Agenda of Corporate and Strategic Committee

HAWKE’S BAY REGIONAL COUNCIL

Corporate and Strategic Committee

Wednesday 14 September 2011

SUBJECT: Opportunities for further improvement of Regional Council Services

REASON FOR REPORT

1. On June 8, 2011 the Regional Council resolved to:

“Carry forward in project 840001 $50,000 from 2010/11 to 2011/12 to provide funding for efficiency and effectiveness studies in relation to Regional Council Activities.”

2. Subsequently at the 27 July Council meeting a further resolution was made:

“To engage McGredy Winder & Co to prepare a report on the advantages of shared services and how best this should be structured with references, if any, in joining another LASS, specifically the Manawatu/Whanganui LASS or with joining a Hawke’s Bay LASS should one be formed.”

3. $10,000 from the above fund was allocated to this study.

4. A further resolution was made to “investigate efficiency gains that can be made from investigating shared services with neighbouring regional councils”.

5. This paper briefly:

5.1. Examines the economic profile of Hawke’s Bay over the past decade, identifies its performance, where there are broad structural issues and in general terms the strategic response and/or opportunity for improvement or additional growth.

5.2. Re-states the purpose of the Hawke’s Bay Regional Council (HBRC).

5.3. Considers how the HBRC’s investment funds are being utilised for both intergenerational activities and regional scale investments.

5.4. Looks at some of the key issues and challenges present within the current and future environment that require a long-term strategic response from HBRC and what it is either doing or might do.

5.5. Identifies significant partnership opportunities with institutions operating in broadly the same or complementary business space.

5.6. Suggests where investment and service delivery arrangements might be made to best position HBRC to both deliver greater efficiencies for the community, and also deliver more effective services which make a difference for the region over the long-term.

5.7. Proposes what HBRC needs to do in the short term, i.e. next two months ahead of the Long Term Planning phase in establishing a detailed action plan.

Hawke’s Bay Regional Economic Performance*

(*Data has been provided by Economic Solutions Ltd)

6. Hawke’s Bay’s economy is largely an open economy, i.e. dominated by primary production and export and therefore exposed to international and domestic market fluctuations.

6.1. The primary production and related processing sector, accounts for 35% of total regional Gross Domestic Product (GDP), compared to 14% nationally.

6.2. The Hawke’s Bay percentage increases well beyond the above figure when all those industries servicing the rural sector (e.g. specialised manufacturing, energy supply, building construction, wholesaling and retailing of rural supplies, Port of Napier and road/rail freight transport, communications and business/financial services) are also taken into account.

7. Of significance is that over the past decade the region has consistently tracked in line with national economic indicators but in one or two notable areas performed better. When profiled against other like regions, i.e. those dominated by the primary sectors Hawke’s Bay is performing well.

8. Since 2001 the Hawke’s Bay’s population has increased by 5.1% which is less than half that of the national increase at 12.6% (dominated by Auckland) but well ahead of other comparable regions such as Taranaki, Manawatu/Whanganui, Gisborne and Southland.

9. Since 1998, the overall economic standard of living in Hawke’s Bay, as measured by the indicator ‘real GDP per capita’, has risen by 26.4%, compared to 17.3% nationally. This year (March 2011 year-end), the level for this indicator in HB stood at 95% of the national figure, compared to 88% in 1998.

10. In June 2011, the rate of unemployment in HB stood at 5.7%, compared to 6.4% nationally. The rate of unemployment in the region has fallen from 10% in September 2009 and 10.6% in September 1998.

11. Total GDP for the combined Napier-Hastings Territorial Local Authority (TLA) area has increased by 36.2% in real terms since 1998 (compared to 36% nationally).

12. The total number of businesses in Hawke’s Bay has increased overall by 22.7% since Year 2000, compared to 26.2% for Napier-Hastings and 23% nationally.

13. The primary sector in particular pastoral hill country, has suffered from 4 years of drought and this reduced value added economic activity over the period 2005/06-2008/09 by $326 million across the East Coast.

14. However, in the past year as climatic conditions have improved, coupled with a surge in international demand for and pricing of food, and forest products has resulted in a 7% increase in real GDP across the total rural production sector. The expectation is that the trend for rising food prices (which are at a historical high) will continue, but there is some softening of forest product prices.

15. A structural issue for the Hawke’s Bay economy is its dependency on the primary sectors and therefore production of commodity products for export. It shares this profile with a number of other regions through New Zealand. Hawke’s Bay no longer has a substantial central government sector present, post the mid-1980s reforms and nor does it have a significant knowledge based sector centered around a combination of a University and Crown Research Institutes. A further social dimension is that the primary sector is a comparatively smaller employer than the service sectors and to some degree this ends up being reflected in employment and income statistics.

16. The recent formation of Business Hawke’s Bay is encouraging in that a core focus for the network is to draw in new business activities to Hawke’s Bay – in effect utilising the well developed supply chains here, good climate and strong social fabric.

17. In the primary sectors, to reduce manageable as opposed to unmanageable volatility, it is very clear that building increased resilience into hill country farming systems from both a land use and income perspective is a major priority. On the extensive plains within the region, delivering secure and sustainable water for irrigation offers an opportunity to substantially increase economic performance as well as diversifying further the agricultural/horticultural base.

18. Further investment in the supply chain which secures the Port’s future is also critical especially as increasingly the Port is in competition with others in drawing cargo from the central and southern North Island.

19. In addressing the knowledge sector question it seems logical that drawing additional national scale R&D programmes and the capacity into Hawke’s Bay would be desirable and if so, the primary and food processing sectors would offer the best focal point for such activity.

20. In recent times activity on Treaty of Waitangi settlements has been scaled up and there are now seven out of nine claimant groups mandated in the region. Settlement redress typically covers issues of cultural redress and economic redress. With regards to cultural redress, the course of action currently being implemented is to involve claimant groups in co-governance of natural resources with HBRC. Economic redress will, to some degree, involve moving assets owned by the Crown to Iwi and this conversation is purely between the Crown and Iwi. Successful Treaty Settlements have to be beneficial for Iwi self reliance and prosperity in the medium and long-term and hence regional prosperity.

21. Local Government represents approximately 1.8% of regional GDP. As such it’s influence over regional economic activities tends to be facilitative rather than direct through regulations, planning, contracting of operations, etc. It does however have a role in the provision of infrastructure and, in the case of the Territorial Authorities this is focused predominantly in the built environment (with the exception of rural roads) where as in HBRC’s case the infrastructure provision is targeted at regional scale infrastructure associated with the primary sector and export economy.

Regional Council purpose

22. The Regional Council operates in predominantly four major areas:

22.1. Governance and management of natural resources land air and water. Assets on which our primary sector and export economy is based

22.2. Assessment of natural hazards, including floods earthquakes, tsunamis, and where possible mitigation through statutory planning and infrastructure

22.3. Strategic planning at the regional scale delivered through the statutory instruments including the Regional Policy Statement, the Regional Land Transport Plan, the Regional Pest Management Strategy, and

22.4. Provision of Regional Scale Infrastructure, including the Port of Napier and the flood protection assets which protect Urban populations of approximately 120,000 people and much of the intensive land use industries and food processing assets in Hawke’s Bay.

How HBRC is Funded?

23. HBRC is fortunate in having a sound investment portfolio. The original logic for ownership of these assets on behalf of Hawke’s Bay people was to assist HBRC fund expensive and complex natural resource and environmental management activities. These are typically less appealing to many ratepayers who understandably better relate to funding of direct community services. The integrity of this construct has been maintained by successive Councils over a number of years. In more recent times the Council has also determined that it needs to manage the capital base to provide for new regional scale infrastructure which supports both the environment and sustainable long-term development of the economy. The following tables identify:

23.1. The overall revenue profile for HBRC.

23.2. The use of investment income with regards to core activities.

23.3. The use of investment capital to build the regional economy over the past four years.

Table 1: total funding by source

Funding	2011/12 Annual Plan
Funding	$ Million	% of Total
General Rates	3.3	6.2%
Targeted Rates	10.6	19.9%
Investment Income	11.5	21.6%
Direct charges to customers	5.5	10.3%
Loans	7.9	14.8%
HBRC Reserves	8.6	16.2%
Central Government contract revenue*	5.9	11.0%
Total Funding	53.2	100%

*new line of revenue supporting additional services

Table 2: budgeted investment revenue as a proportion of total activity

Area	% funded via investment income/ gross income in $
Water allocation – plans & science, State of Environment monitoring	55% $1,171,000
Water Quality - plans & science, State of Environment monitoring	66% $788,000
Sustainable land use	39% $2,577,000
Natural Hazard Management	25% $1,770,000
Statutory planning	33% $1,591,000
People & Communities	$1,888,000

23.4. Investment capital is increasingly being applied to fund intergenerational scale infrastructure, which builds resilience into the regional economy.

Table 3: Within Region Capital Investment over the past four years including budgeted this financial year

Activity	Investment by $ and source
PONL inner harbour development	$47 million – borrowed on PONLs balance sheet
Forestry assets for waste water and other uses such as demonstration/recreation	$4.7 million – sale of land reinvestment account
Water storage feasibility studies	$5.04 million – Sale of land investment account / Central government grants
Open space assets including NZ Cycle trail and regional assets such as public domains	$5.16 million - Sale of land non reinvestment account, loans, Central Government grants
Community facility grants to TLAs – Hawke’s Bay Museum, Waipawa Town Hall, potentially the Regional Sports Park and or other assets	$5.63 million – Sale of land non reinvestment account and loans

24. The delivery of effective services in each of the core operating areas is becoming more challenging and complex.

25. In the area of natural resource management, delivering clean and plentiful water for all users is a very significant activity. In the next decade it might be possible to almost double the irrigated land within the region, but to do so will require considerable change in water allocation and management processes. In some areas large scale infrastructure will be required. The objective is to relieve pressure on extraction of water from rivers and ground water which currently compromises summer low flows. This infrastructure would however also enable irrigation of currently dry land on a large scale. Feasibility projects are currently underway exploring these opportunities and addressing the environmental costs and benefits.

