Agenda of Regional Council Meeting

	Agenda Item	Action	Person Responsible	Due Date	Status Comment
1.	9 month Annual Report Progress	Develop a strategic approach to Appeals to the Environment Court on consent Decisions, using risk analysis	AN		Update to August Council meeting
2.		Report re costings going forward from Sargeant report (WOW)	MA		Agenda item left to lie on table at July meeting
3.	Ruataniwha Plains Water Storage Project	Regular updates to Council or Committee when each milestone is achieved	AN/GH	Ongoing	Standing Item to be added to future Agendas
4.	Councillor Remuneration	Chairman to have discussions with LGNZ Chairman	FW	Immed
5.	Notices	Letter written to Norwegian Ambassador	AN	Immed	Done
6.	Looking Forward	Craggy Range Ride – updated report on the difficulties encountered and alternative provisions for the planned route	GH	Sept

HAWKE’S BAY REGIONAL COUNCIL

Wednesday 24 August 2011

SUBJECT: Affixing of Common Seal

COMMENT:

1. The Common Seal of the Council has been affixed to the following documents and signed by the Chairman or Deputy Chairman and Chief Executive or a Group Manager.

Seal No.

Date

1.1

Leasehold Land Sales

1.1.1 Lot 9

DP 12780

CT E1/737

- Agreement for Sale and Purchase

- Transfer

1.1.2 Lot 102

DP 13039

CT E2/1248

- Agreement for Sale and Purchase

1.1.3 Lots 35 & 36

DP 921

CTs B3/1154 and B3/1155

- Agreement for Sale and Purchase

(discount 17.5% resides at property)

1.1.4 Lot 57

DP 6481

CT C2/411

- Agreement for Sale and Purchase

(discount 10% overseas landlord)

1.1.5 Lot 2

DP 11689

CT C3/6

- Agreement for Sale and Purchase

- Transfer

(discount 17.5% resides at property)

1.1.6 Lot 31

DP 13217

CT E4/416

- Agreement for Sale and Purchase

(discount 17.5% resides at property)

3057

3063

3058

3059

3060

3061

3062

3064

3 August 2011

15 August 2011

8 August 2011

10 August 2011

11 August 2011

16 August 2011

1.2

Staff Warrants

1.2.1 M Miller

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

.2.2 S Gilmer

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

1.2.3 S Exeter

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

3065

3066

3067

16 August 2011

DECISION MAKING PROCESS

2. Council is required to make every decision in accordance with the provisions of Sections 77, 78, 80, 81 and 82 of the Local Government Act 2002 (the Act). Staff have assessed the requirements contained within these sections of the Act in relation to this item and have concluded the following:

2.1 Sections 97 and 88 of the Act do not apply;

2.2 Council can exercise its discretion under Section 79(1)(a) and 82(3) of the Act and make a decision on this issue without conferring directly with the community or others due to the nature and significance of the issue to be considered and decided;

2.3 That the decision to apply the Common Seal reflects previous policy or other decisions of Council which (where applicable) will have been subject to the Act’s required decision making process.

RECOMMENDATIONS

That 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. Confirms the action to affix the Common Seal.

Diane Wisely

Executive Assistant

Andrew Newman

Chief Executive

Attachment/s

There are no attachments for this report.

HAWKE’S BAY REGIONAL COUNCIL

Wednesday 24 August 2011

SUBJECT: Setting of 2011/12 Rates

REASON FOR REPORT

1. Following the adoption of the 2011/12 Annual Plan, the rate requirements have been calculated for the 2011/12 financial year and it is now necessary to resolve to set and assess the rates scheduled in the recommendations in this paper for the period 1 July 2011 to 30 June 2012.

Comment

2. Council approved in June 2011 as part of the Annual Plan 2011/12, an increase of 2.45% ($331,000) in rates as compared to the previous financial year 2010/11 rating levels. This compares to the increase proposed in the 10 Year Plan of 6.4% ($935,000) for this same period.

3. The Local Government (Rating) Act 2002 provides for the following:

Section 23 – Procedure for Setting Rates

(1) Rates must be set by a resolution of the local authority.

(2) Rates set by a local authority must –

(a) Relate to a financial year or part of a financial year; and

(b) Be set in accordance with the relevant provisions of the local authority's Annual Plan for that financial year.

4. Council approved the inclusion of the required rates in the 'funding impact statement' which was part of the 2011/12 Annual Plan. This plan was adopted by Council on 29June 2011. The rates included in that plan have been consulted on by a special consultative procedure as part of the Annual Plan process. The Local Government (Rating) Act 2002, sections 13 and 14 (General Rate), Section 15 (Uniform Annual General Charge) and Sections 16, 17 and 18 (Targeted Rates) clarifies how each such rate should be set.

5. Section 23 of the Local Government (Rating) Act 2002 does not require that the rating resolutions included in this paper be publicly notified, as details of the rates have been included in the Council's Annual Plan.

DECISION MAKING PROCESS

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

6.1. Section 97 of the Act covering a significant change in the intended level of service provision for a group of activities does not apply.

6.2. Section 83 which sets out the procedures which are to be followed where a special consultative procedure is to be used or adopted does apply. These rates have been included in the 2011/12 Annual Plan and have been consulted on by the use of a special consultative procedure.

6.3. The decisions do fall within the definition of Council's policy on significance, namely that "the decision or proposal affects all or a large part of the regional community in a way that is not inconsequential" and as such have been included in the 2011/12 Annual Plan.

6.4. Council has no option but to set rates for any one financial year in order to ensure that the services the Council provides are fully funded.

6.5. Persons affected by the decision in this paper will be the ratepayers within the Hawke's Bay region.

6.6. Section 80 of the Act covering decisions that are significant and inconsistent with any existing policy or plan does not apply.

RECOMMENDATIONS

That Council:

1. Agrees that the decisions to be made on the setting and assessing of rates cover information that has been included in the funding impact statement of the 2011/12 Annual Plan as required by Section 95 of the Local Government Act 2002 and further that such decisions require special consultative procedure under Sections 83 and 85 of the Act, such special consultative procedure having been previously carried out on the 2011/12 Annual Plan.

2. Sets and assesses the following rates scheduled below for the period 1 July 2011 to 30 June 2012.

GENERAL FUNDING RATES

2.1 General Rate based on land value

Pursuant to Section 13 of the Local Government (Rating) Act 2002 a General Rate of $7.86 per $100,000 of land value on the estimate of projected valuation for land value shall be set on the rating units within the region. The General Rate will yield $1,225,693 (GST inclusive) which is required to meet the statutory functions of the Council.

2.2 Uniform Annual General Charge

Pursuant to Section 15 of the Local Government (Rating) Act 2002, a Uniform Annual General Charge of $37.15 (including GST) will be charged on each separately used or inhabited part of a rating unit. The Uniform Annual General Charge will yield $2,525,929 (inclusive of GST) which is required to meet the statutory functions of Council.

TARGETED RATES

2.3 Subsidised Public Transport Rate

Pursuant to Section 16 of the Local Government (Rating) Act 2002 a rate of $24.64 per $100,000 of land value on the estimate of projected valuation for the land value shall be set on the rating units contained within the Napier (excl. Bay View Township) and Hastings residential and commercial areas including Havelock North.

The purpose of the rate is to fund the Subsidised Passenger Transport System (bus services) and the Total Mobility (transport subsidy for disabled persons) which operate in both cities. The total rate required is $1,679,000 (GST inclusive).

2.4 Heretaunga Plains Flood Control Scheme

Pursuant to Section 16 of the Local Government (Rating) Act 2002 a rate on a graduated scale as set in the Schedules shown below shall be set on those rating units that benefit directly or indirectly from the Heretaunga Plains Flood Control Scheme.

(a) Differential Rate for Flood Protection set on the Estimate of projected valuations of Capital Value comprising all rateable rating units within Hastings District and Napier City

Rate

$100,000 of Capital Value

Yield

GST Incl

Direct Benefit F1

$10.45

1,435,990

Indirect Benefit F2

$2.45

615,424

F1: Directly at Risk of Loss

Rateable land situated in the Heretaunga Plains Control Scheme area which Council considers receives protection from the risk of flooding up to a one per cent Annual Exceedence Probability (AEP) flood and of river alignment.

The benefits of these protection measures – i.e. stopbanking, river control and stability of channel location, are a reduction in the risk of loss of life, limb, land and capital investment such as orchards, vineyards, residential, commercial, industrial and supporting infrastructure situated on the Heretaunga Plains.

F2: Indirectly at Risk of Loss

Rateable land situated within the boundaries of the Hastings District and Napier City Councils which Council considers at risk from the indirect effects of river realignment and flood causing loss of infrastructure and general opportunities to the Community.

(b) Rates for Drainage Maintenance in specific areas on the Heretaunga Plains

These rates are set on the estimate of projected valuations of Land Value of those rating units that receive direct benefit of the specific drainage maintenance.

Rating units zoned industrial are charged a differential equal to 4 times the normal rate due to the expected rainfall run-off from these rating units, and their comparative land values.

Rates – per $100,000 of Land Value:

		Other	Industrial	2011/12
D1	Napier, Meeanee, Puketapu	$24.93	$99.73	$808,516
D2	Karamu & Tributaries	$31.32	$125.30	$999,774
D3	Raupare, Twyford	$78.80		$177,163
D4	Haumoana	$87.90		$127,872
D5	Tutaekuri, Waimate, Moteo	$129.80		$188,626
D6	Pakowhai	$169.40		$129,848
D7	Brookfields, Awatoto	$177.32	$709.26	$142,548
D8	Muddy Creek	$98.18	$392.71	$228,127
D9	Puninga	$218.50		$71,556

Karamu Drainage Maintenance

The Havelock North community is considered to be an exacerbator to the Karamu Drainage Scheme since the rainfall run-off from Havelock North eventually discharges into the Karamu Stream.

The rates are to be set at $9.26 being a fixed amount per separately used or inhabited part of a rating unit on those properties identified on a specific mapped area of Havelock North. Where two or more rating units are contiguously joined, owned by the same person and used for the same purpose, then only one fixed amount will be payable.

The total amount of the rates is $50,736 (GST inclusive).

Karamu Enhancement

The purpose of this rate is to part fund the cost of the environmental enhancement work on the Karamu Stream and its tributaries.

The rates are to be set at $8.66 being a fixed amount per separately used or inhabited part of a rating unit on those properties identified on a specific mapped area of Havelock North. Where two or more rating units are contiguously joined, owned by the same person and used for the same purpose, then only one fixed amount will be payable.

The total amount of the rates is $47,456 (GST inclusive).

2.5 Upper Tukituki Catchment Control Scheme Special Rating Scheme

Pursuant to Section 16 of the Local Government (Rating) Act 2002 a rate on a graduated scale as set out in the schedule on the estimate of projected valuation land value of the rating units shall be set within the Upper Tukituki Special Rating area.

Schedule Rate – per $100,000 of Land Value

DIFFERENTIALS

(a)

(b)

(c)

(D)

(E)

(F)

UF7

(U1)

UF8

(U2)

UF9

(U3)

UF10

(U4)

$572.69

$429.52

$286.35

$143.17

$57.27

$5.73

$143.17

$85.90

$57.27

$5.73

The total rates to be assessed are $663,619 (GST inclusive) which are to be applied to the flood protection works of the Upper Tukituki Catchment Control Scheme.

2.6 Poukawa Drainage Special Rating Scheme

Pursuant to Section 16 of the Local Government (Rating) Act 2002 a rate on a graduated scale as set out in the schedule on the land value of the rating units shall be set within the differential rating area.

Schedule Rate – per $100,000 of Land Value

DIFFERENTIALS	PO1	PO2	PO3
	(A)	(B)	(C)
	$519.06	$86.50	$17.30

The rates of $26,738 (GST inclusive) are required for the maintenance work in the Poukawa drainage scheme.

2.7 Porangahau Flood Control Scheme Special Rating Scheme

Pursuant to Section 16 of the Local Government (Rating) Act 2002 a rate shall be set for the amount in the dollar on the land value of the rating units within the Porangahau area of the Central Hawke's Bay District being the Porangahau Flood Control Scheme Special Rating Area situated within the Hawke's Bay Region.

Schedule Rate – per $100,000 of Land Value

Differentials $10.80

The rates of $34,934 (GST inclusive) are required for maintenance work in the Porangahau Flood Control Scheme.

2.8 Paeroa Drainage Scheme Special Rating Scheme

Pursuant to Section 16 of the Local Government (Rating) Act 2002, a Rate shall be set on the rating units within the Paeroa Drainage Scheme Special Rating Area. Such rate to be set and assessed using the area system of rating on a graduated scale.

Schedule Rate – Dollars for each Hectare

DIFFERENTIALS

(A)

(B)

(C)

(D)

(E)

63.71

41.41

28.67

22.30

3.19

The rates of $21,970 (GST inclusive) are required for maintenance work in the Paeroa Drainage Scheme.

2.9 Ohuia Whakaki Drainage Scheme Rating Scheme

Pursuant to Section 16 of the Local Government (Rating) Act 2002 a Rate shall be set on the rating units within the Ohuia Whakaki Drainage Scheme Rating Area. Such rate to be set and assessed using the area system on a graduated scale.

Schedule Rate – Dollars for each Hectare

DIFFERENTIALS	A	B	C	D	E
	108.43	86.74	65.05	32.53	10.84

The rates of $58,207 (GST inclusive) are required for maintenance work in the Ohuia Whakaki Drainage Scheme.

2.10 Upper Makara Stream Catchment Control Scheme Special Rating Scheme

Pursuant to Section 16 of the Local Government (Rating) Act 2002 a rate shall be set on the rating units within the Upper Makara Stream Catchment Control Special Rating Area. Such rate to be set and assessed using the area system on a graduated scale.

Schedule Rate – Dollars for each Hectare

DIFFERENTIALS	UM1	UM2	UM3	UM4	UM5	UM6	UM7	UM8
	(A)	(B)	(C)	(C)	(D)	(D)	(E)	(F)
	51.18	40.95	30.71	30.71	17.91	17.91	2.56	1.02

The rates of $33,624 (GST inclusive) are required for maintenance work in the Upper Makara Stream Catchment Control Scheme.

2.11 Esk River and Whirinaki Stream Maintenance Scheme

Pursuant to Section 16 of the Local Government (Rating) Act 2002 a rate shall be set on all rating units benefiting from the maintenance work in the Esk River and Whirinaki Stream area.

Such rate to be set and assessed using the area basis of rating on a Differential Rating Scheme.

Schedule Rate - Dollars for each Hectare

DIFFERENTIALS	E1	E2	RI1		RI2	RI3
Esk River	40.26	17.00	41.80		133.71	432.31

	W1	W2		W3	W4	W5	W6	W7
Whirinaki Stream	151.21	110.66		357.77	154.53	3.69	44.61	15.83

The rates of $22,576 (GST inclusive) will be applied to the maintenance work in the Esk River and Whirinaki Stream Maintenance Scheme.

2.12 Te Ngarue Stream Flood Protection Scheme

Pursuant to Section 16 of the Local Government (Rating) Act 2002 a rate shall be set on all rating units benefiting from the maintenance work in the Te Ngarue Stream area.

Such rate to be set and assessed using the area basis of rating on a differential rating scheme.

Schedule Rate - Dollars for each Hectare

TN TN1

Differentials 29.15 184.31

The rates of $2,928 (GST inclusive) will be applied to the maintenance work in the Te Ngarue Stream Scheme.

2.13 Kopuawhara Stream Flood Control Maintenance Scheme

Pursuant to Section 16 of the Local Government (Rating) Act 2002 a rate shall be set on all rating units benefiting from the maintenance work in the Kopuawhara Stream area.

Such rate to be set and assessed using the area basis of rating on a differential rating scheme.

Schedule Rate - Dollars for each Hectare

	A	B	C	D
Differentials	136.40	54.56	27.28	6.82

The rates of $7,940 (GST inclusive) will be applied to the maintenance work in the Kopuawhara Stream Flood Control Scheme.

2.14 Wairoa Rivers and Streams Scheme

Pursuant to Section 16 of the Local Government (Rating) Act 2002 a rate shall be set on all rating units within the Wairoa District.

Such rate to be set on the capital value.

Schedule Rate – per $100,000 of Capital Value

Differentials $7.20

The rates of $125,128 (GST inclusive) will be applied to the maintenance work of the scheme.

2.15 Maraetotara Flood Control Scheme (Maintenance)

Pursuant to Section 16 of the Local Government (Rating) Act 2002 a rate shall be set on the rating units within the Maraetotara Flood Control Scheme Special Rating Area. Such rate to be set on the Capital Value.

Schedule Rate – per $100,000 of Capital Value

Differentials $8.61

The Rates of $10,744 (GST inclusive) will be applied to the maintenance of the scheme.

2.16 Maraetotara Flood Control Scheme (Loan Repayment)

Pursuant to Section 16 of the Local Government (Rating) Act 2002 a rate shall be set on the rating units for loan charges for the Maraetotara River Stopbank. Such rate to be set on the Capital Value.

Schedule Rate – per $100,000 of Capital Value

Differentials $21.10

The Rates of $17,941 (GST inclusive) will be applied to the loan repayments and interest payments of the scheme.

2.17 Central and Southern Area Rivers and Streams Scheme

These rates are set based on the estimates of projected valuations on the capital values of the rating units within the Taupo District, Hastings District, Napier City, Central Hawke's Bay District and Rangitikei District.

Schedule Rate – per $100,000 of Capital Value

Differentials 83 cents

The total rate required is $230,651 (GST inclusive) to fund removal of vegetation, bank stabilisation and land purchase on various rivers and streams.

2.18 Bovine Tb Vector Control

Pursuant to Section 16 of the Local Government (Rating) Act 2002 a rate on all rural rating units containing 4.0468 hectares or more within the Region be set and assessed on the area basis in accordance with the Differential rating system.

Schedule Rate - cents for each Hectare

Group 53.14

The rates of $550,365 (GST inclusive) will be applied to Bovine Tb Vector Control work within the Region.

2.19 Plant Pest Strategy

Schedule Rate - cents for each Hectare

Group 40.70

The rates of $402,643 (GST inclusive) will be applied to the Plant Pest Strategy within the Region.

2.20 Animal Pest Strategy

Schedule Rate - cents for each Hectare

Group A B C

50.60 133.43 0

The rates of $1,194,142 (GST inclusive) will be applied to the Animal Pest Strategy within the Region.

2.21 Clean Heat Financial Assistance

Pursuant to Section 16 of the Local Government (Rating) Act 2002 a rate shall be set on the rating units within the affected airsheds of Napier and Hastings. Such rate to be set on the Land Value.

Schedule Rate – per $100,000 of Land Value

Differentials $8.80

The rates of $670,639 (GST inclusive) will be applied to the provision of a financial incentive package to encourage the replacement of open fireplaces and non-compliant wood burners with a more efficient form of heating and insulation.

The aim is to reduce the particles of polluting smoke in the affected airsheds.

2.22 Rates to Repay Loans to Homeowners for Clean Heat and Insulation

Council has resolved to provide/facilitate loan funding to assist homeowners for insulation where this is a shortfall between the cost of insulation (to EECA standards) and the grants available from EECA and other funders. Further, the Council will provide loan funding to homeowners in the identified airshed wishing to install a more efficient form of heating.

The loans for replacement of open fire or non-compliant wood burners will be 50% interest free. The loans for insulation which is available to all ratepayers in the region will be charged interest subject to the prevailing borrowing interest rate. The total loans plus interest will be repaid over 10 years as a fixed amount through a Targeted Differential Rate.

The Differential Rate for each year to apply over a period of up to 10 years would, for example, equate for a 10 year repayment of $10.00 per $100.00 of borrowings uplifted by individual ratepayers. In this example, if a ratepayer borrows $5,200, then the annual Targeted Differential Rate for that ratepayer would be $520.00 each year for a 10 year period. It is noted that different calculations would apply where the period of repayment was less than 10 years. The borrowings comprise the loan, interest charge, service fee and GST.

