Agenda of Regional Council Meeting

Meeting of the Hawke's Bay Regional Council

Date: Wednesday 18 December 2019

Time: 9.00am

Venue:

Council Chamber

Hawke's Bay Regional Council

159 Dalton Street

NAPIER

Agenda

Item Subject Page

1. Welcome/Apologies/Notices

2. Conflict of Interest Declarations

3. Confirmation of Minutes of the Regional Council Meeting held on 27 November 2019

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

5. Call for Minor Items of Business Not on the Agenda 7

Decision Items

6. HBRIC Ltd and Napier Port Holdings Ltd Director Appointments 9

7. Proxy for the HBRIC Ltd Annual General Meeting 19

8. 2019-22 Triennial Agreement 23

9. Future Farming Trust - Trustee 41

10. Affixing of Common Seal 73

11. Māori Committee Terms of Reference 75

Information or Performance Monitoring

12. Napier Port Shareholder Update

13. HBRC Financials for Q1 2019-20 87

14. Discussion of Minor Items Not on the Agenda 95

Decision Items (Public Excluded)

15. Long Term HBRC Staff Accommodation Options 97

16. HB CDEM Office building lease renewal 99

HAWKE’S BAY REGIONAL COUNCIL

18 December 2019

Subject: Follow-up Items from Previous Regional Council Meetings

Reason for Report

1. On the list attached are items raised at Council Meetings that staff have followed up on. All items indicate who is responsible for follow up, and a brief status comment. Once the items have been report to Council they will be removed from the list.

Decision Making Process

2. Staff have assess the requirements of the Local Government Act 2002 in relation to this item and have concluded that, as this report is for information only, the decision making provisions do not apply.

Recommendation

That the Council receives and notes the “Follow-up Items from Previous Meetings” staff report.

Authored by:

Leeanne Hooper

Principal Advisor Governance

Approved by:

James Palmer

Chief Executive

Attachment/s

⇩1

Followups for December2019 Council mtg

Followups for December2019 Council mtg

Attachment 1

Reference follow-up 1

From: Annelie Roets Sent: Wednesday, 11 December 2019 10:38 AM
Subject: Council follow ups: Explanation of the Bore Security triage system and associated timeframes

Good morning Councillors

In response to the 27 November Council meeting on the 2018-19 Compliance Annual Report - Please find below an email response in relation to the Explanation of the Bore Security triage system and associated timeframes.

Bore security triage

As a result of the Havelock North drinking water contamination the Regulation section of Council has implemented a bore security programme. The Compliance section has risk-prioritised the compliance monitoring related to the bore security as it has doesn’t currently have the resources to implement the total programme at once. Prioritisation or “triage” and associated timeframes are as follows:

1 TLA public water supplies.

These are largely complete with some CHBDC bores awaiting final inspection.

Expected completion early 2020.

2 Pre expiry compliance visits.

Currently being implemented 2019- ongoing.

In tandem with 1 and 2 above, all new resource consents for water takes, existing consents that receive a change of consent conditions, and all new bore consents have a new consent condition requiring the consent holder to ensure the bore is secure.

Some of the large Horticulture companies who have had a consent that falls into this category have been proactive in getting all their bores secure.

3 Private water supplies servicing multiple dwellings.

Programmed for 2020.

4 Bores within the source protection zones for Public Water supplies.

Yet to be started – post 2021.

5 All other consented takes catchment by catchment.

Yet to be started – post 2021.

6 Permitted activity inspections for domestic and stock.

Yet to be started – post 2022.

A more detailed report on bore security will be presented to the Council or appropriate Committee in the New Year with estimated resources to bring forward (accelerate) the current programme.

Cheers

Nick Zaman
Manager Compliance

HAWKE’S BAY REGIONAL COUNCIL

18 December 2019

Subject: Call for Minor Items of Business Not on the Agenda

Reason for Report

1. Hawke’s Bay Regional Council standing order 9.13 allows:

1.1. “A meeting may discuss an item that is not on the agenda only if it is a minor matter relating to the general business of the meeting and the Chairperson explains at the beginning of the public part of the meeting that the item will be discussed. However, the meeting may not make a resolution, decision or recommendation about the item, except to refer it to a subsequent meeting for further discussion.”

Recommendations

2. That Council accepts the following “Minor Items of Business Not on the Agenda” for discussion as Item 14.

Item	Topic	Raised by
1.
2.
3.