26. The Christchurch Earthquakes have challenged the Civil Defence capacity and systems in that area. Hawke’s Bay has expanded its Civil Defence capacity and will be focusing significant attention on recovery and preparedness. Given climate change scenarios there is active consideration in expanding the flood protection to a 500 year versus current 100 year design standard.

27. In the area of strategic and statutory planning there have been some real advances within the region, including development of the Heretaunga Plains Urban Development Strategy. A Regional Land and Water Strategy is also nearing completion.

28. In Auckland major investment decision making across the entire public sector is being debated and planned via the Auckland Spatial Plan. Notably this plan is being developed for a population of 1.4 million people, expected to grow to over 2 million in the next three decades. Were a similar planning framework to be adopted here, it would seem to make sense that it be applied over the Central Southern North Island area, noting that the population across the Greater Wellington, Horizons and Hawke’s Bay regions is approximately 750,000. It could cover optimisation of central, regional, and private sector infrastructure planning.

29. With regard to regional scale infrastructure, the business drivers affecting the Port of Napier are increasingly about where international shipping lines wish to call. The challenge being how much cargo the Port can attract from both within and outside of the region to ensure its competitive position. Further substantial investment to sustain its place will be critical.

30. Comment has been made about upgrading flood management infrastructure, which is key to maintaining economic activity. Given that primary production is dependent on secure and sustainable natural resources, winter water storage infrastructure offers the prospect of further growth in the economy and providing, in part, the region with more resilience with regards to drought risk. There is an opportunity to invest in more ‘within farm’ afforestation, particularly of highly erodible land to assist farmers with diversified revenue streams, better resilience for both drought and storm events, and improved water quality. Maintaining a clear focus on these issues will be a fundamental role for HBRC over the next decade.

31. HBRC will also need to work in a more ‘networked’ environment. The days of a single agency having custody and control over complex management issues are gone. In the natural resource management space significant change is underway in related Central Government Departments such as MAF and DoC. There is a clear opportunity for services to be better integrated with Regional Councils in areas such as water management, catchment management, bio-security and biodiversity management. The same opportunities exist between the Southern North Island Regional Councils. The aggregation and maintenance of joint research capacity and possibly spatial planning should be added to the list.

32. Locally with our Territorial Local Authority (TLA) counterparts, there is an opportunity to collaborate and partner in the procurement, delivery and investment in core business platforms. Opportunities such as geographic information systems, financial systems, insurance and archiving standout. Two recent studies on shared services highlight exactly these points (the O’Rouke and Winder reports respectively). In the meantime, HBRC has funded additional roles in the Civil Defence group, co-located with the TLAs across the region, to ensure better preparedness at the community level for major disaster events and better arrangements for recovery from those events.

33. There may also be another interface area between HBRC and the TLA’s that could be streamlined, notably activities that require both TLA building and HBRC resource consents.

34. The McGredy Winder report (currently in draft), suggests an alignment with the Manawatu/Whanganui Local Authority Shared Services Company as associate members only. The value of such an arrangement being the Hawke’s Bay Councils would be able to work with the other region in taking advantage of service and procurement gains already made.

35. In summary, the Regional Council has a clear role which interacts very closely with both Central and Local Government.

36. Its distinct role across natural resource, natural hazard management, regional and potentially inter-regional planning and provision of major regional scale infrastructure needs to be well aligned with the key strategic drivers of Hawke’s Bay future prosperity.

37. HBRC needs to retain a core focus on ensuring the investment funds deliver intergenerational work in the complex natural resource areas and the investment capital is used for critical regional scale infrastructure which unlocks sustainable economic opportunities.

38. In delivering its services, considerable attention will need to be given to how strategic partnerships are constructed, with who and how. In particular, further work in the central government and inter-regional council space is needed to better establish the opportunities, value and delivery methods.

39. Here in Hawke’s Bay, HBRC needs to work closely with Business Hawke’s Bay which is a networked entity involving the Chamber of Commerce and the TLAs as well as HBRC, in particular, to ensure the economic opportunities for the region are expanded and the economy over time becomes more diversified. Progress in this area will take considerable time and likely be achieved via a set of “many small steps”.

40. HBRC also needs to retain a dedicated focus on assisting the primary sectors build resilience, and if possible to expand.

41. There is an opportunity for HBRC and Business Hawke’s Bay’s focus to cross over and complement each other in two areas – expansion of the knowledge economy and inwards processing sector investment.

42. With our TLA counterparts, active implementation of joint initiatives including the Heretaunga Plains Urban Development Strategy and shared service in ‘back office’ functions would logically be the main focus.

43. Finally, with Iwi as a relationship and mutual understanding grows, especially through the Statutory Planning partnership, other opportunities to do things together that benefit Iwi and the wider economy might follow.

Conclusion

44. With regard to the further investment of the $40,000 for efficiency and effectiveness studies for Regional Council effectiveness, the funds might wisely be invested in the following three areas:

44.1. Further scoping of the opportunities for and value of inter-regional council and natural resource sector government department collaboration.

44.2. In collaboration with the TLA’s and potentially Business Hawke’s Bay further analysis and definition on how, over time, the Hawke’s Bay economy might be further diversified and if so, what targets would need to be set.

44.3. Some specific assessment at a detailed level to better harmonisation of HBRC and TLA regulatory requirements’ notably where there are resource and building consents required for the same activity, be initiated, subject agreement with the TLAs.

DECISION MAKING PROCESS

45. Council is required to make a decision in accordance with the requirements of the Local Government Act 2002 (the Act). Staff have assessed the requirements contained in Part 6 Sub Part 1 of the Act in relation to this item and have concluded the following:

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

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

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

45.4. The persons affected by this decision are members of the community that benefit from the activities of Council.

45.5. Options that have been considered are detailed within this paper.

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

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

RECOMMENDATIONS

The Corporate and Strategic Committee recommends that Council:

1. Agrees that the decisions to be made are not significant under the criteria contained in Council’s adopted policy on significance and that Council can exercise its discretion under Sections 79(1)(a) and 82(3) of the Local Government Act 2002 and make decisions on this issue without conferring directly with the community and persons likely to be affected by or to have an interest in the decision due to the nature and significance of the issue to be considered and decided.

2. Approves the investment of $40,000 for efficiency and effectiveness studies be invested in the following three areas:

2.1. Further scoping of the opportunities for and value of inter-regional Council and natural resource sector government department collaboration.

2.2. In collaboration with the TLAs and potentially Business Hawke’s Bay, further analysis and definition of how the Hawke’s Bay economy might be further diversified and if so, what targets would need to be set.

2.3. Some specific assessment at a detailed level to better harmonisation of HBRC and TLA regulatory requirements’ notably where there are resource and building consents required for the same activity, be initiated subject to agreement with the TLAs.

Andrew Newman

Chief Executive

Attachment/s

There are no attachments for this report.

HAWKE’S BAY REGIONAL COUNCIL

Corporate and Strategic Committee

Wednesday 14 September 2011

SUBJECT: Investment Company Board Structure and Composition

REASON FOR REPORT

1. At its meeting on 29 June 2011, Council approved in principle the establishment of an investment company to improve investment performance and to further the strategic goals of Council.

2. Council also approved the process for its establishment and called for the first step in this process, being submission of a further paper dealing with issues of:

2.1. Company constitution and name

2.2. Size and composition of its Board in terms of number of directors, number of councillor directors, number of independent directors, whether the chairperson should be a councillor or not, the terms and conditions of their appointment

2.3. Its physical location and registered office

2.4. The assets to be transferred from Council to the company

2.5. The company’s funding structure

2.6. The options around managerial oversight.

3. Establishment depends, in the first place, on the form of governance and management of the investment company. Once these issues are resolved, the establishment process can move to issues of name, constitution, registered office, assets to be transferred, funding structure and other matters.

4. This report therefore addresses these first key issues by setting out options for governance and management for the Committee’s consideration.

Background

5. Council has approved establishment, in principle, of an investment company to achieve:

5.1. Increased financial performance from the investments held by the company, compared with currently achieved financial performance

5.2. Growth of the investment portfolio’s value

5.3. Enhanced economic development of the Hawkes Bay Region through active investment in commercially sound strategic infrastructure projects.

6. Council is also evaluating new infrastructure projects, such as the Ruataniwha Plains Water Harvesting Scheme, which may lead to potentially significant new investment in the future. At the same time Council’s largest single existing investment asset, the Port of Napier Limited, has signalled a number of new development projects it is interested in, progress of which may call for further investment by Council.

7. These developments could have substantial financial and economic impacts on Council and the Hawke’s Bay region. The Council investment company could play a major role in facilitating these investments.

8. Establishment of the investment company now will therefore ensure it is available to Council to use to progress its wider infrastructure development and investment programme.

OPTIONS FOR GOVERNANCE AND MANAGEMENT

9. A range of governance options have been considered in the preparation of this paper. Two principal options are presented following, for consideration.

Staged Process Option

10. The governance structure should reflect the development of the investment company from initially holding a single large asset – the Port of Napier Limited to, in time, holding a range of major assets, the first new one of which is likely to be Waterco.

11. To match this growth of the investment company, the governance structure would be put in place in two steps which are:

11.1. Appointing an initial “establishment Board” for the period from November 2011 through to December 2012 of, say, three persons, which will be responsible for:

11.1.1. Broadening the long term strategic vision for the investment company

11.1.2. Implementing Council’s investment decisions in the short term

11.1.3. Taking whatever steps are required to establish Waterco if Council decides to proceed with water harvesting on the Ruataniwha Plains, and other investments as outlined in Section 6 above

11.1.4. Monitor the process of establishment.

11.2. From December 2012, the Board numbers and composition could be increased to reflect the increased complexity and scope of the investment company business.

12. Consideration would need to be given to the mix of councillors or council officers and independent persons on what will become the Full Board of the investment company in December 2012.

13. Consideration would also need to be given to whether the Chief Executive of Council is appointed a member of the establishment Board as Managing Director of the investment company or whether he is appointed Chief Executive of the investment company reporting to the establishment Board, but not a member of it.