Pursuant to Section 16 of the Local Government (Rating) Act 2002, the 2011/12 rates are $173,940 (GST inclusive), and are to be set on the rating units that are servicing a loan for insulation or clean heat.

2.23 Economic and Tourism Development

The Regional Council now directly rates all ratepayers in the region for economic and tourism development

The basis of rating is as follows:

30% of the total rates are to be funded by the commercial or industrial properties, this rate is based on Capital Value. The remaining 70% is to be collected from residential and rural properties as a Uniform Annual Charge.

Wairoa District ratepayers contribution is to be limited to 5% of the total rate.

Pursuant to Section 16 of the Local Government (Rating) Act 2002 a rate shall be set on all commercial and industrial rating units. Such rate is to be set on the capital value.

Schedule Rate – Per $100,000 of Capital Value

DIFFERENTIALS	Napier	Hastings	Taupo	Rangitikei	Wairoa	Central Hawke’s Bay
	$11.88	$12.47	0	0	$15.61	$11.33

Pursuant to Section 15 of the Local Government (Rating) Act 2002, a Fixed Charge shall be set on all residential and rural rating units.

Schedule Rate – Per Fixed Charge

DIFFERENTIALS	Napier	Hastings	Taupo	Rangitikei	Wairoa	Central Hawke’s Bay
	$16.43	$16.43	$16.43	$16.43	$11.76	$16.43

The rates of $1,380,000 (GST inclusive) will be applied for the purposes of economic and tourism development.

2.24 Due Dates for Payment of Rates

The rates are due and payable on or after 1 October 2011. Pursuant to Section 57 of the Local Government (Rating) Act 2002 a penalty charge of 10% will be imposed on the current rates remaining unpaid as at 1 February 2012.

John Keenan

Revenue Accountant

Paul Drury

Group Manager

Corporate Services

Attachment/s

There are no attachments for this report.

HAWKE’S BAY REGIONAL COUNCIL

Wednesday 24 August 2011

SUBJECT: Financial Report for 12 Months Ended 30 June 2011 - Draft Annual Report 2010/11 Adoption for Audit

REASON FOR REPORT

1. The purpose of this paper is to provide explanations covering variances both from the re-forecast budgets and from Annual Plan budgets for year ended 30 June 2011. Further, to provide draft sections of the Annual Report specifically those set out in Attachments 2, 3 and 4 referred to below, to allow Council to adopt these as an appropriate draft of the Annual Report to be forwarded to the Audit Office to form the basis of their audit.

Comment

2. The financial information provided in Attachment 1 is not part of the formal Annual Report publication and is provided to Council to clarify variances, actual (from reforecast and Annual Plan) to budgets. The information included in Attachments 2, 3, and 4 makes up most of the content of the published Annual Report. These sections have only been distributed to Councillors, however they will be made available to members of the public on request.

Attachment 1

3. The financial overview for the year ended 30 June 2011 is set out in a similar format as council receives during the year. The emphasis in this report is to detail and provide explanations for variances (actual compared to reforecast) in projects within each group of activity and for flood control and drainage scheme reserves and other scheme reserves. All these variances affect public good funding.

Attachment 2

4. This attachment sets out the extent to which Council has been able to deliver on the levels of service provision and performance targets as set out in the Annual Plan for 2010/11 under each group of activity. The format provided in this attachment is the same as council normally considers as part of their financial report, with the addition of reporting on the extent to which the issues raised in the “right debate” section of the Ten Year Plan have been achieved. This reporting against the “Right Debate” will form the substantive part of the chairman and chief executive’s report in the final annual report.

Attachment 3

5. Management statements set out in the format as they will appear in the annual report. (Excludes the report on Council controlled organisations as this council has no council controlled organisations.)

Attachment 4

6. The financial results included in this attachment are set out in the same format as will appear in the published annual report. The cashflow statement and some notes to the accounts are still being finalised.

7. The normal practice is that the final audited Annual Report is tabled for adoption at Council’s September meeting. As this meeting has been rescheduled a week earlier than normal the final audit will not be completed for this meeting so will accordingly be submitted for formal adoption to Council at its meeting on 26 October 2011.

Regional Disaster Damage Reserve

8. At this time of year the need to tag operating cash balances to fund a shortfall in investments for Disaster Damage Reserve is considered. Council has resolved that this reserve should maintain a balance of funds of between $2.75m and $3.75m. Council set this reserve limit at their meeting on 28 February 2007, at the same time that a decision was made to become a member of the Local Authority Protection Programme (LAPP), which provides a 40% cover for damage to insured infrastructure assets, the remaining 60% of the cover continues to be placed with commercial insurers.

9. Council considered a paper on 29 June 2011 covering infrastructure insurance. The premiums for insurance for the 2011/12 financial year had increased substantially due to the September 2010 Canterbury earthquake and the attitude of reinsurers due to the losses incurred during that event. At that meeting Council approved the placement of 60% cover as commercial insurance at a premium of $132,000. The excess had increased from $1m to $5m for any one event. The remaining 40% cover was to be covered from Central Government under the National Civil Defence Recovery Plan.

10. The Regional Disaster Damage Reserve will therefore cover:

10.1. Meet any extraordinary costs of managing the response and recovery to a disaster event.

10.2. Meet the $3m excess (60% of $5m) for any event for damage covered by Council’s commercial insurance infrastructure policy.

10.3. Meet, along with the Scheme Disaster Reserves (current level of $2.2m at 30 June 2011), 60% of the cost of the damage to live edge protection which is not covered by commercial insurance.

11. The Regional Disaster Damage Reserve shows a market value of an investment of $3.7m at 30 June 2011. Accordingly, it is proposed that no action be taken to tag any cash operating balances to increase the value of this fund as funds are available to cover at least the excess required in the event of a disaster.

12. At its meeting on 29 June 2011 Council resolved that staff undertake a review over the next four months of Council’s infrastructure asset insurance, including its membership of the LAPP and report back to Council on the appropriate mix of insurance to cover damage to Council’s infrastructure assets in the event of a disaster.

Revaluation of Council's Assets

13. The following Council asset groups are subject to revaluation and have been incorporated where available in the draft Annual Report figures presented to this meeting. These asset groups are:

13.1. Infrastructure Assets
These assets were last revalued as at 30 June 2008; Council's current policy is to revalue these assets every three years – i.e. next revaluation is due on 30 June 2011. The revaluation exercise has not been completed, however will be finalised and included in the final Annual Report.

13.2. Hydrological Assets
These assets were revalued as at 30 June 2010. The next revaluation will be finalised as at 30 June 2012.

13.3. Operational Assets
These assets which include land, buildings, plant and equipment, have been valued at 30 June 2010. Council's current policy is to re-value land and buildings to fair value every three years for Annual Report purposes. The next revaluation is due on 30 June 2013.

13.4. Forestry Crops
Under the international accounting standards, biological assets including forestry crops are to be revalued at the end of each financial year. Accordingly, the evaluations as set out in the table below have been received for 30 June 2011.

Forest Location	Value as at 30 June 2010	Value as at 30 June 2011	Variance
Lake Tutira	$792,000	$1,074,000	($292,000)
Tangoio Conservation Reserve	$690,000	$940,000	($250,000)
Central Hawke’s Bay Wastewater	$165,000	$241,000	($76,000)
Waihapua	$130,000	$225,000	($95,000)
Mahia Wastewater	$51,000	$163,000	($112,000)

13.5. The reasons for the increase in values over the last year are due to an increase in plantings of forestry in a number of the areas and also that the forests are becoming more mature.

13.6. Forest Land Valuations
The land on which all the forestry crops are grown was revalued at 30 June 2010 and Council policy is to revalue every three years. The next revaluation will be 3 June 2013.

13.7. Investment Properties – Leasehold Land
The main investment properties held by Council are the leasehold land in Napier and Wellington. These valuations have again this year not shown significant changes in the lessor's value of the Council's leasehold property investments.

13.8. The table below sets out the percentage changes in lessor's interest for both Napier and Wellington leasehold property.

	Napier Leasehold		Wellington Leasehold
	No. of Lessees	$	No. of Lessees	$
Valuation (Lessor's Interest) 30 June 2010	1047	80.3m	13	11.4m
Valuation (Lessor's Interest) 30 June 2011	1027	79.8m	12	11.1m
Property Leases Freeholded	20	2.1m	1	0.3m
Increase in valuation over the 12 months to 30 June 2010 adjusted for sales		+1.6m (2%)		Nil
Comparative for year ended 30 June 2010		-1.3m (1.6%)		0.2m (1.8%)

13.9. After a few years of modest decreases in the lessor’s interest for Napier leasehold land, the market has again started to strengthen and has shown some strengthening.

13.10. Port of Napier Ltd Shareholding
Council shareholding of 100% in the Port of Napier Ltd is revalued every three years. The revaluation on 31 March 2009, which is included in this Council’s 2010/11 Annual Report, states that Council’s investment in the Port of Napier Limited is $120.4m. This shareholding will be revalued by the Directors of the Port of Napier Limited at 31 March 2012.

13.11. General Funded Operating End of Year Position
The Council's General Funded Operating result, subject to final audit processes, for the year ended 30 June 2011 is shown in Attachment 1 as a deficit of $607,880. When this is compared to the forecast end of year deficit position of $646,471, the result is an improvement from forecast in the year-end position of $38,591.

13.12. The final impact of Council's favourable year end position on cash operating balances still needs to be finalised as part of the Annual Report preparation. However, it is estimated that the forecast cash operating balance will be approximately $6m at the end of 2010/11 and reduce to $5.7m at the end of 2011/12. Council’s policy is to ensure that cash operating balances are maintained at a level of at least $4m in order to fund normal Council operations – this level avoiding the need for bank overdrafts.

13.13. It should be noted that the operating statement set out in Attachment 4 and included as part of the formal Annual Report to proceed to Audit, shows an operating result that differs from the general funded operating end of year position as presented to Council. There are a number of reasons for this difference, the major reasons being the losses/gains in fair value of Council’s investment properties and the targeted rates which have been set to fund the capital purposes of Council, both being shown in the income statement in the Annual Report but do not affect the end of year position from a general funded operating position.

DECISION MAKING PROCESS

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

14.1. Section 97 covering significant changes in the intended level of service provision for a group of activity do not apply.

14.2. Sections 83 and 84 which set out the procedures to be followed where a special consultative procedure is to be used or adopted does not apply.

14.3. The decision does not fall within the definition of Council's policy on significance.

14.4. No options are available to Council for this item. The Annual Report is required under Section 98 of the Local Government Act 2002.

14.5. This report, when adopted, is available for any person requiring a copy of this report.

14.6. Section 80 of the Act covers decisions that are inconsistent with existing policy or plan and does not apply.

14.7. Council can exercise its discretion under Section 79 (1)(a) and 83(3) of the Act and make a decision on this issue without conferring directly with the community or others due to the nature and significance of the issue to be considered and decided, and also Council's understanding of the issues that persons likely to be affected by or have an interest in the decisions to be made.

RECOMMENDATIONS

That Council:

1. Confirms the decisions to be made are not significant under the criteria contained in Council’s adopted "policy on significance"; and Council can exercise its discretion under Sections 79(1)(a) and 82(3) of the Local Government Act 2002 and make decisions on those issues 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. Adopts the Draft Annual Report for the period 1 July 2010 to 30 June 2011, subject to any adjustments required by Council, for the purposes of audit, with a view to Council adopting the final report at its meeting on 26 October 2011.

3. Resolves that $109,635 profit on external work undertaken by Council's Operations Group during the year ended 30 June 2011 be used by Council to increase the cash operating balances available to fund general funded operating expenditure.

John Peacock

Financial Controller

Paul Drury

Group Manager

Corporate Services

Attachment/s

1 View	Financial Overview
2 View	Narratives on Performance Targets
3 View	Annual Report Management Statements
4 View	Annual Report Financial Statements

Financial Overview

Attachment 1

REPORT FOR THE YEAR ENDED 30 JUNE 2011

FINANCIAL OVERVIEW

Summary of Financial Result for the Year Ended 30 June 2011

· The actual result covering the Council’s general funded operating statement for the full year of 2010/2011 is a deficit of $607,880. This compares with the Annual Plan budget deficit for the full year of $599,808 and the re-forecasted deficit (including carry-forwards approved at the 30 June 2011 Council Meeting) of $646,471 (Refer to Table 1 below).

Table 1: Reforecast Deficit

	$’000
2010/11 Annual Plan Deficit	(600)
March 2011 Re-forecast Adjustment (27 April 2011 Meeting)	(228)
Expenditure carried forward from 2010/11 to 2011/12 (8-10 June 2011 Meetings)	182
2010/11 Re-forecast Deficit	(646)

· Major reporting variances from budget and forecast are summarised in Table 2 below.

Table 2: Major Reporting Variances from Budget and Reforecast

	Actual Result ($’000)	Variances from Budget F(Favourable) U(Unfavourable) ($’000)	Variances from Reforecast F(Favourable) U(Unfavourable) ($’000)
Net Funding Requirement for Groups of Activities	(14,634)	(512)	(358)
Notional Interest	158	2	2
Operations Group External	110	60	60
Venture Hawke’s Bay	31	31	31
Regional Income	14,192	380	253
Capital Funding	(464)	32	52
Combined Operating & Capital Result	(608)	(8)	39

· The financial result shows a deterioration of $8,072 on Annual Plan budget and an improvement of $38,591 on the reforecast.

Comment on Variations from Annual Plan

The Local Government Act 2002 requires reporting in the Annual Report of the variances between actual expenditure and the Annual Plan budget for the financial year ending 30 June 2011. These explanations are included in the level of service and performance measures for each activity within each group of activities. Financial Variances greater than $50,000 from Annual Plan Budget are commented on in this attachment.

Comment on Variations from Re-forecast

It is important for Council year-end financial reporting to comment on the main reasons for the variation between actual and reforecast results as these variations provide an indicator of how accurately the Council has been able to predict the year-end financial position. The total variance is shown as a favourable variance of $39,000 as against reforecast, refer to table 1 above.

Before proceeding with the detailed explanations for this favourable variance of $39,000 against reforecast, it is important to note a number of issues.

· Council’s operating and capital expenditure is in the order of $50m for the financial year ended 30 June 2011. Council’s Annual Plan projected an operating general funded deficit of $600,000 on this level of Council’s operations for the 2010/11 year.

· There have been a number of reforecasting exercises carried out throughout the 2010/11 year, however the reforecast deficit still remains very close to the Annual Plan deficit.

· Council’s policy has always been to use cash operating balances where such operating balances exceed the minimum operating requirement of $4m. In this regard Council, for the 2010/11 year, has planned to use $600,000 of cash operating balances to fund the Annual Plan deficit. This funding policy of Council ensures that the rates set by Council are kept to a minimum.

It is important to recognise that there are a number of “unders” and “overs” in the projects included in Council’s operations – the details below therefore provide Council with an indication of those areas that have been identified as requiring comment.

A) Groups of Activities ($358,000 Unfavourable)

· Overheads budgeted to be allocated to Investment Company ($190,000 Unfavourable)

A sum of $170,000 was budgeted for in the Annual Plan as an internal charge to the proposed Investment Company, this charge representing the cost of budgeted time for the Chief Executive, Group Manager Corporate Services, accounting and secretarial support. As the establishment of the Investment Company was not approved by Council in June 2010, the $170,000 provided in the Annual Plan 2010/11 needed to be reallocated to all groups of activities at the end of the financial year ending 30 June 2011. The reforecasting exercise in April 2011 was not able to adjust for this under recovery of overhead as the hourly charge our rates had already been set at the beginning of the commencement of the 2010/11 financial year.

Therefore this additional $170,000 of overhead, when reallocated from Investment Company operations in Regional Income, to other Council projects, has resulted in a large portion of the over expenditure in the groups of activities.

After the adjustment to groups of activities referred to above, there have been modest increases in expenditure for the groups of activities. Set out below are some of the more important increases in external expenditure costs over forecasted levels:

· Heretaunga Plains Flood and Control Scheme – Flood and River Control ($30,000 Unfavourable)

These costs are associated with the development of ecological management plans and were originally forecasted as capital expenditure. During the year it was agreed that these costs do not meet the accounting definition of a capital asset and have therefore been reclassified as operating expenditure.

· Bovine TB Regional Vector Control Programme ($44,000 Unfavourable)

The unfavourable variance is due mainly to the undertaking of an increased work programme for the Animal Health Board.

At the beginning of the financial year the Animal Health Board set a Regional Vector Control work programme for which the Council contributes a certain share. As a larger amount of work was undertaken than originally set the Council’s share of the costs was proportionately larger than budgeted.

· Soil Conservation Nursery ($70,000 Unfavourable)

Income ($37,000 unfavourable) – This is a direct result of lower pole sales than reforecast for the 2010/11 financial year. The lower sales are reflective of a downturn in the rural sector, not only in Hawke’s Bay, but other surrounding regions where sales are also generated.

Expenditure ($40,000 unfavourable) – The unfavourable variance in expenditure against re-forecast is attributable to a number of factors throughout the year. The major contributors to this increase in expenditure were:

- Unexpected repairs to plant and machinery.

- Requirement for extra thinning. Production is normally based on re-growth but last year a significant amount of re-planting had to be undertaken and this resulted in an unexpected increase in thinning costs.

- Extra pest control spraying required due to weather conditions.

- Extra printing/ advertising costs in an attempt to sell surplus poles.

· Resource Consent ($50,000 Unfavourable)

The unfavourable variance is due mainly to an increase in non-recoverable external costs for Appeals/ Direct Referrals against the re-forecast. A summary of these costs by Appeal/Direct Referral are outlined in the table below:

Appeals/ Direct Referrals	2010/11 Reforecast $	2010/11 Actual $	Variance $	Comment
Mahia Land Base Wastewater Disposal (recovery uncertain)	150,092	149,223	869
AFFCO Environmental Court Appeal	65,431	81,321	(15,890)	On going technical discussions, mediation and legal costs
Garrity Land Co Ltd	5,660	5,660	-
Mexted Williams - s121 Environment	2,953	8,366	(5,413)	Ongoing legal costs. Hearing date set and deferred, evidence preparation.
Ngaruroro Appeals	80,771	80,771	-	Concluded 2010
Opoutama Environment Court Appeal	10,959	35,317	(24,358)	Preparation for Opoutama appeals which were heard in July 2011.
Brylee Farm Ltd Condition Appeal	2,092	2,101	(9)
Twyford Appeals	-	22,506	(22,506)	Twyford appeals lodged in March. Staff time and legal costs.
Objection Write offs on invoice	49,459	59,799	(10,340)	Affco and Mexted cost write offs
Total for all Appeals/ Direct Referrals	367,417	445,064	(77,647)

It should be noted that $122,000 of the costs incurred in processing a direct referral application to the Environment Court for the Mahia land based wastewater has been invoiced to the Wairoa District Council.

B) Operations Group ($60,000 Favourable)

Council’s Operations Group budgeted for a surplus of $50,000 to be earned from work carried out for parties external to Council. During the year the level of external contract work being undertaken exceeded estimates and this resulted in an additional $60,000 of profit becoming available to Council from this work. The recommendations in this paper covering the proposal to transfer the surplus of $109,635 represent profit on external work carried out by the Operations Group, to Council’s cash operating balances to assist with funding Council operations.

C) Venture Hawke’s Bay ($31,000 Favourable)

The re-forecast assumed that Venture Hawke’s Bay would achieve a break-even position at the end of the 2010/11 financial year whereas the actual year end position shows a surplus of $31,000. This surplus is a result of the removal of balance sheet items which have been processed as part of the wind up of the Venture Hawke’s Bay entity now that it is operating as Hawke’s Bay Tourism.

