Agenda of Corporate and Strategic Committee - Wednesday, 20 September 2023

HAWKE’S BAY REGIONAL COUNCIL

Corporate and Strategic Committee

Wednesday 20 September 2023

Subject: 2023 Navigation Safety Bylaw approval for consultation

Reason for Report

1. The 2018 Navigation Safety Bylaw needs to be updated in 2023 in accordance with the Maritime Transport Act (1994) and the Local Government Act (2002). Committee approval is sought to take the attached draft 2023 Bylaw to public submission stage prior to its return to Council for approval and adoption.

Officers’ Recommendation(s)

2. Council officers recommend that the Corporate and Strategic Committee adopts the proposed 2023 Navigation Bylaw for public consultation 29 September to 29 October 2023.

Background /Discussion

3. In April of this year a project team was formed to undertake the process of updating the 2018 Navigation Bylaw. Pre-engagement feedback from key stakeholders alongside the identification of known navigational issues in the region was the starting point for the drafting process. A further key consideration was the need to simplify and refine the document to make it more readable and relevant to a wider variety of recreational water users.

4. Overall, it was felt that the existing Bylaw was working well but changes were needed to address the increased popularity and patronage of some mixed-use areas coupled with the advent of new water recreation technologies.

5. The Hardinge Rd waterfront in Napier is one such mixed-use area that is becoming increasingly popular with ocean swimmers, surfers and paddle boarders, foil-boarders, recreational boaties and jet-skiers. The area is relatively confined and gets very busy over the summer months. Navigational risk occurs in such areas where high-speed powered vessels are in close proximity to passive recreational water users. Similar navigational risks are present at Napier Pandora Pond and the Pourerere lagoon reserve areas.

6. Inflatable jet-boat use is also increasing in popularity. These vessels are used to explore and access remote river systems and have high-speed capability. While no incidents have yet been reported, near misses and nuisance behaviour have been. Anecdotal evidence increasingly suggests safety awareness, adherence to the five-knot rule and user education need better promotion. We are seeking feedback from the public on this issue as part of the consultation process.

Project Timeline

7. Pre-engagement with key contacts was undertaken in mid-April to help inform a starting point for the drafting process.

8. Taking into account this feedback, drafting began in May with attention also given to overall document refinement and further navigational risk identification.

9. By the end of August a supporting consultation document and communications plan was created to contribute to the public consultation process. Although not itemised on the workplan, a Statement of Proposal has also been drafted; this is required by the Local Government Act when proposing a Bylaw.

10. Public consultation will run from 29 September to 29 October 2023 with submissions, hearings in the event that individuals wish their submissions to be heard in person and deliberations to follow if necessary.

11. Alongside Council’s own internal processes, and to ensure consistency with national maritime regulations, the draft Bylaw is also required to be submitted for approval to Maritime NZ.

12. Subject to final Maritime NZ and Council approval, the updated Bylaw will come into effect in late January 2024.

Updated Bylaw – what’s changed?

13. A number of proposed changes are suggested for the 2023 Bylaw review. These changes, intended to be tested with the public, are incorporated into the draft document and have been summarised into the following table for consideration.

Changes to current Bylaw	Reason(s) for the change	Draft (2023) Bylaw reference
Bylaw section re-ordering, refining, and reducing document size. Material from the Maritime Transport Act and Maritime Rules is now referenced rather than included in the Bylaw where possible.	To streamline the Bylaw and make more readable and relevant to water users.	Various
New or strengthened provisions regarding: • the seaworthiness of ships • speed to reference restrictions in reserved areas and mooring zones.	To mitigate navigational risk and the potential for harm caused by unseaworthy vessels as well as excessive speed in reserved areas and mooring zones.	Pages 14-15
Removed redundant clauses regarding: • licensing of hire vessels • tanker operations.	Regulations, certifications or safety protocols exist in other forms.	N/A
Refined section on rocket launching.	To help promote public safety and awareness and also include flexibility on public notice provisions.	Page 11
Removed Te Paerahi Beach from schedule.	Schedule (and associated regulations) deemed unnecessary.	N/A
Increased regulation in these spatial areas: • Napier Hardinge Road beach • Pourerere Beach lagoon • Napier Pandora Pond • Mohaka River.	To mitigate collision risk in mixed use areas.	Schedules 1.3, 1.4, 1.5, 2.2
Decreased regulation in these spatial areas: • Whangawehi Beach • Kairakau Beach • Waikokopu Beach.	Variable seasonal coastal conditions mean attempting to demarcate some areas is impractical. Water users are instead advised to exercise caution. These areas are identified and scheduled as ‘cautionary zones’ with ‘advisory notes’ included within the proposed Bylaw.	Schedules 1.7, 1.8, 1.9
Include new schedule for Pourerere Beach.	To advise water users to exercise caution.	Schedule 1.10

Significance and Engagement Policy assessment

14. 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:

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

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

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

Considerations of Tangata Whenua

15. Key Treaty partners were approached for feedback at the project’s inception. However, this was not able to be effectively obtained at the time due to cyclone recovery efforts taking priority across many entities. At the time HBRC indicated that a further opportunity for participation would be available later in the year. Mana whenua will be approached directly for further feedback pending the Committee’s approval to move to the consultation phase.