14. Recruitment of independent directors could parallel planned recruitment of new directors for the Port of Napier Board, due to be appointed on retirement of some current directors in December 2012. Recruitment, evaluation and selection of directors is a slow process, but running both the investment company and Port recruitment processes in parallel will be more efficient and should give Council a wider range of candidates from which to select both Boards.

15. Costs of an establishment Board will be met from within existing budgets.

Direct to Full Board Option

16. Alternatively, Council could move directly to appointing a full Board with effect from, say, the end of March 2012, which would undertake the full responsibilities for the investment company including those outlined in Section 11.1 above.

17. This option would still require consideration of the size and composition of the Board as outlined in Sections 11.2 and 12 above, and consideration of the position of the Managing Director or Chief Executive of the company as outlined in Section 13 above.

18. Recruitment of independent directors would not be done in conjunction with recruitment of new directors for the Port of Napier. This recruitment process would take place over the period November 2011 to February 2012.

Next Steps

19. Once decisions are made about the governance and management of the investment company, the next steps in its establishment are:

19.1. Drafting the company constitution, and other documentation including indicative Statement of Intent and resolving asset transfer procedures and funding arrangements

19.2. Establishment of the company’s operating systems.

19.3. Full development of procedures for recruiting and appointing directors, drafting Board protocols and management systems.

DECISION MAKING PROCESS

20. Council completed a special consultative process on the proposal to consider the establishment of an investment company. This consultation process was undertaken during April and May 2011.

RECOMMENDATIONS

The Corporate and Strategic Committee recommends that Council:

1. Notes that a special consultative process has been undertaken during April and May 2011 on the proposal to establish an investment company.

2. Approves the adoption of the staged process option of governance, initially appointing there persons to the establishment Board for the terms of appointment up to December 2012 and, subsequent to that date, to develop an appropriate Board structure to effectively control governance of the Company and all its interests into the future.

3. Approves the appointment of the Chief Executive of Council as a member of the Board of the investment company and as its Managing Director.

4. That two further establishment directors that have the appropriate skills for appointment to the establishment Board of the investment company be identified.

Paul Drury

Group Manager

Corporate Services

Fenton Wilson

Chairman

Attachment/s

There are no attachments for this report.

HAWKE’S BAY REGIONAL COUNCIL

Corporate and Strategic Committee

Wednesday 14 September 2011

SUBJECT: High Ultra Manuka Factor (UMF) Manuka Honey Trial

REASON FOR REPORT

1. The Tutira Country Park Operational Management Plan 2009-2014 includes an objective to encourage the reversion of the steep slopes on the Western side of Table Top to revert to native bush. This process is to be achieved through light grazing.

2. Staff are currently working through the potential of high Ultra Manuka Factor (UMF) Manuka honey as an investment opportunity for Council. Staff believe that this crop could provide an effective nurse crop to assist Council achieve the objectives for this area of the Park more quickly, while providing a significantly greater return to Council than it currently receives through a grazing lease.

3. This paper outlines the opportunity and seeks Council agreement to planting an initial block of approximately 45 hectares, or approximately one third of the area over which this objective applies. The planting is proposed to be done in April/May 2012, and therefore would require unbudgeted funding from Council’s investment reserves.

Background

4. High UMF honey has strong antiseptic and health/healing properties and is currently being developed and marketed both in New Zealand and overseas. It could potentially be an effective steep hill country land use change tool as it delivers very good financial returns in a steep hill country context. A high UMF Manuka project trial has been scoped by forestry consultants Hardwood Management for Tutira Country Park.

5. The honey off take partner would be Comvita Ltd. The scoping document indicates that the returns to Council will comfortably meet Council’s hurdle rate of 7% before tax return on investment.

6. As part of the Long Term Plan investment process a business case is being prepared for a regional forestry programme. This business case will initially be presented to Council as part of the LTP workshops with additional detail being refined through the LTP process. One afforestation investment option being investigated by staff is Ultra Manuka Factor (UMF) Manuka honey.

7. Comvita Ltd is a New Zealand based company with an annual sales volume of $80m. They have a range of NZ based Manuka honey product sales and US Federal drug agency (FDA) approval to supply high UMF honey for antiseptic wound dressings to the US medical dressings market. They have made a significant investment in high UMF Manuka genetic stock. Their US partner Derma Sciences is publically listed on the Nasdaq US stock exchange. Derma Sciences webpage can be viewed at http://www.ir.dermasciences.com/profiles/investor/DetailedQuote.asp?page=d&f=1&BzID=1109&to=sd&Nav=0&LangID=1&s=302&sm_quote_field=DSCI

8. Tutira Country Park has approximately 140ha that has been identified under the Management Plan for reversion to native bush. All of this area could be planted with high UMF Manuka seedlings.

9. It is intended that approximately 140 hectares of Tutira Country Park would be planted in high UMF producing Manuka. This would be a staged investment with approximately 45 hectares planted in April/May 2012. The remaining area would be planted in the following year, subject to agreement from Council for this proposal. Comvita recommends 100ha minimum as an area to harvest UMF honey from, to increase the likelihood of the UMF levels in the honey.

10. The costs of the establishment of this area are as below:

Planting 45 hectares at $2,000 per hectare	$90,000
Funding of the trial four hectare block	$16,000
Legal/miscellaneous costs	$4,000
Total	$110,000

11. The risks specific to Manuka honey are that the Manuka areas planted fail to establish or that returns from honey do not meet projected levels. The modelled returns suggest that there would need to be significant failure in honey returns before the investment would be at risk of not meeting Council’s 7% ROI hurdle rate.

12. There are still a range of matters to be worked through to ensure this meets Council’s investment and land use change needs. These are discussed in brief below and will be worked through by staff before a final commitment is made.

13. Staff are currently seeking legal advice on the apiculture agreement that would be entered into between Council and Comvita. Key elements for Comvita are the protection of their IP and genetic stock from competitors. Key elements for Council are the financial return, and the implications for any future changes at Tutira Country Park that could impact on Council’s commitments to Comvita accessing the Manuka honey.

14. Planting areas will be designed to ensure walking tracks through the park are maintained. Effective weed control throughout the Park will also need to be maintained as will other maintenance and enhancement work. Budgets will be reviewed for this and included into Council’s draft LTP 2012/22 Council consideration.

15. Staff have had initial discussions with the current lessee of the property about the proposal. The lessee is very supportive of the initiative. Further detailed discussions will need to be held to revise the grazing lease for the property.

16. While it is yet to be finalised it is likely that the investment portfolio will pay a commercial land lease back to the Council for the use of the land for high UMF honey production. These arrangements will be worked through and budget implications included in Council draft LTP 2012/22.

17. Staff have agreed with Comvita that subject to letters of intent being signed, Council will commit to purchasing high UMF seedlings sufficient to plant up to 50ha in April/May 2012. The agreement is that if Council chooses not to enter into a contract with Comvita then the nursery holding cost estimated at $5,000 of those seedlings will be met by Council.

DECISION MAKING PROCESS

18. Council is required to make a decision in accordance with the requirements of the Local Government Act 2002 (the Act). Staff have assessed the requirements contained in Part 6 Sub Part 1 of the Act in relation to this item and have concluded the following:

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

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

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

18.4. The persons affected by this decision are the users of Tutira Country Park, the grazier, and the local community.

18.5. Options that have been considered are to decline the proposal, or to proceed as set out in the report.

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

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

RECOMMENDATIONS

The Corporate and Strategic Committee recommends that Council:

2. Agrees to encourage the reversion of the steep slopes on the western side of Table Top within Tutira Country Park to revert to native bush, through the establishment of an initial area of approximately 45ha of high Unique Manuka Factor Manuka in April/May 2012, plus the costs of the 4ha trial block, at an estimated cost of $110,000 to be funded from Council’s Sale of Land Reserves which will include a charge for use of funds.

3. Delegates to the Chief Executive, authority to finalise a contract with Comvita at terms and conditions acceptable to Council.

4. Notes that appropriate budgets for the establishment of the remaining area of approximately 95ha in high UMF Manuka will be included in Council’s draft LTP 2012/22, subject to the satisfactory outcome of the outstanding issues.

Campbell Leckie

Manager Land Services

Mike Adye

Group Manager

Asset Management

Attachment/s

1	High UMF Manuka Honey Business Case		Under Separate Cover
2 View	Manuka Honey - Investment Matrix Report

Manuka Honey - Investment Matrix Report

Attachment 2

Subject: Manuka Honey Investment

Prepared by: Hawke's Bay Regional Council Staff

Completed: 9 September 2011

The following report provides an investment matrix and potential investment returns for Council's proposed involvement in high UMF manuka for honey production. The criteria as set out below is as adopted by Council on 30 April 2008 as Council's ''Policy on Evaluation on Investment Opportunities''.

1. Background

1. High Unique manuka factor (UMF) honey has strong antiseptic and health/healing properties and is currently being developed and marketed both in New Zealand and overseas. It could potentially be an effective steep hill country land use change tool as it delivers very good financial returns in a steep hill country context. A high UMF manuka project demonstration area has been scoped by forestry consultants Hardwood Management for Tutira Country Park.

2. The honey off take partner would be Comvita Ltd. Comvita Ltd is a New Zealand based company with an annual sales volume of $80m. They have a range of NZ based manuka honey product sales and US Federal drug agency (FDA) approval to supply high UMF honey for antiseptic wound dressings to the US medical dressings market. They have made a significant investment in high UMF manuka genetic stock. Their US partner Derma Sciences is publically listed on the Nasdaq US stock exchange. Their webpage can be viewed at: http://www.ir.dermasciences.com/profiles/investor/DetailedQuote.asp?page=d&f=1&BzID=1109&to=sd&Nav=0&LangID=1&s=302&sm_quote_field=DSCI

Property Details

Tutira Country Park is a regional council park based around Lake Tutira. It has approximately 140ha of steep slopes that has been identified under the park Management Plan for reversion to native bush. All of this area could be planted with high UMF manuka seedlings.

Stage 1 – Initial Filter

This initial filter are simple measures, the application of which will permit immediate filtering of a large proportion of investment opportunities in an objective manner.

The initial filter places this investment proposal in the category to advance to Stage 2 of the evaluation process.