D) Regional Income ($83,000 Favourable after adjusting for $170,000 Investment Company Costs)

· Disaster Interest Reserve and Dividends ($50,000 Favourable)

The reason for this favourable variance was due to additional interest income being received from Council’s investment in Government stock. The indexed Government stock pays interest at 4.5% plus inflation. Inflation adjustment was higher than the figure included in the budget over 18 months ago.

· Operating Interest ($42,000 Favourable)

A favourable variance due to marginal increases in actual interest over that budgeted and also fluctuating balances invested as compared to the estimates used in the budget.

E) Capital Projects – General Funded Contribution ($52,000 Favourable)

· Heretaunga Plains Flood and Control Scheme – Flood and River Control ($52,000 Favourable)

Costs associated with the development of ecological management plans were less than budget, but significant progress was made on the project.

F) Movement of Scheme Reserves

· Transfers to and from the scheme balances and reserves do have an impact on the general funding operating result as reported to Council. The table below shows the extent to which scheme reserves have increased (favourable variance) or decreased (unfavourable variance) by comparing the year end reserve balance at 30 June 2011 as against the re‑forecast year end position for that reserve.

· Where a reserve balance has increased, this could mean that work programmed during the year was not completed, and hence the general funding requirement to assist in the funding of that work was not required during the 2010/11 year. Conversely, if there has been a decrease in the reserve balances, then work, which was carried out during the 2010/11 year but not programmed for completion in that year, has required additional general funding.

Schemes / Reserve	Reserve Balances at 30 June 2011		Actual / Budget Fav / (Unfav)	Reason for Change in Reserve/Scheme Account Balances
	Reforecast¹$000	Actual $000	Variance $000
Flood and Drainage
· Upper Tukituki	17	102	85F	Due to unfavourable conditions some scheduled work was not undertaken. In addition, a refund from Operations Group surpluses of $57,800 was made to the scheme.
· HPFCS Rivers	285	419	134F	Due to unfavourable conditions some scheduled work was not undertaken. In addition, a refund from Operations Group surpluses of $87,800 was made to the scheme. Costs associated with the development of ecological management plans were less than budget, but significant progress was made on the project.

Schemes / Reserve	Reserve Balances at 30 June 2011		Actual / Budget Fav / (Unfav)	Reason for Change in Reserve/Scheme Account Balances
	Reforecast¹$000	Actual $000	Variance $000
Flood and Drainage
· HPFCS – Drainage - Napier/Meeanee	(311)	(349)	38U	Higher than budgeted costs were experienced for maintaining the major pump stations servicing Napier. Additional staff time was required to establish the Harakeke Drain project ($50,000) offset by a surplus refund from Operations Group.
· HPFCS – Drainage - Brookfields	(3)	2	5F	No Significant Change
· HPFCS – Drainage - Pakowhai	(46)	(48)	2U	No Significant Change
· HPFCS – Drainage - Muddy Creek	65	73	8F	No Significant Change
· HPFCS – Drainage - Haumoana	38	58	20F	No Significant Change
· HPFCS – Drainage - Karamu	(179)	(232)	53U	An opportunity to secure land in excess of budget was taken ($110,000), offset by a surplus refund from Operations Group.
· HPFCS – Drainage - Raupare/Twyford	48	68	20F	No Significant Change

Schemes / Reserve	Reserve Balances at 30 June 2011		Actual / Budget Fav / (Unfav)	Reason for Change in Reserve/Scheme Account Balances
	Reforecast¹$000	Actual $000	Variance $000
· HPFCS – Drainage - Tutaekuri Waimate	3	7	4F	No Significant Change
· HPFCS – Drainage - Puninga	(16)	(1)	15F	No Significant Change
· Separate Schemes	180	230	50F	Reduced operational expenditure in a number of schemes was offset to some extent by increase expenditure in others. Cost in the Ohuia Scheme were less than budget.
· Wairoa Rivers and Streams	90	123	33F	Reduced operational expenditure together will higher than budgeted income resulted in a better than forecast result.
· Central and Southern areas	255	267	12F	No Significant Change

Financial Overview

Attachment 1

Schemes / Reserve

Reserve Balances at 30 June 2011

Actual / Budget
Fav / (Unfav)

Reason for Change in Reserve/Scheme Account Balances

Reforecast¹

$000

Actual

$000

Variance
$000

Animal Pest Control

528

507

21U

No Significant Change

Bovine Tb

(33)

(28)

No Significant Change

Plant Pest

(21)

(10)

11F

No Significant Change

Subsidised Passenger Transport

164

401

237F

The favourable variance for this scheme resulted from an increase over budget for fare box recovery ($109,000), increase in Supergold revenue over budget ($40,000), decrease internal time costs ($30,000) and the carryover of the budget for provision of bus shelters to the 2011/12 year ($50,000).

Water Initiatives

(61)

(106)

45U

This unfavourable variance results from the allocation of overhead to the water information services telemetry budget being in excess of that budgeted. As this is a business unit that recovers their costs from consent holders for provision of telemetry services, it is proposed to reassess the additional overhead charge and reverse up to $45,000.

Tangoio Soil Conservation Reserve

3,093

3,234

142F

Interest income were $50,000 more than budgeted and some thinning work was put on hold due to the inability to sell the logs.

Port Dividend Equalisation

3,392

No Change

Coastal Marine Area Reserve

Nil

N/A

Lease rentals credited to this reserve are used to fund qualifying expenditure.

¹ This balance represents the actual opening scheme balance at 1 July 2010, adjusted for reforecast scheme movements for 2010/11 as reported to Council in April 2011.

() Brackets show reserve balances that are in debit or are overdrawn and are therefore drawing on Council's operating reserves.

U Unfavourable variance

F Favourable variance

Consolidated Balance Sheet

Public Equity, which reflects the net value of all the Council's assets and liabilities, has increased by $2.6 million over the year. The major components of this movement are discussed below.

Impact on Public Equity	($Million) F / (U)
· Property, plant and equipment and intangible assets have increased by $1.3 million mainly due to the accumulation of a further $1.2 million of development expenditure as a part of the Ruataniwha Water Augmentation scheme.	1.3
· Infrastructure assets have increased by $1,6 million due largely to drainage works, land purchases and stop bank reconstruction.	1.6
· Investment property has decreased by $797,000 due to the sale of 20 Napier leasehold properties and one Wellington leasehold with a combined book value of $2.3 million offset by the upward valuation of the Napier leasehold portfolio by $1.5 million.	(0.8)
· Financial assets together with cash & cash equivalents have increased by $2.2 million due largely to proceeds from the sale of leasehold properties for $2.3 million.	2.2
· Forestry assets have increased by $825,000 due to growth in the forestry crop.	0.8
· Trade and other receivables have increased by $948,000 due to the invoicing of Section 36 notices at year-end and increased work-in-progress.	0.9
· Trade and other payables have decreased by $324,000 due to the refunding of 1.4 million of afforestation grants monies (as a deposit) and a significant reduction in year-end accruals.	0.3
· Borrowings have increased by $3.7 million due to net effect of borrowing $5.0 million at year-end and repaying $1.3 million of loans during the year.	(3.7)
Total	2.6

Investments and Operating Funds

· The average interest rate being earned on liquid investments at 30 June 2011 was 4.63%. This rate is marginally higher than the average rate of 4.58% at 30 June 2010 and higher that the rate assumed in the 2010/2011 Annual Plan of 4.00% for short and longer term bank investments. Throughout the year the Council earned an average of 4.84% on its liquid investments.

· The pie chart at the end of Attachment 1 “Allocation by Institution” shows the percentage of Council's investments placed with various institutions. Council's policy requires that no more than 25% of investments are to be placed with any non Council-guaranteed institution or groups of associated institutions with credit rating of A1 (short term investments) and A (long term investments).

Regional Disaster Reserve Fund

· The objective of the Regional Disaster Reserve Fund is to achieve a target rate of return of at least 3.5% above underlying inflation while remaining within the maximum percentage allocation limits determined by Council. The information below addresses this and other Council policy objectives.

· The performance over the twelve months period to 30 June 2011 is given below. The analysis takes into account dividends and interest received, realised gains or losses from sales, and unrealised changes in market values.

· The high return on funds invested relative to previous financial years was due to the higher than expected greater inflation which increased the return on inflation indexed Government stock.

	($000)
Market Value of Investments and Cash at 1 July 2011	3,487	i
Plus/(Less) realised gain/(loss) from sale of equities	4
Plus /(less) realised gain/(Loss) from sale of bonds	0
Plus/(Less) unrealised gain/(loss) in value of equities	28
Plus/(Less) unrealised gain/(loss) in value of bonds	6
Transfer to operating account for insurance purposes	0
Increase/(decrease) of cash into the fund	0
Market Value of Investments and Cash at 30 June 2010	3,525
Plus actual and accrued interest and dividends	186
Adjusted Market Value of Investments and Cash at 30 June 2010	3,711	ii

· The return on total investments for the twelve months ended 30 June 2011 is 6.4% (i.e. the percentage increase from i to ii above. This compares with 2.8% for the corresponding period ended 30 June 2010.

· Underlying inflation for the year ended 30 June 2011 was 5.3% (year to 30 June 2010, 1.7%).

· The reason for the improvement in the return on the investment in this fund as compared to the previous financial year is due to the increased levels of inflation which have resulted in substantially higher returns on Council’s inflation indexed Government stock.

· The components of the $3.525 million accumulated as the Regional Disaster Damage Reserve are set out below.

Regional Disaster Reserve Components	Purchase Cost ($’000)	Market Value 30 June 2011 ($’000)	Market Value Percentage of Reserve	Percentage Ceiling
Þ New Zealand Equities	-	358	10%	10.0%
Þ Overseas Equities	-	686	19%	22.5%
Total Equities	843	1,044	29%	30.0%
New Zealand Bonds	2,370	2,462	70%	-
Short Term Bank Deposits	46	19	1%	-
Total	3,325	3,525	100.00%	-

Narratives on Performance Targets

Attachment 2

Reporting on the Right Debate

· This section summarises Council’s achievements over the last reporting year, in the key strategic areas that were identified in the Right Debate section of Council’s 2009-19 Ten Year Plan.

Regional Leadership/ High Performing Organisation

· During the 2010/11 year, Council was active in planning for the region’s future, spending time on future-focused projects and discussions that help to develop a vibrant Hawke’s Bay community and prosperous local economy.

· Council’s Embracing Futures Thinking breakfast series took on a different flavour this year, starting with a very successful two day Water Symposium to kick off the regional discussion about water issues facing the region and strategies to address them. This was followed by the establishment of an External Reference Group to assist us in developing the vision, guiding principles and objectives for water management of the region’s water and land resources. Four meetings were held, with the draft Hawke’s Bay Land and Water Strategy ‘Land Water Us’ to be finalised in the coming year. The branding of ‘Land Water Us’ was inspired by the Futures Scenarios project titled Land River Us: HB2050 which was formally launched at a breakfast presentation in April. The Land, River and Us stories were read out by members of the Hawke’s Bay Youth Theatre to a very attentive audience of over 100 people.

· Local Government Collaboration within Hawke’s Bay continued to evolve over several areas during 2010/11. For example an insurance buying group was established in 2010/11 and HBRC alone made savings of $26,000 on insurance premiums through bulk purchasing. Other areas for collaborative opportunities include regional rating and valuation data, computer systems integration and a regional GIS portal. The Local Government Efficiency Study, to be jointly funded by all five councils in Hawke’s Bay, did not eventuate in 2010/11. Looking forward, the Regional Council is looking further afield at how it can collaborate or achieve shared service efficiencies with other regional councils on a range of specialised or unique regional government functions.

· The Heretaunga Plains Urban Development Strategy which sets the direction for urban growth in the Heretaunga Plains sub region was adopted early in the year. This means clearly defined urban limits with development away from valuable Heretaunga Plains soils and greater housing density inside existing city boundaries. A key role for the Council is to embed the principles in the Regional Policy Statement and work on this started in the latter part of the year, to be publicly notified in October 2011.

Partnerships with Maori

Council has continued to work directly with tangata whenua to develop partnerships under Te Tiriti O Waitangi. As the Maori population increases to its predicted level of 30% over the coming years, Council is working to create effective networks with iwi and hapū, to proactively identify and respond to community needs.

Council signed an agreement with Te Taiwhenua O Heretaunga to support a Community Development Unit. Working locally within hapū, the Unit caters for the resource management needs of local people, with the support of other agencies.

Significant progress has occurred in 2010/11 on addressing the co-governance of natural resource management in Hawke’s Bay. In April 2011 Council approved the establishment of a Regional Planning Committee comprising equal representation of councillors and Treaty claimant group representatives. This committee will oversee the review and development of the regional policy statement and regional plans for the Hawke’s Bay region. Final details of the Terms of Reference for the committee were being discussed at the end of the 2010/11 year, with the adoption of the Terms of Reference expected to occur in September 2011.

Other Strategic Partnerships

Council relies on its partnerships with other organisations to help deliver many of its work programmes and community-based projects; work that contributes to community outcomes and regional goals. Over the 2010/11 year, Council continued its strategic and operational work programmes with strategic partners, strategic relationships and organisational partners.

Strategic partners, such as central government departments, are integral to the community seeing progress on major projects like Heat Smart or Open Spaces development. Strategic relationships are many and varied, such as water or river catchment groups, land trusts or farming groups. In these partnerships, community input forms an important part of Council’s management, planning and response. Organisational partners, such as Sustaining HB Trust or HB Coastguard, receive an element of Council funding to help operate their activities that support the community and complement Council’s work, such as community education or pollution response.

Council is looking to establish partnerships which deliver critical outcomes faster. To that end, Council will investigate enhanced relationships with primary sector associations, the regional government sector group, central government departments and the research and development sector, in addition to activities already underway around shared services and the co-governance of natural resources.

Healthy Homes

The Healthy Homes programme was a brand new initiative for Council in 2009/10. It came from the need to improve air quality in Napier and Hastings to meet the National Environmental Standards for Air Quality. Council knew that a compliance-based solution led by rules wouldn’t suit the community on its own, and so developed a funding assistance package - Heat Smart loans and grants - for homeowners to access insulation and for clean heat options to be installed. At the end of June, 898 funding applications had been made to Council, which is only part of the picture, as not everyone who has upgraded their insulation or converted to clean heat has sought a Council grant or loan. The bigger picture shows that in the 18 months to June 2011 EECA subsidised 1,432 clean heat conversions and 6,212 houses received both insulation and clean heat upgrades in Hawke’s Bay.

The original deadline for compliance with the national standards was 2013, but a review of these standards by the Ministry for the Environment has resulted in changes to this date. The Napier airshed must now achieve compliance of no more than one exceedence per year by 2016, and the Hastings airshed must achieve this same compliance by 2020, with an interim target of no more than three exceedences by 2016. The air quality provisions in Council’s Regional Resource Management Plan are based around a target date of 2018 so Council will review its conversion targets in the next Ten Year Plan to meet the new dates required by the National Environment Standard.

Council’s desire is to make damp and cold housing a thing of the past for many local people.

Open Space Parks and Pathways

Council manages six open space ‘parks’ for the community at Karamu Stream, Pakowhai, Pekapeka, Tangoio, Tutira and Waitangi, as well as 32 river entry points. Pekapeka Wetland - the most recent addition to Council’s public open spaces - was officially opened in October 2010. With over $670,000 of funding support from Council, the Lottery Grants Board and the Eastern & Central Community Trust through the Community Foundation, this heritage site is fully planted, with the addition of a formal carpark, pathways, boardwalks, information panels, an observation deck, seats and tables.

The government’s New Zealand Cycle Trails project was established to deliver economic benefits both nationally and regionally, creating employment and tourism opportunities. The Regional Council applied for and was successful in receiving government funds to assist in developing the Hawke’s Bay Trails. With ongoing support from the Napier and Hastings Councils, the Regional Council is leading this initiative budgeted at $4.38 million. The Trails include a 46km Landscapes Ride and a 32km Water Ride and with plans for a Wineries Ride, using a network of off-road concrete/ limesand and on-road pathways. The first two Rides will open officially at the end of 2010.

Regional Infrastructure

Hawke’s Bay people want the same high standard of public facilities and large-scale events, places to meet, play sport and be entertained, as in other regions. For that reason, Council has supported funding for large-scale assets and activities to meet the various needs of local people as well as ensuring that Hawke’s Bay has the same consideration as other regions for conferences, sports tournaments and big events. Council’s Community Facilities Fund enables a number of major projects to proceed:

2010/11

· Hawke’s Bay Museum and Art Gallery ($1.25m)

· 2011 Rugby World Cup ($80,000)

2011/12

· Regional Sports Park (held awaiting decision on allocation)

· Hawke’s Bay Museum and Art Gallery ($1.25m)

· Hawke’s Bay Museum Earthquake display ($100,000)

· 2011 Rugby World Cup ($150,000)

Public Transport

Reliable and affordable transport that helps people in the community to travel within and between the region’s two main cities is important.

In July 2011, Council approved a trial bus service for Ahuriri, which is due to commence in October 2011 and run for a period of six months. Passenger numbers will be collected monthly and closely monitored to determine whether the service should be extended into the future.

Hawke’s Bay Tourism

In May 2011 Council approved a funding agreement for Hawke’s Bay Tourism Limited covering a three year period and starting in the 2011/12 financial year. Set up as a not-for-profit limited liability company, Hawke’s Bay Tourism Limited supports the region’s tourism industry and does the regional tourism work previously carried out by Venture Hawke’s Bay. Economic development work for the region previously undertaken by Hawke’s Bay Tourism is now carried out by a team with the Regional Council.

The activities of Hawke’s Bay Tourism Limited will not only be funded by Council for a three year period ($850,000 per annum) but will also be partly funded through private investment from the commercial community of Hawke’s Bay through Hawke’s Bay Wine Country Tourism Association Inc. Council’s funding agreement requires key performance indicators to be reported frequently back to Council.

Economic Development

Michael Bassett-Foss overview 10/11 and note economic development resolutions adopted by Council in July 2011.

Investments

Decisions were made in 2009/10 to invest in land near Waipawa, Waipukurau and Mahia Beach with the intention of these blocks being planted in forestry for waste water scheme purposes. The Waipukurau and Waipawa sites have been planted, mainly in Eucalypts and the property at Mahia Beach is currently being planted.

In December 2009 Council increased the shareholding in the Port of Napier Ltd to 100% through the purchase of the remaining 8% Port of Napier shares from Horizons Regional Council.

Council in June 2011 approved in principle the establishment of an investment company to improve investment performance and to further the strategic goals of Council. This approval followed an extensive public consultation process carried out in April - June 2011.

Responding to Climate Change

The effects of climate change are in the news constantly, usually as a major flood or drought. The same situations are impacting on Hawke’s Bay, where the climate is getting dryer, but where rainfall events also leave the community at risk. Rainfall in the April 2011 storm was the greatest in living memory along some of the region’s coastal country. During 2010/11, Council achieved the following:

· Planted 200 ha of carbon forest on its properties at Tutira and Central Hawke’s Bay. These Central Hawke’s Bay properties will receive waste water from the Waipukurau and Waipawa communities for land treatment, meaning treated waste water feeding into local rivers will be significantly reduced – a major positive for local communities and down-stream users. Land at Mahia Beach will be planted in the 2011/12 financial year.

· Continued investment in water storage feasibility studies which, if feasible, will provide local communities with additional security of water supply.

· Progressed a review of the region’s flood control and drainage assets, i.e. stop bank heights and drain capacities, to maintain and improve protection from frequent flooding.

· Allowed for the management of coastal land use that may be affected by sea level rise.

Council’s Napier office achieved Enviro-Mark NZ Bronze certification in July 2010, and awaits confirmation of Enviro-Mark NZ Silver certification following an audit in July 2011.

