Agenda of Extraordinary Hawke's Bay Regional Council meeting

Hawke’s Bay Regional Council

10 July 2024

Subject: Adoption of the HBRC Three Year Plan 2024-2027

Reason for Report

1. This report presents the Three-Year Plan 2024-2027 for adoption by Council as required by the Local Government Act 2002.

Background

2. A requirement under the Local Government Act 2002 (the Act) is that all councils develop a 10-year long term plan, reviewed every three years.

3. Following the severe weather in early 2023, including Cyclone Gabrielle, special temporary legislation – Severe Weather Emergency Recovery Legislation Act 2023 (SWERLA) – enabled some changes to the long-term planning requirements in the Local Government Act 2002 for the most affected councils. This included changing the 10-year time period covered by the plan to three years, not requiring the consultation document or plan to be audited, and relaxing some disclosure requirements. The changes recognise that it is too hard to forecast beyond three years with enough certainty to meet the standards under normal requirements.

4. As a result, Hawke’s Bay Regional Council is producing an unaudited Three-Year Plan 2024-2027 focused on supporting the community to recover and build resilience for future events. This includes delivering the nearly $250M Flood Resilience Programme negotiated with the Government to support recovery from Cyclone Gabrielle and bolstering the Hawke’s Bay Civil Defence Emergency Management (CDEM) Group funding by $1.3M over the three years of the plan on behalf of the region’s five councils.

5. At the extraordinary meeting of the Regional Council on 10 April 2024, the Council adopted for consultation the supporting information, draft policies, submission form, and the consultation document entitled Have Your Say Hawke’s Bay on our recovery focussed Three-Year Plan 2024-2027.

6. A comprehensive engagement process was undertaken to seek the views of the community. Formal consultation was held from 15 April to 16 May 2024. A total of 824, (including 2 late submissions) were received, compared to 791 three years ago. In total, 60 verbal submissions were heard on 29 and 30 May 2024.

7. The Council deliberated on all submissions and staff responses on 18 and 20 June 2024. Deliberation reports were written by topic – one for each of the five consultation topics plus a further eight to cover other inputs into the Three-Year Plan and all submissions received.

Budget challenges and cutting costs

8. The Three-Year Plan 2024-2027 was challenging to develop. The Regional Council’s financial position has been impacted by two significant events in quick succession – the Covid pandemic and Cyclone Gabrielle. Our investment returns are down; we are repaying money we have borrowed since Covid to keep rates down and fund a step change in environmental work; we faced unplanned costs to repair infrastructure; and there’s more to come to build resilience for future events. Further, the Regional Council, like others, is facing significant increasing operational costs such as inflation, insurance and public transport indexation.

9. Staff and councillors looked closely at the budgets when developing the Three-Year Plan 2024-2027 to identify ways to cut costs to lessen the impact on our ratepayers. Additional cost savings over and above what was consulted on, and the use of a special dividend from Council’s investment company Hawke’s Bay Regional Investment Company (HBRIC) have further lessened the impact on ratepayers.

10. Internal cost savings have been achieved by:

10.1. holding 20 vacancies for three years

10.2. slowing down technology development

10.3. reducing our fleet size and keeping our vehicles for longer.

11. Council also agreed to cut or slow down some services to reduce rates, and to narrow our focus to recovery and core business.

12. Service changes over the life of the three-year plan include:

12.1. Continued funding for Hawke’s Bay Tourism of $1.52 million in 2024-25 with no commitment beyond Year 1

12.2. Stopping the Sustainable Homes programme from July 2024

12.3. Continuing a post-cyclone slow-down of the Erosion Control Scheme

12.4. Cutting the annual maintenance budget for our regional parks by 20% per year for three years, deferring development costs for Ahuriri Regional Park, deferring development of Wairoa Regional Park, and deferring all capital works on cycleways (aside from a commitment to safety improvements).

13. These service changes combined with the internal cuts, save about $4.9 million in 2024-25.

14. More information on these and other key decisions made by the Regional Council at the deliberations meeting on 18 and 20 June 2024, is in Part 2 of the Three-Year Plan.