Stage 2 – Subjective Evaluation

Phase 1 – Intuitive Assessment

This phase involves the completion of an intuitive assessment which will be completed by Council Executive. The purpose of this phase is to assess whether a proposed investment is not inconsistent with the values and objectives of the Council and has potential to contribute to the four wellbeings as set out in the Local Government Act.

Is this asset consistent with the values and objectives of HBRC?	1	2	3	4
Does this asset have non-economic benefits?	1	2	3	4
Is there long term potential through changing use or other development?	1	2	3	4
Is this a strategic, rather than investment asset?	1	2	3	4
Is there an economic growth potential for the region as a result of HBRC ownership?	1	2	3	4
Does the risk profile of this asset improve over time?	1	2	3	4
Does the asset fit with regional social and economic trends?	1	2	3	4
Are there significant opportunities to advance HBRC objectives in the long term?	1	2	3	4
Is the present cost of ownership justified by the expected or possible future gains?	1	2	3	4
Is there an opportunity for the Council to show environmental leadership from this asset?	1	2	3	4
SCORE	32
PASS SCORE	20

1	No
2	Fair chance
3	Good chance
4	Yes

Phase 2 – Weighted Assessment Matrix

This matrix requires the completion of a subjective evaluation of 11 criteria that are considered to be the essential determinants of a good investment opportunity for Council. Each of the 11 criteria below have been evaluated by Council staff to enable the completion of the weighted assessment.

	Feature	Score Range		Score	Weighting	Contribution		Maximum
1	Location	1-5		4	5	20		25
2	Four Well-beings	1-5		4	5	20		25
3	Lease Term	1-5		5	3	15		15
4	Revenue Risk (tenant)	1-5		4	4	16		20
5	Capital Protection	1-5		3	5	15		25
6	Capital Growth	1-5		2	3	6		15
7	Management Intensity	1-5		4	4	16		20
8	Liquidity	1-5		2	2	4		10
9	Value Quantum	1-5		2	3	6		15
10	Cash Return	1-5		3	3	9		15
11	Vision Compatibility	1-5		5	5	25		25
			Weighted Score				152
			Maximum Weighted Score					210

Score	Zone	Result
0-110	Red	Decline
111-130	Amber	Further Analysis
131-210	Green	Proceed

Stage 3 – Objective Evaluation

Independent consultants Hardwood Management have prepared a project proposal. This indicates that the project comfortably meets the 7% return on investment rate hurdle for Council investments. This project proposal is attached.

Stage 4

As this investment proposal passes all stages of the policy on the evaluation of investment opportunities, it is now necessary for Council to determine what further action is to be taken on this project.

APPENDIX A

WEIGHTED ASSESSMENT

Modification of a generic evaluation of an investment prospect can be achieved through a weighting system that reflects the specific objectives and key criteria of HBRC. These weightings can be considered in isolation from a prospect and can be amended from time to time to reflect differing conditions or changed objectives.

1. Location

Location considerations here are based upon growth potential and capacity of site to attract an occupant or user. We consider location a key factor in risk mitigation and given the HBRC adversity to risk have weighted this measure at 2.

We have added a premium to the scoring range for Hawke’s Bay property to reflect the preference for investment in the region.

Scoring Range	1 to 5
Hawke’s Bay Scoring Premium	2
Score Weighting	5

Assessed score 4

The location of this proposed investment on Council owned land with HB enable Council full control over the investment. It also allows Council to utilise this as a demonstration area for an alternative approach to soil conservation and regeneration of native bush on low productivity steep hill country farm land. The area of 140ha of proposed planting is adequate (minimum of 80ha is recommended) to minimise the risk of dilution of the high UMF factor honey by honey from other plants.

2. Regional Economic, Social, Cultural and Environmental Well-Beings

Considerations here are based upon regional benefit. Investment in infrastructure or social servicing would score highly. Investment possibilities include those that are beyond the scope or appeal of the private sector from a cost or return perspective.

We consider this a key aspect in terms of the LTCCP objectives and goals and have applied a weighting of 5.

Scoring Range	1 to 5
Score Weighting	5

Assessed score 4

Council is seeking more activity associated with sustainable land management. Staff have identified high UMF manuka as a possible land use tool providing an alternative land use and income source for steep hill country in HB. This initiative could lead to improved economic and environmental performance for some hill country pastoral farming. The use of manuka as a nurse crop for regeneration into native bush is a positive contribution to cultural values.

3. Term of Revenue Return

For investment properties the term is important to HBRC as it is affects risk and longevity of ownership. For example, leases of less than five years scoring below 2, while 12 years or more would score 5.

Scoring Range	1 to 5
Score Weighting	3

Assessed score 5

This investment once established (expected to be 3 years before extensive flowering sufficient to produce commercial quantities of honey), is expected to provide returns to Council for at least 20 years, when native regeneration could reduce the UMF factor of the honey produced through dilution.

4. Revenue Risk

This is a measure of tenant/occupier substance and the capacity of the tenant/occupier to meet obligations.

Scoring Range	1 to 5
Score Weighting	4

Assessed score 4

Returns on this investment will be dependant on the value of the high UMF honey produced from the plantings. A portion of the return is also reliant on an active ongoing carbon market. As the investment is on Council owned land there is little risk associated with the tenant/Council relationship, other than contractual obligations associated with the intellectual property of the crop, and honey collection and marketing arrangements. There is a small risk of honey being collected through hives on neighbouring land, however effective relationships between Comvita and bee keepers will minimise this risk.

5. Capital Protection

The most important factor to HBRC is protection of existing capital, thus the applied weighting to this factor is the highest adopted. Capital quantum should be considered in a real value sense.

Scoring Range	1 to 5
Score Weighting	5

Assessed score 3

The plantings will be high UMF manuka genetic stock which is the intellectual property of Comvita. Should the planting fail to produce the revenue expected, or Council wish to negotiate out of the contract for whatever reason, then to protect their IP, Comvita will be within their contractual rights to destroy the crop.

6. Capital Growth

While desirable, capital growth (beyond real value) is not a critical factor. There is however a trade off between capital growth and cash flow and so the scoring for this aspect should be considered in conjunction with cash flow. The trade off also has an impact on inter-generational equity.

Scoring Range	1 to 5
Score Weighting	3

Assessed score 2

There is little opportunity for capital growth of this particular initiative. However there is potential for the further expansion of this initiative as a tool to encourage change in land use, particularly on steep erodible hill country.

7. Management Intensity

HBRC have no desire to acquire properties that have an intensive management requirement.

Scoring Range	1 to 5
Score Weighting	4

Assessed score 4

Management of this investment will require ongoing control of weed and animal pests, management of contractual arrangements and obligations, and maintenance of relationships with contractual parties and in some cases neighbours. This is not expected to require significant staff or external input.

8. Liquidity

Initial evaluation will be based upon a preference for long term holds, rather than active medium term trading to maximise investment cycles. Accordingly liquidity has been given a weighting of 2.

Scoring Range	1 to 5
Score Weighting	2

Assessed score 2

There will be little opportunity to dispose of or realise any value from this investment upon sale or disposal. However this is a relatively small investment with other benefits in terms of the long term management of Tutira Country Park.

9. Value Quantum

HBRC have a preference for higher valued investments due to the reduced market competition and reduced management requirement. Higher valued investments tend to have a longer investment profile and provide long term capital growth opportunities with lower risks and less revenue volatility.

We see sub $3.0M property scoring 2 or less and $10m plus property scoring 4 or more.

Scoring Range	1 to 5
Score Weighting	3

Assessed score 2

The total investment to be made by Council on this project will be between $300,000 and $350,000, excluding any allowance for land costs. Accordingly this is a small investment in terms of these criteria.

10. Cash Return

HBRC’s long term horizon reduces the importance of revenue or cash return, however there remains a need for rate subsidisation and a market related return on capital relative to risk. Intergenerational equity is a consideration and cash returns should ideally approximate term deposit rates. As HBRC are not a tax payer, the tax advantages available to many property investors are not motivators to HBRC; unless a separate investment entity is created. The scores should be tied to specific return expectations and will need to be monitored in conjunction with prevailing market interest rates.

Scoring Range	1 to 5
Score Weighting	3

Assessed score 3

The current world market for high UMF honey products is large and growing. Product is currently constrained by supply. Accordingly while there is some risk in this investment, there is also some real potential for growth in returns. Considered on its own the return on investment is very good, however this potential is to some extent offset by the risk.

11. Vision Compatibility

HBRC has a goal of being a good corporate citizen and needs to invest in assets that are consistent with its role as guardian of the environment and regional resources. It is also desirable that proposed investments are consistent with Council's strategic goals and do not conflict with ethical considerations.

This criteria is considered to be vital to the evaluation and has accordingly been given a weighting of 5.

Scoring Range	1 to 5
Score Weighting	5

Assessed score 5

The Management Plan for Tutira Country Park is for the regeneration of the steep slopes under Table Top in native bush. Manuka is an effective nurse crop for regenerating bush. This opportunity will assist in Council meeting this objective.

Council is also seeking improved environmental and economic performance from steep hill country pastoral farming. This is a potential tool to assist with that process.

Proposed Deed of Commitment

Attachment 2

Proposed

Deed of Commitment

BETWEEN

Hawke’s Bay Regional Council (“HBRC”)

AND

Mana Ahuriri Incorporated

Maungaharuru-Tangitu Incorporated

Ngāti Hineuru Iwi Incorporated

Ngāti Pāhauwera Development and Tiaki Trust

(each a “Tangata Whenua Party” and together the “Tāngata Whenua Parties”)

INTRODUCTION

The tāngata whenua of Hawke’s Bay and the Hawke’s Bay Regional Council care deeply about Hawke’s Bay and its environment. We all have responsibilities around the management of resources that we believe are best met by working together.

The HBRC has delegated responsibility under legislation for various matters (as set out in clause 2.8 of this Deed), including the management of the natural and physical environment under the Resource Management Act 1991.

In recognition of the Treaty of Waitangi and the relationship between tāngata whenua and the management of natural resources, a joint approach to that management is being developed by the parties. This joint approach includes the establishment of a committee of the HBRC to develop and review policy statements and plans prepared under the Resource Management Act.