Sustainable Land Management

Hawke’s Bay’s land is extremely varied being flat and fertile in places, but equally rugged, hilly and highly-erodible in others. In 2010/11, Council implemented changes to its sustainable land management programme to encourage best practice and better meet the needs of landowners, agencies and sector groups. Council is undertaking a feasibility study into a proposal to encourage the integration of forestry with pastoral farming using the opportunities associated with carbon forestry.

Strategic Water Programme and Water Harvesting

Parts of Hawke’s Bay are already limited in terms of the available water supply. Water is fully allocated from many surface river flows and there is increasing pressure on the region’s largest aquifers which are linked to those rivers. Extra water available from river flows during winter months is in contrast to the region’s dry summer months. The potential for water storage is not only a chance to feed back into low-flowing river levels and improve water quality, but also provides an economic opportunity for the region.

The water programme started in 2009. It is a long-term project including science investigations, the development of policy, specific water studies and work on user demand for water. Through the project, Council hopes to return better minimum flows to key rivers during summer periods and manage the effects of land use with landowners.

In 2010/11, Council:

· Reviewed Information on water flows in the Tukituki and Ngaruroro catchments; allocation-related low-flow and high-flow models were completed, and have fed into the Regional Water Demand Availability Study, Water Strategy and Plan Review work.

· Explained the link between surface water and groundwater in the Ruataniwha Basin, following geological investigations.

· Worked closely with consent holders in the Tukituki and Ngaruroro River Catchments to set up Water User groups, leading to more open information-sharing, understanding and ownership around water use.

· Worked with these groups in support of water metering requirements and how to use the resulting data for efficient water management.

· Approved a feasibility study for water storage in the Ruataniwha Basin, supported by considerable government funding. A work programme was established to prove feasibility and prepare the project for consent lodgement by July 2012, subject to satisfying considerable environmental, cultural and economic requirements.

· Completed a pre-feasibility study for the Ngaruroro/ Karamu catchments.

Narratives on Performance Targets

Attachment 2

Activity 1 - Levels of Service Provision and Performance Targets – Strategic Planning

Level of Service Statement	Level of Service Measure	Performance Targets Years 1-3 in detail Years 4-10 outline	Progress Achieved to Date
We will help the community prepare for the future	Future Scenarios for Hawke’s Bay	Year 1 - Complete four scenarios for Hawke’s Bay	Hawke’s Bay 2050 Land River Us is the brand that has been given to the Scenario Report and associated material. The development process involving significant input from the community resulted in three scenarios being prepared with the titles of Land, River and Us. This material was introduced and used at the Water Symposium held in November to help described Rosy and Bleak Water management Futures. The scenarios were successfully launched at an Embracing Futures Thinking Breakfast on 14 April 2011.
We will help the community prepare for the future	Completion of a Strategic Plan	Year 2 – Complete a Strategic Plan	The Plan will articulate the Council strategic focus for the next ten years and a discussion document will inform the statutory long term process.
	Completion of the Heretaunga Plains Urban Development Study	Year 2 – Complete the Heretaunga Plains Urban Development Study	The Heretaunga Plains Urban Development Strategy was finally adopted by Napier City, Hastings District and Regional councils in August 2010. There is an associated Implementation Plan and a key action for the Regional Council is to incorporate the strategic direction o f the Strategy into the Regional Policy Statement. An Implementation Committee has been formed with representatives of the three councils.
Venture Hawke’s Bay We will position the region as a great place to visit, do business with and invest in	Comprehensive visitor strategy in place within an overall regional marketing plan	Year 2 - Strategy developed in consultation with regional stakeholders	The new JV entity between Council and HBWCTA in consultation key stakeholders has developed a broader more aligned strategy to meet industry requirements. This incorporates strategies to attract visitors.

Level of Service Statement	Level of Service Measure	Performance Targets Years 1-3 in detail Years 4-10 outline	Progress Achieved to Date
	Investment for research and development and business development	Years 1 – 10 - At least $500,000 per annum achieved for Research & Development (R&D) investment	Research and Development funding achieved $1.2M. The Regional Partner Network initiative has increased capacity for this work and a major marketing programme started in March. A number of workshops and presentations in the region have taken place to promote the regional partner network initiative.
	Long term regional economic development strategy	Year 2 - Complete update of Long Term Regional Development Strategy	A Regional Strategy Fund project to refresh the Regional Economic Development Strategy was undertaken this year and adopted by Council in July 2011. This was undertaken by a steering group comprising Napier, Hastings and Regional Councils, Chamber of Commerce and industry representatives. Two workshops were held with a wider group of stakeholders. The strategy clearly articulates four strategies and lead and support agencies.
	Annual Regional Economic Monitoring Report	Years 1 – 10 - Maintain up to date model Prepare annual report in consultation with stakeholders	Access to information datasets has been maintained. In partnership with EIT the Industry Projections report has been refreshed. Going forward, HBRC will collaborate with Business Hawke’s Bay to provide the underlying economic information requirements for the region.

Financial Variances Explained

During the 2010-11 year, Hawke’s Bay Tourism was created to manage the tourism arm of Venture Hawke’s Bay with the remaining economic development activity (costs and revenue) being transferred to project 179. The project also managed the New Zealand Trade and Enterprise Regional Strategy Fund contracts however contractor costs and revenue were not specifically budgeted as they were not known at the time. Council administers those contracts.

Activity 2 - Levels of Service Provision and Performance Targets – Policy Development

Level of Service Statement

Level of Service Measure

Performance Targets

Years 1-3 in detail

Years 4-10 outline

Progress Achieved to Date

We will establish and maintain clear and appropriate policy to enable the sustainable management of the region’s natural and physical resources by undertaking a rolling review^{^[1]} of the regional plans in a responsive and timely way

Status of resource management plans and policy statements

Year 1 – Plan change for on-site domestic wastewater publicly notified

Plan change for stormwater discharges publicly notified

Council now proposes to proceed with these plan changes in the first half of year 3

Plan change for minor changes relating to Land Use intensification

Council decided not to proceed with this to give priority to Taharua River plan change

Decision of whether to proceed with a plan change for land use intensification relating to Taharua River Catchment

Council decided to proceed with a plan change with the following Performance Target:

Year 2 – plan change for managing land use in Taharua River catchment for water quality purposes publicly notified

Year 2 – Initiate a change to the Regional Policy Statement following completion of the Heretaunga Plains Urban Development Study by Year 2

Council now proposes to proceed with this in the first half of year 3

Year 3 – Plan change for Water Allocation and Environmental Flows and Levels for surface and ground water publicly notified

Additional resources (2 FTE) are proposed in this Annual Plan to ensure these performance targets are able to be met

Years 4 - 10 – plan changes as per Rolling Review programme

Council had an endorsed a work programme and revisited that programme in April 2011. Onsite wastewater plan change prepared and notified in July 2011.

Stormwater plan change has been deferred to follow release of the ‘Growth’ plan change. A Regional Stormwater Strategy has been drafted with TLA and iwi input.

As indicated, the plan change relating to Land Use intensification was deferred in lieu of Taharua policy development strategy.

Working with the Taharua Stakeholders Group (TSG) comprising landowners, iwi, statutory and industry organisations, the TSG has established its vision and values and have agreed in principle to water quality targets and timeframes. These were presented to Council in April 2011 and was also agreed that the timeframe to notify the plan change be extended to December to allow more time to determine the implications and costs of meeting the water quality targets. A Taharua Strategy discussion document was developed to enable wider community consultation. Discussion document was released in July 2011.

Council endorsed a work programme with reviewed notification date as July–Oct 2011. The Change will embed relevant parts of Heretaunga Plains Urban Development Strategy into the RPS, plus various other principles for integrated growth and infrastructure management. Consultant was engaged to prepare initial draft plan change. Draft plan change was presented to Council in August 2011.

Indicative timeframes toward freshwater flows and allocation policy development were endorsed by Council in Feb 2010. A Regional Water Symposium held late 2010 to build shared understanding amongst stakeholders. A Reference Group has been established and four meetings have been held to inform preparation of the Regional Water Strategy. The Regional Water Strategy will assist in informing drafting of water flows and allocation changes for notification in 2012. Recruitment difficulties has resulted in the use of consultants to assist in the preparation of the Tukituki Plan Change.

The National Policy Statement for Freshwater will have implications for the scheduling of plan changes over this period. So too could other NPSs currently being prepared by the government (e.g. NPSs for biodiversity and infrastructure).

Explanation of Significant Financial Variances

There were no significant variances in this group of activities.

Activity 3 - Levels of Service Provision and Performance Targets – Policy Implementation

Level of Service Statement

Level of Service Measure

Performance Targets

Years 1-3 in detail

Years 4-10 outline

Progress Achieved to Date

We will promote integrated management by proactively communicating the Council’s policies and responsibilities through dialogue and submissions on district plans and consent applications and central government initiatives

Submissions made on district plans, district planning applications and central government initiatives where there are relevant regional Council policies and responsibilities to consider

Years 1 – 10 - Submissions made on district plans, district planning applications and central government initiatives reported to Council’s Environmental Management Committee

Staff of Regional Council and territorial local authorities meet at least twice a year to discuss integration issues

Steps for improved integration are identified and actioned

Regular reports have been presented to Environmental Management Committee and Maori Committee on submissions/ comments etc. made under Statutory Advocacy project.

Comments and submissions are made to express the Regional Council’s interests in land use and resource management decisions being made by other councils and agencies. Matters expressed in Council’s comments and submissions to city and district councils often relate to a development’s proposed methods of stormwater disposal; discharge of wastewater; the development’s proximity to river control or drainage works; its location relative to known natural hazards; etc. (Example outcome: land use consent granted by Napier City Council included conditions requiring certain works be undertaken for on-site stormwater detention and disposal).

Several responses have been made to recent central government proposals:

· Ministry for the Environment discussion document on ‘Building Competitive Cities’ as part of Resource Management Act Phase 2 reform;

· National Environmental Standard for Plantation Forestry (original plus revised versions);

· Proposed NPS for Biodiversity;

· Marine and Coastal Area Bill and appearance at Select Committee hearing;

· Environmental Protection Authority Bill and appearance by teleconference at Select Committee hearing.

The Regional Council has opportunities to submit on proposed National Policy Statements (NPSs) and National Environmental Standards (NESs) like any other person. The Regional Council often submits to ensure NPSs and NESs do not require costly and unnecessary implementation actions that are disproportionate to any benefits of the national instrument.

HBRC Policy staff convene “Hawke's Bay Council Planners’ Forum.” Forum membership comprises key resource management policy managers and advisors from each of the Hawke's Bay councils. Five meetings held since Forum’s inaugural meeting in April 2010. Principal purpose of Forum is to assess and share opportunities to harmonise content of regional and district plans in Hawke's Bay.

We will investigate and manage contaminated sites to ensure public health and safety and environmental protection

Number of top priority (Category 1) contaminated sites investigated

Maintain a database of potentially and confirmed contaminated sites

Years 1 – 10 - Investigate 4 of the Top Priority Contaminated sites a year

The last nine Top Priority sites have been investigated this year, with long-term management now being worked through where needed.

Explanation of Significant Financial Variances

There were no significant variances in this group of activities.

Activity 4 - Levels of Service Provision and Performance Targets – State of the Environment Reporting

Level of Service Statement

Level of Service Measure

Performance Targets

Years 1-3 in detail

Years 4-10 outline

Progress Achieved to Date

We will monitor and provide accurate information to the community so that they understand the State of the Environment (SOE) for Hawke’s Bay.

Data quality as assessed against Council’s quality assurance system

Amount of SOE monitoring data available through the Council’s web site

Years 1 – 10 - Maintain current level of SOE data on the Council website

Year 2 - Make information from the following monitoring sites available through Council’s website:

· All telemetered river flow sites

· All telemetered rainfall sites

· All telemetered climate stations

Year 3 - All data collected, processed, analysed and stored in accordance with ISO requirements

Year 4 - Apply for ISO accreditation

Data is regularly updated and made available on the council website. A number of sites are now available through third party providers to ensure complete coverage (Lake Tutira and Waikaremoana).

All telemetered sites are available via the council website. Climate stations in accordance to the climate station review have increased with five sites to be fully operational by year 5. Currently 3 climate stations have been installed. River flow and rainfall sites have been re-evaluated with recommendations to upgrades now being implemented.

Promapp, a tool underpinning the science QA system, has now had all technical processes uploaded, quality auditing procedures are now underway and will be completed ready for year 4 ISO accreditation

State of the Environment Monitoring Report

Years 1 – 10 - Annual Update State of the Environment Reports available by June each year.

Year 5 - State of the Environment Monitoring Report available

Annual update report currently being written with drafts of each section now complete. Editing process and design now initiated. Annual report will be completed by August 2011 (currently at publishers).

Explanation of Significant Financial Variances

To be done.

Narratives on Performance Targets

Attachment 2

Activity 1 - Levels of Service Provision and Performance Targets – Land Drainage and River Control: Upper Tukituki Scheme

Level of Service Statement

Level of Service Measure

Performance Targets

Years 1-3 in detail

Years 4-10 outline

Progress Achieved to Date

We will maintain an effective flood control network that provides protection from frequent river flooding to communities and productive land within the Upper Tukituki Scheme

The level of protection in technical terms is to convey a flood discharge with a 1% probability of being exceeded in any one year (1%AEP)

A full assessment of the capacity and integrity of flood control works is completed every six years by a chartered professional engineer with interim audits undertaken annually

The level of service will be reported as:

· Kilometres and percentage of floodway that provide the design level of service

· Kilometres and percentage of river edge that are at no more than low risk of failure

Years 1 - 3 - Increasing to 98%

Years 4 - 10 - increasing to 100%

· Review of the current level of service provided by the Scheme to determine whether they are still appropriate or should be increased.

· A Level of Service review will begin at the completion of the HP Scheme review starting programmed for 2012.

· There is 76.8 km of stopbank in the UT Scheme. Currently 95% the design LOS (1%AEP capacity) is provided. A small section of the Tukituki River was below capacity and this has been upgraded.

· Some reaches remain with reduced free board and those will be addressed in the LOS review.

· There is 212.2 km of river berm edge protection. Current assessment is that 95% are at no more than a low risk of failure. The rivers in the UT Scheme suffer some flood damage from time to time or are under repair with young vegetation; hence the downgrading.

We will protect and enhance scheme riparian land and associated waterways administered by the Council for public enjoyment and increased biodiversity.

The length of Scheme riparian land enhanced (each side of a waterway measured separately)

Years 1-3 - 1.5km of riparian land enhanced a year

Years 4 - 10

· to be determined by Stream Ecological Valuation (SEV) programme and level of service review

· Review the current level of service provided by the Scheme and determine new level of service targets

2.8 km of river berm are part of the 2010/2011 enhancement of native and exotic tree species.

The LOS review for the drainage network is programmed to begin once the bulk of the review for the rivers is complete. This will begin in the 2012-13 year.

Activity 1 - Levels of Service Provision and Performance Targets – Land Drainage and River Control: Other Designated Schemes

Level of Service Statement

Level of Service Measure

Performance Targets

Years 1-3 in detail

Years 4-10 outline

Progress Achieved to Date

We will maintain an effective flood control and drainage network that provides protection from frequent flooding to communities and productive land within designated Scheme areas

These Schemes include:

· Makara Flood Control

· Paeroa Drainage

· Porangahau Flood Control

· Ohuia – Whakaki Drainage

· Esk River

· Whirinaki Drainage

· Maraetotara

· Te Ngarue

· Kopuawhara Flood Control

· Poukawa Drainage

A full assessment of the capacity and integrity of flood control works is completed every six years by a chartered professional engineer with interim audits undertaken annually

The level of service will be reported as:

· Percentage of assets that provide the design level of service

Years 1 - 3 - No change

Years 4 - 10 - 98%

Current Levels of Service are being achieved across the smaller schemes. Levels of Service vary across the schemes, depending on their purpose. Estimated to be operating at 95% or higher after allowing for periodic flood damage.

Kopuawhara suffered damage in the April Floods and significant repair work is required to bring the scheme back to pre-flood protection standard. A discussion paper has been prepared for Council consideration.

We will protect and enhance scheme riparian land and associated waterways administered by the Council for public enjoyment and increased biodiversity

The level of service will be reported as the length of Scheme riparian land enhanced (each side of a waterway measured separately)

Years 1 - 3 - No change

Years 4 – 10 - to be determined by SEV programme and level of service review

· No specific enhancement of the riparian land has been carried out. The SEV work and LOS review is necessary to identify areas where such enhancement will be beneficial.

Narratives on Performance Targets

Attachment 2

Activity 1 - Levels of Service Provision and Performance Targets – Land Management

Level of Service Statement

Level of Service Measure

Performance Targets

Years 1-3 in detail

Years 4-10 outline

Progress Achieved to Date

We will encourage land uses and land use practices that:

· are appropriate to the environmental constraints of any given site;

· reduce negative, and produce positive, offsite impacts (including to water bodies and biodiversity);

· provide social and environmental benefits;

So that land is sustainable for future generations.

Percentage of properties within eight focal catchments/areas implementing plans to enhance environmental and economic function and performance.

Focal catchments include: Taharua (Mohaka sub-catchment) Class IV ^{^[2]} flats, Class VIe, VIIe Hills, total area 14,400 ha;

Huatokitoki (Porangahau sub-catch) Class VI, VII, total area 10,500ha);

Maraetotara (Class VIe, 13,000 ha);

Pouhokio (Class Ve, VIe, 4200 ha.)

Additional focal catchments /areas to be considered:

· Ruataniwha Basin

· Aropaoanui (Class Vie, VIIe)

· Waikare (Class VIe, VIIe)

Percentage of property owners within individual focal catchments /areas actively engaged in dialogue:

Year 1 20%

Year 2 40%

Year 3 60%

Years 4-10 60%

Percentage of property owners within individual focal catchments/areas actively implementing plans

Year 1 0%

Year 2 0%

Year 3 20%

Year 4 40%

Years 5 – 10 60%

Huatokitoki 85%

Taharua 100%

Maraetotara 45%

Pouhokio 65%

Huatokitoki 85%

Taharua 100%

Maraetotara 19%

Pouhokio 27%

Hill Country Erosion sustainable Farming Fund project (Wairoa District) for:

· Ruakituri

· Hangaroa

· Whakaki

· Kopuawhara

Percentage of property owners within each of the four catchments actively engaged in dialogue:

Year 1 20%

Year 2 40%

Year 3 60%

Years 4-10 60%

Percentage of property owners within each of the four catchments actively implementing plans

Year 1 0%

Year 2 0%

Year 3 20%

Year 4 40%

Years 5 – 10 60%

Whakaki 100%

Hangaroa 0%

Ruakituri 90%

Kopuawhara/Nuhaka 80%

Whakaki 80%

Hangaroa 0%

Ruakituri 40%

Kopuawhara/Nuhaka 60%

Hectares of Class VIIIe land in retirement or forestry

Year 2 - 100% Class VIIIe land in retirement or forestry

Majority of Class VIIIe land in DoC estate and therefore retired.

We will work with landowners and community groups to protect biodiversity and enhance the environment of coastal dune systems and riparian margins

Number of community groups working in coastal and riparian margins

Number of community groups engaged & actively implementing the protection & enhancement of riparian margins and coastal dune systems:

Year 1 - 12

Year 2 - 13

Year 3 - 14

Years 4-10 15

Currently working with 12:

Ocean Beach; Waimarama, Waipatiki, Pakowhai, Tutira, Horseshoe Lake, Kairakau, Maraetotara Tree Trust, Mahanga dunes, Pourere dunes, Rununga, Porangahau

We will increase our knowledge of the region’s land, soil and terrestrial habitats so that they can be managed sustainably for future generations

Development and monitoring of pressure, state and response indicators

Year 2 - Develop and monitor indicators for soil erosion, riparian enhancements, changing land use, farm inputs by Dec 2011

Indicators are being developed and monitored as follows;

Erosion – Plans for measurement of sediment loads in selected rivers and erosion modelling of specific catchments is underway.