Final rates increases

15. The cumulative impact of all decisions equates to a 16% rates increase in Year 1 (2024-25), 18.3% in Year 2 and 8.5% in Year 3.

Concurrent consultation on policies

16. Council concurrently consulted on three draft policies that were reviewed as part of the Three-Year Plan development:

16.1. (statement of proposal) Fees and User Charges Policy – resolved to adopt the amended Fees and User Charges Policy, including the implementation of two new Harbourmaster fees being an annual fixed Harbourmaster charge to Napier City Council, and an anchorage levy outside of the Napier harbour as consulted on.

16.2. (statement of proposal) Rates Remission and Postponement Policies – resolved to adopt a new remission policy that gives a 50 percent remission for one year for local councils only on the utilities rolls. It also resolved to investigate applying a cap on capital value for utility rolls for the general rate in future years.

16.3. (statement of proposal) Revenue and Financing Policy – resolved to undertake a further review of the banding used in differential rating for Upper Tukituki Flood Control Scheme and Upper Makara Stream Catchment Special Rating Scheme and to investigate the impact on residential/lifestyle properties before the next Annual Plan. Council also resolved to fund a rates remission budget up to $1.2 million in 2024-25 from a special dividend from HBRIC to help ratepayers facing large increases from the new policy settings (as well as facing hardship through natural calamity related to Cyclone Gabrielle).

17. This item seeks a resolution of Council to adopt these policies prior to adopting the Three-Year Plan 2024-2027.

New content

18. The information contained in the final Three-Year Plan is largely the same as the previously adopted supporting information for consultation but consolidated into a single document and updated for recent decisions.

19. The document has bilingual headings (English and te reo Māori) and a message from the Co-Chairs of the Māori Committee following directly after the message from the Chair and Chief Executive.

20. The cover and graphics throughout the document match the imagery used in the Consultation Document.

21. New material not previously seen by Council includes:

21.1. the Overview that sets the scene and introduces what the Plan is about (Part 1)

21.2. the Engaging with the Community section outlining the public consultation undertaken and the resulting decisions (Part 2)

21.3. updated Financial Statements based on the key decisions (Part 5)

22. the Rates Funding and Funding Impact Statements that were not included in the supporting information for consultation but have since been finalised (Part 5).

Balanced budget

23. Under section 100 of the Local Government Act 2002 (the Act), the Council must ensure that each year’s projected operating revenues are set at a level sufficient to meet that year’s projected operating expenses. Where this is not the case, the Council should resolve that it is financially prudent.

24. As specified in the Financial Strategy (Part 4) and Financial Reporting Benchmarks (Part 5), HBRC has a balanced budget for all three years of this Three-Year Plan. This is shown in the graph below.

25. There are significant grants received for capital works in each of the years to fund the Flood Resilience Programme, however, when these are removed from the figures the balanced budget benchmark is still forecast to be met.

Next steps

26. Under the Local Government Act 2002, the final plan must be sent out no later than one month after Council’s formal approval. Staff will print and bind hard copies in house. These will be available mid-July.

27. The Three-Year Plan 2024-2027 will be available on our website by close of business Tuesday 16 July 2024.

28. Staff will reply to submitters advising them of Council’s final decisions. Submitters will receive a standardised response covering all key decisions made. Tailored responses will be sent to specific submitters.

Decision-making process

29. Section 93 of the Local Government Act 2002 prescribes the statutory requirements in relation to long-term plans. Council must use the special consultative procedure in adopting a long-term plan. This process has been undertaken and reflects the high degree of significance associated with adopting an LTP.

Recommendations

That Hawke’s Bay Regional Council:

1. Receives and notes the Adoption of the HBRC Three Year Plan 2024-2027 staff report.

2. Adopts the strategies and policies included in the Three-Year Plan as required by the Local Government Act 2002 and modifications enabled through the Severe Weather Emergency Recovery Legislation Act 2023 (SWERLA), including the:

2.1. Financial Strategy

2.2. Infrastructure Strategy

2.3. Revenue and Financing Policy

2.4. Treasury, Liability Management & Investment Policy

2.5. Rates Remission and Postponement Policies

2.6. Significance and Engagement Policy

2.7. Fees and User Charges Policy.

3. Adopts a balanced budget for all three years of the Three-Year Plan 2024-2027.

4. Adopts Hawke’s Bay Regional Council’s Three-Year Plan 2024-2027 as presented, with any minor editorial corrections as necessary.

