIL exits before 15 years), HBRIC will receive pro-rata returns on its investment, projected to be in the region of 10%, thus it can fund a 6% rate of return on an ongoing basis solely from RWSS returns.

15. HBRIC has analysed its ability to fund the required 6% flat dividend for the Base and Downside uptake cases of the financial model provided to Deloitte for independent analysis, and have also considered a Severe Downside uptake case to further assess risks to HBRIC’s ability to fund such payments.

16. The Base, Downside and Severe Downside cases are described briefly in Attachment 1 to this paper.

17. For completeness, the rates of return, total amounts of cash received by HBRIC over various periods, and the IRR over the 70-year life of the project are covered in Confidential Attachment 2. The detail of these returns is commercially confidential, subject to confirmation when negotiations are completed, and thus is Confidential at this time.

Logic of HBRIC Ltd’s analysis

18. To protect Council’s dividend income that is funded by Napier Port ordinary dividends received by HBRIC, no part of the funding of the RWSS dividends in this analysis is reliant on ordinary dividends from Napier Port.

19. HBRIC, therefore, has only three sources of funding available to it to fund returns on the RWSS investment to Council:

19.1. cash generated from the RWSS (in later years) and cash generated via subvention payments for tax losses generated by the RWSS (in the construction period and early years),

19.2. special dividends from Napier Port (in addition to ordinary dividends) as described in the Business Case approved by Council in 2014, and

19.3. borrowing.

20. During the construction period, the RWSS generates no cash. HBRIC Ltd has discussed, and agreed in principle as part of the SoI Process with Napier Port, an aggregate sum of special dividends that may be available over this period, subject to approval in each year by Napier Port directors (the use of special dividends in this manner was described in general terms on pages 64-5 of the Business Case received and approved by Council in 2014).

21. Part of that aggregate sum of special dividends from Napier Port will now be used in 2016/17 to bridge a funding gap for Council relative to its LTP forecasts that is due solely to the delay of the RWSS caused by the actions of third parties. The remainder has been spread over the three years of construction.

22. After the construction period, no further special dividends from Napier Port are assumed in this analysis.

23. Over the early years of operations, HBRIC receives a mixture of tax losses (which can be converted to cash by subvention payments) and cash payments. These are somewhat variable year to year, and have been smoothed to an average annual amount to year 5 of operations in the Base case; smoothed to year 7 of operations in the Downside case; and not smoothed in the Severe Downside case (because payments are small and infrequent up to year 11).

24. Borrowings required to fund $4.8 million of dividend payments in each year are shown and cumulated from year to year.

25. Interest on the cumulative level of debt is capitalised (added to the opening debt for each subsequent year).

26. When large payments are received by HBRIC from the RWSS, a flat 6% level of dividend is paid (consistent with Council’s advice) and HBRIC debt is paid down with the surplus funds.

27. If there is additional cash available after debt is paid down and a 6% dividend has been paid, the surplus cash is paid on to Council as additional dividend.

Results

28. Results are shown in separate tables for each of the Base, Downside and Severe Downside cases. Years are numbered from the start of operations.

Base Case

29. Napier Port special dividends are “topped up” by debt in the construction period. Limited cash generated from the RWSS is “topped” up by an average of $3.5 million of debt up to year 5, by which time cumulative debt is $25 million, which is substantially paid down in year 6 and fully paid down in year 9. HBRIC’s debt goes above 5% of its value from year 4 to year 7, peaking at 7.8%. This would require Council approval, or adjustment of HBRIC’s SoI, at year 4 of operations.

Downside Case

30. The construction period is the same as the Base case. Lower cash available from the RWSS than in the Base case is topped up by an average of $4.3 million to year 5, to $30.5 million in total (9.6% of value), then debt is paid down and borrowed again at varying amounts in years 6 to 9, peaking at $41.5 million (13% of value). Council approval at year 3 of operations would be required for debt exceeding 5% from year 3 onwards.