Leeanne Hooper

GOVERNANCE LEAD

James Palmer

CHIEF EXECUTIVE

HAWKE’S BAY REGIONAL COUNCIL

18 December 2019

Subject: HBRIC Ltd and Napier Port Holdings Ltd Director Appointments

Reason for Report

1. This report from Hawke’s Bay Regional Investment Company (HBRIC) outlines the process for approving upcoming director re-appointment resolutions at the Napier Port AGM and seeks Council input to the resolutions so that HBRIC can vote as a 55% shareholder.

Background/Discussion

2. Following the recent IPO, HBRIC holds 55% of the shares in Napier Port.

3. When HBRIC was the 100% shareholder, Council approval was required for all director appointments to subsidiary companies of HBRIC, including Napier Port Holdings Ltd.

4. In a listed company context this is no longer Council policy for Napier Port (as adopted 25 September 2019), but remains the case for all appointments other than Napier Port.

5. The revised protocol for Napier Port director appointments is for HBRIC to seek Council input to director appointment resolutions for Napier Port.

6. The existing Board of Napier Port was reviewed and ratified as part of the recent IPO process and although no retirements are required this year, Napier Port has elected to offer two directors for re-appointment in order to spread out director appointment terms.

7. These are Alasdair MacLeod (current Chair) and Stephen Moir (current Chair of Audit and Risk).

8. The Napier Port shareholder notice is attached for information.

Decision Making Process

9. Council and its committees are 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 decision is not inconsistent with an existing policy or plan.

9.5. 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 Hawke’s Bay Regional Council:

1. Receives and considers the “HBRIC Ltd and Napier Port Holdings Ltd Director Appointments” staff report.

2. 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 or persons likely to have an interest in the decision.

3. Notes and endorses the HBRIC Boards’ recommendation of the re-appointment of the two nominated directors.

Authored by:

Jessica Ellerm

Group Manager Corporate Services

Blair O'Keeffe

HBRIC Ltd Chief Executive

Approved by:

James Palmer

Chief Executive

Attachment/s

⇩1	Napier Port Annual Notice of Shareholders Meeting on 20 December 2019
⇩2	HBRIC Board Members Profile

HAWKE’S BAY REGIONAL COUNCIL

18 December 2019

SUBJECT: Proxy for the HBRIC Ltd Annual General Meeting

Reason for Report

1. The purpose of this report is for Council to appoint a proxy, and alternate, to vote at the Annual General Meeting of Hawke’s Bay Regional Investment Company Limited (HBRIC Ltd).

Summary

2. HBRIC Ltd is intending to hold its Annual General Meeting on Friday, 20 December 2019 in the Council Chamber, Hawke’s Bay Regional Council, 159 Dalton Street, Napier. The Council (as the shareholder) is required to appoint a proxy and alternate to attend this meeting and vote on the Council’s behalf at the meeting.

3. All Councillors are invited to the Annual General Meeting which will be held at 9.00am in the Council Chamber, Hawke’s Bay Regional Council, 159 Dalton Street, Napier. A copy of the Notice of the Annual General Meeting of HBRIC Ltd is set out in Attachment 1. (Please note there has been a change of time to 9.00am)

4. With regards to appointing a proxy to attend this meeting, it is recommended that the proxy be given to the Chairman of the Council, with the alternate being the Deputy Chairman of the Council.

Decision Making Process

5. Decisions covering the Annual General Meeting of HBRIC Ltd are required to be made under the Companies Act 1993.

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 have an interest in the decision.

2. Notes the date of the Hawke’s Bay Regional Investment Company Limited Annual General Meeting is 20 December 2019.

3. Agrees that the Chairman of Hawke’s Bay Regional Council be appointed as Council’s proxy at the Annual General Meeting of the Hawke’s Bay Regional Investment Company Limited to be held at 9.00am on Friday, 20 December 2019, and to vote as proxy holder on behalf of the Council, and that the Deputy Chairman of the Hawke’s Bay Regional Council act as alternate.