5. Instructs staff to publish Hawke’s Bay Regional Council’s Three-Year Plan 2024-2027 in its final form, within one month of adoption in accordance with Section 93(10) of the Local Government Act 2002.

Authored by:

Chris Comber

Chief Financial Officer

Desiree Cull

Strategy & Governance Manager

Approved by:

Nic Peet

Chief Executive

Attachment/s

HBRC Three-Year Plan 2024-27 for adoption

Under Separate Cover

Hawke’s Bay Regional Council

10 July 2024

Subject: Setting of the 2024-2025 Rates

Reason for report

1. This item is to enable the Regional Council to collect its budgeted rates revenue for the 2024-25 financial year. It follows the legal process, under the Local Government (Rating) Act 2002, for Council to set the rates for the period 1 July 2024 to 30 June 2025.

Background

2. Council must approve the budget, 2024-25 level of rates to be collected, along with the calculation factors in the Funding Impact Statement, as included in the 2024-27 Three-Year Plan prior to setting the rates.

3. Setting the rates enables Council to collect rates for the year.

4. After Council has passed the resolutions setting the rates, staff can start preparing the rates assessments for all ratepayers which will be sent out before the end of August 2024. The 2024-25 rates will be due for payment on 20 September 2024.

5. This Setting of the Rates paper has had a legal review ahead of the Council meeting today.

6. The Local Government (Rating) Act 2002, Section 23 sets out the procedure for setting rates, with the main considerations being that rates must:

6.1. be set by a resolution of the local authority

6.2. relate to a financial year

6.3. be set in accordance with relevant provisions of the local authority’s Long-term Plan and the Funding Impact Statement for the relevant financial year.

7. The Local Government (Rating) Act 2002, sections 13 and 14 (General Rate) section 15 (Uniform Annual General Charge) and sections 16, 17 and 18 (Targeted Rates) explains how each such rate is to be set.

Decision-making process

8. Council is required to make a decision to set rates in accordance with the requirements of the Local Government (Rating) Act 2002 (the Act) including Section 23.

Recommendations

That Hawke’s Bay Regional Council:

1. Confirms that the decisions to be made on the setting and assessing of rates cover information in the Funding Impact Statement for the 2024-25 year as included in the 2024-2027 Three-Year Plan as required by Section 95 of the Local Government Act 2002.

2. Sets the following rates under the Local Government (Rating) Act 2002, on rating units in the region for the financial year commencing on 1 July 2024 and ending on 30 June 2025. These rates are set in accordance with the relevant provisions of the 2024-25 Funding Impact Statement and are inclusive of GST.

2.1. A general rate is set under sections 13, and 131 of the Local Government (Rating) Act 2002 on an estimate of projected equalised capital value as per the following table.

2.2. A uniform annual general charge is set at $125.95 per separately used or inhabited part of a rating unit (SUIP) under section 15(1)(b) of the Local Government (Rating) Act 2002 as per the following table.

2.3. The following targeted rates, as described in the Funding Impact Statement, are set under sections 16, 17 & 18 of the Local Government (Rating) Act 2002 as per the tables following.

2.3.1. Subsidised Public Transport – Based on rating units in Napier and Hastings within a designated valuation roll footprint and equalised capital value

2.3.2. Healthy Homes/Clean Heat – Based on rating units in Napier and Hastings within a designated valuation roll footprint and equalised land value

2.3.3. Economic Development – All non-Residential, non-Lifestyle, or non-Utilities properties based on equalised capital value

2.3.4. Primary Production Pests – Based on non-urban properties and equalised land value

2.3.5. Sustainable Land Management – Based on non-urban properties and equalised land value

2.3.6. Water Quality – Based on non-urban properties and equalised land value

2.3.7. Land Monitoring, Research, and Investigations Science – Based on non-urban properties and equalised land value

2.3.8. Heretaunga Plains Flood Control Scheme - Based on properties within Napier City and Hastings District and equalised capital value