This Deed of Commitment is prepared and agreed to by all parties in good faith as a measure of our commitment to working together for the long-term benefit of the Hawke’s Bay region.

1 VISION

Ko te tohu Rangatira, ko te oranga o te Taiao

Our achievement will be measured by how well we look after our environment

2 PRINCIPLES

2.1 The parties will abide by the following principles:

Tino Rangatiratanga and Kaitiakitanga

2.2 The HBRC acknowledges the tino rangatiratanga of the Tāngata Whenua Parties and their responsibility to exercise kaitiakitanga for the benefit of present and future generations.

2.3 The Tāngata Whenua Parties recognise the role of the HBRC in representing the interests of the regional community.

Representation

2.4 The basis of the relationship between the parties will be between elected representatives of the HBRC and appointed representatives of the Tāngata Whenua Parties in the region.

Tīkanga

2.6 In our relationship we will respect and observe tīkanga.

Sustainable Management

2.7 We acknowledge the need for a strong regional economy and good social outcomes in decision making and recognise that such outcomes must be based on the sustainable management of the natural and physical environment.

Treaty of Waitangi and its principles

2.8 We also acknowledge the importance of the provisions relating to the Treaty of Waitangi and its principles in various legislation, and the need to give full effect to those provisions and principles in the management of our natural and physical environment. The functions, duties and powers of the Council are primarily contained within the following Acts:

· Biosecurity Act 1993

· Building Act 2004

· Civil Defence Emergency Management Act 2002

· Hawke’s Bay Endowment Land Empowering Act 2002

· Land Drainage Act 1908

· Land Transport Management Act 2003, and Land Transport Management Amendment Act 2008

· Local Electoral Act 2001

· Local Government Act 2002

· Local Government Official Information Meetings Act 1987

· Local Government (Rating) Act 2002

· Maritime Transport Act 1994

· Resource Management Act 1991

· Soil Control and Rivers Conservation Act 1941

· Transport Services Licensing Act 1989

Mutual Respect and Understanding

2.9 Both parties are committed to quality engagement with each other and undertaking training to ensure that both parties understand each other and the processes of Council. To meet the cost of such training the Council will make provision annually in its budgeting processes.

Living Document

2.10 This Deed of Commitment is a living document and will evolve as the relationship between the parties evolves over time.

3 PROTOCOLS

3.1 In our relationship the following protocols will be observed.

Confidentiality and communications

3.2 We agree that all information communicated to one party by another party in any manner in connection with this Deed will be kept confidential and used by the recipient party only for the purposes of this Deed.

3.3 The consent of all parties will be required before any public announcement is made about any aspect of the relationship between the parties.

Hui

3.4 We will meet on a quarterly basis (in addition to any other committee meetings of the HBRC that we may be involved in). Until the proposed Regional Planning Committee is established, we agree to meet as frequently as is needed.

Representatives

3.5 Consistency of representation is preferred to enable the strengthening of relationships.

3.6 The HBRC representatives at the quarterly meetings will be the Chairperson, the Chief Executive Officer and the Group Manager: External Relations.

3.7 Each Tāngata Whenua Party will advise the other parties of the representative that party has appointed to attend the quarterly meetings on their behalf, and any changes to that appointment.

Disputes

3.8 Should any issue arise in relation to the subject matter of this Deed, the parties will consult in good faith with each other and attempt to resolve such issues.

Amendment

3.9 This Deed may be amended by agreement of the parties.

Changes or additions to parties

3.10 We note that there are various Crown-recognised, mandated groups with tāngata whenua interests in the Hawke’s Bay region, who may not currently be in a position to sign this Deed, even though they support its intention.

3.11 Each of those groups may be joined to this Deed at a later date by executing a Deed of Accession with the parties to this Deed, substantially in the form set out in Schedule 1 to this Deed.

3.12 When a group becomes a party to this Deed in accordance with clause 3.11, it shall be deemed to be a Tangata Whenua Party for the purposes of this Deed.

3.13 Each Tāngata Whenua Party (other than the Ngāti Pāhauwera Development and Tiaki Trust) is, or will be, negotiating the settlement of its Treaty of Waitangi claims with the Crown. As a result of their settlements, it is likely that a new post settlement governance entity (PSGE) will be established which may assume some or all of the roles currently performed by that Tāngata Whenua Party. It is agreed that a PSGE may replace a Tangat Whenua Party and be joined to this Deed by such PSGE and Tāngata Whenua Party.

3.14 Upon receipt of such Deed of Accession by the parties in accordance with clause 3.13, such Tāngata Whenua Party shall cease to be a party to this Deed and the PSGE will be deemed to be a Tāngata Whenua Party for the purposes of this Deed.

Communications

3.15 Upon the signing of this Deed, each party will notify the others of their contact details including the name of their contact person, for the purpose of communications between the parties under this Deed. Any changes to those contact details should be notified to all parties.

3.16 All communications made in relation to this Deed shall be made in writing.

Signed for and on behalf of

Hawke’s Bay Regional Council by

[insert name and title]

Signed for and on behalf of

Mana Ahuriri Incorporated by

[insert name and title]

Signed for and on behalf of

Maungaharuru-Tangitu Incorporated by

[insert name and title]

Signed for and on behalf of

Ngāti Hineuru Iwi Incorporated by

[insert name and title]

Ngāti Pāhauwera Development and Tiaki Trust by

[insert name and title]

Schedule 1

Form of Deed of Accession

(clause 3.11)

Deed of Accession

relating to (insert name)

Dated [ ]

Background

We refer to the Deed of Commitment dated [ ] 2011 between the Hawke’s Bay Regional Council and the Tangata Whenua Parties. Defined terms used in the Deed of Commitment have the same meaning in this deed.

[Insert name] is a Crown recognised, mandated group having tangata whenua interests in Hawke’s Bay. [ Insert name] wishes to become a party in accordance with clause 3.11 (changes or additions to parties) of the Deed of Commitment.

Accession

1. The Hawke’s Bay Regional Council and the Tangata Whenua Parties agree to the accession of [insert name] to the Deed of Commitment

2. From the date of this Deed of Accession [ insert name] shall be deemed to be a Tangata Whenua Party for the purposes of the Deed of Commitment.

Signed for and on behalf of

Hawke’s Bay Regional Council

Tangata Whenua Parties

New Party

Schedule 2

Replacement of [insert name of Tangata Whenua Party] with [name of PSGE]

Dated [ ]

Background

[Insert name] is a party to the Deed of Commitment. In accordance with clause 3.13 (Changes or Additions to Parties) of the Deed of Commitment [insert name of tangata whenua party] wishes to replace itself with [insert name of PSGE] as a party to that Deed.

Accession

1. By executing this Deed of Accession [insert name of PSGE] confirms that it wishes to become a party to the Deed of Commitment

2. From the date of this Deed of Accession [ insert name of PSGE] shall be deemed to be a Tangata Whenua Party, and [insert name of Tangata Whenua Party] shall cease to be a Tangata Whenua Party, for the purposes of the Deed of Commitment.

Signed for and on behalf of

Hawke’s Bay Regional Council

Tangata Whenua Parties

New Party

Top 10 Risks Sept 2011

Attachment 1

Risk Issue 1

Water Quality

Current and planned future position

	Immediate	Mid term	Long term
React	Water quality
Mitigate
Opportunity		By 2012

Baseline Situation and risk (Sept 2009)

· Water quality declining in a number of waterways; especially noticeable during periods of low flow.

· Little recognition by water users of value of water

· Climate change and land use intensification will increase pressure on water resource and water quality.

· Collaboration with CHBDC and Wairoa DC to improve Mahia Beach, Waipawa and Waipukurau sewage treatment

· Public perception from some sectors that proposed new irrigation dams will result in poorer water quality due to change to more intensive land use

· Urban runoff adversely impacting on water quality, particularly on Heretaunga Plains.

· Mohaka/Taharua land use/water quality project underway

· Assessment of water quality trends in Hawke’s Bay being provided at a national level by NIWA with little or no input from this Council.

· Riparian fencing and planting being encouraged through Council’s Regional Landcare Scheme and Fonterra’s Clean Streams Accord.

Risk mitigation approach

· Development of a regional water strategy

· Adaptive management approach to be taken in sensitive catchments and water short areas involving water users, their industry groups, environmental lobby, Iwi, Council

· Science input appropriately targeted to sensitive catchments and risk areas and possible development of new policy

· Continue to collaborate with CHBDC and Wairoa DC and celebrate achievements

· More holistic approach to Council involvement with primary sector being taken by Council with objective of reducing impact of sector on water quality.

· Establishment of web portal through which regional councils can communicate water quality trends.

Mitigation actions completed

· Water Symposium held and reference group established.

Change since March 2011

· Dam feasibility studies Ruataniwha Water Storage progression. These studies include management of intensification of land use such that the risk to water quality is addressed.

· Prefeasibility study for water harvesting in Ngaruroro catchment completed 30 June 2011. Project awaiting decision to move to full feasibility, subject to Council and Irrigation Acceleration fund approvals.

· Development of a land and water strategy ongoing. A draft including land use and water quality was considered by Reference Group in August.

· National Policy Statement for Freshwater Management came into effect on 1 July 2011. This requires regional councils to set water quality limits and timeframe targets in regional plans.

· Proactive approach continues to be taken on Taharua catchment to reduce farming impact on water quality. Draft strategy released in July with 40 responses received.

· Waste water projects for CHB and Mahia Beach progressed.

· Web portal establishment progressed.

Assessment – no change in risk to Council since last assessment. Is receiving on-going attention.

Risk Issue 2

Water Quantity

Current and planned future position

	Immediate	Mid term	Long term
React	Water quantity
Mitigate
Opportunity		Water quantity

Baseline Situation and risk (Sept 2009)

· Surface water/ground water fully allocated in parts of region. (see map attached)

· Considerable investment in science required in future to underpin water allocation and RMA based approach

· NES for measurement of water takes, and ecological flows and water levels being developed by government.