Financial and Resource Implications

16. All project costs have been budgeted. The project is on time and within budget.

Decision Making Process

17. 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:

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

17.2. The use of the special consultative procedure is prescribed by legislation. The Council must consult directly with the community or others having an interest in the decision.

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

17.4. The persons affected by this decision are all persons with an interest in the region’s waterbodies that are used for navigation and recreation.

Recommendations

1. That the Corporate and Strategic Committee receives and considers the 2023 Navigation Safety Bylaw approval for consultation staff report.

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

2.1 Delegate authority to the Group Manager Policy and Regulation to make any required minor amendments or edits to the document prior to publication and the start of engagement.

2.2 Adopts the proposed 2023 Navigation Bylaw for public consultation 29 September to 29 October 2023.

Authored by:

Jason Doyle

Project Manager Policy & Planning

Martin Moore

Harbourmaster

Approved by:

Katrina Brunton

Group Manager Policy & Regulation

Attachment/s

1 ⇨	Navigation Safety Bylaws 2018	Under Separate Cover
2 ⇨	Statement of Proposal Document 2023	Under Separate Cover
3 ⇨	Draft Navigation Safety Bylaws 2023	Under Separate Cover
4 ⇨	Navigation Safety Bylaws Consultation Document 2023	Under Separate Cover

HAWKE’S BAY REGIONAL COUNCIL

Corporate and Strategic Committee

Wednesday 20 September 2023

Subject: 2022-2023 Carry forwards

Reason for Report

1. This item seeks approval from the Corporate and Strategic Committee to carry forward expenditure budgets from 2022-2023 to 2023-2024.

Executive Summary

2. During 2022-2023 a number of work programmes experienced delays and were unable to be completed as originally planned. Where this work cannot be reprioritised from within the 2023-2024 Annual Plan budget, unspent expenditure budgets are requested to be carried forward to cover the expected costs of completion.

3. A total of $9.043m unspent opex and $3.805m unspent capex is requested to be carried forward into the 2023-2024 Annual Plan budget.

4. The source of funds required ($12.849m) for the total carry forward request is split as following:

4.1 $3.535m debt funding,

4.2 $5.811m reserve funds,

4.3 $0.863m external funds, and

4.4 $2.640m general funds.

5. The interim financial results presented to Council on 30 August, indicated that Council will have an operating deficit for the 2022-2023 financial year. Even after allocating cyclone expenditure to the Emergency Management and Regional Disaster Damage Reserves this will still result in a deficit to general funds for the year due to the reduced investment income.

6. Any carry over of general funds into the 2023/24 year would therefore require a drawdown from accumulated funds (i.e.: from general fund surpluses accumulated over previous financial years) and should be considered in this context.

7. The opening balance of accumulated funds as at 1 July 2022 was $275 million (excluding $46m of internal loans). The movements for the 2022/23 financial year are still being finalised.

8. Debt and reserve funded carry forwards have no immediate impact on Council’s financial position as they are just a timing difference of when funding is drawn or recognised.

Background

9. Carry forwards is a common practice within councils and allows for unspent funds against projects to be moved forward so that projects can be completed. These include the funding of final costs of projects, contracts that were unable to be completed by the financial year end, and the carry forward of external income received for specific projects.

10. The funding types are categorised as:

7.1 General funding is from General Rates which includes investment income.

7.2 Reserve funding is from targeted rates that have flowed through to Reserves or from specific reserves (eg: asset replacement reserve).

7.3 External is external funding received for specific projects.

7.4 Debt is for debt funding not drawn down this year and is covered by interest and principal repayments that are already included in the LTP and/or Annual Plan.

11. Officers informed the Corporate & Strategic Committee on 14 June 2023 that, based on the full year forecast at that time, the indicative carry forwards from 2022-2023 would be $6.0m opex and $9.6m capex, and that final carry forward requests would be presented at the conclusion of the financial year once the draft financial results had been analysed.