Riparian enhancement – working in conjunction with land management to monitor water quality and biodiversity of new areas of riparian protection is underway.

Land use change – derived from latest GIS data and supported by ground proofing.

Farm inputs – supported by ‘overseer’ and consent data is underway. A comprehensive nutrient leaching model (including overseer outputs) has been developed for the Taharua catchment. Similar work for the Ruataniwha is under development.

Terrestrial habitats – An extensive aerial, ground and GIS survey of the Karamu and Tukituki catchments has been undertaken (final reports due September 2011). This includes Herpetofauna, avian and indigenous flora) and identifies areas of significance for resource management.

Regional baseline hill country erosion monitoring

Years 1 – 10 - Regional baseline erosion monitoring report completed by Dec 2011

Erosion monitoring repeated and report completed by June 2016, contingent on major regional storm event

A combination of monitoring techniques are being investigated that can be used in conjunction with the new ‘kiwi image’ satellite imagery being made available to HBRC. This will lead to a baseline erosion monitoring report for the region by Dec 2011.

Catchment-scale modelling & monitoring:

Taharua/Upper Mohaka Ruataniwha/Tukituki (Land Use intensification).

Catchment-scale monitoring of Huatokitoki

Years 1-3 - Catchment models developed for Taharua & Ruataniwha (& reports).

Year 3: Start monitoring in Huatokitoki

Currently nutrient contaminant transfer model has been developed for Taharua with Ruataniwha model to be completed by late 2011. Scenario modelling to determine acceptable nutrient levels to meet instream values has been developed for Taharua. A refinement of the model’s assumptions is now taking place to reflect the instream standards. The instream values for nitrogen levels have now been set to test the model against river changes.

Ruataniwha scenarios will be completed in late 2011.

Monitoring weir design has been completed and weir expected to be installed when flow conditions permit.

Narratives on Performance Targets

Attachment 2

Activity 2 - Levels of Service Provision and Performance Targets – Air Management

Level of Service Statement	Level of Service Measure	Performance Targets Years 1-3 in detail Years 4-10 outline	Progress Achieved to Date
· We will have adequate knowledge on the level of air pollutants that may impact on public health and aesthetic values so that we can manage air quality for human health needs and aesthetic values ·	State of the Environment monitoring programme for: · air quality · climate	Years 1 – 10 - Monitoring undertaken in accordance with the Regional Air Quality Monitoring Strategy Year 1 - 3-yearly review of AQMS Year 2 - Revise airshed modelling Years 1 – 10 - Report on exceedances of the National Environmental Standards in accordance with the standard	Continuous monitoring is undertaken in Napier and Hastings. Screening monitoring has been completed in Taradale and will commence in Waipukurau. The AQMS is reviewed annually and changes made as required. A comprehensive review is currently underway with completion in late 2011. A revised air shed model is currently in development. Model is due for completion late 2011. NES exceedances continue to occur in both the Napier and Hastings air sheds and these have been publicly notified and reported to MfE. The NES has recently changed, with 2016 now a key date for compliance.
·	Emissions Inventory	Years 1, 3 and 6 - Complete inventory updates	An emissions inventory was completed in 2010.
· We will provide financial assistance for healthy homes	Number of clean heat systems installed under financial assistance programme	Years 1 – 10 – 1,500 ‘clean heat’ systems installed under the Council’s financial assistance programme each year Years 1 – 10 – Provide loan assistance to homeowners region wide for insulation of homes under Council’s financial assistance programme.	Applications for HBRC financial assistance (grants and loans) totalled 898 in 2010/11. Clean heat installations = 272 Insulation installations = 316 Clean heat and insulation = 219 Figures from EECA for Hawke’s Bay show the total number of clean heat conversions receiving EECA subsidy from December 2009 to June 2011 was 1432, and the total insulation and clean heat in that same period was 6212. While the target of 1500 clean heat systems installed under Council’s heat smart programme annually significantly over-estimated the number of homeowners who would seek financial assistance from Council, the figures from EECA show that the number of clean heat conversions is starting to be significant. The challenge now is twofold: · To further increase awareness and uptake of the programme; and · To ascertain how to determine the number of “self-funded conversions” outside of the Heat Smart programme as part of the assessment of progress towards an improvement in PM10 air quality.

Activity 3 - Levels of Service Provision and Performance Targets – Water Management

Level of Service Statement

Level of Service Measure

Performance Targets

Years 1-3 in detail

Years 4-10 outline

Progress Achieved to Date

We will increase our knowledge of the region’s water resources in terms of quantity, quality and habitats so that a policy framework can be developed to sustainably manage the water resources within Hawke’s Bay.

State of the Environment monitoring programme for:

- Climate

- River flows

- Groundwater levels

- Surface water quality

- Groundwater water quality

- Aquatic ecosystems

Years 1 – 5 - Establish 1 climate station a year

Years 1 – 10 - Monitoring undertaken in accordance with State of the Environment monitoring strategy

Year 3 Upgrade rainfall sites

Taharua, Wallingford and Drumpeel climate stations commissioned and available via the Council’s website.

Monitoring continues to be collected in accordance to the environmental monitoring strategies. Additional monitoring is taking place on the Tukituki, Ngaruroro, Karamu as required in accordance to the regional plan upcoming changes.

Rain station upgrades have commenced with the first step of identification of priority sties now complete and additional CAPEX sought. Due to the number of changes required upgrades will be spread over a number of financial years.

Knowledge available to inform environmental flow and allocatable volume review of the following river catchments and groundwater basins:

Tukituki River; Ngaruroro River; Karamu Stream; Tutaekuri River; Ruataniwha Plains ; Heretaunga Plains

Year 2 - Groundwater Allocation report

- Ruataniwha Plains, Heretaunga Plains

Year 3 - Environmental flow and Allocation Reports for:

- Tukituki River, Ngaruroro River, Karamu Stream, Tutaekuri River

Ruataniwha groundwater model is now complete with scenarios run (4), Heretaunga model has been reassessed to inform future development of the model in line with new information in the Heretaunga Plains. Development of the Heretaunga Aquifer allocation is under way.

Reports on the Ngaruroro and Tukituki are now complete, Karamu and Tutaekuri are scheduled for year 3.

Level of Service Statement

Level of Service Measure

Performance Targets

Years 1-3 in detail

Years 4-10 outline

Progress Achieved to Date

Knowledge available to inform review of water quality objectives and guidelines

Year 2 - Review of water quality guidelines and objectives completed and reported

Draft regional instream values, guidelines and standards report completed. An international review of the ANZECC guidelines and national monitoring and reporting for water quality review, of which HBRC is closely involved, has delayed completion of this work. Although ANZECC guideline review will not be completed before the end of Year 2 the review of the national monitoring and reporting will be sufficiently advanced to enable consideration be given to the water quality guidelines. The land and water strategy currently under development should assist in reviewing the water quality objectives. These will need to be reviewed in line with the NPS for freshwater management.

Knowledge available to manage nutrient inputs to rivers

Report on Nutrient limits:

Year 1 - Tukituki River, Taharua River

Year 2 - Ngaruroro River

Nutrient thresholds and reports describing nutrient limits are currently under development with the initial modelling of the Taharua complete). The Tukituki catchment nutrient limit report is also under development but not expected till December 2011. Delays have occurred due to additional information needing to be collected to inform the models and FRST programmes that did not commence till October 2010 (nutrient spiralling in the cumulative effects water project). Additionally, the impact of the water storage project needs to be aligned once certainty on options through the feasibility stage are refined.

Level of Service Statement

Level of Service Measure

Performance Targets

Years 1-3 in detail

Years 4-10 outline

Progress Achieved to Date

· We will increase our knowledge in terms of potential regional water demand and availability and how it is valued so that we can strategically plan for regional economic, social, cultural and environmental benefits

Regional Water Demand /Availability study

Regional Water Values study

Year 2 - Regional Water Values study completed

Year 3 - Regional Water Demand/Availability study completed

The Water Values Study has been scoped. As the different strands of the Strategic Water Programme progress, the linkages are becoming increasing apparent with the need to constantly review projects to ensure work is well aligned. Workshops have been held to look at angling and kayaking values and more are planned to be completed by December 2011. These will support policy development, particularly the implementation of the National Policy Statement for Freshwater Management.

Regional water availability and demand study has commenced. A number of scenarios have been considered for water availability in the various catchments. Work has commenced on actual and potential water demand based on various land uses and climate change scenarios as part of the storage feasibilitiy study and this work is ongoing. A key element of the third year will be identifying strategies to meet the shortfall in supply and demand.

This study will inform and be part of the Regional Land and Water Strategy.

Level of Service Statement

Level of Service Measure

Performance Targets

Years 1-3 in detail

Years 4-10 outline

Progress Achieved to Date

· We will encourage efficient and effective water use to maximise the benefits of the water allocated

Number of active water user groups

Year 2 – 3 Water User Groups established and facilitated

Three water user groups have been established; Ruataniwha, Ngaruroro and Twyford. Ngaruroro has been formally constituted with the other two currently going through the formalisation process. Engagement between HBRC Staff and the various water user groups is ongoing with various initiatives such as water rationing and rostering, consent advice, etc being trialled during the year.

Number of consent holders with water meters operating using telemetry or web/text systems

Year 1 – 570 consents telemetered or using web/text system

Year 2 – 677 consents telemetered or using web/text system

Year 3 – 786 consents telemetered or using web/text system

Year 4-10 – 893 consents telemetered or using web/text system

Approximately 350 consent holders are using telemetry or web entry access for monitoring water use to date.

Activity 4 - Levels of Service Provision and Performance Targets – Coastal Management

Level of Service Statement	Level of Service Measure	Performance Targets Years 1-3 in detail Years 4-10 outline	Progress Achieved to Date
· We will measure water quality at key recreation sites and make the results available to ensure public health and safety	Recreational water quality monitoring Programme and website management	Years 1 – 10 - Weekly monitoring of key recreational sites as per recreational water quality monitoring plan Swimsafe information available on website within 2 days of results being available	This programme continues to provide timely and key information on the recreational water quality of the region. Exceedances are notified to the PHU (HBDHB) to act upon. Target of 2 days for updated information to be online has been met for the2010-2011 season.
· ·	Annual coastal monitoring and investigation programme for: beach profiling storm surge monitoring sediment transport coastal inundation	Years 1 – 10 - Annual monitoring and investigation programme completed and reported each year	Coastal monitoring and investigation is carried out on the regions beaches throughout the year. This work is reported in a report published in July each year.
· We will increase our knowledge of the region’s coastal resources in terms of water quality, sediment quality and ecology so that we are able to assess the effects of future activities on the coastal environment	State of the Environment monitoring programme for: nearshore water quality sediment quality estuarine ecology hard and soft shore ecology	Years 1 – 10 - Monitoring undertaken in accordance with SOE Monitoring Strategy (2006)	Programme has continued in line with strategy with reports on Sandy Beaches, Estuarine and coastal water quality completed.
	Identification of freshwater/ saltwater transition zone in the region’s rivers	Years 1 – 10 - Freshwater/saltwater transition zones identified in 5 rivers a year	Year 2 rivers have now commenced with maritime consents now obtained for work in the Wairoa and Tukituki estuaries.

Activity 5 – Levels of Service Provision and Performance Targets

Level of Service Statement	Level of Service Measure	Performance Targets Years 1-3 in detail Years 4-10 outline	Progress Achieved to Date
We will monitor and manage river-bed sediment to ensure flood protection schemes work as expected	River surveys (3-6yearly) show all scheme rivers have sufficient capacity The average riverbed level where gravel is extracted is managed within +/- 200mm of the design grade line No incidences of erosion or flooding as a result of undesirable gravel levels	Years 1 - 10 - No decline in river capacity Average riverbed within design grade range No incidences	River bed surveys are rotated on a 3 to 6 year frequency and analysed. A reach of the Upper Tukituki has been shown to have insufficient capacity and this has largely been corrected. All other rivers that are monitored have sufficient capacity. The average riverbed gravel where gravel is extracted is within the design grade line. There have been no incidences of erosion or flooding that have resulted from gravel levels not being managed appropriately.
River-bed gravel is equitably allocated to gravel extractors	The gravel allocation process complies with the RRMP	Years 1 - 10 - No compliance issues with gravel extraction	The gravel allocation process has complied with the RRMP and there are no compliance issues.
River gravel management activities have no significant adverse effects on river ecology and water quality	No reported incidences of adverse impacts following gravel extraction or beach raking activities	Years 1 - 10 - No reported incidences of adverse impacts following gravel extraction or beach raking activities	Gravel extraction has been managed to avoid adverse impacts on the ecology. In addition, ecology management plans for the rivers are currently being developed to manage the ecology more effectively.

Activity 6 - Levels of Service Provision and Performance Targets – Open Spaces

Level of Service Statement	Level of Service Measure	Performance Targets Year 1-3 in detail Year 4-10 outline	Progress Achieved to Date
We will provide public access to, and manage existing Council owned parks and wetlands for multi-purpose benefits.	Pekapeka Wetland Management Plan Tutira Country Park Management Plan Tukituki Estuary Management Plan Waitangi Management Plan Pakowhai Country Park Maintenance Plan	Year 2 - Public walkway access to Pekapeka swamp available subject to resolution of consent appeals Years 1 – 10 - Public access to Pakowhai and Tutira Country Parks continue to be available	Interpretation site, including carpark, pathways, earthworks, planting and signage, boardwalks and bridges all completed in accordance with programme and budget. Maintenance work at Pakowhai Country Park and Tutira Country Park carried out in accordance with programme and budget for the year.
We will actively look for opportunities to provide the public with additional access to coastal areas and ‘near urban’ rural environments that meet the Open Space policy and evaluation criteria.	Open space policy and evaluation criteria	Years 1 – 10 - Up to 3 proposals evaluated against the criteria *Year 2* – complete Landscapes cycleway of the “Heretaunga Ararau” cycleway proposal, subject to Central Government funding	Cycleways: Landscapes Trail – Blackbridge to Te Awanga and Moore Road to Blackbridge sections completed prior to Christmas 2010. Red bridge to Moore road section in conjunction with HDC 90% complete with holdups due to machinery being prioritised for flood clean up duties following May storm event. Access approvals for the Craggy range ride have stalled due to landowner problems and Council is seeking an amendment to the work programme to reallocate funding to the Water and wineries trails, with a decision due next financial year. Water Trail – Funding and access approvals gained during the year and construction commenced on 2 significant sections of the trail. NCC coastal section approximately 75% complete at year end and HBRC estuary section of trail approximately 30% complete by year end. Work is programmed for completion by the end of 2011.
We will maintain the stability of part of State Highway 2 by appropriate land use and management of the Tangoio Soil Conservation Reserve.	Tangoio Soil Conservation Management Plan	Years 1 – 10 - Yearly inspections	Annual maintenance works have been carried out in accordance with programme and budget.

Narratives on Performance Targets

Attachment 2

Activity 1 - Levels of Service Provision and Performance Targets – Resource Consent Processing

Level of Service Statement

Level of Service Measure

Performance Targets

Years 1-3 in detail

Years 4-10 outline

Progress Achieved to Date

We will ensure accurate information about resource consent requirements and processes is readily available

Application and submission guides are available in electronic and hard copy form

Years 1 – 10 - No verified reports of inaccurate information being given in relation to resource consent requirements

Years 1 – 10 - Electronic application and submission forms, application and submission guides are available through the Council’s website

Of the 951 consents processed in the year and the large number of consent enquiries, there were 2 instances of inaccurate information given to a consent holder and an applicant. Both issues have been acknowledged by Council staff and in one instance has been settled and the other instance is still in the process of being settled. Both issues have been discussed with staff to ensure correct advice on these issues is given in future.

Target met.

We will process resource consent applications in a timely manner

100% of resource consents processed within statutory timeframes set down in the Resource Management Act 1991

Years 1 – 10 - 100% of resource consents processed within statutory timeframes

Of the 613 non notified consents, 97% were processed within statutory timeframes.

Activity 2 - Levels of Service Provision and Performance Targets – Compliance Monitoring

Level of Service Statement

Level of Service Measure

Performance Targets

Years 1-3 in detail

Years 4-10 outline

Progress Achieved to Date

We will check that consent holders comply with the resource consent conditions imposed to protect the environment

Number of consents monitoring in accordance with the adopted compliance monitoring strategy

Years 1 – 10 - 90% of programmed inspections/reports completed each year

95% of monitored consents achieve an overall grading of full compliance or minor non-compliance

Target met.

This target is not appropriate anymore due to changes in Councils grading system to bring it into line with national reporting grades. Historically HBRC had grade 1-5. Now we use three grades, Compliance. Non-compliance and significant non-compliance. Minor non-compliance now is included in the non-compliance category.

Under the new grading system, there were 70% of assessed consents fully complying with their conditions.

We will provide a 24 hr/7 day a week pollution response service for reporting environmental problems

Duty management/Pollution Management response system

Years 1 - 10 - 24 hour duty Management/pollution management response system maintained

Target met.

Activity 3 - Levels of Service Provision and Performance Targets – Maritime Safety & Navigation

Level of Service Statement

Level of Service Measure

Performance Targets

Years 1-3 in detail

Years 4-10 outline

Progress Achieved to Date

We will provide local navigation safety control of shipping and small craft movements to ensure the region’s navigable waters^{^[3]} are safe for people to use.

Navigation Safety Bylaws and Port and Harbour Safety Management System

Years 1 – 10 – Bylaws to be reviewed in 2012

Maintain a Maritime New Zealand accredited Safety Management System for the Napier Pilotage area

Marine accidents and incidents are investigated and actioned using education and enforcement as appropriate

SMS has been audited by MNZ and our accreditation has been maintained.

Recent review of this project has identified minor gaps in investigation procedures. New procedures were introduced to ensure appropriate investigation takes place. Target met.

Activity 4 - Levels of Service Provision and Performance Targets – Building Act Implementation

Level of Service Statement	Level of Service Measure	Performance Targets Years 1-3 in detail Years 4-10 outline	Progress Achieved to Date
Process Building Act consent applications within timeframes	Contract with Environment Waikato to process dam consents on behalf of HBRC	Maintain contract with Environment Waikato, for the processing of dam building consents	Contract maintained. No dam building consents applied for.
Maintain an accurate Dam Register and assist dam owners preparing dam safety assurance programmes in accordance with Building Act timeframes	All known dams have been recorded on the Dam Register, and dam owners informed of Building Act requirements	Years 1-10 – 100% of dams comply with regulation requirements that come into force in July 2012	Regulations have been put on hold by the government, so target date of 2012 no longer applies. Target to be reassessed when regulations re-released.
Investigate and resolve illegally built dams	Any illegally build dam is either legalised or removed within six months of identification	Years 1-10 – 100% of dams comply with regulation requirements	No illegal dams have been identified this year.

Narratives on Performance Targets

Attachment 2

Activity 1 - Levels of Service Provision and Performance Targets – Regional Road Safety

Level of Service Statement

Level of Service Measure

Performance Targets

Years 1-3 in detail

Years 4-10 outline

Progress Achieved to Date

We will engage, co-ordinate and implement sustainable regional road safety initiatives so that our roads and pathways are safe and accessible, and the emotional and financial costs of road accidents are reduced

Implementation of Regional Safety Action Plans and Neighbourhood Accessibility Plans which effectively implement relevant objectives of the Regional Land Transport Strategy and the New Zealand Injury Prevention Strategy

Years 1 – 10 - Review Regional Safety Action Plans (RSAP) for Wairoa, Napier, Hastings, and Central Hawke’s Bay on a quarterly basis and prepare updated RSAP for the following quarter

Years 1 – 10 – Allocate New Zealand Transport Agency funding to service providers to enable implementation of Regional Safety Action Plan

Regional RSAP meeting was held in June 2011 to re-prioritise road safety issues, review processes and discuss joint activities for the next year.

RoadSafe only provide limited funding to community organisations due to the reduction in funding to RoadSafe budget. Any community funding is monitored and reported to the RoadSafe Governance Group.