· Process of assessing minimum river flows based on robust instream assessments and allocation limits to be reviewed for surface water and ground water.

· Water Initiatives Group established within Council to focus on water issues.

· Regional Plan change to meet Council obligation associated with NES initiated.

· Current water allocation process will become increasingly confrontational and litigious and adaptive management philosophy required.

Risk mitigation approach

· Development of a regional water strategy

· Council led initiative to investigate water harvesting opportunities, water metering and water use efficiency through rationing and rostering.

· Complete review of minimum river flows and allocation limits for ground water and surface water.

· Science input appropriately targeted to sensitive catchments and risk areas

Mitigation actions completed

· Water Symposium held and well attended.

Change since March 2011

· Considerable science work now ongoing with outputs due between May 2010 and June 2012

· Development of a land and water strategy ongoing. A draft was considered by Reference Group in August.

· Water focus group established

· Review of water allocation model being initiated.

· Feasibility study for water harvesting on Ruataniwha Plains being progressed with governance and stakeholder groups considering water allocation issues.

· National Policy Statement for Freshwater Management came into effect on 1 July 2011. This requires regional councils to set water quality limits/ timeframe targets and water allocation limits and minimum flows in regional plans. It also provides for the involvement of tangata whenua in freshwater planning and management.

· Initial meetings have been held with hapu in the Tukituki River Catchment with regard to the plan change for the Tukituki catchment.

Assessment – no further reduction in risk to Council

Risk Issue 3

Land Use Intensification

Current and planned future position

	Immediate	Mid term	Long term
React	Land use intensification
Mitigate			Land use intensification
Opportunity

Baseline Situation and risk (Sept 2009)

· Media comment questions Council’s effectiveness in managing land use because of impacts of land use on water quality in parts of region

· Land use intensification is resulting in reduced water quality in region’s rivers. This is shown through Council’s SOE monitoring and reporting programme.

· Current RRMP focussed on point source discharges and some members of the public believe Council should regulate land use to deal with non point source discharges.

· Council land management staff able to influence land use practices through relationship and RLS subsidy.

· Council agree to a combined regulatory and collaborative approach using an adaptive management philosophy is most effective in achieving best practice approach by land owners.

· Council implementing science programme designed to understand actual risk and trends associated with land use intensification.

Risk mitigation approach

· Continue to work with primary sector industry groups and groups of farmers to encourage the use of best practice. Council recognises that it must be the champion of the challenge to accommodate land use intensification while protecting water quality.

· Council to identify sensitive catchments and work with communities associated with those catchments to achieve an adaptive management approach.

· Regulation to be developed associated with adaptive management approach, with standards agreed with community.

· Science input appropriately targeted to sensitive catchments and risk areas

· Planning commenced to use Ruataniwha water storage project to raise profile of intensification issues

Mitigation actions completed

· Regional Landcare Scheme reviewed and level of administration reduced.

Change since March 2011

· Dairy liaison group continue to meet.

· Work with Taharua and Huatokitoki communities progressing with nutrient balance model being developed for Taharua. Proactive approach continues to be taken on Taharua catchment to reduce farming impact on water quality. Draft strategy released in July with 40 responses received.

· Development of a land and water strategy ongoing. A draft including land use and water quality was considered by Reference Group in August.

· Land use intensification issues included as part of Ruataniwha water storage feasibility study.

· Land Management team and programmes being restructured to increase focus on influencing uptake on good practice farming and reducing impact of land use on water quality.

Assessment – no change in risk to Council however remains a focus area of work.

Risk Issue 4

Co- Governance of Natural Resources

Current and planned future position

	Immediate	Mid term	Long term
React
Mitigate	Co-management
Opportunity			Co- Governance

Baseline Situation and risk (Sept 2009)

· Management of natural resources is key area for cultural redress for Treaty Claimant groups in Hawke’s Bay

· It is a strategic goal of Council to improve relationships with tangata whenua and local Maori.

· Treaty settlements have potential to make Iwi significant players in Hawke’s Bay economy in the future.

· Cabinet has endorsed a Joint Regional Planning Committee as its preferred co-governance model for Hawke’s Bay (July 2010) to be discussed with the Treaty claimant groups.

· Council has resolved to establish a new Committee to undertake regional planning with the membership basis being equal representation of Councillors & Treaty Claimant representatives.

Improve relationship with tangata whenua and local Maori through range of involvement:

· Co governance – joint Committee of Council

o Involving each Treaty claimant Grouping

o Focussed on Regional Policy Statement, Regional Plan development

· Regular meetings Treaty Claim Groups

o Development of Deed of Commitment to relationship between HBRC & Treaty claimant groups

o Understanding of values important to tangata whenua.

· Capability and Capacity

o Hapu, rohe specific

o Understanding role of RC

o Water quality and other monitoring and reporting

o other resource monitoring

o Involvement in specific projects

· Current initiatives

o Finalisation of details of the Regional Planning Committee

o Financial support for Community Development Unit

o Support for hapu management plans

o Proactive encouragement of hapu involvement in water quality monitoring and data recording through Council website.

Mitigation actions completed

· Council has signed Deed of Settlement with Ngati Pahauwera

Change since March 2011

· Establishment of Regional Planning Committee to undertake Council’s statutory resource management functions, with equal representation of Councillors & Treaty Claimant representatives.

· Further constructive meetings held with Maungaharuru Tangitu Inc,

· Development of Deed of Commitment to underpin the long term relationship between Council and Treaty Claimant groups.

Assessment – no change in risk to Council since last assessment. Is receiving ongoing attention.

Risk Issue 5

Investment Portfolio

Current and planned future position

	Immediate	Mid term	Long term
React
Mitigate		Investment portfolio
Opportunity			By 2015

Baseline Situation and risk (Sept 09)

· Council reliant on income from investments to meet operational costs.

· Some restriction on expenditure of income through Hawke’s Bay Endowment Land Act.

· Investment balance sheet seen as poorly geared and illiquid.

· Investments continually challenged by TLA’s and potentially at risk.

Risk mitigation approach

· The policy on the evaluation of investment opportunities completed and is being implemented.

· Investment Company to be established.

· A number of Investment opportunities have been approved that align to Council goals and for the benefit of the regional economy.

· Review mix and performance of investment portfolio and consider rationalisation of portfolio to proposed investment company being considered by Council.

Mitigation actions completed

· On 29 June 2011 Council approved the establishment of an Investment Company to support Council’s proposed investments in natural infrastructure which will assist with the drive to increase economic development in the region.

Change since March 2011

· Ruataniwha Water Storage Project Feasibility Study progressing. Ngaruroro Water Augmentation prefeasibility study completed.

· Development of additional opportunities being developed for consideration by Council as part of LTP 2012-22 development process.

· Council has approved the realising of value from the Napier leasehold land portfolio by providing discounts to the lessees of this property. Furthermore, Council has instructed staff to report back on the terms and conditions achievable to sell the cash flows from the leasehold properties not sold to the lessees by 30 June 2012.

· In the longer term, Council has agreed to a strategy to increase its level of activity with funding coming from investment returns.

Assessment – risk to Council has the potential to increase as a result of increasing pressure on the portfolio.

Risk Issue 6

Climate Change

Current and planned future position

	Immediate	Mid term	Long term
React		Climate Change
Mitigate			Climate change
Opportunity

Baseline Situation and risk (Sept 2009)

· Climate change generally accepted as having a future impact on Hawke’s Bay

· Predicted impacts:

o Sea level rise predicted of 0.8m by 2100

o Reduced rainfall

o Increased intensity of storms

o Average temperature rising.

· Hazard lines associated with coastal erosion established and incorporated into regional plans.

· Response factored into specific work programmes for asset management (Council infrastructure assets), land management (resilience of region’s primary productive sector), community (healthy homes), and water (water strategy and water harvesting); and into other Council programmes.

· Council assessing and managing its corporate carbon footprint.

Risk mitigation approach

· Continue to take a leadership role on the issue and to factor the potential impact of climate change into work programmes, to position the community to adapt to the changing climate and benefit from opportunities arising from its impacts.

· Undertake an energy audit on Council buildings and pump stations and implement an action plan to reduce energy use.

· Awaiting receipt of sea level rise National Environmental standard to define planning levels.

· Clarity on HBRC role in issue to be developed

Mitigation actions completed

· Achieved Enviromark Bronze and Silver certification

· Carbon sequestration forestry planted

o Waihapua 160ha

o CHB 170ha

Change since March 2011

· Energy audit on Council buildings completed and recommendations implemented, further work to ensure energy efficiency continuing

· Council has been audited and achieved EnviroMark NZ bronze certification in July 2010 and achieved EnviroMark NZ Silver in July 2011.

· Assessment of carbon sequestration potential through plantings on Council owned land continuing.

· Options using carbon forestry opportunity being developed.

· Climate change impacts being included into many Council programmes e.g. Asset Management Levels of Service review and associated provision for mitigation, Land Management projects, policy development.

Assessment – no change in risk to Council
Risk Issue 7

Natural Hazard Risks

Current and planned future position

	Immediate	Mid term	Long term
React		Natural Hazard	Natural Hazard
Mitigate
Opportunity

Baseline Situation & risk (March 2011)

· Hawke’s Bay at risk from a range of natural hazard events with potential to significantly affect the economic, environmental, social & cultural aspects of the community. These include:

o Tsunami

o Earthquake

o Flood

o Volcanic Ash fallout

o Coastal erosion & inundation

· Infrastructure assets administered by HBRC and fixed assets owned by HBRC are at risk from these hazards.

· Council as administering authority for HB Civil Defence Emergency Management Group will play a key role in response to any natural hazard event.

Risk Mitigation approach

· Administering authority for Hawke’s Bay CDEM Group, HBRC active in seeking to improve resourcing of CDEM in HB.

· Commitment to ongoing natural hazards and coastal hazard research and is recognised nationally as proactive in these areas.

· Staff involved in a number of national and local initiatives associated with natural hazards readiness, reduction and response planning.

· Working with HB planning group (including TLA and RC planners) to ensure common and thorough understanding of hazards and common strategy for risk reduction through planning mechanisms.