12. The interim financial results presented to Council on 30 August, indicated that HBRC will have an operating deficit for the 2022-2023 financial year, and any carry forward of general funding will impact the general funds deficit further.

13. The carry forward decision this year is significantly impacted by Cyclone Gabrielle response and recovery activities.

13.1. It has been a key driver for delays to originally planned activities, thus causing many of the requests for carry forwards.

13.2. It has also had significant adverse impact on Council’s financial situation, limiting our capacity to fund planned activities.

14. Unplanned expenditure for the response to Cyclone Gabrielle will be charged to the Emergency Management and Regional Disaster Damage Reserves. A significant proportion of this shortfall is anticipated to be repaid via NEMA, and insurance and other claims over the coming 12 months.

15. It should be noted that the deficits in the Emergency Management and Regional Disaster Damage Reserves will need to be addressed as part of the Long-Term Plan 2024-2034.

Operating expenditure carry forward requests

Activity / Project		Amount Requested	Source of funds
Activity / Project		Amount Requested	General	Reserve	External	Debt
*Integrated Catchment Management (ICM)*
1	Biodiversity	$429,000			$229,000	$200,000
2	Predator Free Hawkes Bay	$423,000			$423,000
3	Land for life	$277,000		$277,000
4	Environm’l Science data models	$502,000				$502,000
5	Environm’l Enhancement Prog	$320,000	$208,000		$112,000
6	Land research & investigations	$99,500			$99,500
*Asset Management*
7	Central & Southern Rivers – flood protection	$30,000	$ 3,750	$26,250
8	Regional Water Security	$3,500,000		$3,500,000
*Governance & Partnerships*
9	Tangata Whenua Partnerships	$700,000	$700,000
*Policy & Regulation*
10	Kotahi (policy & planning)	$1,500,000	$1,500,000
*Transport*
11	Passenger Transport	$763,000		$763,000
*Corporate Services*
12	Software-as-a-service dvlpt	$500,000				$500,000
Total		$9,043,500	$2,411,750	$4,566,250	$863,500	$1,202,000

Biodiversity - (opex – 1)

16. Integrated Catchment Management (ICM) seeks to carry forward a total of $429k to cover various biodiversity projects supported by external funding agreements with the Department of Conservation (DOC) and the Ministry for the Environment (MFE).

16.1. $200k of the Covid Recovery fund approved in 2020/21 (debt funding at $100k per project) for the Department of Conservation Jobs for nature fencing project, and the Porangahau catchment group Freshwater improvement fund project;

16.2. $194k is required to complete fencing projects supported by the DoC Jobs for Nature funding.

16.3. $35k is required to continue the support of the Porangahau catchment group Freshwater Improvement fund project.

17. Financial Assessment: The $200k loan funding was not drawn in 22/23, but repayment and interest costs have been accounted for in the 23/24 annual plan as if it had been. $229k of the unspent funds was received from external parties under Deeds of Funding agreements.

18. Recommendation: That Council approves the carry forward of $200k of debt funding, and $229k of external funding in external funds from the general reserve.

Predator Free Hawkes Bay - (opex – 2)

19. ICM seeks to carry forward $423k to cover the final milestones for the Predator Free Hawkes Bay project in Mahia, as supported by a new funding agreement with Predator Free NZ 2050 Ltd.

20. Financial Assessment: $423k of external funding was not spent in 2022-23.

21. Recommendation: That Council approves the carry forward of $423k in external funding from revenue received in advance.

Land for life - (opex – 3)

22. ICM seeks to carry forward $277k for the Land for Life project for implementation planning and scale up to support primary sector recovery subject to due diligence on the business case.

23. Financial Assessment: The $277k reserve funding was not drawn in 22/23, due to the impacts of the Cyclone and the subsequent repositioning of the project.

24. Recommendation: That Council approves the carry forward of $277k from the long-term investment fund reserve.

Environmental Science Data models - (opex – 4)

25. ICM seeks to carry forward $502k for environmental science data model projects that were unable to progress as intended due to science staff turnover, difficulty securing contractors and Cyclone Gabrielle impacts. Each of these multi-year projects provide a critical role in the science decision support for PC6 and Kotahi, and have contractual commitments now delayed into the 23/24 financial year.

25.1. $147k for the LiDAR tools project (data modelling for the completed LiDAR mapping project)

25.2. $240k for the final milestones of the 3D Aquifer project

25.3. $115k for the Ruataniwha Groundwater modelling

26. Financial Assessment: The $502k loan funding was not drawn in 22/23, but repayment and interest costs have been accounted for in the 23/24 annual plan as if it had been.