Severe Downside Case

31. The construction period is unchanged from other cases. Much lower cash available from the RWSS requires borrowing ranging from $3.7million to $4.8 million/year, up to year 11 of operations, with debt peaking at $71.8 million (22.5% of value), with a reduction in debt to $36.3 million in year 12 (11.4% of value) which increases to $46.3 million (14.5%) by year 15. Council approval would be required for debt exceeding 5% from year 3 onwards.

Conclusions

32. It is clear that in all cases HBRIC can, if Council continues to require it to do so, pay dividends at $4.8 million per year (6% return on funds invested in the RWSS) and remain within normal gearing (debt to debt+equity) levels for an infrastructure holding company, which could ordinarily be up to 30% or more depending on ownership.

33. Significant borrowing by HBRIC to pay dividends is required to fund the dividends required by Council.

34. The borrowing by HBRIC required to fund a flat rate dividend is a direct consequence of Council’s resolution 8.5 of 25 June 2014, given that there are significant periods with no, or limited, cash-flow to HBRIC from the RWSS. When Council made its 25 June, 2014 resolution it was well-informed about the limited nature and timing of the uptake period cash-flows to HBRIC, both by the Business Case (pages 60, 64-5) provided by HBRIC, and by its own advice from Deloitte reviewing the financial model underlying the Business Case.

35. Council approval will be required in all cases for debt to exceed 5% of HBRIC value, in either year 3 or 4 of operations – 6 or 7 years after construction commences.

36. Peak gearing of HBRIC will be:

36.1. In the Base case, HBRIC’s peak gearing (debt/(debt+equity)) reaches 7.3% (pg1 Attachment 2)

36.2. In the Downside case, HBRIC’s peak gearing reaches 11.5% (pg2 Attachment 2)

36.3. In the Severe Downside case, HBRIC’s peak gearing reaches 18.4% (pg3 Attachment 2.

37. Dividend levels from HBRIC, including those providing the required 6% rate of return to Council, will be projected in the draft HBRIC Ltd SoI for each year to be discussed and agreed with Council in the normal course of that annual process.

Decision Making Process

38. Council is required to make every decision in accordance with the requirements of the Local Government Act 2002 (the Act). Staff have assessed the requirements in relation to this item and have concluded:

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

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

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

38.4. The persons affected by this decision are ratepayers of the region who have been previously consulted on matters relating to the RWSS.

38.5. Options that have been considered include amending the dividend required to be paid to Council.

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

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

Recommendations

That Council:

1. Agrees that the decisions to be made are not significant under the criteria contained in Council’s adopted Significance and Engagement Policy, 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.

2. Notes:

2.1. HBRIC’s projections of dividends reflecting a 6% return on the RWSS do not require funding from ordinary dividends received by HBRIC from Napier Port;

2.2. In each uptake case, Council approval will be required in year 3 or 4 of operations for HBRIC debt to exceed 5% of HBRIC’s value;

2.3. HBRIC’s peak gearing (debt to debt+equity ratio) that would be required to fund the projected dividend, is projected to be 7.3% in the Base case, 11.5% in the Downside case, and 18.4% in the Severe Downside case

2.4. Dividend levels will be projected for each year (and the subsequent 2 years) in the Draft SoI for HBRIC Ltd, to be agreed with Council in each year; and

2.5. The returns projected to year 15, and over the 70 year period, as described in Attachment 3 are consistent with the Objectives of HBRIC’s 2015-16 SoI, which (page 2) states “In order to balance these objectives, HBRIC Ltd may, in appropriate circumstances, recommend to Council that HBRIC Ltd accepts lower return or slower route to profitability.”

3. Agrees that HBRIC has demonstrated that it will be able to fund the payment of $4.8 million of dividends per year, being consistent instalments reflecting a flat rate of return of 6% on the $80 million of funds invested in the RWSS, as required by Council’s resolution 8.5 of 25 June 2014, subject to the Council of the day approving a debt level exceeding 5% of HBRIC’s value, approximately 6 or 7 years after the project commences.