Authored by: Approved by:

Bronda Smith

Chief Financial Officer

Jessica Ellerm

Group Manager Corporate Services

Attachment/s

⇩1

2019 AGM Letter of Notice

HAWKE’S BAY REGIONAL COUNCIL

18 December 2019

Subject: 2019-22 Triennial Agreement

Reason for Report

1. This report provides the draft 2019-22 Triennial Agreement for councillors’ feedback.

Officer’s Recommendations

2. Officers recommend that councillors provide feedback on the draft Agreement today, for incorporation into a further draft for presentation to the Hawke’s Bay Leaders’ Forum at the earliest opportunity and adoption by all councils by 29 February 2020.

Executive Summary

3. The Triennial Agreement provides the framework for local government in the Hawke's Bay region to:

3.1. work collaboratively

3.2. improve communication and coordination at all levels

3.3. maximise effectiveness and efficiency

in order to meet the purposes of Local Government to:

3.4. enable democratic local decision-making by and on behalf of communities

3.5. promote the social, economic, environmental and cultural well-being of communities in the present and for the future.

Background

4. In accordance with LGA section 15 the local authorities in Hawke’s Bay are required to adopt a Triennial Agreement by 1 March 2020.

5. The 2016-19 Triennial Agreement was used by the HB Leaders’ Forum as the basis for developing the draft version for 2019-2022 (attached).

6. The content of the Agreement is prescribed by legislation and, in particular, by s.15 of the Local Government Act.

7. There are five primary signatories to the Hawke’s Bay Triennial Agreement – the Wairoa, Hastings and Central Hawke’s Bay District councils, the Napier City Council and the Hawke’s Bay Regional Council. In addition, there are two non-primary signatories – the Rangitikei and Taupo District councils.

Process

8. The Hawke’s Bay Leaders Forum, comprised of the region’s Mayors and Chair of the Regional Council, considered two previous versions of the Triennial Agreement alongside a report on collaborative achievements over the previous triennium to develop the Agreement proposed for Council’s feedback today.

9. Following receiving feedback on the Agreement from each of the region’s councils, the HB Leaders Forum will meet to consider and agree amendments to enable the Agreement to be put to all councils again in early 2020 for adoption in time to meet the legislative deadline of 1 March 2020, to have entered into the Triennial Agreement.

Decision Making Process

10. 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:

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

10.2. A Triennial Agreement is a legislative requirement contained within the Local Government Act, so there is no option for Council to not agree a new Agreement for the 2019-22 triennium.

10.3. Given the provisions above, Council can exercise its discretion and make these decisions without consulting directly with the community or others having an interest in the decision.

Recommendations

That Hawke’s Bay Regional Council:

1. Receives and notes the “2019-22 Triennial Agreement” staff report.

2. Agrees that the decisions to be made relate to a legislative requirement and that Council can exercise its discretion and make these decisions without consulting directly with the community.

3. Provides agreed feedback for consideration of incorporation into the 2019-22 Triennial Agreement for consideration at the next available HB Leaders Forum on 27 January 2020 in preparation for adoption by Central Hawke’s Bay District, Hastings District, Hawke’s Bay Regional, Napier City, Wairoa District, Rangitikei District and Taupo District councils by 29 February 2020.

Authored by:

Leeanne Hooper

Governance Lead

Joanne Lawrence

Group Manager Office of the Chief Executive and Chair

Approved by:

James Palmer

Chief Executive

Attachment/s

⇩1	Draft Hawke's Bay 2019-22 Triennial Agreement version 5
⇩2	Five Pou of Matariki

HAWKE’S BAY REGIONAL COUNCIL

Wednesday 18 December 2019

Subject: Future Farming Trust - Trustee

Reason for Report

1. This item provides the means for Council to appoint a trustee to the Future Farming Charitable Trust Board following the resignation of the current Council appointee.

Background

2. The Future Farming Initiative (FFI) was created as an outcome of the Council’s consultation on the 2018-28 Long Term Plan as an independent farmer and grower led initiative to lead on-farm research and innovation focused on identifying practical, profitable and achievable options for farmers to improve environmental outcomes on their farms while maintaining and enhancing productivity.

3. The Terms of Reference and Constitution for the Trust provides for one Council-appointed trustee. Staff consider that in the formation of the Trust an expectation was created that the Council-appointee would be either a councillor or staff member. In the last triennium, following the establishment of the Trust, the then councillor Mr Tom Belford was appointed to the Future Farming Trust in accordance with the Terms of Reference and Constitution for the Trust.