27. Recommendation: That Council approves the carry forward of $502k in loan funding.

Environmental Enhancement Programme - (opex – 5)

28. ICM seeks to carry forward a total of $320k to cover:

23.1 $208k for the final year of the Whakaki Environment Enhancement project which is a multi-year project which has suffered accumulated delays in deliverables due to extended community consultation, covid-19 impacts and adverse weather. This project is co-funded by MfE via the Freshwater Improvement fund.

23.2 $112k for the Fonterra sponsored wetland construction at Tukipo as this was delayed due to restricted access due to adverse weather conditions.

29. Financial Assessment: $208k for Whakaki is general rate funded as part of the wider Enviro Enhancement Programme, which had an underspend of $811k in 2022/23. $112k is external funds received from Fonterra, which were note spent in 2022/23.

30. Recommendation: That Council approves the carry forward of $112k external funds and $208k from the general reserve.

Land Research Investigations - (opex – 6)

31. ICM seeks to carry forward a total of $99.5k for the completion of landslide mapping work with delivery of the contractual commitments delayed into 23/24.

32. Financial Assessment: $114k external funds were received from Ministry of Primary Industries (MPI) to support this work, and $99.5k has not been spent.

33. Recommendation: That Council approves the carry forward of $99.5k external funds from the general reserve.

Central & Southern rivers flood protection - (opex – 7)

34. Asset Management seeks to carry forward a total of $30k for flood protection work in the Central & Southern rivers, which was originally programmed to commence in Autumn 2023, but was unable to begin due to the Cyclone.

35. Financial Assessment: The Central & Southern rivers flood protection workstream was underspent in 22/23 by $52k.

36. Recommendation: That Council approves the carry forward of $3.750k from the general reserve and $26.250k from the Central & Southern rivers scheme reserve (representing the unspent targeted rates collected in 22/23).

Regional Water Security Programme - (opex – 8)

37. Asset Management seeks to carry forward a total of $3.5m for the continuation of the multi-year Regional Water Security Programme, including the Water Demand Study as planned in the LTP, and the Te Tua and CHB water storage and reticulation infrastructure (the latter of which is expected to begin construction in 2023-24).

38. Financial Assessment: The Regional Water Security Programme was underspent in 22/23 by $3.5m.

39. Recommendation: That Council approves the carry forward of $3.5m from the long-term investment reserve.

Kotahi and Tangata Whenua Partnerships - (opex – 9 & 10)

40. Policy & Regulation and Governance & Partnerships seek to carry forward a total of $2.2m, for tangata whenua engagement regarding te mana o te wai, which stalled due to the inability to progress discussions 'at place' for visions and values (for Kotahi) and set up contracts with tāngata whenua. This was due to a change to the work programme direction from All Governors and exacerbated by the inability to meet at place because of Cyclone Gabrielle.

41. The visions and values work programmed for 22/23 is still required as per the NPSFM. The budget was established for Kotahi not on a year on year spend but an anticipated total amount for the 3 years of the LTP to enable this work to be undertaken. Visions and values is one piece of the work which needs to be progressed and contracted. The next stage which will require funding is attributes, limits, targets and matauranga maori, and this stage will fully utilise the existing budget allocated to Kotahi in the 23/24 annual plan.

42. Financial assessment: Tangata Whenua Partnerships were underspent by $783k and the Kotahi external expenses budget was underspent by $1.5m.

43. Recommendation: That Council approves the carry forward of $2.2m from the general reserve.

Passenger Transport - (opex – 11)

44. Policy & Regulation seek to carry forward the $763k shortfall funding received from NZTA to contribute towards increased operational costs. The additional operational costs will impact in the 23/24 financial year as indexation costs on the GoBus contract are applied.

45. Financial Assessment: The passenger transport cost centre had a $947k surplus in the 22/23 financial year. Note a carry forward of surplus only addresses cost pressures for one financial year, and ongoing cost pressures will need to be addressed in the 2024 LTP.

46. Recommendation: That Council approves the carry forward of $763k from the transport reserve.

Software-as-a-service ICT - (opex – 12)

47. ICT seeks to carry forward $500k for the digital transformational work programme, which was not progressed due to the suspension or slowing of work on the Finance and Biodiversity systems, caused by unavailability of business teams to assist with scoping due to staff turnover, and reprioritisation to work on the cyclone response.

48. Financial Assessment: The $500k loan funding was not drawn in 22/23, but repayment and interest costs have been accounted for in the 23/24 annual plan as if it had been.