Andy Pearce

Chairman,
HBRIC Ltd Board of Directors

Liz Lambert

Chief Executive

Attachment/s

1	Water Sales (Uptake) Drives RWLP Revenue & Distributions from RWLP to HBRIC
2	Distributions Under Base, Downside and Severe Downside Cases

HAWKE’S BAY REGIONAL COUNCIL

Wednesday 27 April 2016

SUBJECT: Monthly Work Plan Through May 2016

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
CE’s Office		1. Annual Plan /LTP Amendment consultation public meetings.
External Relations	Communications	2. Preparation for Annual Plan/LTP amendment public meetings. 3. Staff are assisting with resource development for Waitangi Estuary Enhancement, Tukituki implementation, Share the Road campaign, and Local Elections 2016. 4. Supported events are: Careers Expo, Better Homes & Living
	Transport	5. Investigations nearly complete into potential bus service improvements under new contract in August 2016, with focus on improving journey times and reliability on Route 12 between Napier and Hastings. 6. NZ Transport Agency approved the use of unused road safety funding for driver licensing programmes & local share funding has also been sourced. Good progress being made on development of information packs and the establishment of a governance group, and availability of the fund will be advertised shortly. 7. RTC is gearing up to start preparation of the next Regional Land Transport Plan. The strategic case for investing in transport in HB is the first part to be developed, with meetings with neighbouring regional transport committees scheduled during May. 8. RoadSafe Hawke’s Bay Expo week will be 16-20 May at Pettigrew Arena in Taradale. High school students from across the region will attend one of the two daily sessions, and members of the public are welcome too.
Corporate Services		9. Consultation Document covering Annual Plan and amendment to LTP out for consultation 11April-13May. 10. Submissions will be distributed to Councillors in the week of 16 May. 11. Staff responses to the submissions will be distributed to Councillors on Wednesday 1 June along with the Agenda and schedule for the 8 June meeting to hear and deliberate on submissions.
Asset Management & Biosecurity	Coastal	12. Next Coastal Strategy Joint Committee meeting scheduled 2 May. TAG to hold drop in sessions at Haumoana and Westshore during May - June to enable public to ask questions. Meetings with Marae committees are also being arranged for Marae potentially affected.
Asset Management & Biosecurity	Land Management	13. Further FEMP workshops in collaboration with Beef & Lamb are being held in CHB during May. 14. Currently 14 different organisations or individuals working closely with staff to develop approved farm plan templates. 15. Staff currently assessing RLS projects for 2016-17 financial year. 16. Staff will work closely with Landcare Research during May via a workshop and buddy interviews as part of an ongoing Integrated Research project looking at development of a monitoring, evaluation and reporting framework for implementation. 17. Four stakeholder meetings planned for May as part of the East Coast Hill Country Project. 18. Delivery of plants through the Riparian Planting Program commences in May
	Engineering & Asset Management	19. Ebbett’s stopbank (2.5 km) on the Tutaekuri River. Construction progressing – completion early June. 20. Project management for $M15 Waipaoa River stopbank upgrade programme (Gisborne DC) ongoing. 21. City revetments design and contract project for GDC and other smaller projects. 22. Upper Tukituki scheme rating review ongoing. 23. Gravel Review –EMS looking in to consenting issues, and ultimately funding for ongoing management. 24. Heretaunga Plains Flood Control Scheme – Hydrologic review being undertaken as initial stage in level of service improvement project. 25. River/drainage maintenance contracts ongoing. 26. Review of HBRC River leases – location and amounts charged. 27. Lake Tutira – riparian restoration, includes low flow diversion of Sandy Creek, other bits of minor flood control.
	Biosecurity	28. Cape to City initial control of predators continues with significant numbers of feral cats being caught on the properties being controlled. 29. Cape to City research projects with Landcare Research are being finalised. Significant funding commitment from LCR for 16-17 biodiversity/biosecurity research directly related to HBRC biosecurity/biodiversity outcomes. 30. Velvet leaf incursion shifts to a discussion with MPI on longer term management options. 31. Staff continue to progress the high UMF manuka plantation draft memorandum of Understanding with Comvita. Small scale planting trials to test flowering timing of cultivars to begin.