4. At its meeting of 27 November 2019 Council re-confirmed Mr Belford as Council’s appointee for the new triennium. Following the recent resignation of the interim-chair of the Trust, Mr Belford has resigned as the Council appointee and has been appointed at large by the Trust as a general Trustee. Consequently, Council now needs to appoint a replacement for Mr Belford as its appointee to the Trust.

Councillor Appointee

5. The Trust deed provides for a Councillor appointee to be a trustee, recognising:

5.1. HBRC’s role in both originating the Future Farming Initiative and supporting its progression through to final establishment

5.2. An additional layer of oversight of Council’s initial funding commitment through its 2018-28 Long Term Plan

5.3. Council’s ongoing interest and role in identifying and promoting land management practices consistent with the region’s environmental aspirations.

6. The specific provisions in the trust deed in relation to this issue are:

7.3.1 It is intended that the Trust Board will include one Trustee appointed by the Regional Council on account of the Regional Council’s anticipated provision of funding support to the Trust, and for this purpose:

(a) Subject to clause 7.3.1(b), the Regional Council has the power to appoint (and to remove), at any time and by ordinary resolution of the Regional Council (which the Council must notify to the Trust Board), one Trustee. [Insert name of Initial Trustee] is deemed to be the first Council-appointed Trustee under this clause.

(b) The Regional Council will not have the power to appoint a Trustee, and any Council-appointed Trustee will cease to hold office, if at any time the Trust Board and the Regional Council agree that, on account of the level of funding support (if any) provided by the Regional Council to the Trust at the relevant time or for any other reason, it is no longer appropriate for the Trust Board to continue to include a Council-appointed Trustee. Any such agreement may be subsequently rescinded by the parties.

(c) The Trust Board must notify the Regional Council if a Council-appointed Trustee ceases to hold office (other than by way of removal by the Council).

Next Steps

7. It is recommended by staff that the following actions are implemented:

7.1. Council notes the resignation of Mr Belford as the Council’s appointee and his appointment at large by the Trust.

7.2. Council selects a replacement councillor or staff member as its appointee to the Future Farming Trust.

Decision Making Process

8. 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:

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

8.2. Provisions of the Local Electoral Act also apply, in relation to the decision and its implementation occurring during the formal pre-election period.

8.3. 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 Hawke’s Bay Regional Council:

1. Receives and considers the “Future Farming Charitable Trust Council Appointment” staff report.

2. 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.

3. Notes the resignation of Mr Tom Belford as Council-appointed trustee.

4. Appoints [enter name] as the Council-appointed trustee for the Future Farming Charitable Trust, effective immediately, under clause 7.3.1 of the Trust Deed.

5. Requests that staff communicate the name of the Council-appointed trustee to the other trustees.

Authored by:

Joanne Lawrence

Group Manager Office of the Chief Executive and Chair

Approved by:

James Palmer

Chief Executive

Attachment/s

⇩1

Future Farming Charitable Trust - Trust Deed

HAWKE’S BAY REGIONAL COUNCIL

Wednesday 18 December 2019

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.

1.2

Staff Warrants

1.2.1 J. Byrne

(Delegations under Resource Management Act 1991; Soil Conservation and Rivers Control Act 1941; Land Drainage Act 1908 and Civil Defence Act 1983 (s.60-64); Civil Defence Emergency Management Act 2002 (s.86-91) and Local Government Act 2002 (s.174))

1.2.2 S. Murphy

(Delegations under Resource Management Act 1991; Civil Defence Act 1983 (s.60-64); Civil Defence Emergency Management Act 2002 (s.86-91) and Local Government Act 2002 (s.174))

1.2.2 H. Meates

B. Fahnle

(Delegations under Biosecurity Act 1993; Civil Defence Act 1983 (s.60-64); Civil Defence Emergency Management Act 2002 (s.86-91)and Local Government Act 2002 (s.174))

4367

4366

4367

4369

25 November 2019

21 November 2019

25 November 2019

1.3

Deed of Novation, Variation and Renewal between Hawke’s Bay Regional Council, Kiwi Bee Medical Limited and Comvita New Zealand Limited

4370

5 December 2019

1.4

Deed of Lease between Hawke’s Bay Regional Council and Napier Freshwater Anglers Club Inc.

(Land that the Napier Freshwater Anglers Club Inc.’s hut is on at Lake Tutira)

4371

5 December 2019

2. The Common Seal is used twice during a Leasehold Land Sale, once on the Sale and Purchase Agreement and once on the Land Transfer document. More often than not, there is a delay between the second issue (Land Transfer document) of the Common Seal per property. This delay could result in the second issue of the Seal not appearing until the following month.