49. Recommendation: That Council approves the carry forward of $500k in loan funding.

Capital expenditure carry forward requests

Activity / Project		Amount Requested	Type of funding
Activity / Project		Amount Requested	General Funds	Reserve	Debt
*Integrated Catchment Management (ICM)*
1	SOE ground water monitoring drilling	$275,000		$208,000	$67,000
2	Enviro info technical equipment	$102,000		$102,000
*Asset Management*
3	Flood protection schemes	$397,000		$397,000
4	Flood risk assessment & warning	$113,000	$113,000
5	Forestry	$45,000		$45,000
6	Regional cycleways	$115,000	$115,000
7	Regional Parks	$707,000			$707,000
8	IRG – HPFCS and gravel extraction	$1,101,000		$212,000	$889,000
*Corporate Services*
9	Office renovations (including furniture & fittings)	$730,000		$164,000	$566,000
10	Radio network	$44,000		$44,000
11	ICT network & equipment	$72,500		$72,500
12	Aerial Imagery (GIS)	$104,000			$104,000
Total		$3,805,500	$228,000	$1,244,500	$2,333,000

SOE Ground water monitoring drilling - (capex – 1)

50. ICM seeks to carry forward $275k to cover the contractually committed drilling programme delayed into 2023/24. Resource capacity of drilling companies continues to be a limiting factor to achieving the annual programme of work in line with the financial year, and this was exasperated in 2022/23 by the cyclone disruptions.

51. Financial Assessment: The groundwater monitoring drilling workstream was underspent by $275k.

52. Recommendation: That Council approves the carry forward of $67k loan funding and $208k of asset replacement reserve funding.

Environmental monitoring equipment replacements - (capex – 2)

53. ICM seeks to carry forward $102k for scheduled equipment replacements postponed due to staff capacity redirected to repair and replacement of equipment damaged in the cyclone.

54. Financial Assessment: The environmental monitoring equipment cost centres were underspent by $102k.

55. Recommendation: That Council approves the carry forward of $102k of asset replacement reserve funding.

Flood protection schemes - (capex – 3)

56. Asset Management seeks to carry forward a total of $397k for cyclone-disrupted projects as follows:

56.1. Wairoa River and streams scheme – $120k for the extension of the rock wall bank protection of the true right of the Wairoa River upstream of the mouth.

56.2. Ohuia- Whakaki – $277k for renewal works including pump installations, power supply and pump station screens.

57. Financial Assessment: The Wairoa scheme opex budget was underspent by $120k, and it is this budget that is requested to be carried forward and converted to capex. The Ohuia-Whakaki workstream was underspent by the amount of carry forward requested above.

58. Recommendation: That Council approves the carry forward of $120k from the Wairoa river and streams scheme reserve (representing the unspent targeted rates collected in 22/23) and $277k from the asset replacement reserve.

Flood risk assessment & warning - (capex – 4)

59. Asset Management seeks to carry forward $113k for software developments for flood forecasting, where the project was not started due to reprioritisation of staff capacity for the cyclone response.

60. Financial Assessment: The flood risk assessment and flood forecasting workstreams were underspent by the amount of carry forward requested above. There is no budget for this work in the 23/24 annual plan.

61. Recommendation: That Council approves the carry forward of $113k from the general reserve.

Forestry - (capex – 5)

62. Asset Management seeks to carry forward $45k for the development of roading and access for three blocks around the Devil’s Elbow due to be harvested, which were unable to be accessed due to closures of SH2 following the cyclone.

63. Financial Assessment: The forestry capex workstream was underspent by the amount of the carryfoward requested.

64. Recommendation: That Council approves the carry forward of $45k from the long-term investment fund reserve.

Regional cycleways - (capex – 6)

65. Asset Management seeks to carry forward a total of $115k for the extension of the Ngaruroro explorer cycleway, which will be progressed once repairs on the cyclone-damaged section of the trail are completed. This project has co-funding contributions from MBIE and Hastings District Council.

66. Financial Assessment: The regional cycleways capex budget was not spent in 2022/23.

67. Recommendation: That Council approves the carry forward of $115k from the general reserve.

Regional Parks - (capex – 7)

68. Asset Management seeks to carry forward a total of $707k for Regional Park developments unable to be progressed:

68.1. Hawea Historical Park and Waitangi Park (toilet block) – $605k

68.2. Ahuriri Regional Park, – establishment of project manager for planning work – $102k

69. Financial Assessment: The $707k loan funding was not drawn in 22/23, but repayment and interest costs have been accounted for in the 23/24 annual plan as if it had been.