Asset Management & Biosecurity	Open Spaces	32. Te Karamu Enhancement Strategy Review and Draft Implementation Plan update to TANK date to be confirmed. 33. Waitangi Estuary Enhancement funding applications submitted to Eastern and Central Community Trust & Lotteries. Decisions announced June 2016. 34. Whakatu riparian and pathway development in progress. 35. Te Karamu tree felling in Havelock North to be completed. 36. Tutira Regional Park Management plan in draft. 37. Tutira Regional Park Trail Run being held on Sunday 1^st May 38. Tutira walking track junction signage to be replaced May. 39. Waitangi Regional Park bird hide completed and track construction underway. 40. Pekapeka western wetland tree felling late April. 41. Pekapeka Poukawa Stream F&B planting to be held Sunday 12 June. 42. Te Mata Park management plan draft to be presented to the E&SC 11 May.
Resource Management	Compliance	43. The prosecution of the Te Mata Mushroom Company for discharge of odour has been completed with the company pleading guilty. They were sentenced to a fine of $15,000 and an enforcement order issued requiring them to apply for a new resource consent [to address the odour issues] by the 20 December 2016. 44. The investigation into the discharge of silt into the Waihi Stream from the Waihi Dam is continuing. Awaiting notice for an acceptable time to formally interview Eastland staff, before completion and recommendation. There is a legislative requirement for any prosecution action to be initiated within 6 months of any offending, if prosecution is a recommended outcome, this legislative requirement will be adhered to.
Resource Management	Science	Environmental Monitoring Design of web pages for the national LAWA Groundwater Quality module will commence in late April, co-led by HBRC. Land Science 45. Review of new draft Land Science Strategy completed, and revisions being undertaken. 46. Brownrigg farming and Land Science collaborative work on peat soils under discussion 47. Land use/nutrient loss modelling for TANK continues 48. Site selection of wetland monitoring sites for new SoE programme. 49. New riparian mapping methodology being tested. 50. Planning of new Land Science page on HBRC website. Water Quality and Ecology 51. Gary Rushworth starts with the team Thursday 5^th May 52. HBRC will be steering development of consistent habitat monitoring and reporting by councils for the EMAR and LAWA programmes 53. Results from shading trial to restrict weed growth in streams have been very promising 54. Undertaking sampling of pristine areas to improve MCI modelling performance 55. Conversations being had with Ngai Tuhoe to negotiate access to sampling sites 56. Daniel Fake’s Masters project is finalising the design of a fish ramp mould to aid native fish passage 57. SOE reporting continues, with 5 reports on track to be drafted by the end of April 58. Investigating potential designs for Tutira destratification system with Max Gibbs 59. Trialling new protocol for assessing native fishery health in the mainstem of the Tukituki River Coastal and Estuarine Water Quality and Ecology 60. Investigation underway to measure state of, and identify risks to, Ahuriri Estuary. Reporting being undertaken through May. 61. Coastal quality work for TANK continues. 62. Review of information on the ecology of Hawke Bay is being undertaken by Ecoast. 63. Coastal SOE report will be in draft state by end of April, reviews through May. 64. Recreational Water Quality report planned for completed draft by end of May. Faecal source tracking results to be included. 65. Coastal buoy Hawqi is out of action and is undergoing repairs. Maintenance on the chain mooring to be undertaken. Air/Climate. 66. A year-long source apportionment study at Awatoto is underway. 67. PM10 screening monitoring at Port Ahuriri School will be completed.