· HBRC has Disaster Damage Risk Management Plan including commercial insurance, disaster damage reserves and mutual insurance cover.

· Council has a business Continuance Plan setting out how Council will continue to do its business if staff are unable to access the office. The plan is regularly updated.

Mitigation actions completed

· Improved CDEM structure agreed and Group Manager CDEM commenced employment 5 Sept 2011.

Change since March 2011

· Funding for additional CDEM resource is included in Councils 2011/12 Annual Plan. A Group Manager CDEM Group has been appointed and will commence employment on 5 September. Further resource will be appointed in Wairoa and Central Hawke’s Bay District Councils, after an appropriate process run by the new Group Manager.

Risk Issue 8

Hazardous Activity Industry List (HAIL)

Current and planned future position

	Immediate	Mid term	Long term
React
Mitigate	HAIL
Opportunity

Baseline Situation and risk (Sept 2009)

· List prepared in 1996 and assessments and actions programmed on basis of risk

· List required to be made public following decision of Ombudsman 12 October 2009

· Residential and commercial sites on list but which have not been addressed as priorities to date advised

· Some sites are high priority due to potential public health risks.

Risk mitigation approach

· Respond to property owner concerns

· Implement programme of work to establish degree (if any) of contamination on site

· Focus on high priority site work programs in conjunction with TLAs

· New Contaminated level draft NES clarifies principle role is with TLA.

Mitigation actions completed

· The top priority sites in the Hawke’s Bay region that are known have been investigated.

Change since March 2011

· Continuing investigations of medium priority sites

· Formation of a Hawke’s Bay regional database in collaboration with TLAs progressing

· Continuing to work on unverified HAIL sites.

· Napier City Council have chosen to action Onekawa landfill issues through their own resources and will carry out any further sampling by directly liaising with Pattle Delamore Partners.

Assessment – Risk being effectively managed no further reduction in risk to Council since September 2009.

Risk Issue 9

Local Government Reform

Current and planned future position

	Immediate	Mid term	Long term
React
Mitigate
Opportunity		LG Reform	LG reform

Baseline Situation and approach (Sept 09)

· Regional councils widely criticised for failing in role as managers of NZ’s resources.

· Formation of Auckland “supercity” being progressed

· Local government amalgamation being proposed for local government in Hawke’s Bay.

· Low level of public understanding of Regional Council role.

· Regional councils as a group weak on coordination or collaboration.

Risk mitigation approach

· Focus on effectively undertaking regional council role.

· Greater collaboration and coordination between regional councils being delivered.

· Points of difference between Regional and territorial authorities being highlighted to national and local politicians and the public.

· Council to lead a well planned and effective effort to achieve collaboration between local authorities in specific areas.

· Gather information on the effectiveness of Unitary Councils in implementing regional council role.

Mitigation actions completed

· Mitigation actions ongoing.

Change since March 2011

· Chair and Chief Executive continue to be active in working with Central Government agencies and politicians to communicate the regional council value proposition in national resource management and economic development, including environmental, cultural, economic and social aspects.

· Regional Council role recognised in National Policy Statement for Fresh Water Management.

· Regional Planning Committee with equal representation of Treaty Claimant Groups reinforcing resource management role of HBRC.

· Shared services with TLA’s including CDEM.

· HBRC continue to develop very good profile – Government Ministers, Local central government politicians, Government Department CEs, (MAF, MfE, and DoC etc.) The relevance of regional councils continues to be demonstrated and promoted. There is now a much greater awareness of the value of regional councils by central government

· Substantial improvement across regional council sector in collaboration and coordination.

· Feedback from Auckland is indicating that amalgamation is a difficult and expensive process, with positive outcomes for regional planning specific to Auckland.

· One TLA mayor seems to have interest in amalgamation, but little apparent support from other mayors.

Assessment – no significant change in risk to Council

Risk Issue 10

Operational Risks

Current and planned future position

	Immediate	Mid term	Long term
React
Mitigate	Operational risks
Opportunity

Baseline Current situation and risk

· Natural hazard impacts considered in infrastructure and asset design

· Business continuity plan regularly updated

· Financial controls in place and audited

· Integrity of infrastructure assets audited

· Disaster reserves and insurance provisions in place with robust overarching policy.

· Technical reports peer reviewed and systems reviewed

Risk mitigation approach

· Continuation of controls and systems for management of operational risks

· Implementation of new finance system, replacing 25 year old system complete

Mitigation actions completed

· Venture HB Tourism arm transferred to a new Regional Tourism Organisation and Economic arm amalgamated into HBRC.

Change since March 2011

· Review of Finance team’s capacity and resourcing completed which recommended increased management accounting support particularly given increased operational activity

· Review efficiency of other support services of Council (Information Services, Corporate Support and External Relations) has been completed.

· Efficiency exercise on legal expenditure has been completed.

· Approval for new Council website, intranet and data management system to be implemented over the next two years.

· Reorganisation of Comms delivery being worked through to ensure accurate, timely and relevant messaging to the public.

Assessment – remains a risk area for Council with management continuously monitored.

HAWKE’S BAY REGIONAL COUNCIL

Corporate and Strategic Committee

Wednesday 14 September 2011

SUBJECT: New Zealand Cycle Trail Project - Funding Approval for Wineries Ride

REASON FOR REPORT

1. Council is currently managing the delivery of the Hawke’s Bay Trail’s project, which forms one of the 18 Great Rides of the New Zealand Cycle Trail project. Work has been progressing over the past 12 months, specifically on the Landscapes and Water rides, with significant sections nearing completion.

2. A recent decision to abandon the Craggy Range section of the Landscapes ride has provided the opportunity to consider other options for the reallocation of this funding, including commencing sections of the Winery ride. This detail was included in the ‘Craggy Range Re-allocation Proposal’ provided to Councillors with the Asset Management and Biosecurity Committee agenda papers for 17 August 2011.

3. This paper seeks Council’s approval to fund the remaining section of the ‘Wineries’ trail from the Open Spaces budget, which will enable the completion of the broader three themed ride proposal that makes up the ‘Hawke’s Bay Trails’.

Open Spaces

4. Open Spaces was identified as one of Council’s strategic goals in 2008, and Council formally adopted the Open Space Investment Policy in August 2008.

5. This policy was established to enable the evaluation of open space investment opportunities against a range of defined criteria, as a means of guiding Council in the consideration of specific opportunities. Successful projects were to be funded from the $7.5M borrowing facility approved for open space and community facility initiatives. The table below shows the state of this fund at 31 August 2011.

Details	$	$
Total Approved Facility		7,500,000
Loans already drawn down:
- Open spaces	1,895,000
- Community facilities	950,000
Total loans drawn		2,845,000
Total funding not drawn		4,655,000
Projects approved by Council that will require loan funding:
- Hawke’s Bay Museum (2^nd instalment)	750,000
- Regional Sports Park	1,600,000
- Wairoa (project to be identified)	500,000
- Waimarama (9 June 2011)	300,000
		3,150,000
Loan funding not drawn down or committed by Council resolution		1,505,000

Estimated repayments over the three years to 2012/13 that will be available for reallocation		493,000
Borrowing facility not committed		$1,998,000

6. The ‘Wineries’ ride proposal has been evaluated through the Open Space Investment Policy and scored a credible 70.3% score (65% required to proceed). The scoring matrix and comments are attached as Attachment 1.

“Hawke’s Bay Trails” Project

7. As part of the original ‘Hawke’s Bay Trails’ project, HBRC committed $1,500,000 of Open Space funds towards construction of two of the three Hawke’s Bay Trails’ rides. The total estimated cost of these trails was $4,400,000, as approved by New Zealand Cycle Trail (NZCT) and these are currently on track for completion within the time and budget provision.

8. The ‘Wineries’ ride forms an important element of the broader three themed ride proposal that makes up the ‘Hawke’s Bay Trails’. The trails currently include ‘Landscapes’ and ‘Water’ rides however the addition of the ‘Wineries’ ride will enable the delivery of the whole ‘Hawke’s Bay Trails’ package. It will also provide a further 36.2 km of new world-class trails for the region.

9. The proposed Wineries ride is already a popular route for tourists, locals and bike tour operators and as a result, it has been included in the new official Hawke’s Bay Trail map. However, there are some safety concerns about the existing route as it is located on busy 100 km/hr public roads. Construction of the Wineries ride will improve the current situation by converting the route to a much safer and more enjoyable off-road Grade 1 trail. This will result in much greater numbers of visitors exploring this award winning wine area.

10. The Wineries ride has very strong support from the many local businesses, local MPs, as well as Hawke’s Bay Tourism and the local media. They all recognise that the Wineries ride will generate significant economic benefits to the region and this is also confirmed by the recent decision by the New Zealand Cycle Trail (NZCT) to (1) include it as an official NZCT Trail and (2) re-allocate $270,000 of funding from the other two rides towards the Wineries ride.

11. The NZCT project team has also stated that the construction of the Wineries ride will confirm Hawke’s Bay as having the No.1 tourism offering out of all the 18 official NZCT Trails.

Funding

12. The total estimated cost for the Wineries trail is $1,140,260 with $510,000 already secured from other sources.

13. The Craggy Range Reallocation Proposal, as submitted to New Zealand Cycle Trails (NZCT), includes an amount of $145,000 to fund a section of the Wineries ride. A further $125,000 of contingency funding from the Landscapes and Water rides is able to be committed to the Winery ride and HDC have contributed $240,000 from their Model Communities i-Way funding source.

14. NCC has committed $85,000 to a section of the Water trail, which also assists with funding of the Winery trail. A request has also been made for a local share contribution of $40,000 from local interests on the Winery trail, which as yet has not been confirmed but is expected as part of the external funding source.

15. The project therefore seeks funding for the remaining amount of $590,260 from the HBRC’s Open Space initiative in order to complete the Wineries ride.