70. Recommendation: That Council approves the carry forward of $707k of loan funding.

IRG – Heretaunga Plains Flood Control Scheme (HPFCS) and gravel extraction - (capex – 8)

71. Asset Management seeks to carry forward a total of $1.101m for the planned programme of works for HPFCS improvements and Upper Tukituki gravel extraction, which was significantly impacted by the cyclone. This multi-year programme of work is co-funded by Kanoa/MBIE, and an extension to the funding deadline will be sought.

72. Financial Assessment: The $889k loan funding was not drawn in 22/23, but repayment and interest costs have been accounted for in the 23/24 annual plan as if it had been.

73. Recommendation: That Council approves the carry forward of $889k of loan funding and $212k of HPFCS scheme reserves funding.

Office renovations (including furniture & fittings) - (capex – 9)

74. Corporate Services seeks to carry forward a total of $730k for the accommodation refurbishment project postponed due to consent and engineering report delays.

75. Financial Assessment: The accommodation and furniture & fitting workstreams were underspent by the value of the carry forward request above. The $566k loan funding was not drawn in 22/23, but repayment and interest costs have been accounted for in the 23/24 annual plan as if it had been.

76. Recommendation: That Council approves the carry forward of $566k of loan funding and $164k of asset replacement reserves funding.

Radio network - (capex – 10)

77. Corporate Services seeks to carry forward a total of $44k for the final deliverables of Project Tarsier.

78. Financial Assessment: The RT Network capex workstream was underspent by $234k in 22/23.

79. Recommendation: That Council approves the carry forward of $44k asset replacement reserves funding.

ICT network & equipment - (capex – 11)

80. Corporate Services seeks to carry forward a total of $72.5k for the purchase of extended hardware warranty support. This will improve the resilience of the ageing parts of our ICT infrastructure.

81. Financial Assessment: The Servers & Storage capex workstream was underspent in 22/23 by the amount requested to be carried forward.

82. Recommendation: That Council approves the carry forward of $72.5k asset replacement reserves funding.

Aerial imagery - (capex – 12)

83. Corporate Services seeks to carry forward a total of $104k for the acquisition of aerial imagery. This will be necessary to develop models and storage systems to support the increased volume of datasets collected following Cyclone Gabrielle.

84. Financial Assessment: The $104k loan funding was not drawn in 22/23, but repayment and interest costs have been accounted for in the 23/24 annual plan as if it had been.

85. Recommendation: That Council approves the carry forward of $104k loan funding.

Options Assessment

86. Option 1: Council approves the carry forwards as proposed from 2022-2023 to 2023-2024 to enable all the projects to be completed, service levels to be achieved, commitments to external organisations to be fulfilled and the future work to be funded), acknowledging this would require a drawdown of accumulated funds to fund the general and external funded expenditure.

87. Option 2: Council approves the carry forward of reserve, debt and externally funded expenditure only, leaving the general-funded carry forward expenditure requests to be reprioritised through 2023-24 annual plan budgets.

88. Option 3: Council does not approve the carry forwards as proposed and provides officers with guidance on which carry forwards, if any, should be approved.

Financial and Resource Implications

89. Debt funded expenditure can be carried forward with no impact to the ratepayer in future years as the repayment of these funds have already been included in the LTP and Annual Plan.

90. Funding from reserves can be carried forward with no impact, as the expenditure has not been drawn from the reserve and is therefore available to be drawn in 2023-24 instead.

91. Funding from targeted rates will be automatically carried forward through the associated reserve to enable the funds to be drawn down to complete the work in subsequent years.

92. The carry forward of $2.640m in general funding and $0.863m in external funding from 2022-2023 to 2023-2024, will impact the general reserve as there is not expected to be a surplus of general funds for the 2022-23 financial year. The actual quantum of the general fund deficit will be confirmed once the final funding and reserve movements have been completed for the Annual Report.

93. Approved general funded and external funded carry forward requests would be funded from the general reserve in 2023/24, drawing from accumulated funds.

Decision Making Process

94. Staff have assessed the requirements of the Local Government Act 2002 in relation to this item and have concluded:

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

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

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

121.4 The persons affected by this decision are Council’s ratepayers.

95. 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

1. That the Corporate and Strategic Committee receives and notes the 2022-2023 Carry forwards staff report.

2. The Corporate and Strategic Committee recommends that Hawke’ 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. Approves the carry forward of all expenditure requests from the 2022-2023 to the 2023-2024 budget, being:

Operating expenditure carry forward requests

Activity / Project		Amount Requested	Source of funds
Activity / Project		Amount Requested	General	Reserve	External	Debt
*Integrated Catchment Management (ICM)*
1	Biodiversity	$429,000			$229,000	$200,000
2	Predator Free Hawkes Bay	$423,000			$423,000
3	Land for life	$277,000		$277,000
4	Environmental Science data models	$502,000				$502,000
5	Environmental Enhancement Programme	$320,000	$208,000		$112,000
6	Land research & investigations	$99,500			$99,500
*Asset Management*
7	Central & Southern Rivers – flood protection	$30,000	$ 3,750	$26,250
8	Regional Water Security	$3,500,000		$3,500,000
*Governance & Partnerships*
9	Tangata Whenua Partnerships	$700,000	$700,000
*Policy & Regulation*
10	Kotahi (policy & planning)	$1,500,000	$1,500,000
*Transport*
11	Passenger Transport	$763,000		$763,000
*Corporate services*
12	Software-as-a-service development	$500,000	$500,000
Total		$9,043,500	$2,411,750	$4,566,250	$863,500	$1,202,000

Capital expenditure carry forward requests

Activity / Project		Amount Requested	Type of funding
Activity / Project		Amount Requested	General	Reserve	Debt
*Integrated Catchment Management (ICM)*
1	SOE Ground water monitoring drilling	$275,000		$208,000	$67,000
2	Enviro info technical equipment	$102,000		$102,000
*Asset Management*
3	Flood protection schemes	$397,000		$397,000
4	Flood risk assessment & warning	$113,000	$113,000
5	Forestry	$45,000		$45,000
6	Regional cycleways	$115,000	$115,000
7	Regional Parks	$707,000			$707,000
8	IRG – HPFCS and gravel extraction	$1,101,000		$212,000	$889,000
*Corporate Services*
9	Office renovations (including furniture & fittings)	$730,000		$164,000	$566,000
10	Radio network	$44,000		$44,000
11	ICT network & equipment	$72,500		$72,500
12	Aerial Imagery (GIS)	$104,000			$104,000
Total		$3,805,500	$228,000	$1,244,500	$2,333,000

Authored by:

Amy Allan

Senior Business Partner

Chris Comber

Chief Financial Officer

Approved by:

Andrew Siddles

Acting Group Manager Corporate Services

Susie Young

Executive Officer Recovery

Nic Peet

Chief Executive

Attachment/s

There are no attachments for this report.

HAWKE’S BAY REGIONAL COUNCIL

Corporate and Strategic Committee

Wednesday 20 September 2023

Subject: Hawke's Bay Tourism Annual report

Reason for Report

1. This item provides an outline of HB Tourism’s Annual report (attached), and an overview of activities and funding sources, and of performance against key indicators.

Background

2. Hawke’s Bay Tourism is reliant upon funding via two primary means – Hawke’s Bay Regional Council, and membership fees and investment/support from tourism businesses who belong to the Hawke’s Bay Tourism Industry Association. Additional turnover is generated by the summer and winter F.A.W.C! series and additional marketing/industry initiatives.

3. Hawke’s Bay Tourism is a limited liability company owned by its shareholders, the Hawke’s Bay Tourism Industry Association.

4. It has an independent board of 6 directors, including a representative from Hawke’s Bay Regional Council (Cr Sophie Siers).

Key Performance Indicators

5. The ‘Funding Agreement for the Operation of a Regional Tourism Organisation’ (the Agreement) between Hawke’s Bay Regional Council (HBRC) and HB Tourism requires HBTL to deliver KPIs in accordance with the Agreement and current accepted best practices applicable to the tourism industry and tourism promotion.

Market share

6. HBT set an ambitious target for 23/24 – aiming to achieve 4% market share of domestic visitor spend. This was, effectively, setting ourselves an increase of 14.3% from the previous year’s target.

7. Due to international borders reopening, an increase in visitation to Auckland (Auckland had suffered during Covid with a series of specific city lockdowns), and the resulting Cyclones Hale and Gabrielle, market share achieved was, understandably, lower than targeted and our result was 3.2% market share.

Industry Contribution

8. The tourism sector continues to support Hawke’s Bay Tourism and invest in joint marketing initiatives.

9. The target of $200,000 cash investment was surpassed by 57% - $313,113.50. The target of $50,000 of in-kind support was surpassed by 122% - $111,113.

10. Our efforts in generating public relations exposure resulted in an equivalent advertising value of $5.3m EAV.

11. In 2020 Hawke’s Bay Tourism offered businesses free membership as a means of bringing the sector together for purposes of capability and communications throughout the Covid-19 period. Paid membership was reintroduced from 22/23 and as a result we saw a reduction in membership (with the majority being businesses that either closed or sold).