Activity 2 - Levels of Service Provision and Performance Targets – Regional Land Transport Strategy

Level of Service Statement

Level of Service Measure

Performance Targets

Years 1-3 in detail

Years 4-10 outline

Progress Achieved to Date

We will promote improved integration of all transport modes and land use through the region’s transport strategy

Regional Land Transport Strategy (RLTS)

Year 3 - Review by June 2012

Year 2 – Heretaunga Plains Transportation Study (HPTS) to be completed June 2011

Year 2 – Hawke’s Bay Wider Transportation Study (WRTS) to be completed June 2011

The HPTS study is being undertaken by GHD Consultants and has been delayed by a number of factors, but is being closely monitored by the Study Management Technical Group (SMTG). The expected completion date is October 2011. The Heretaunga Plains Transport model now contains the 2046 settlement pattern from the Heretaunga Plains Urban Development Strategy and assessments can be made on the impacts of the transport network.

This Wider Region Transportation Study (WRTS) is being undertaken by Murray Tonks and, following an agreed extension is expected to be completed by 30 September 2011.

These studies will feed into the Regional Land Transport Strategy.

A discussion document on the RLTS was sent out in March and presented to the RTC in April. The RLTS and RLTP will be drafted as one document and go out for public consultation early 2012.

Three yearly Regional Land Transport Programme (RLTP)

Year 4 - Regional Land Transport Programme submitted to New Zealand Transport Agency by 30 June 2012

The Regional Land Transport Programme contains the region’s bids for transport funding from the government. It is being developed in conjunction with the review of the Regional Land Transport Strategy, and will be consulted on at the same time.

Activity 3 - Levels of Service Provision and Performance Targets – Subsidised Passenger Transport

Level of Service Statement	Level of Service Measure	Performance Targets Years 1-3 in detail Years 4-10 outline	Progress Achieved to Date
We will provide an accessible bus service and appropriate service infrastructure within and between the Napier, Hastings and Havelock North urban areas that will be expanded to meet the increasing need for passenger transport for the people of Hawke’s Bay	In accordance with Regional Land Transport Strategy	Years 1 – 3 - Services to be expanded and improved over next 3 years Improvements to Routes 10, 11, 13, 16, 20 and Saturday Services on Route 12 were made in November 2009.	Further service improvements were made in 2010/11 on Routes 13, 14, 20 and 21. A trial Sunday service was introduced in January 2011 and due to its success was made a permanent service.
	Bus stop signs to be significantly improved to ensure all bus stops have appropriate infrastructure	Years 1 – 2 - Ensure both Hastings and Napier bus stops have appropriate signs at 100% of bus stops on current routes All Hastings and Napier bus stops are now appropriately marked Complete 4 additional bus shelters 1 new shelter was installed, working with TAs to identify other sites	All bus stops in Napier and Hastings have some form of identification. Timetable information has been installed at key bus stops. Two new bus shelters were installed. It was agreed to carry over funding for the 2 remaining shelters while appropriate sites are identified Including the Home HQ site in Hastings.
	Where bus routes exist, at least 90% of residences and businesses are in the following walking distances of a bus stop: 500m – normal conditions 600m – low density/outer areas	Years 2 – 3 - Increase the number of bus stops in Hastings and Napier to meet the measure by 100% New bus stops considered based on passenger demand	New bus stops are continually being considered based on demand and in liaison with Napier City Council and Hastings District Council.
	We will increase the frequency and start and finish times of some main services and provide more services on weekends	Years 1 – 2 - Saturday – 7 to 12 hours of service From November 09 on Saturdays there are now nine hours of services Years 2 – 3 - Sunday – between 5 to 10 hours of service	With the introduction of the Sunday service the bus services now provide 10 hours of service.
		Years 2 – 3 Extend start and finish times for main services Request for funding from NZTA was declined, therefore no extension of services will be implemented	The service improvements made on Routes 13, 14, 20 and 21 have enhanced bus services on these routes, the improvements were implemented within current budgets.
		Years 3 – 4 - Main services run at 15 min intervals (peak times) Request for funding from NZTA was accepted, these improvements will commence 1 July 2011.	This service improvement was due to be implemented on 1 July 2011, the delivery of new buses was delayed and this is now scheduled to commence 5 September 2012.
	We will review fares and the fare structures on all services annually	*Years 1 – 10 –* Review fares and fare structure	A fare review will be carried out in early 2012.
We will provide a subsidised taxi service for Hawke’s Bay residents who are unable to use public transport because of serious mobility constraints, through the delivery of a Total Mobility Scheme	Membership is increased and service delivered in accordance with NZTA guidelines	Years 1 – 10 - Increase by 5% per year	Total Mobility scheme users are continuing to increase by more than 5% per year. The increase of total members to end of June 2011 was 18.5%.

Narratives on Performance Targets

Attachment 2

Activity 1 - Levels of Service Provision and Performance Targets – Community Partnerships

Level of Service Statement	Level of Service Measure	Performance Targets Years 1-3 in detail Years 4-10 outline	Progress Achieved to Date
We will work toward mutually beneficial partnerships with Maori in order to jointly explore sustainable economic opportunities in Hawke’s Bay, understand the drivers and desired outcomes of Treaty settlements involving management of natural resources and to actively engaged on resource management matters in general	Level of service agreement in place with Maori entities	Years 1-3 – At least three agreements in place with Maori entities associated with either sustainable economic development initiatives or natural resource management	An agreement was signed in 2009 with Te Taiwhenua o Heretaunga for the establishment of a Community Development Unit, whose purpose is to 1. Support various/hapū in their role as kaitiaki . 2. Coordinate the ongoing identification and prioritisation of Maori development needs and aspirations. 3. Facilitate the integration of Maori strategic priorities into regional development strategy 4. Support implementation of regional development strategy within the capacity of the unit. 5. Provide liaison, advisory and consultancy services to local government and marae/ hapū, in accordance with the RMA and LGA. The Taiwhenua provides regular written and verbal reports updating progress towards these goals. In 2010 Council signed an agreement with Ngati Pahauwera to ensure liaison around gravel management in the lower Mohaka River. In 2010/11 the focus of the partnership with Maori has been principally on the development of the relationship between Council and the Treaty claimant groups. A Deed of Commitment expressing the foundations of an ongoing relationship between the parties, and the agreement to establish a Regional Planning Committee comprising councillors and treaty claimant representatives, were the main achievements this year.
We will deliver some community sustainability and environmental education objectives through strategic partnerships with community based organisations	Level of service agreements in place with community based organisations	Years 1-3 – Agreements have been signed with at least three strategic partner organisations Years 1-10 – Council continues to work in partnership with community based organisations to progress Council’s strategic goals	A template for strategic partners’ agreements is yet to be completed. Council is however actively engaged with several potential strategic partner organisations including Massey University, Plant and Food and MAF. Council continues to work with a range of community based organisations as its operational partners. Agreement are in place in 2010/11 with: · Sustaining HB Trust ($30k) · HB Cultural Trust ($30k) · EcoEd Trust ($30k) · Creative HB ($20k) · HB Coastguard ($8k) · Te Mata Park Trust Board ($25k) · Helicopter rescue trust ($100k)
We will contribute to supporting regional activities which benefit the community’s social, cultural, economic and environmental wellbeing.	Evaluation of, and make decisions on which regional projects to support.	Years 1-3 – Provide assistance of $330,000 to support the hosting and events of the Rugby World Cup in Hawke’s Bay.	Payments to date for Rugby World Cup: · 2009/10 - $100,000 · 2010/11 - $80,000
We will contribute to supporting the development of Regional Public Infrastructure projects.	Evaluation of, and make decisions on which Regional Public Infrastructure projects to support.	Years 1-3 – Determine which Regional Public Infrastructure projects will be supported from the $5.6m contestable fund. Year 1 - $500,000 paid to assist the Waipawa Town Hall development. Year 2-3 - $2,500,000 approved in each of the years to cover assistance to the Hawke’s Bay Museum and Art Gallery, and the velodrome at the Regional Sports Park. Years 4-10 – a further sum of $7.9 million subject to annual plan rolling reviews has been allocated to the contestable Regional Public Infrastructure projects. Contestable fund for years 1-3 has been increased to $5.5M with a corresponding reduction in years 4-10 to $4.9M	$500,000 paid in 2009/10 for Waipawa Town Hall development. $1,250,000 paid in 2010/11 to the Museum and Arts Gallery
We will engage with key resource users and environmental groups so that both parties understand impacts of resource management initiatives on business and environmental concerns	Meetings held in accordance with agreed schedules	Years 1-10 – Meetings held in accordance with agreed schedules	Meetings are held with a range of resource users and environmental groups both formally and informally, and separately and as part of wider groups. In 2010/11 formal stakeholder meetings were held with HBDHB, Pan Pac, Winegrowers Association and Hawke’s Bay Fruit Growers’ Association.

Financial Variances Explained:

- The $1,250,000 budgeted as a contribution to the velodrome at the Regional Sports Park was not paid as the Hawke’s Bay bid to establish a National Velodrome was not approved by SPARC.

- Other target assistance not paid during the 2010/11 years was assistance to the Rugby World Cup ($150,000) and for heating and insulation to low income homeowners ($130,000). This assistance will be paid during 2011/12.

Activity 2 - Levels of Service Provision and Performance Targets – Community Engagement & Communications

Level of Service Statement	Level of Service Measure	Performance Targets Years 1-3 in detail Years 4-10 outline	Progress Achieved to Date
We will communicate with the community so that they understand the roles and responsibilities of the Council	Percentage awareness of regional community	Year 2 – 65% of residents surveyed aware of Council’s roles and responsibilities Year 5 – 70% Year 8 – 75%	Community Engagement Strategy is on-track and ongoing. Community awareness measurement recorded at 78.9% in May 2011. All four editions of Big Picture were published and delivered.
We will help people get information that they need to make informed sustainable decisions	Percentage of community satisfied with the information available for sustainable decision making	Years 1 – 10 - Targeted information packs developed for frequently requested information or key strategic or environmental issues 80% of people requesting information satisfied with quality, usefulness and timeliness of the information received as measured through feedback forms	Activities in this area have included Home and Garden Show, NZ Cycle Trails, Enviroschools Programme, Tutira community group, HB2050, Pekapeka wetland, Plantation Drain, and the Eastern Field Day (formerly the Lifestyle Block Field Day) An education resource for Air Quality has been developed for use by schools. All requests have been responded to within a 2-day timeframe, or as agreed.
We will provide opportunities for communities to enjoy, care for, become involved in and learn about sustaining our environment	% of businesses, schools and communities who have participated in council supported educational opportunities that rate their involvement as satisfactory or higher	Percentage of businesses, schools and communities who have participated in Council supported educational events that rate their involvement as satisfactory or higher Year 1 75% Year 2 80% Year 3 80% Years 4 – 10 80%	Coordination of community-focused events during Conservation, Sea and Disaster Awareness weeks. “Your Choice” programme focussing on Whakatu catchment has been completed. Youth Environment Council has remained active. Attainment of Enviromark “Silver” award for HBRC

Level of Service Statement

Level of Service Measure

Performance Targets

Years 1-3 in detail

Years 4-10 outline

Progress Achieved to Date

We will engage with key stakeholders so that they are aware and informed on issues that may impact on them and their business

% of Stakeholders satisfied that they were adequately informed on issues that may impact on them and their business

Years 1 – 10 - Percentage of stakeholders satisfied with quality of engagement

Year 1 70%

Year 2 80%

Years 3 – 10 90%

Stakeholder engagement within water user groups and catchment based groups has been targeted in 2010/11.

Provided assistance with Water Symposium event.

Financial Variances Explained:

The variances from budget are not significant

Activity 3 - Levels of Service Provision and Performance Targets – Response to Climate Change

Level of Service Statement

Level of Service Measure

Performance Targets

Years 1-3 in detail

Years 4-10 outline

Progress Achieved to Date

We will increase the community’s resilience to climate change

The Council’s corporate total annual Greenhouse Gas emissions measure in carbon dioxide equivalents (including Port of Napier Ltd)

Years-10 – Reduce corporate (excluding Port of Napier Ltd) carbon emissions from 2005/06 by:

- 10% by 2014

- 20% by 2020

- 30% by 2050

Council achieved silver status under the Enviromark in 2011. A baseline is being established for carbon emissions from this process.

Number of sectors through which Council promotes/influences reduction in carbon emissions and adaptation to climate change

Year 1-3 – Increase sectors through which the Council is promoting / influencing reduced carbon emissions and sustainability

- At least two investments providing an economic return resulting in sustainable use of regional resources included in the Council’s investment portfolio

- Establish a process for monitoring and reporting regional carbon emissions with first report completed by 30 June 2012

Years 4-10 – Continue to increase the Council’s influence in initiatives to improve regional resilience to the impacts of climate change

- Continue to update and report regional carbon emissions at least 3 yearly

The feasibility of a project to integrate carbon forestry with hill country farming is being developed.

An investigation into the use of portions of Council river berm land for carbon forestry is being progressed.

Level of Service Statement

Level of Service Measure

Performance Targets

Years 1-3 in detail

Years 4-10 outline

Progress Achieved to Date

The number of areas (where water demand exceeds availability) investigated for water harvesting opportunities

Years 1-3 – At least three areas completed to prefeasibility stage.

Ruataniwha Plains area completed to feasibility stage

Years 4-10 – Areas investigated as identified by the Regional Water Demand and Availability Study

Ruataniwha Prefeasibility Study was completed and a commitment from Council to proceed to full feasibility was confirmed in December 2010 which included further investigation of two potential dam sites located on the Makaroro Stream and the Makaretu Stream.

A full feasibility programme of works was established and peer reviewed with the aim to have the feasibility study completed in approximately 18 months. The programme identified numerous studies covering engineering, environmental, economics, cultural and communications.

Tonkin and Taylor were successfully re-engaged as engineering consultants for the project. Consultants were also confirmed for sections of the environmental and water resources works.

Tonkin & Taylor have also completed the Ngaruroro Water Augmentation Scheme Prefeasibility Study. Landowner, stakeholder and community meetings have been held and the project now awaits a decision by Council as to whether it will proceed to the full feasibility phase in the next financial year.

Financial Variances Explained

The variances from budget are not significant

Activity 4 - Levels of Service Provision and Performance Targets – Community Representation & Regional Leadership

Level of Service Statement	Level of Service Measure	Performance Targets Years 1-3 in detail Years 4-10 outline	Progress Achieved to Date
We will provide to the community a channel for representation through elected members and Iwi representation to enable access and influence on Council decision making	Councillors’ attendance at monthly Council and Committee meetings achieving at least 90% attendance of elected and appointed members	Years 1-10 – Attendance rate of 90%	Attendance rate of 98% for the 17 Council meetings and 92% for the 33 Committee meetings held over this period.
	Attendance at Maori Committee meetings	Years 1-10 – Attendance rate of 80%	Attendance rate of 89% for the 5 committee meetings over this period.
	10 Year Plan/Annual Plan consultation during April and May with the final report being adopted by the Council by 30 June	Year 1-10 – Consultation and submission period of at least 30 days	Draft Annual Plan 2011/12 issued for consideration on 6 April 2011. Submissions close on 10 May 2011.
	Comply with the provisions of the Local Electoral Act 2001	Years 1-10 – Complete the basis of membership of the Council. Hold Council Elections	Elections held in October 2010.
We will provide the Community with an opportunity to influence Local Government activities/agenda	Facilitate and complete the revision of Community Outcomes	Year 3 – Complete revised Community Outcomes by December 2011	The requirement to report on community outcomes was repealed in the Local Government Act 2002 Amendment Act 2010
We will aim to maximise Local Government effectiveness and efficiency	Facilitate and report on Local Government efficiency	Year 1 – Report completed by June 2010 Report now scheduled for 2011/12	Review of efficiency exercises were completed covering Regional Council’s Corporate Services and External Relations divisions.

Financial Variances Explained

Actual expenditure was $140,000 less than budget.

The reasons were a transfer of $75,000 from contingency funding to offset a portion of the additional legal costs incurred in Council’s regulatory activities, and the $50,000 provided in the budget for a study into Council’s efficiencies being carried forward to 2011/12.

Activity 5 - Levels of Service Provision and Performance Targets – Investment Company Support

Level of Service Statement

Level of Service Measure

Performance Targets

Years 1-3 in detail

Years 4-10 outline

Progress Achieved to Date

We will provide support services to the proposed Holding Company (if approved) and to any associated subsidiaries of the Holding Company.

A number of Board meetings to be supported by Council staff.

· Provide support for the Board meetings of the Investment Holding Company and subsidiaries.

· Finalise the Statement of Corporate Intent.

Establishment of an Investment Company approved by Council on 29 June 2011. This Company will be set up during 2011/12

Financial Variances Explained:

The costs budgeted of $393.000 to provide resources and support to the proposed Investment Company and subsidiary companies was not required as the establishment of the Investment Company was not approved by Council until June 2011. Therefore the Company’s establishment is timed to take place during 2011/12.

Annual Report Financial Statements

Attachment 4

Note 1: General Information

1.1 Reporting Entity

The Hawke's Bay Regional Council (Council) is a regional local authority governed by the Local Government Act 2002 and is domiciled in New Zealand.

The Hawke’s Bay Regional Council group (group) consists of the parent, the Council, and its 100% owned subsidiary, Port of Napier Limited (Port). The Port is incorporated and domiciled in New Zealand.

The primary objective of Council is to provide services for the community and social benefit rather than making a financial return. Accordingly, The Council has designated itself and the group as public benefit entities for the purposes of New Zealand equivalents to International Reporting Standards (NZ IFRS).

The financial statements of the Council and group are for the year ended 30 June 2011 and were authorised for issue on 26 October 2011 by the Council.

1.2 Basis of Preparation

The financial statements have been prepared in accordance with the Local Government Act 2002, which includes the requirement to comply with New Zealand generally accepted accounting practice (NZ GAAP).

These financial statements have been prepared in accordance with NZ GAAP as appropriate for public benefit entities adopting NZ IFRS and other applicable New Zealand Financial Reporting Standards.

The statements have been prepared under the historic cost convention, as modified by the revaluation of land and buildings, infrastructure assets, hydrological equipment, investment property, forestry assets and financial instruments.

The group’s functional currency is New Zealand dollars and the statements have been presented in thousands of dollars ($’000) exclusive of New Zealand Goods and Services Tax (GST) except for trade accounts payable and receivable, which are stated at GST inclusive amounts.

1.3 New standards and Interpretations issued that are not yet effective and have not yet been adopted

The following new standards are applicable to the group but are not yet effective and have not been early adopted:

· NZ IFRS 9 Financial Instruments (Issued November 2009 to replace NZ IAS 39)

· FRS 44 New Zealand Additional Disclosures and Amendments to NZ IFRS to Harmonise With IFRS and Australian Accounting Standards (Harmonisation Amendments) (Issued in May 2011)

The Group will adopt NZ IFRS 9 for the year ending 30 June 2014 and FRS 44 and the Harmonisation Amendments for the year ending 30 June 2011. The Group has not yet quantified the potential impact of the changes in those periods.

There are a number of amendments to standards and interpretations that are issued but not yet effective and are not considered to have any significant effect on the group.

Note 2: Summary of Significant Accounting Policies

The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.

2.1 Consolidation

The Council’s subsidiary has a financial year ending on 30 September. In order to consolidate the subsidiary, a reporting package with a financial year ending on 31 March is produced so as to avoid peak seasonal work periods. The subsidiary is accounted for using the purchase method, which involves adding together corresponding assets, liabilities, revenues and expenses on a line-by-line basis. All significant inter-entity transactions are eliminated and significant transactions occurring during the period 1 April to 30 June are adjusted for.

2.2 Inventories

Inventories are stated at the lower of cost (using the weighted average cost method) and net realisable value.