3. As a result of sales, the current numbers of Leasehold properties owned by Council are:

3.1. 0 cross lease properties were sold, with 70 remaining on Council’s books

3.2. 0 single leasehold property was sold, with 91 remaining on Council’s books.

Decision Making Process

4. 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:

4.1 Sections 97 and 88 of the Act do not apply

4.2 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

4.3 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 Hawke’s Bay Regional Council:

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

Authored by:

Trudy Kilkolly

Principal Accountant Rates and Revenue

Diane Wisely

Executive Assistant

Approved by:

Jessica Ellerm

Group Manager Corporate Services

James Palmer

Chief Executive

Attachment/s

There are no attachments for this report.

HAWKE’S BAY REGIONAL COUNCIL

Wednesday 18 December 2019

Subject: Māori Committee Terms of Reference

Reason for Report

1. The reason for this item is to provide the Terms of Reference and membership of the Māori Committee to Hawke’s Bay Regional Council for Council’s confirmation and proposal to the first meeting of the Māori Committee for the 2019-22 Triennium.

2. The minutes of the Regional Council meeting of 6 November 2019, record that:

3. Hawke’s Bay Regional Council establishes the following committee structure and adopts the Terms of Reference, membership, meeting frequency and Council Executive responsible for each committee as detailed following.

3.5 The Māori Committee

3.5.1 Terms of Reference for the Māori Committee to be confirmed by Council by March 2020, including membership.

3.5.2 Appoints Councillors Rick Barker, Charles Lambert, Hinewai Ormsby and Rex Graham as representatives on the Māori Committee.

3. The Terms of Reference can now be confirmed and this will allay some concern expressed by Taiwhenua as to the current status of the Māori Committee leading into this new 2019-22 triennium.

Officers’ Recommendation(s)

4. That the Terms of Reference for the Māori Committee be confirmed by Council, for proposing to the first Māori Committee meeting of the Triennium where the names of the appointees will be confirmed, and the Chair and Deputy Chair elected.

Executive Summary

5. The Māori Committee Terms of Reference adopted 25 October 2017, and membership updated 4 July 2018, states:

Terms of Reference

Hawkes Bay Regional Council Māori Committee

1. The Māori Committee are those 12 representatives nominated by each of the four Ngāti Kahungunu Taiwhenua / Executive in this region.

2. Within the first year of the Committee’s establishment, a work plan for the Committee will be developed to set out, in general terms, what the Committee aims to achieve over its three-year term.

3. The expectation of the membership is that each Taiwhenua / Executive collective will engage with their respective constituents.

Members	*Twelve* representatives nominated by the Tangata Whenua, appointed at the first meeting of the Māori Committee each triennium; plus one Proxy representative nominated to attend in an appointee’s absence; being:
	Bill Blake Michelle McIlroy Kataraina Kawana Teresa Smith	Kaumatua (Wairoa) Kahungunu Executive (Wairoa) Wairoa Taiwhenua Proxy (Kahungunu Executive - Wairoa)
	Haami Hilton Michael Paku Marei Apatu Vacant (to be confirmed)	Kaumatua (Hastings) Heretaunga Executive (Hastings) Heretaunga Taiwhenua (Hastings) Proxy (Heretaunga Taiwhenua)
	Paora Sciascia Mike Mohi Brian Gregory Marge Hape	Te Taiwhenua o Tamatea (Central Hawke’s Bay) Kaumatua (Central Hawke’s Bay) Tamatea Taiwhenua (Central Hawke’s Bay) Proxy (Tamatea)
	Peter Eden Ata Te Tomo Api Robin tbc	Te Taiwhenua O Te Whanganui-a-Orotū (Napier) (Te Taiwhenua o Te Whanganui-a-Orotū) (Te Taiwhenua o Te Whanganui-a-Orotū) Proxy
	Up to *four* elected members of the Council: Councillors’ Rick Barker, Charles Lambert, Hinewai Ormsby, Rex Graham
Meeting Frequency	Bi-monthly, but with the Chairman of the Committee authorised to arrange additional meetings should the need arise, with Tuesday being the normal meeting day.
HBRC Executive member of staff	Te Pou Whakarae

4. The Chairperson is to be elected at the first meeting of the Committee of each triennium, from among the appointed Māori members of the committee. The Chairperson shall be elected for that term of the Committee but is not be precluded from a subsequent term as Chairperson if so nominated. Two key roles of the Chair will be to:

4.1 preside over meetings of the Committee in accordance with the Regional Council Standing Orders.