2.3.9. Maraetotara Flood Control – Based on properties in Hastings District within the Maraetotara Flood scheme footprint and capital value

2.3.10. Upper Makara – Based on properties in Central Hawke’s Bay and Hastings District within the Upper Makara Flood scheme footprint and equalised capital value

2.3.11. Upper Tukituki Flood Control Scheme - Based on properties in Central Hawke’s Bay and Hastings District within the Upper Tukituki Flood scheme footprint and equalised capital value

2.3.12. Whirinaki Industrial – Based on properties in Hastings District within the Whirinaki Industrial Flood scheme footprint and capital value

2.3.13. Various Streams and Drainage Schemes

2.3.13.1. Brookfields & Awatoto – Based on properties in Napier City within the Brookfields Awatoto drainage area and capital value

2.3.13.2. Clive & Muddy Creek – Based on properties in Hastings District within the Clive Muddy Creek drainage area and capital value

2.3.13.3. Haumoana Te Awanga – Based on properties in Hastings District within the Haumoana drainage area and capital value

2.3.13.4. Karamū & Tributaries – Based on properties in Hastings District within Havelock North area and capital value

2.3.13.5. Napier, Meeanee, Puketapu – Based on properties in Hastings District and Napier City within the Napier, Meeanee, Puketapu drainage area and equalised capital value

2.3.13.6. Ohuia, Whakaki – Based on properties in Wairoa District within the Ohuia drainage area and capital value

1.1.1.1. Opoho Drainage – Based on properties in Wairoa District within the Opoho drainage area and fixed amount

1.1.1.2. Pākōwhai Brookfields – Based on properties in Hastings District within the Pākōwhai drainage area and capital value

1.1.1.3. Paeroa Drainage – Based on properties in Wairoa District within the Paeroa drainage area and capital value

1.1.1.4. Poukawa Drainage – Based on properties in Hastings District within the Poukawa drainage area and capital value

1.1.1.5. Puninga – Based on properties in Hastings District within the Puninga drainage area and capital value

1.1.1.6. Raupare Enhancement – Based on properties in Hastings District within the Raupare Enhancement area and calculated on area

1.1.1.7. Raupare Twyford – Based on properties in Hastings District within the Raupare Twyford drainage area and capital value

1.1.1.8. Tūtaekurī-Waimate & Moteo – Based on properties in Hastings District within the Tūtaekurī Waimate Moteo drainage area and capital value

1.1.2. Sustainable Homes – Financial Assistance (includes Clean Heat Assistance) Based on value of service provided to specific properties as requested

1.2. The following uniform targeted rates, as described in the Funding Impact Statement, are set under sections 16 and 17 of the Local Government (Rating) Act 2002 as per the following tables.

1.2.1. Coastal Hazards - Fixed amount per separately used or inhabited part based on location

1.2.2. CDEM- Emergency Management - Fixed amount per separately used or inhabited part based on location

1.2.3. Regional Economic Development: Residential and Lifestyle properties as a fixed amount per separately used or inhabited part of a rating unit

2. Sets the due date for payment of rates set for the financial year commencing 1 July 2024 and ending on 30 June 2025 as 20 September 2024.

3. Resolves, in accordance with sections 57 and 58(1)(b) of the Local Government (Rating) Act 2002, that a penalty of 10% be added to the amount of rates from previous financial years remaining unpaid on 18 July 2024. The penalty will be added on 18 July 2024.

4. Resolves, in accordance with sections 57 and 58(1)(a) of the Local Government (Rating) Act 2002, that a penalty of 10% be added to the amount of rates for the 2024-25 financial year that remain unpaid after the due date stated above. The penalty will be added on 21 September 2024.

5. Resolves, in accordance with sections 57 and 58(1)(b) of the Local Government (Rating) Act 2002, that a penalty of 10% be added to the amount of rates from previous financial years remaining unpaid on 1 July 2025. The penalty will be added on 1 July 2025.