Strategic Development	Resource Management Planning	68. Further report on review of TANK Group and wider TANK plan change project was presented to Regional Planning Committee meeting on 20th April. Next TANK Collaborative Stakeholder Group meeting is scheduled for 24th May. 69. Awaiting next steps regarding Minister for the Environment’s handling of the Water Conservation Order application for the Ngaruroro and Clive rivers. 70. Submissions to be lodged on Resource Management Amendment Bill and ‘Next Steps for Freshwater’ consultation document being presented to Regional Planning Committee meeting 20 April. Possible submission to be prepared on recently released consultation document for ‘Streamlining the regulatory regime for pest control. Submissions close 26th May. 71. MFE-funded project to develop national criteria and methodology for the identification of outstanding was originally programmed to be completed by June 2016 for delivery of all criteria and methodology outputs. However, expert advice obtained during the project's Milestone 3 phase has prompted a substantive reorientation of this Project. The Project's reorientation will now have flow-on implications for commencement of preparing a Hawke's Bay-specific plan change re identification of any outstanding freshwater bodies in our region. 72. Stage 1 of the Review of Heretaunga Plains Urban Development Strategy (HPUDS) completed and Stage 2 (of 3 stages) is underway. Next meeting of the HPUDS Implementation Working Group is scheduled 30 June to consider Stage 2 reporting and next steps. 73. Ongoing involvement in 10 appeal proceedings for proposed Hastings District Plan review. 2016 likely to involve Environment Court-assisted mediation for several of those appeals. 74. Emerging involvement in Hastings DC’s preparation of four draft District Plan variations relating to zoning and land use at Howard Road, Iona (both residential areas); and Omahu Road and Irongate (both industrial areas). 75. Draft revisions to Regional Planning Committee’s Terms of Reference were presented to RPC for feedback and further revisions to be presented to the RPC’s meeting in August. These revisions follow enactment of the Hawke's Bay Regional Planning Committee Act 2015. 76. Reports on Regional Resource Management Plan’s effectiveness for managing effects of oil and gas exploration and development activities are intended to be presented to Regional Planning Committee meeting in June. 77. Scoping work has commenced on preparation of a HBRC/Maori strategic relationships plan. 78. Scoping work has commenced on refreshing the HBRC Strategic Plan. 79. Support Clifton to Tangoio Coastal Hazard Management Strategy project as required. 80. Support preparation of a plan to implement the Regional Biodiversity Strategy in regional planning documents where relevant. 81. Support preparation of planning to implement Plan Change 6 for the Tukituki River catchment.
Strategic Development	Economic Development	82. Final Regional Economic Development Strategy and Action Plan is being presented to the interagency governance group in late April and then submission to central government. Launch is currently scheduled for August. 83. Staff are working with Wairoa District Council, NCC, HDC, BHB and HB Tourism on a possible feasibility study to review the funding needs of Rocket Lab’s Mahia Peninsula operations for regional tourism and associated economic activity. 84. Implementation of revised business assessment tools continues. A free online CRM system will be trialled to improve communication and manage data across the 3 Advisors. There is a long term vision of sharing information with other Hub organisations. 85. Running a Callaghan Innovation Better by Lean 2 day workshop on 24& 25 May. 86. Callaghan Regional Technology Services automation and sensing specialists will visit the region for 2 days to meet with businesses. 87. Quarterly RBP Performance review visit by Callaghan/NZTE on 3 May and includes a customer visit. 88. Development of a Regional Business Support Plan for Maori businesses will be a focus for submission in May. RBPs will liaise with wider Strategic Development Maori Policy team and liaise with Business Hawke’s Bay to dovetail with the REDS Action Plan.
Emergency Management		89. The development of options to integrate Hawke’s Bay Civil Defence Emergency Management (CDEM) staff under one organisation. 90. Finalisation and approval of the Group Training and Exercising Strategy at the Coordinating Executives Group (CEG) meeting on 30 May. 91. Finalisation and approval of the implementation decision to rationalise emergency coordination facilities across the CDEM Group at the CEG meeting on 30 May. 92. Finalisation and approval of the Group Community Resilience Strategy at the CEG meeting on 30 May. 93. Continue to work with Napier City Council on a Community Response Plan for the Bayview community. This is a piolet for a rollout for priority communities across Hawke’s Bay. 94. Final review of the Hawke’s Bay Liquefaction Risk Review.

