Late Agenda of Corporate and Strategic Committee

Hawke’s Bay Regional Council

Corporate and Strategic Committee

1 June 2022

Subject: Operational Land Asset Policy

Reason for Report

1. This item seeks a recommendation from the Corporate and Strategic Committee to Council, to adopt the Operational Land Asset Policy.

Officers’ Recommendations

2. Council officers recommend that the Corporate and Strategic Committee resolves a recommendation to the Regional Council to adopt the Policy as proposed, the Policy having been updated in response to feedback provided at the 25 May 2022 workshop with councillors.

Executive Summary

3. This is a new Council policy, created to provide a framework for the assessment of and decisions on claims for the transfer of operational land holdings.

4. The Policy does not signal a review or changed position from the status quo on HBRC’s operational land holdings, but merely provides staff a mechanism for reviewing requests that are received from time to time.

5. The Policy may be used when Council has identified a parcel of land for review, or is responding to an external request to purchase, occupy, transfer or obtain an interest in operational land such as a lease, license or easement.

6. The Policy considers key criteria when assessing any land or property asset and aligns with the strategic plan, in-particular the desire to recognise the cultural connection and whakapapa of Tangata Whenua to land and water, that brings with it an inseverable role of kaitiakitanga.

7. The Policy applies to Council’s operational land portfolio which is primarily, but not exclusively managed by the Asset Management group for the purposes of Flood Management. It may extend to land managed by other parts of the organisation for purposes such as soil conservation or forestry estate. It excludes investment property, leasehold land property portfolios providing investment returns and commercial assets governed and managed within Council’s Investment and Treasury Frameworks.

8. Council retains the right to refuse or decline any claim, or decide that the application of this Policy is not the appropriate mechanism for evaluation of the claim, should the objectives of the claim fail to align with the purpose of the Policy.

Funding and Resourcing the Business Case preparation

9. The Policy presented includes a proposed business case framework. The cost of preparing business case(s) and the subsequent staff time contributing towards decision making will require funding. There is currently no dedicated funding within current work programmes.

10. It is proposed the business cases be prepared internally by Council staff and funded by Council up to $20,000 per business case. Many historical land ownership right matters are complex and will also require external consultancy advice and expertise.

11. The development of a business case could vary significantly depending on the complexity of the land ownership. In more complex cases the cost could be as much as $30k-$40k per business case. Aa number of options available for consideration for funding the costs include:

11.1. The requestor funds the costs

11.2. Council funds the costs – either charged to the scheme in which the land resides, or to the Governance and Partnerships cost centre

11.3. The cost is shared between the requestor and Council, by either ratio or cap where Council funds the first $10,000 or $20,000.

12. To manage Council resources, both people and financial, staff recommend including limits to the Policy whereby only one request or business case is accepted for preparation by staff at any given time.

13. The Policy has been drafted with a staff recommendation of shared costs, where Council funds the first $20,000 towards development of the business case, for Committee consideration.

Significance and Engagement Policy assessment

14. This Policy is a decision-making framework and in itself does not trigger consultation in accordance with the Significance and Engagement policy.

15. It is possible that a recommendation by staff on a particular land holding may trigger the Significance and Engagement Policy, and if that is the case then the requirements of the Significance and Engagement Policy will be met.

Climate Change considerations

16. Land may be held by HBRC for strategic purposes which may include for flexibility in managing schemes or assets with respect to the impact of climate change.

Considerations of Tangata Whenua

17. A determinant for the drafting of this Policy is four independent tangata whenua requests that Council has received, some dating back to early 2018. These relate to specific parcels of Council’s operational land holdings at Pōrangahau, Roys Hill – Ngatarawa, Waiōhiki and Ōhiti. Each of these requests will require extensive investigation, research and consultation with potential for a business case to Council.

18. Council’s desire and commitment is to achieve a close partnered working relationship with its Tīriti partner. That becomes evident in the co-governance and legislated relationship of Council with ten post settlement governance entities across Te Matau a Māui region. Also, the Māori Committee of Council and its enduring 25yr+ relationship with Ngāti Kahungunu Iwi through four of six Taiwhenua within the region.

19. Council recognises and acknowledges its Māori Committee and Regional Planning Committee. It is anticipated that this agenda item and draft policy, prior to its finalisation, will be brought before each of those committees for consideration and endorsement.

Financial and Resource Implications

20. The financial impact of any individual claim, on either Council income (annualised) or balance sheet is expected to be immaterial based on the level of materiality during the FY20-21 audit was deemed $100k by Audit NZ.

21. For context as at 30 June 2021, annual income from grazing leases on infrastructure land totals $90k per annum. Significant assumptions used in land valuation value floodable land that is grazed at $6k per annum, and floodable land that is not grazed at nil.

22. However, for larger land holdings where divestment is being requested or considered, the financial impact may be more significant. The financial impact on income and therefore funding of Council operations and balance sheet treatment and impact will be assessed on a case-by-case basis. Council’s standard decision-making processes apply to every decision made. If the financial impacts assessed as significant or the asset is strategic, Council may need to consult ahead of making a formal decision.

23. Current Infrastructure land valuations are based on a 2017 valuation and are due for revaluation. Staff are progressing the revaluation of infrastructure land assets in parallel with development of this policy. Current valuations as at 30 June 2022 will be available for business case assessment, and to ensure that these land asset values are not misstated within financial statements.

Decision Making Process

24. 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:

24.1. The decision does not significantly alter the service provision or affect a strategic asset, nor is it inconsistent with an existing policy or plan.

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

24.3. The decision is not significant under the criteria contained in Council’s adopted Significance and Engagement Policy.

24.4. Given the nature and significance of the issue to be considered and decided, the Committee can exercise its discretion and make a decision recommendation to Council without consulting directly with the community.

Recommendations

1. That the Corporate and Strategic Committee:

1.1. Receives and considers the Operational Land Asset Policy staff report.

1.2. Refers the Operational Land Asset Policy to the Māori Committee and Regional Planning Committee for their consideration and endorsement for provision to the 29 June 2022 Regional Council meeting.

2. The Corporate and Strategic Committee recommends that Hawke’s Bay Regional Council:

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

2.2. Adopts the Operational Land Asset Policy as proposed.

Authored by:

Tim Chaplin

Senior Group Accountant

Jessica Ellerm

Programme Director

Pieri Munro

Te Pou Whakarae

Approved by:

Chris Dolley

Group Manager Asset Management

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