16. The following table from the Wineries ride proposal summarises the proposed costs and funding splits.

WINERIES RIDE	Kms	Secured NZCT Funding	Secured HBRC Funding	Proposed HBRC Funding	Local share Funding	HDC Funding	Totals	Comments
Fernhill Bridge to Ngatarawa Rd to Stock Road	21km	$91,865	$33,135	$590,260	$40,000	$0	$755,260	Funding from HBRC and/or other local contribution
Ngaruroro stopbank true right, Oak Av to Fernhill	8.7km	$100,000	$45,000	$0		$0	$145,000	Re-allocation of funds from landscapes ride budget
HDC i-Way Wilson Rd off-road concrete pathway	1.8km	$0	$0	$0		$220,000	$220,000	Recently completed
HDC i-Way Wilson Rd cycle lanes	0.9km	$0	$0	$0		$15,000	$15,000	Recently completed
Oak Ave/Ormond Rd	3.8km	$0	$0	$0		$5,000	$5,000	Recently completed
Totals	36.2km	$191,865	$78,135	$590,260	$40,000	$240,000	$1,140,260

DECISION MAKING PROCESS

17. Council is required to make a decision in accordance with the requirements of the Local Government Act 2002 (the Act). Staff have assessed the requirements contained in Part 6 Sub Part 1 of the Act in relation to this item and have concluded the following:

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

17.2. The use of the special consultative procedure is not prescribed by legislation and full consultation was carried out as part of the Annual Plan 2010-2011 for this initiative.

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

17.4. The persons affected by this decision are all members of the regional community who will have the opportunity to access the cycleways.

17.5. Options that have been considered are detailed in this paper.

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

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

RECOMMENDATIONS

The Corporate and Strategic Committee recommends that Council:

2. Approves the funding requirement of $590,260 for the residual section of the ‘Wineries Ride’ to be funded from the uncommitted provision of $1,505,000 remaining in the borrowing programme to cover Open Space and Community Facility initiatives, conditional on final acceptance of the Craggy Range Reallocation Proposal by the Ministry of Tourism and confirmation of all external funding contributions.

Graeme Hansen

Group Manager Water Initiatives

Andrew Newman

Chief Executive

Attachment/s

1 View	Evaluation of Wineries Trail Matrix
2	Cycleways/Pathways Map	Under Separate Cover
3 View	Letter from the Ministry of Economic Development

Evaluation of Wineries Trail Matrix

Attachment 1

Evaluation of “Wineries Trail” Opportunity under the Open Spaces Investment Policy

OPEN SPACE PROJECT: National Cycleway Winery Ride
PROPERTY COMMENT:
Table 1: Open Space to be actively sought ("Category 1")
	Coastal Access	Qualifies? Yes / No
Minimum requirements for Council involvement	Coastal strip is currently impractical to access without crossing private land; OR
	Public access is disputed and needs to be clarified; OR
	Existing public access is under threat (e.g. from erosion)
	Near Urban	Qualifies? Yes / No
Minimum requirements for Council involvement	Is of country park concept with a minimum number of formal facilities; OR
	Contains a number of environmental aspects, e.g. water, flora & fauna, wildlife; OR	Yes
	Be located to encourage significant use by urban population
	Ecological	Qualifies? Yes / No
Minimum requirements for Council involvement	Has significant existing ecological values; OR
Minimum requirements for Council involvement	Existing ecological values will be protected or enhanced by intervention
	Aligned with HBRC Strategic Goals	Qualifies? Yes / No
Minimum requirements for Council involvement	Encompasses the open space and at least 2 other Council strategic goals,	Yes
Minimum requirements for Council involvement	Provides for the concept of sustainability

Open Space to be passively sought ("Category 2")
	Outstanding Natural Feature	Qualifies? Yes / No
Minimum requirements for Council involvement	At risk in long term if remaining in private ownership; AND
Minimum requirements for Council involvement	Available at no more than normal market cost
	Lake or inland open water	Qualifies? Yes / No
Minimum requirements for Council involvement	Within close proximity of a significant population base; AND	Yes
	Suitable for water skiing & rowing; AND
	Available at no more than normal market cost
	River access	Qualifies? Yes / No
Minimum requirements for Council involvement	Available at significantly below normal market cost

Table 2: Attributes

	Key Attributes	Score Range	Score	Weighting	Max Weighting		Contribution	Maximum
1	Coastal Access	1 - 5	0	0	10		0	0
2	Proximity to Centres of Population	1 - 5	4	10	10		40	50
3	Ecological value	1 - 5	1	5	10		5	25
4	Linkages	1 - 5	5	10	10		50	50
5	Water quality improvements	1 - 5	1	2	5		2	10
6	Recreational Opportunity	1 - 5	5	5	5		25	25
7	Cultural & Historical value	1 - 5	4	3	5		12	15
8	Camping Potential	1 - 5	3	2	5		6	10
9	Partnership benefits	1 - 5	4	5	5		20	25
10	Environmental education	1 - 5	4	3	5		12	15
11	At Risk Environments	1 - 5	2	2	5		4	10
12	Iconic value	1 - 5	4	4	5		16	20

	Financial Attributes	Score Range	Score	Weighting	Max Weighting		Contribution	Maximum
13	Development Costs	1 - 5	2	5	5		10	25
14	Maintenance Costs	1 - 5	2	5	5		10	25
15	Other financial returns (e.g. leases, concessions, carbon credits)	1 - 5	4	5	5		20	25
16	Resale potential	1 - 5	0	0	5		0	0
	Total Score						232	330

			Overall Score =	Total contribution score
				Total maximum score			x 100%

				232
	Result	Score		330		70.3%
	Decline	< 60%
	Further analysis	60% to 65%
	Proceed	> 65%		PROCEED

	Key Attributes	Scoring Comment
1	Coastal Access	Low - no additional coastal related access achieved
2	Proximity to Centres of Population	High - will connect significant urban areas with direct access to facility
3	Ecological value	Low - minimal ecological values connected with this initiative however this project will raise awareness of these values through signage and access to more remote areas, particularly within river corridors.
4	Linkages	High - direct linkages to existing cycleway assets, council land and other councils
5	Water quality improvements	Low - Minimal water quality issues connected to this project
6	Recreational Opportunity	High - Adds significantly to existing recreational infrastructure, regionally and nationally
7	Cultural & Historical value	High- Significant cultural heritage within proximity that could be coordinated into project
8	Camping Potential	Med - A range of economic opportunities could be derived from this initiative, including camping
9	Partnership benefits	High-Provides an opportunity to operate regionally, as exists with cycleway committee representative group
10	Environmental education	High-Would provide opportunity for education around a number of river systems and ecological environments
11	At Risk Environments	Low -This initiative would raise awareness about at risk environments but not necessarily protect or enhance them
12	Iconic value	High- Can view Te Mata Peak and the Ruahine and Kaweka Ranges. Pass through the world renowned Gimblett Gravels Wine Growing Region and also through Bridge Pa and the Historic Oak Avenue.

	Financial Attributes	Scoring Comment
13	Development Costs	Low - significant local funding required to support this project, perhaps $1-2m.
14	Maintenance Costs	Low - Commitment will be left with TLA/Region to operate and maintain
15	Other financial returns (e.g. leases, concessions, carbon credits)	High- A wide range of economic opportunities exist, such as tourism, cafes, accommodation, small businesses etc.
16	Resale potential	Low - Not specifically relevant to this initiative

	Agenda Item	Action	Person Responsible	Due Date	Status Comment
1. 6	Shared Services	What support/advisory services are available by TAs An assessment of what services are required	LL	Sept	Update at Sept meeting
2.	Notices	Ensure that Maori Committee representatives are on distribution lists for appropriate Committee agendas, minutes and meeting notices	LH	Immed	Done
3.	Matters Arising	A copy of Harry O’Rourke’s report to be given to McGredy Winder & Co Copies of the O’Rourke report to be distributed to Councillors	PD
4.	Environmental Action Awards	Number and ‘scope’ of awards to be further developed with input from Councillors Judging Criteria to be developed in line with the ‘type’ of awards and with input from Councillors who previously served as judges Wairoa DC and CHBDC to be invited to participate – for an appropriate financial contribution	DB		Memo sent to Councillors and Maori Committee by email 5 September 2011

Proposed Plan/Policy Statement	A proposed plan or policy statement is a document that has been issued by the council and ‘proposed’ as the council’s official position. To be legally proposed, a document must be publicly notified so people can make submissions.
Plan Variation	A plan variation is when a council changes a plan that is still in the ‘proposed stage’ and has yet to be finalised Is a change prepared by a council to a proposed plan or policy statement
Operative Plan/Policy Statement	In relation to a plan or a policy statement means that it has been through the public submission, hearings and Court processes and has full effect.
Plan Change	Is when a council changes an existing plan (an “operative” plan or policy statement)
Hearings Panel	Is a panel appointed to hear public submissions on any proposed plan, plan change or plan variation. It may be made up of any number of people, and may include elected members (councillors), independent commissioners, or a mix of the two
Tāngata Whenua Representative	Means a representative nominated by one of the Large Natural Groups with interests within the Hawke’s Bay region, and which has been formally recognized by the Crown.
Regional Policy Statement	Is the document that sets the basic direction for environmental management in the region. This also includes the Maori Dimension. It does not include rules.
Regional Plan	A document that sets out how the regional council will manage a particular aspect of the environment, like the coast, soil, rivers or the air. Can include rules.

MEMBERS:	· All Councillors being: · Two appointed members of the Maori Committee being: and .
CHAIRMAN:	A member of the Committee as elected by the Council being:
DEPUTY CHAIRMAN:	The Chairman of Council or in his absence the Deputy Chairman of Council
MEETING FREQUENCY:	Two-monthly, generally on the second Wednesday of the month
STAFF EXECUTIVE:	Group Manager Resource Management Group Manager Asset Management

GENERAL SUBJECT OF THE ITEM TO BE CONSIDERED	REASON FOR PASSING THIS RESOLUTION	GROUNDS UNDER SECTION 48(1) FOR THE PASSING OF THE RESOLUTION
Confirmation of Public Excluded Minutes from the Corporate and Strategic Meeting Held on Wednesday, 17 August 2011	7(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.

1 View	Regional Planning Committee - Proposed Terms of Reference
2 View	Proposed Deed of Commitment

1 View	Top 10 Risks Sept 2011
2	Risk Register Spreadsheet Sept 2011		Under Separate Cover