4.2 manage the nominations and appointments to the Māori Committee before the beginning of each triennium.

5. The Deputy Chair is to be elected at the first meeting of the Committee of each triennium from among the appointed members of the committee.

Decision Making Process

6. Council and its committees are 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:

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

6.2. 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 Hawke’s Bay Regional Council:

2. Confirms the Terms of Reference for proposal to the Māori Committee for confirmation at its first meeting of the Triennium.

Authored by: Approved by:

Pieri Munro

Te Pou Whakarae

James Palmer

Chief Executive

Attachment/s

⇩1

Proposed Maori Committee Terms of Reference

HAWKE’S BAY REGIONAL COUNCIL

Wednesday 18 December 2019

Subject: HBRC Financials for Q1 2019-20

Reason for Report

1. This item provides Council with a financial progress report for the first three months of the 2019-20 financial year to 30 September 2019.

Financial Summary to 30 September 2019

2. The first quarter of the financial year shows expenditure below budget for both operational and capital expenditure. Commentary has been added below regarding the significant amounts.

3. For the 2019-20 budget, an annual budget was completed and for reporting purposes has always been phased evenly over the year. In reality this is not reflective of how the budgets are spent in respect to the timing of expenditure. To assist with more accurate reporting, the 2020-21 budgets are being phased based on expected expenditure to allow for a more accurate and therefore meaningful picture of budgets against actuals.

4. Reporting for the second quarter (and 6 months year to date) will include more detailed analysis including detailed capital spend commentary and full year expectations.

5. The majority of the underspend in operational expenditure, $2.2m less than pro-rata budget for the first quarter is due to timing and phasing of budgets. This includes items such as the Erosion Control Scheme expenditure which happens between April and June based on planting timing and Water Information Scheme expenditure, which is completed over the summer months. Insurance was not applied to the activities by the end of the first quarter due to timing of the invoices from the broker. ICT costs are tracking higher than planned for ICT infrastructure and software licensing that will need to managed for this financial year.

6. Capital expenditure is significantly behind budget due to major projects that have been delayed or are in implementation stages. The Heretaunga Plains Flood Control Scheme is a key project behind budget. This is in the planning stage only and not ready for construction. More extensive capital expenditure reporting will be provided with the half year financial reporting in February 2020. An under-spend in Q1 pro-rata capital budget aligns with historical trends and is not unexpected.

7. From a revenue/income perspective, there is expected to be a shortfall in forestry income this financial year as a result of the delayed start to the planned Tūtira harvest, the expected impact is approximately $2m. This income will be delayed not unrealised completely, and how we offset or addres the shortfall in this financial year will need to be planned as we progress through the year.

8. Current forecast returns from the diversified investment portfolio however are favourable to the 5% budgeted with Mercer currently tracking towards a gross return annualised rate of 11.9% and Jarden 8.2%. This is certain to fluctuate but early indications are that the investment fund will outperform the budgeted net return of 5% and could provide some upside this year.

Financial Information for Three Months to 30 September 2019

9. High level financial information is reflected in Council’s Operating Statement following.

Investment Portfolio Update

10. A full treasury report will be provided to the first meeting of the Finance, Audit and Risk Sub-committee in February 2020, however given the signficance of the peformance of the fund, a brief update on investment portfolio performance is attached.

Decision Making Process

11. Staff have assessed the requirements of the Local Government Act 2002 in relation to this item and have concluded that, as this report is for information only, the decision making provisions do not apply.

Recommendation

That Hawke’s Bay Regional Council receives and notes the “HBRC Financials for Q1 2019-20” staff report.

Authored by:

Bronda Smith

Chief Financial Officer

Approved by:

Jessica Ellerm

Group Manager Corporate Services

Attachment/s

⇩1

Investment Portfolio Performance to 30 September 2019

Investment Portfolio Performance to 30 September 2019

Attachment 1

Long Term Investment Fund

Mercer portfolio

1. The Mercer portfolio generated a gross return (before fees and tax) of 2.8% for the quarter, marginally trailing their benchmark by 40bp.
This corresponds to an 11.8% annualised return (on a theoretical basis).