Value of Tourism for Hawke’s Bay Economy

12. An analysis undertaken by specialist economic impact modelling agency Hughes Economics, Auckland (January '23) indicates that the total direct visitor spending in Hawke’s Bay over the year ended October 2022, of $696 million, has a total direct plus flow-on or multiplied GDP or economic activity impact within the region of $666.31 million and a total flow-on employment impact in the area of 9,468 full/part-time employees.

13. The total GDP impact for the visitor spending in 2022 represents an approximate 7% of total ‘all industries’ regional GDP and ranks the visitor industry 3rd (after processing/manufacturing and agriculture) amongst the different industry sectors in the region.

14. Total visitor industry GDP in the region grew at an estimated annual average rate of 5-6% over the 2012-2022 interval, compared to the ‘all industries’ growth figure of 4.7%.

15. The employment impact of the Hawke’s Bay visitor industry is estimated to represent 9-10% of total employment in the region.

16. Examples of the results of HBT’s work over the past decade have included: the now pivotal role for the agency in the growth and development of the region’s visitor industry; overall significant visitor spending growth (especially in the domestic sector); increased visitor duration in the region and share of national commercial accommodation night-stays; significantly increased business numbers and new building investment activity within visitor industry-related industries; development of an annual programme of major events catering for both Hawkes Bay residents and visitors; and major upgrading and development of new Local Government and other organisation community/visitor facilities and amenities.

17. Analysis undertaken by ESL indicates that HBRC annual grant figures of $1.85 million (2019), $1.88 million (2020), $1.94 million (2021) and $2.08 million (2022), compared to the actual grant for these years of $1.52 million would have resulted in at least a stable annual Council grant allocation in real or inflation-adjusted terms, during the above period.

18. Over 2012-2022, HBT’s total expenditure grew at an annual average 6.8%, similar to the growth in total revenue. Over the period, the agency’s operating expenses have comprised 40% of its total expenditure and marketing/events/industry partner expenditure the balance of 60%. Staff remuneration has comprised approximately 70% of total operating expenses.

Funding

19. HBRC funding for HBT has largely remained a flat-line base of $1,520,000 since 2016 (with the one-year exception 2017/18), without CPI adjustment.

	Hawke’s Bay Regional Council investment	Annual NZ CPI (y/e JUN)
2015/16	$1,220,000
2016/17	$1,520,000	1.7%
2017/18	$1,820,000	1.5%
2018/19	$1,520,000 (decrease)	1.7%
2019/20	$1,520,000 (no increase)	1.5%
2020/21	$1,520,000 (no increase)	3.3%
2021/22	$1,520,000 (no increase)	7.3%
2022/23	$1,520,000 (no increase)	6%
2023/24	$1,520,000 (no increase)

20. MBIE recognised the importance of tourism to New Zealand, and provided one-off additional investment funds to regional tourism organisations to revitalise and maintain tourism demand throughout Covid. As such, Hawke’s Bay Tourism received:

a. 2020/21 $750,000 (Strategic Tourism Asset Protection Programme – STAPP)

b. 2021/22 $1,000,000 (Tourism Communities: Support, Recovery and Re-Set Plan)

c. 2021/25 $603,000 (Regional Events Fund)

21. Excluding a small budgeted amount attributed to the Regional Events Fund for the 23/24 and 24/25 years, the other funds are exhausted.

22. MBIE funding was made available to RTOs that could demonstrate a commitment to retaining RTO investment from local government e.g. Government funding is not a substitution for local government funding.

23. Hawke’s Bay Tourism is grateful for the support of Hawke’s Bay Regional Council as we achieved laudable results during unprecedented and impactful events.

Decision Making Process

24. 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 the Corporate and Strategic Committee receives and notes the HB Tourism Annual report report.

Authored by:

Andrew Siddles

Acting Group Manager Corporate Services

Approved by:

Andrew Siddles

Acting Group Manager Corporate Services

Attachment/s

1 ⇩

Hawke's Bay Tourism Annual Report 2023

External Debt	Running Total
Existing debt	$97,625,000
BNZ Committed Cash Advance Facility (undrawn)	$10,000,000
Total Debt Facilities	$107,625,000

1 ⇩	HBRIC unaudited consolidated annual report to 30 June 202324
2 ⇩	HBRIC Finacials to June 2023

General subject of the item to be considered	Reason for passing this resolution	Grounds under section 48(1) for the passing of the resolution
HBRIC Chairperson appointment	s7(2)(a) 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 protect the privacy of natural persons.	The Council is specified, in the First Schedule to this Act, as a body to which the Act applies.

General subject of the item to be considered	Reason for passing this resolution	Grounds under section 48(1) for the passing of the resolution
Cyclone financials update	7(2)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.