2.3 Trade Receivables

Trade receivables are recognised initially at fair value and subsequently remeasured each balance sheet date at amortised cost using the effective interest method less provision for impairment.

2.4 Plant, Property and Equipment

(2.5.1) Operational Assets

Council land and buildings are shown at fair value less subsequent accumulated depreciation, based on periodic, but at least triennial, valuations by independent, professionally qualified valuers

Hydrological equipment is shown at fair value less subsequent accumulated depreciation, based on periodic, but at least triennial, valuations by suitably experienced Council employees, on the basis of depreciated replacement cost. Independent, professionally qualified valuers review all such valuations.

All other operational assets (including Port assets for consolidated financial statements) are stated at historical cost less accumulated depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items.

The costs of asset constructed by the group include the cost of all materials used in construction, direct labour on the project and an appropriate amount of directly attributed costs. Costs cease to be capitalised as soon as the asset is ready for productive use.

(2.5.2) Infrastructure Assets

Infrastructure assets are tangible assets that are necessary to fulfil the Council’s obligations in respect of the Soil Conservation and Rivers Control Act 1941 and the Drainage Act 1908. Such assets usually show some or all of the following characteristics:

· They are part of a system or network that could not provide the required level of service if one component was removed.

· They enable the Council to fulfil its obligations to the region’s communities in respect of flood control and drainage legislation.

· They are specialised in nature and do not have alternative uses.

· They are subject to constraints on removal.

Infrastructure assets are shown at fair value less subsequent accumulated depreciation, based on periodic, but at least triennial, valuations by suitably experienced Council employees, on the basis of depreciated replacement cost. Independent, professionally qualified valuers review all such valuations.

(2.5.3) Subsequent Costs

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Council or group and the cost can be measured reliably. All other repairs and maintenance are charged to the comprehensive income statement during the financial period in which they are incurred.

(2.5.4) Revaluation Adjustments

Increases in carrying amounts arising from revalued assets are credited to revaluation reserves in equity. Decreases that offset previous increases of the same asset category are charged against revaluation reserves in equity. All other decreases are charged to the comprehensive income statement.

Any accumulated depreciation at the date of revaluation is eliminated against the gross carrying amount of the asset and the net amount is restated to the revalued amount of the asset.

(2.5.5) Other Adjustments

Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in the comprehensive income statement. When revalued assets are sold, the amounts included in revaluation reserves are transferred to the accumulated balance in equity.

2.5 Investment Property

Investment property is residential and commercial land and buildings held to earn rental income and for capital appreciation. Such property is initially recognised at cost. At each balance sheet date investment property is measured at fair value, representing open market value determined annually by independent, professionally qualified valuers. A gain or loss in value is recorded in the comprehensive income statement for the period in which it arises.

Under the Hawke’s Bay Endowment Land Empowering Act 2002, rental income from endowment land in Hawke’s Bay can only be used for the improvement, protection, management or use of Napier Harbour or the Regional Council’s coastal marine area as defined in section 2 (1) of the Resource Management Act 1991. Unspent funds are held in the Coastal Marine Area Reserve Fund.

2.6 Forestry Crops

Forestry crops are measured at their fair value less estimated point-of-sale costs each balance sheet date by independent, professionally qualified valuers. Fair value is determined by the present value of expected net cash flows discounted by the current market-determined pre-tax rate. A gain or loss in value is recorded in the comprehensive income statement for the period in which it arises.

2.7 Financial Assets

Financial assets are designated at initial recognition into one of the four following categories set out below depending on the purpose for which the financial asset was acquired. At each balance sheet date, all financial asset designations are re-evaluated.

(2.8.1) Financial Assets at Fair Value through Profit or Loss

Financial assets are classified in this category if acquired principally for the purpose of selling in the short term or are so designated by management. The category includes derivatives and has two sub-categories: financial assets held for trading, and those designated at fair value through the profit and loss at inception. Assets held in this category are classified as current assets if they are either held for trading, or are expected to be realised within 12 months of balance sheet date.

Financial assets in this category, including derivatives, are initially recognised at fair value and are measured at each balance sheet date at fair value. Realised and unrealised gains or losses in value are recorded in the comprehensive income statement for the period in which they arise.

(2.8.2) Loans and Receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in non-current assets except when maturities are shorter than 12 months from balance sheet date.

Financial assets in this category are initially recognised at fair value plus transaction costs that are directly attributable to their acquisition or use. At each balance sheet date these financial assets are measured at amortised cost using the effective interest method. Realised and unrealised gains or losses in value are recorded in the comprehensive income statement for the period in which they arise.

(2.8.3) Held-to-Maturity Investments

Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturities that management have a positive intention and ability to hold to maturity.

(2.8.4) Available-for-Sale Assets

Available-for-sale financial assets are non-derivative financial assets that are either designated in this category or are not classified in any of the other categories. They are included in non-current assets unless there is an intention to dispose of the investment within 12 months of balance sheet date.

Available-for-sale financial assets are carried at fair value using a quoted price if an active market exists or using discounted valuation techniques if no active market exists. Any gain or loss in value is recognised directly in equity through the statement of changes in equity for the period in which it arises.

When an available-for-sale financial asset is sold, the accumulated fair value adjustments are included in the comprehensive income statement.

At each balance sheet date, an assessment is made whether there is any objective evidence that a financial assets or group of financial assets is impaired. If objective evidence of impairment exists for available-for-sale financial assets, then any cumulative loss is transferred from equity to the comprehensive income statement. Such a transfer is not reversible.

2.8 Intangible Assets

Intangible assets comprise acquired computer software licences and development expenditure. All intangible assets with finite lives are carried at the historical cost incurred to acquire and bring into use the specific software less accumulated amortisation.

2.9 Impairment of Non-Financial Assets

Assets that have an indefinite useful life are not subject to amortisation and are tested for impairment at each balance sheet date. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised in the comprehensive income statement for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows.

2.10 Depreciation and Amortisation

Land and hard dredging are not depreciated. Depreciation on other assets is calculated using the straight-line method to allocate their cost or revalued amounts to their residual values over their estimated useful lives. Assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date. Major depreciation and amortisation periods are as follows.

*Asset Category*	*Years*
Buildings	10 - 100
Site Improvements	10 - 40
Wharves & Jetties	10 - 80
Vehicles	3 - 10
Plant & Equipment	3 - 25
Computer Equipment	3 - 5
Computer Software & Licences	3 - 10
Infrastructure Assets	25 - 70
Soft Dredging	6 - 8

No depreciation is provided for stop banks, berm edge protection, sea or river groynes, drainage works or unsealed roads. These assets are not considered to deteriorate over time and, therefore, will provide a constant level of service unless subjected to a significant flood event.

2.11 Cash and Cash Equivalents

Cash and cash equivalents include cash in hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities in the balance sheet.

2.12 Borrowings

Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the comprehensive income statement over the period of the borrowings using the effective interest method.

Borrowings are classified as current liabilities unless the group has an unconditional right to defer settlement of the liability for at least 12 months after the balance sheet date.

Borrowing costs are recognised as an expense when incurred except to the extent that they are capitalised. Borrowing costs that are directly attributable to the acquisition, construction or production of an asset are capitalised as a part of the cost of that asset.

2.13 Income Tax

Income tax expense charged to the comprehensive income statement includes both current and deferred tax and is calculated after allowing for non-assessable income and non-deductible costs.

Deferred income tax is provided using the balance sheet liability method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Temporary differences are not provided for where the initial recognition of assets and liabilities does not affect either accounting or taxable profit. The amount of deferred tax provided is based on tax rates enacted or substantively enacted at the balance sheet date and are expected to apply when the related deferred tax liability is settled.

A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be utilised. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realised.

2.14 Employee Benefits

Short-term employee benefits including salaries and wages, annual leave and contributions to superannuation schemes are recognised when they accrue to employees and are measured at undiscounted cost.

The liability for accumulating sick leave is stated as the cost of sick leave that is expected to be used.

Long-term employee benefits including long service leave and retirement gratuities are recognised at the present value of the Group’s obligation at balance sheet date.

2.15 Provisions

Provisions are recognised when:

· the Group has a present legal or constructive obligation as a result of past events, and

· it is more likely than not that an outflow of resources will be required to settle the obligation, and

· the amount has been reliably estimated.

Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a pre-tax rate that reflects the current market assessments of the time value of money and risks specific to the obligation. The increase in the provision due to passage of time is recognised as interest expense

Provisions are not recognised for future operating losses.

2.16 Revenue Recognition

Revenue comprises the fair value for the sale of goods and services, net of GST, rebates and discounts and after elimination of sales within the Group. Revenue is recognised as follows:

· Sales of goods are recognised when a product is sold to a customer. The recorded revenue is the gross amount of the sales.

· Sales of services are recognised in the accounting period in which the services are rendered, by reference to the completion of the specific transaction assessed on the basis of the actual service provided as a proportion of the total service provided.

· Interest income is recognised on a time proportion basis using the effective interest method.

· Dividend income is recognised when the right to receive payment is established.

· Government grants are recognised as income when eligibility has been established by the grantor agency.

· Rates are recognised as income in the accounting period in which they are set and assessed.

2.17 Leases

Finance leases, which transfer to the Group substantially all the risks and benefits incidental to ownership of the leased item, are capitalised at the inception of the lease at the fair value of the leased property or, if lower, at the present value of the minimum lease payments.

Lease payments are apportioned between the finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are included in the comprehensive income statement as finance costs.

Capitalised leased assets are depreciated over the shorter of the estimated useful life of the asset and the lease term.

Leases in which a significant proportion of the risks and benefits of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases are charged to the comprehensive income statement on a straight-line basis over the period of the lease.

2.18 Financial Risk Management

The Group’s activities expose it to a variety of financial risks including:

· Market risk, including currency risk, fair value interest rate risk and price risk;

· Credit risk;

· Liquidity risk; and

· Cash flow interest-rate risk.

The Group’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group’s financial performance. The Group uses derivative financial instruments such as foreign exchange contracts and interest rate swaps to hedge certain exposures.

The Group enters into foreign currency forward exchange contracts to hedge foreign currency transactions, when purchasing major property, plant and equipment and when payment is denominated in foreign currency.

Interest rate swaps are entered into to manage interest rate risk exposure.

The Group has no significant concentrations of credit risk. It has policies in place to ensure that services are provided to customers with an appropriate credit history.

Collateral or other security in not required for financial instruments subject to credit risk.

2.19 Accounting for Derivative Financial Instruments and Hedging Activities

Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently remeasured at the fair value at each balance sheet date.

Where the Group determines that it will hedge a transaction the Group documents at the inception of the transaction the relationship between hedging instruments and hedged items, as well as the its risk management objective and strategy for undertaking various hedge transactions.

The Group also documents its assessment, both at inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in fair values of hedged items.

(2.20.1) Cash Flow Hedge

The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges are recognised in equity. The gain or loss relating to the ineffective portion is recognised immediately in the comprehensive income statement. The Group accounts for hedges of foreign currency risk of a firm commitment as cash flow hedges.

(2.20.2) Derivatives that Do Not Qualify for Hedge Accounting

Certain derivative instruments do not qualify for hedge accounting and changes in the fair value of these instruments are recognised immediately in the comprehensive income statement.

Any changes in the fair value of interest rate swaps due to changes in interest rates are recognised in the comprehensive income statement in the period in which they occur.

2.20 Foreign Currencies

Transactions in foreign currencies are translated at the New Zealand rate of exchange ruling at the date of the transaction. At balance sheet date foreign monetary assets and liabilities are translated at the closing rate and exchange variations arising from these are included in the comprehensive income statement.

2.21 Basis of Allocation of Council’s Indirect Costs

Clearly identifiable costs are directly charged against each activity. Indirect costs are allocated to cost centres in the first instance under a variety of methods including:

· Floor area occupied

· Number of full time equivalent employees

· Assessed use of various services provided.

These costs are then charged to projects on a labour standard costing basis. The allocation unit is each working hour charged by employees at a pre-determined rate. Variances arising from this method will be allocated on the same basis as for costs of a fixed nature referred to above. Project costs are then summarised for each activity and group of activities.

2.22 Changes in Accounting Policies

There have been no changes to accounting policies.

HAWKE’S BAY REGIONAL COUNCIL

Wednesday 24 August 2011

SUBJECT: Long Term Plan (LTP) - 2012-22

REASON FOR REPORT

1. There are five areas covered in this paper that provide information to Council on the development of the LTP 2012-22.

1.1. Highlights the process to be undertaken for the development of the LTP and clarify the workshops and Council meetings that are proposed to ensure that the LTP can be completed during the statutory timeframes.

1.2. Clarify the major changes made by the Local Government Act 2002, Amendment Act 2010 to the requirements of the LTP document.

1.3. Clarify the timelines to be adopted by Council to ensure that all Council papers that cover the LTP issues are considered by Council and that the LTP 2012-22 is adopted by the end of June 2012.

1.4. Set out the provisions of the Local Government Act 2002 (the Act) that cover the content of an LTP.

1.5. Clarify the approach, timing and extent of the audit of the LTP.

Comment/Analysis

Flow of the Plan

Strategic Plan

· Workshops on resource requirements for delivery of the strategic targets

· Revenue and financing policy/financial strategy

Performance management information

Financial/

budgets

Audit

Adoption of the Draft Plan

Strategic Plan

2. A draft of Council’s proposed Strategic Plan and issue papers supporting that Plan are proposed to be discussed at a Council workshop on Monday 5 September 2011.

Proposed Workshops

Workshop 1 – Thursday 13 October 2011

3. Confirmation of targets from Strategic Plan, programmed delivery framework and resource requirements for:

3.1. Resilient landscapes (land use)

3.2. Resilient eco systems (water quality)

3.3. Resilient economy (water demand)

3.4. Resilient communities (people and community)

3.5. Statutory planning

3.6. Investment

3.7. Strategic alliances

3.8. Fit for purpose organisation

3.9. Executive Summary of Major Flood and Drainage and Asset Management plans (including financial consequences).

Workshop 2 – Thursday 10 November 2011

4. Service performance targets

5. Revenue and financing policy

6. Financial strategies on rates and borrowing

7. Significant forecasting assumptions

8. Investment policy

Workshop 3 – Tuesday 31 January 2012

9. Summarised financials and project budgets.

10. These workshops must be spaced sufficiently so that there is time for staff to compile the information required. For example, staff will be working through the resource implications of the strategic targets during August, September and early October. They will then be required to develop the service performance targets during the last part of October and early November and finally will be developing the budgets during late November. The Executive will be finalising the budgets during December and compiling draft financial figures and PowerPoint slides for presentation to Council in late January 2012.

11. Changes Actioned in the Local Government Act 2002 Amendment Act 2010 (the Act)

12. This Amendment Act 2010 sets out a number of changes to the original Act passed in 2002. The main changes to content of the LTP to improve transparency and accountability are:

Community Outcomes

13. Community outcomes remain in the Act however these outcomes need to be owned by the Council and cover those outcomes that Council can deliver to the community. This will require some adjustments to the community outcomes as stated in the 2009-19 10 Year Plan and these changes will need to be presented to Council.

Financial Strategy

14. The purpose of this report is to ensure that Council’s financial strategy is clear and coherent in the Plan. The Act is specific on what is to be included in the financial strategy, for example a statement of the Council’s quantified limits on rates, rates increases and levels of borrowing. Further, an assessment is to be made of the Council’s ability to maintain existing levels of service and to meet additional demands for service within those limits.

15. It is proposed that the financial strategy will be included in the “Right Debate” section of the Annual Plan, as the financial strategy will cover significant issues included in the Plan and the financial implications of these strategies. In this way the financial strategy can then refer to strategies as they will appear in the Right Debate.

Details of Council’s Reserves

16. The LTP must identify each reserve fund set aside by Council, the purpose of the fund, the movements within the fund and the balance of the fund.

Funding Impact Statement

17. To be provided not only for Council as a whole but for each group of activities. This funding impact statement is in the nature of a cash flow for each group of activities, thus detailing where the cash is being spent and how it is being funded for each of the group’s activities. It is proposed that this information will be included in the funding impact statement in the financial part of the LTP and not under the groups of activities. The reason for this is that a cost of activity statement which includes non-cash expenditure (e.g. depreciation) is already included in that section.

18. The New Zealand Society of Local Government Managers (SOLGM) has issued a brochure of approximately 50 pages covering the long term planning process for decision makers, specifically for those Councillors that have recently been elected and have not worked through a previous LTP. Copies of this brochure can be made available to Councillors on request if they wish to be provided with a copy.

Timelines to be Adopted for the Completion of the LTP 2012-22

19. Attached as Attachment 1 to this paper is a proposed timeline set out for adoption by Council so that the LTP 2012-22 can be adopted within statutory timelines.

20. The following notes are worth considering:

20.1. The Strategic Plan that will drive the content of the LTP has been presented to Council at this meeting.

20.2. A number of workshops to cover strategic issues have been specified. These will need to be completed by Council prior to the development of the levels of service under groups of activities.

20.3. Parts of the LTP, for instance the policies as set out under Section 102 of the Act, (for example, Revenue and Financing policy and Investment policy) groups of activities information covering levels of service etc are all timed to be presented to Council over the latter period of 2011.

20.4. The financial activities and budgets are to be completed and discussed by the Executive prior to Christmas 2011 and presented to Council in Late January 2012.

20.5. The final Audit process of the draft LTP has been allocated a two week period commencing 24 February 2012. This period has been discussed with the Audit office and agreement has been given that this period will be sufficient for both the detailed review by the Audit Office and ''hot review'' by the Office of the Auditor General.

20.6. It is proposed that the Consultation Plan for the LTP will be presented to Council in February 2012.

20.7. The Council meeting to adopt the draft LTP is proposed to be on Wednesday 21 March 2012.

20.8. Whilst the Act provides for a minimum consultation period of four weeks, it is recommended that five weeks be allocated for the LTP consultation. It is proposed that this period is to commence on Monday 9 April 2012 and will end on Monday 14 May 2012. Council will consider submissions on the LTP for three days from Monday 11 June to Wednesday 13 June. If three days are not needed then one of these days will be cancelled.

20.9. It is proposed that the final LTP will be adopted by Council on Thursday 28 June 2012.

Provisions in the Act Covering Content and Timing of LTP

21. The main requirements as set out in the Local Government Act 2002 and the Amendment Act 2010 are detailed for Councillors’ reference in Attachment 2.

Provisions in the Act Covering the Audit of the LTP

22. Set out in Attachment 3 are the main provisions of the Act in relation to the requirement for the LTP to be audited and the areas to be focused by Audit.

DECISION MAKING PROCESS

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

23.1. Section 97 covering a significant change in the intended level of service provision for a significant activity does not apply.

23.2. Section 83 which sets out the requirements in the Act and other enactments where a special consultative procedure must be carried out does not apply.

23.3. The decision does not fall within the definition of the Council's policy on significance.

23.4. The options available to the Council would be to either adopt the timelines set out in Attachment 1 which establishes the Council meetings that various LTP papers will be presented to or amend the timelines, or to adopt no timeline commitments for LTP development. Advantages of accepting the recommended timelines is to ensure that a proper project plan is put in place and accountabilities for preparation of such papers clearly understood.

23.5. The persons affected by the decisions in this paper will be all members of the community to the extent that they require the production of the LTP to include all relevant issues and that the plan is available to them for consultation.

23.6. Section 80 of the Act covering decisions that are significantly inconsistent with any existing policy or plan does not apply.

23.7. Council can exercise its discretion under Section 79 (1) (a) and 82 (3) of the Act and make a decision on this issue without conferring directly with the community or others having given due consideration to 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 to be made.

RECOMMENDATIONS

That Council:

2. Adopts the Long Term Plan timelines set out, and leading up to the adoption of the Long Term Plan on Tuesday 28 June 2012.