2. When combining second and third quarter performance, the Mercer gross return corresponds to an annualised rate of 11.9%.
Mercer has not provided an overall since inception return figure.

3. The portfolio remains compliant with the strategic asset allocation (SAA) ranges stipulated in the SIPO.

4. On an absolute and relative basis, overseas sovereign bonds were the best performing asset class over the quarter returning 4.5%,
outperforming the manager’s benchmark by 1.5%. Overseas shares were the weakest relative performer despite returning 4.1%,
trailing the manager’s benchmark by 50bp.

Jarden portfolio

5. Jarden generated a gross return (before fees and tax) of 2.0% for the quarter, marginally trailing their benchmark by 20bp. This corresponds to an 8.2% annualised return (on a theoretical basis).

6. When combining second and third quarter performance, the Jarden gross return corresponds to an annualised rate of 8.9%.

7. The portfolio has produced a net return (after tax, fees, and inflation) of 6.31% since inception on 6 December 2018.

8. The portfolio is still in the process of being implemented and is only compliant with its NZ Property asset allocation so far. Overall, growth assets are approximately 17% underweight the SAA target.

9. NZ Property was the strongest absolute performing asset class over the quarter, returning 8.7% (vs 8.6% for the benchmark). Global Equities was the strongest relative performer, returning 2.1% vs 0.5%. NZ Fixed Income was the weakest performer returning 1.6% (vs 2.2% for its benchmark).

Combined portfolio

10. The combined Mercer and Jarden portfolios generated a gross return of approximately 2.4% over the September quarter (10% on an annualised basis). The Mercer portfolio contributed slightly more to the overall return in part because it has been fully invested in equities, which produced stronger returns than bonds.

11. The total size of the LTIF portfolio at the end of September was $49.5m, with approximately half invested with Mercer and Jarden respectively.

Port Future Investment Fund (PFIF)

12. The PFIF portfolios started on 15 September 2019. The above tables therefore only represent a couple of weeks of performance
history and inferences should be made accordingly.

13. Gross returns have not been provided by both of the managers for this short performance period.

14. The Mercer portfolios are both compliant with their respective SAA SIPO requirements.

15. Jarden is again adopting a staggered implementation approach, meaning both portfolios are not yet SIPO compliant with their target asset allocations. The Jarden portfolios had an allocation to growth assets of 13% at the end of September versus a target benchmark allocation of 50%.

16. The total size of the PFIF portfolio at the end of September 2019 was $103.3m, with approximately half invested with Mercer and Jarden respectively.

HAWKE’S BAY REGIONAL COUNCIL

Wednesday 18 December 2019

Subject: Long Term HBRC Staff Accommodation Options

That Council excludes the public from this section of the meeting, being Agenda Item 15 Long Term HBRC Staff Accommodation Options 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:

GENERAL SUBJECT OF THE ITEM TO BE CONSIDERED	REASON FOR PASSING THIS RESOLUTION	GROUNDS UNDER SECTION 48(1) FOR THE PASSING OF THE RESOLUTION
Long Term HBRC Staff Accommodation Options	s7(2)(i) 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 enable the local authority holding the information to carry out, without prejudice or disadvantage, negotiations (including commercial and industrial negotiations).	The Council is specified, in the First Schedule to this Act, as a body to which the Act applies.

Authored by:

Stacey Rakiraki

Facilities and Fleet Manager

Jessica Ellerm

Group Manager Corporate Services

Approved by:

James Palmer

Chief Executive

HAWKE’S BAY REGIONAL COUNCIL

Wednesday 18 December 2019

Subject: HB CDEM Office building lease renewal

That Council excludes the public from this section of the meeting, being Agenda Item 16 HB CDEM Office building lease renewal 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:

GENERAL SUBJECT OF THE ITEM TO BE CONSIDERED	REASON FOR PASSING THIS RESOLUTION	GROUNDS UNDER SECTION 48(1) FOR THE PASSING OF THE RESOLUTION
HB CDEM Office building lease renewal	s7(2)(i) 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 enable the local authority holding the information to carry out, without prejudice or disadvantage, negotiations (including commercial and industrial negotiations).	The Council is specified, in the First Schedule to this Act, as a body to which the Act applies.

Authored & Approved by:

Jessica Ellerm

Group Manager Corporate Services