Decision Making Process

2. Council is required to make every decision in accordance with the Local Government Act 2002 (the Act). Staff have assessed the requirements in relation to this item and have concluded that as this report is for information only and no decision is required, the decision making requirements of the Act do not apply.

Recommendation

1. That Council receives the Monthly Work Plan Through May 2016 report.

Mike Adye

Group Manager
Asset Management

Paul Drury

Group Manager
Corporate Services

Ian Macdonald

Group Manager/Controller

Iain Maxwell

Group Manager
Resource Management

James Palmer

Group Manager
Strategic Development

Liz Lambert

Chief Executive

Attachment/s

There are no attachments for this report.

HAWKE’S BAY REGIONAL COUNCIL

Wednesday 27 April 2016

SUBJECT: Annual Plan Progress Report for the first Nine Months of the 2015-16 Financial Year and Reforecasting to 30 June 2016

Reason for Report

1. This is a full financial report (includes financials and performance reporting) for the first nine months of the 2015/16 financial year.

2. The reforecasting exercise covering the full financial year to 30 June 2016 has been carried out after tracking financial performance for the first nine months of the financial year.

Summary of Financial Position to 31 March 2016

3. The actual result covering Council’s general funded operations for the first nine months of the 2015/16 year is a deficit of $1,488,000. This compares to the pro-rata reforecast budget deficit of $1,732,000. The variation for the nine months is $245,000 favourable. The variations from pro-rata budgets are covered in this report.

Reforecasting Exercise

4. The first reforecasting exercise was carried out in October 2015 and tracked the major changes in regional income which were caused by decreasing interest rates and delays in financial close for the Ruataniwha Water Storage Scheme (RWSS).

5. A further reforecasting exercise was carried out in December 2015 and reported more detail on the movements in regional income caused by these external factors. The report included some material changes in dividend receipts from HBRIC Ltd, income from Council’s forestry estate and improvements in rental returns from Napier and Wellington leasehold land. In both these reforecasting exercises, the Annual Plan deficit of $480,000 did not change.

6. The reforecasting exercise reported in this financial report is based on the expenditure and revenue trends for the first nine months of the current financial year and are reforecasted to the end of the financial year 30 June 2016. In this exercise both the groups of activity and regional income have been analysed. It is pleasing to note that the Annual Plan deficit of $480,000 has not changed as the number of unfavourable variances are offset by favourable movements both in revenue and expenditure.

7. This retention of the Annual Plan deficit of $480,000 has been achieved in spite of a payment being required by this Council of approximately $214,000 in settlement of litigation and restitution costs in relation to an action taken by Cityscape NZ covering accommodation at Tourism House which was occupied by this Council’s Regional Development Agency, “Hawke’s Bay Incorporated” back in 2004. Full details of the circumstances arising to this claim and the reason for the litigation are provided in this financial report, and Matthew Lawson of Lawson Robinson, will be attending this meeting to provide background and answer questions.

Comment on Financial Results for Nine Months to 31 March 2016

8. The financial reporting is covered in two attachments – Attachment 1 consists of:

8.1. Section A – Operating Statement (including reforecast)

8.2. Section B – Balance Sheet including borrowing

8.3. Section C – Cashflow Statement

8.4. Section D – Capital

9. Attachment 2 contains the performance reporting for all groups of activities.

Decision Making Process

10. Council is required to make every decision in accordance with Part 6 Sub-Part 1, of the Local Government Act 2002 (the Act). Staff have assessed the requirements 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:

1. Receives the Annual Plan progress report for the first nine months of the 2015-16 financial year, including the reforecasting for the 12 months to 30 June 2016

2. Notes the circumstances behind the litigation covering accommodation in Tourism House back in 2004, and that the settlement and restitution costs relating to this litigation (Council’s share estimated at $214,000) will be paid as unbudgeted expenditure and debited to Council’s contingency project.

Manton Collings

Corporate Accountant

Paul Drury

Group Manager
Corporate Services

Liz Lambert

Chief Executive

Attachment/s

1	Reforecast Financial Position to 30 June 2016		Under Separate Cover
2	Progress Narratives to 31 March 2016		Under Separate Cover