Paul Drury

Group Manager

Corporate Services

Andrew Newman

Chief Executive

Attachment/s

1 View	LTP 2012-22 - Timelines
2 View	LTP 2012-22 - Provisions in the Act Covering Content and Timing of LTP
3 View	2012-22 - Provisions in the Act Covering the Audit of the LTP

LTP 2012-22 - Timelines

Attachment 1

Item	Responsible	Due Date	2011												2012
Item	Responsible	Due Date	J	F	M	A	M	J	J	A	S	O	N	D	J	F	M	A	M	J
Finalise Strategic Plan	HC	Sept 11
LTP Workshop 1 – (13 October 2011)
Land Use	MA	13/10/11
Water Quality	HC	13/10/11
Water Demand	GH	13/10/11
People and Community	LL	13/10/11
Statutory Planning	HC	13/10/11
Investment	PD	13/10/11
Strategic Alliances	LL	13/10/11
Fit for Purpose Organisation	LL/PD	13/10/11
Asset Management Plans	MA	13/10/11
LTP Workshop 2 – (10 November 2011)
Revenue and Financing Policy	PD/Grp Mgrs	10/11/11
Investment Policy	PD	10/11/11
Financial Strategy	PD	10/11/11
Significant Forecasting Assumptions	PD	10/11/11
Groups of Activities – Service Performance Targets	HC/GP Mgrs	10/11/11
Financials and Project Budgets	Grp Mgrs/Senior Mgrs	18/11/11											X
Executive Discussion on Budgets (No 1)	Paul/John	05/12/11
Executive Discussion on Budgets (No 2)	Paul/John	19/12/11
Develop Council report for PowerPoint Presentation to Council	Grp Mgrs/Paul/ John	24/01/12
LTP Workshop 3 – (31 January 2012)
Council Budget Presentation		31/01/12													X

Item	Responsible	Due Date	2011												2012
			J	F	M	A	M	J	J	A	S	O	N	D	J	F	M	A	M	J
Finalise Draft LTP (3 weeks)	Rachel/John/Paul	24/02/12
Audit Review completed		09/03/12															X
Council Paper on Draft LTP sent to Council	Paul	14/03/12															X
Council Meeting to adopt draft LTP		21/03/12															X
Final Print (2.5 weeks)	Rachel/Leeanne	29/03/12															X
Consultation commences (5 weeks)		09/04/12
Consultation ends		14/05/12
Council considers submissions	Leeanne	11-13 June 2012																		X
Changes made to LTP (where appropriate)	Leeanne	22/06/12																		X
LTP to Audit		22-27 June 2012																		X
LTP Distributed to Council	Leeanne	21/06/12																		X
Council adopt final LTP	Paul	28/06/12																		X

HAWKE’S BAY REGIONAL COUNCIL

Environmental Management Committee

Wednesday 24 August 2011

SUBJECT: Ruataniwha Groundwater Model ScenarioS

REASON FOR REPORT

1. This paper provides a summary of the development and results of the Ruataniwha groundwater predictive modelling (scenarios modelling).

Background

2. The Ruataniwha Basin is one of the main sources of water supply in Hawke’s Bay. Rivers and aquifers are highly inter-connected and thus, groundwater abstraction may significantly affect the surface water flow.

3. It is important to understand the relationship between groundwater and surface water and to predict the impact of water resources development on river flows and aquifer storage.

4. Four future scenarios for water resources management in the Ruataniwha Basin over the coming five years have been developed and simulated using the newly developed numerical model.

5. It must be emphasized that the four scenarios are hypothetical only and do not represent possible or recommended management options for the Basin.

6. The first scenario assumes a gradual increase of the actual abstracted water to reach consented volume by 2015. The current actual abstraction is estimated at 31% of the consented volume.

7. According to the proposed National Environmental Standards, the groundwater abstraction should not exceed 35% of annual average recharge. The long-term average recharge is estimated at 255 million m³ (MCM) per year. Therefore, the second scenario assumes gradual increase of groundwater abstraction from the current 10% of recharge to 35% of recharge in 2015.

8. The third scenario assumes gradual intensification of land-use from the current 7,000 ha to 13,000 ha over the coming five years.

9. The fourth scenario assumes no change in the current abstraction and examines when the system will stabilise i.e. reach a new steady state.

SCENARIO 1: Gradual increase in abstraction up to 100% of consented volume in 2015

10. According to scenario 1, the total loss in storage for the period from 2010 to 2015 is 17 MCM. This amount is added to the loss we already have for the period from 1990 to 2010, which is 66 MCM. This makes the total loss of storage 83 MCM.

11. The decline in rivers gain rate as a result of groundwater abstraction in scenario 1 is approximately 190L/s. This rate adds to the rate of decline at the end of 2010, which was 650 L/s. The overall decline in river gain is 840 L/s. On the other hand, the stream losses to the aquifer have slightly increased

12. The groundwater abstraction based on scenario 1 also shows affects on the springs flow. The decline in springs flow is approximately 46 L/s. This decline in springs flow adds to the 50 L/s, which has already occurred in the period 1990-2010. Thus, the total spring losses are 96 L/s.

SCENARIO 2: Gradual increase in abstraction up to 35% of recharge (Draft National Environmental Standard) in 2015

13. The loss of storage for the period from 2011 to 2015 is 53 MCM. This loss adds to the storage loss at the end of 2010, which was estimated at 66 MCM. Thus, the total storage loss from 1990 to 2015, based on scenario 2, is 119 MCM.

14. The decline in rivers gain rate as a result of groundwater abstraction is approximately 690L/s. This rate adds to the rate of decline at the end of 2010, which was 650 L/s. Thus, the overall decline in river gain from 1990 to 2015 is 1340 L/s. This is high, compared to the previous scenario. The stream losses to the aquifer have slightly increased.

15. The impact of groundwater abstraction on springs flow, based on scenario 2, is significant. The decline in springs flow is approximately 115 L/s. This decline in springs flow adds to the 50 L/s, which has already occurred in the period 1990-2010, making a total loss of 165 L/s.

SCENARIO 3: Gradual increase in abstraction to irrigate 13,000 ha in 2015

16. The loss of storage for the period from 2011 to 2015 is 24 MCM. This loss adds to the storage loss at the end of 2010, which was estimated at 66 MCM. Thus, the total storage loss from 1990 to 2015, based on scenario 3, is 90 MCM.

17. The decline in rivers gain rate as a result of groundwater abstraction is approximately 209 L/s. This rate adds to the rate of decline at the end of 2010, which was 600 L/s. Thus, the overall decline in river gain from 1990 to 2015 is 859 L/s. This decline in rivers flow is slightly higher than scenario 1. The stream losses to the aquifer have slightly increased.

18. The decline in springs flow is approximately 58 L/s, based on scenario 3. This decline in springs flow adds to the 50 L/s, which is resulted from the period 1990-2010, making a total loss of 108 L/s.

SCENARIO 4: No change in current use to see when the new “steady state” will be reached.

19. Scenario 4 shows that the loss of storage has been almost constant starting from 2011)until the end of simulation, in 2017. The loss of storage when the system stabilizes is 62 MCM. The later loss is composed of two components; the 66 MCM at the end of 2010 (resulting from the transient model) and 4 MCM increase in the storage over the period from 2010 to 2017. This increase in storage (or recovery) is a result of not increasing groundwater abstraction over time.

20. It was found that the rate of river gain and loss is almost stable, especially in the last few years of simulation, based on scenario 4. The average loss in stream gain rate at the end of 2017 is approximately 450 L/s. This total reduction of stream gain from aquifer is composed of two components: the total loss of 650 L/s at the end of 2010, and a recovery of 200 L/s by the end of 2017. The stream losses to the aquifer are almost constant.

21. Based on scenario 4, the spring flow has recovered (increased) by 30 L/s. Thus, the total spring flow loss at the end of scenario 4 simulation (year 2017) is 20 L/s. This decline in springs flow is the 50 L/s, which resulted from the period 1990-2010, and 30 L/s recovery.

SCENARIO RESULTS

Component	Models
Component	Transient⁽¹⁾	Scenario 1	Scenario 2	Scenario 3	Scenario 4
Time	1990-2010	2011-2015	2011-2015	2011-2015	2011-2017
Cumulative groundwater abstraction⁽²⁾	215	202	344	219	184
Average annual recharge	255	255	255	255	255
Cumulative Storage loss⁽²⁾	66	17	53	24	-4⁽³⁾
Average rate of reduction in stream gain	650 L/s	190 L/s	690 L/s	209 L/s	-200 L/s⁽³⁾
Average rate of reduction in spring flow	50 L/s	46 L/s	115 L/s	58 L/s	-30 L/s⁽³⁾

(1) This is based on the results of the transient model and presented here for comparison only.

(2) This is a cumulative over the indicated period.

(3) Negative values mean the system gains instead of losing.

All values are in million m³ per year, unless if it is mentioned otherwise.

CONCLUSION

22. Scenarios 1 and 3 were found to have less impact on the respective weather resources than scenario 2, with 17 and 24 MCM loss in storage for scenario 1 and 3; respectively. Scenario 2 results in a loss of storage of 53 MCM.

23. Scenarios 1 and 3 results in a reduction in stream flow of 190 and 209 L/s, respectively, while scenario 2 results in 690 L/s. Similarly, scenarios 1 and 3 results in decline of stream flow equals 46 L/s and 58 L/s; respectively.

24. Results of scenario 4 shows the system will stabilize in 2017, with a small recovery of storage and rivers gain, given all components of flow are constant. Scenario 4 results in a storage recovery of 4 MCM, rivers flow recovery of 200 L/s and springs flow recovery of 30 L/s.

25. The results of this study inform the policy and decision makers on the likely impact of each different scenario on the environment and to decide which management scenario is appropriate.

DECISION MAKING PROCESS

26. Council is required to make a decision in accordance with Part 6 Sub-Part 1, of the Local Government Act 2002 (the Act). Staff have assessed the requirements contained within this section of the Act in relation to this item and have concluded that, as this report is for information only and no decision is to be made, the decision making provisions of the Local Government Act 2002 do not apply.

RECOMMENDATION

1. That Council receives the report.

Husam Baalousha

Senior Groundwater Scientist

Graham Sevicke-Jones

Manager Enviromental Science

Darryl Lew

Group Manager

Resource Management

Attachment/s

There are no attachments for this report.

HAWKE’S BAY REGIONAL COUNCIL

Wednesday 24 August 2011

SUBJECT August 2011 Work Plan Looking Forward

REASON FOR REPORT

1. This report is provided in order to update Councillors about significant work activities under way over the next month in each area of Council.

Group	Area of Activity	Report to go to Council or Committee as indicated
Asset Management	· Review of Heretaunga Plains Scheme	Update provided to AM&B Committee at 17 August meeting.
	· Asset Management Plan reviews	Reviews of Asset Management Plans commenced. Committee approval for reviewed plans will be sought by November 2011.
	· Biosecurity	Draft proposed strategy to be presented to November AM&B Committee meeting.
	· Land Management	A number of strategies to improve effectiveness of Council land management investment being developed for Council Ten Year Plan consideration.
	· CHB District Council Wastewater project	System design and consenting progressing.
	· Mahia Wastewater project	Land purchase being finalised. Forest establishment planned for winter 2011.
	· Tangoio and Tutira	Recreational plan for area being developed.
	· Accommodation	Plans being progressed for upgrade to Guppy Road office accommodation and review of Dalton Street.
Resource Management	· Appeal mediation processes underway for: o Twyford o AFFCO o Opoutama Wastewater o Mexted & Williams	Ongoing
Strategic Development	· Development of the Water Strategy with input from the Reference Group. More meetings may be required.	A Draft Land and Water Strategy to be presented to the Reference Group before the end of August
	· Schedule 1 RMA process for Variation 1 (Rivermouth Hazard Areas) to proposed Regional Coastal Environment Plan. Awaiting technical evidence then officers report will be prepared.	Hearings to be scheduled late 2011.
	· Schedule 1 RMA process for Onsite Wastewater change, plus subsequent hearing process.	Notification 13 July 2011. Submissions closed 10 August 2011. Hearings possible late 2011, subject to complexity of submissions received.
	· Drafting of objectives and policies for RPS to incorporate HPUDS/ Stormwater and Wastewater. Also liaising with key stakeholders on draft provisions. Aiming to notify Change in October 2011.	Draft growth and infrastructure RPS plan change to a Committee in August./September
	· Publish Draft Taharua Strategy. Strategy to be released for public comment over 3 week period July/August 2011. Will inform direction for Taharua Plan Change intended for notification end 2011.	Ongoing Consultation closes 22 August. Suggested proposal is to feed back results to the October EMC meeting together with a comprehensive Taharua update.
Corporate Services	· Freeholding of leasehold properties.	Ongoing
	· Assessment of selling cashflows from Napier leasehold land.	Ongoing
	· Initial report on establishment of Investment Company.	Corporate and Strategy Meeting 14 September 2011
External Relations	· Freshwater Governance and Management – Collaborative sector approach to Implementation of NPS	Ongoing
	· Continuation of discussions with Treaty claimant groups on development of Regional Planning Committee Terms of Reference	Final version of Terms of Reference for Council approval in September
	· Organisation of leasehold information centre at Marewa Shopping Centre	1-3 September 2011
Operations/ Water Group	· Ruataniwha Water storage – Work over the next month involves: Evaluation and award of tender for the significant elements of the environmental works programme which have been developed from 13 study scopes. Stakeholder, and leadership group meetings are programmed, while site visits are planned for landowners & CHBDC councillors. Site visits are also planned for the Engineering consultants and geologists as part of finalising geotechnical issues in early August.	Ongoing Milestones to be reported to Council as achieved
	· Cycleways – Work is progressing on construction of the coastal section of the water trail, as tendered and supervised by Napier City Council. Work has also commenced on the HBRC section of the trail with the construction of a bridge opposite Prebenson drive and delivery of limesand in preparation for trail works. · Work is being carried out on a revised bid process with the Ministry of Economic Development due to the failure in confirming an option for the Craggy Range ride ($1.1m). Options being considered include additional section of the Water and Landscapes trials , as well as sections of the Winery ride. This feasibility variation is due by 31 July 2011 for consideration.	Ongoing
	· Final Pre Feasibility report for Ngaruroro Water storage project now complete	Ongoing Landowner. Stakeholder and Community meetings were held.
CE’s Office	Ÿ Draft strategic plan to be developed post 10 May workshop and discussion document.	Staff workshop held - Council workshop to be scheduled in September.
	Ÿ Freshwater Governance and Management – sector workshops on allocation, limit setting and regulatory agility aligned with NPS for freshwater workshops completed in May – detailed work program being discussed with RSG subgroup	Ongoing
	Ÿ Regional sector alignment with “LAWF” (Land and Water Forum) grouping going forward. HBRC CE attended LAWF meeting June 23 on behalf of Regional sector to discuss this relationship	Ongoing LAWF due to submit proposal to CE’s sub group in next week
	Ÿ Treaty Settlements – further work with Claimant Groups	Ongoing
	Ÿ Investment Portfolio scenarios – further development of detailed business cases for 10 Year Plan.	November
	Ÿ Ongoing engagement in regional water strategy and Water storage feasibility projects	Ongoing

DECISION MAKING PROCESS

2. Council is required to make a decision in accordance with Part 6 Sub-Part 1, of the Local Government Act 2002 (the Act). Staff have assessed the requirements contained within this section of the Act in relation to this item and have concluded that, as this report is for information only and no decision is to be made, the decision making provisions of the Local Government Act 2002 do not apply.

RECOMMENDATION

1. That Council receives the August 2011 Work Plan Looking Forward report.

Andrew Newman

Chief Executive

Attachment/s

There are no attachments for this report.

[1] Rolling Review Programmes – The Council has made the decision to undertake rolling reviews of its Resource Management Plans and Policy Statement. This will enable it to focus on priority areas and issues and to reduce the timeframe for plan amendments that are considerable when complete reviews are undertaken.

[2] Note: References to claims relate to the Land Use Capability Classification System. Class VIIe for example is steep land prone to erosion. The highest class is Class VIII.

[3] Department of Conservation currently has navigation safety responsibility for Lakes Waikaremoana and Waikareiti

Level of Service Statement	Level of Service Measure	Performance Targets Years 1-3 in detail Years 4-10 outline	Progress Achieved to Date
We will maintain an effective flood control network that provides protection from frequent river flooding to communities and productive land within the Heretaunga Plains Scheme The level of protection in technical terms is to convey a flood discharge with a 1% probability of being exceeded in any one year (1%AEP) safely to the sea	A full assessment of the capacity and integrity of flood control works is completed every six years by a chartered professional engineer with interim audits undertaken annually The level of service will be reported as: · Kilometres and percentage of floodway that provide the design level of service · Kilometres and percentage of river edge that are at no more than low risk of failure	Years 1 - 3 - Review of the current level of service (LOS) provided by the Scheme to determine whether they are still appropriate or should be increased Years 1 - 3 - No change Year-10 - increasing to 100%	· A Level of Service review has begun. This was reported to Council at its meeting in April 2010 and again in March 2011 to report on the findings of the review. · There is 111.2 km of stopbank in the HP Scheme. Currently the design LOS (1%AEP capacity) is provided. · There is 192.7 km of river berm edge protection. Current assessment is that 95% are at no more than a low risk of failure. The rivers in some areas are recovering from sawfly damage, hence the downgrading.
We will maintain an effective drainage network that provides protection from frequent flooding from smaller watercourses to communities and productive land within the Heretaunga Plains Scheme	A full assessment of the capacity and integrity of the drainage network within each drainage catchment is completed every three years by a chartered professional engineer with interim audits undertaken annually	Years 1 - 3 - Review the current level of service provided by the scheme and determine new level of service measures and targets Years 4 - 10 - To be defined by the level of service review	The LOS review for the drainage network is programmed to begin once the bulk of the review for the rivers is complete. This will begin in the 2011-12 year.
We will protect and enhance scheme riparian land and associated waterways administered by the Council for public enjoyment and increased biodiversity	The level of service will be reported as the length of scheme riparian land enhanced. (Each side of a waterway measured separately)	Years 1 - 10 - 0.5km of riparian land enhanced a year (on average) Years 1 – 3 - Review the current level of service provided by the Scheme and determine new level of service targets	14 km of river berm has been enhanced with native and exotic tree species for the 2010/2011 planting season. An Ecological Management and Enhancement plan has been completed for the Ngaruroro River and work is proceeding with the Tutaekuri River this year. These plans form the LOS for the future management of the rivers and are being incorporated into the AMP’s and AM Contracts.

Level of Service Statement	Level of Service Measure	Performance Targets Years 1-3 in detail Years 4-10 outline	Progress Achieved to Date
We will be available to provide expert advice on drainage, flooding, and coastal erosion issues	All queries are dealt with by appropriate qualified and experienced staff	Years 1 - 10 - No change	Many flood, drainage and coastal queries are handled by staff and are appreciated by the public.
We will provide up to a 30% subsidy for river control and flood protection where the criteria set out in the Council’s guidelines for technical and financial assistance are met	Value of subsidies provided annually	Years 1 - 10 - $40,000 of subsidy money is provided each year at a subsidy rate of 30%	Subsidy of $40,000 is expected to be allocated by 30 June 2011.
We will provide a consultancy service for drainage, flooding, and coastal erosion issues according to individual project agreements on a full cost recovery basis	Costs are recovered	Years 1 - 10 - Full costs of any consultation work are recovered	Six engineering consultancy jobs have begun or been completed this year to date.

Level of Service Statement	Level of Service Measure	Performance Targets Years 1-3 in detail Years 4-10 outline	Progress Achieved to Date
We will ensure that the beach at Westshore has erosion checked to 1986 extents (The 1986 line was the extent of erosion before beach renourishment commenced. This line is identified on a series of posts along the foreshore)	The comparison of annual beach cross section surveys to the 1986 extent of erosion	Years 1-10 - Erosion does not extend landward of the 1986 line	The annual nourishment project is successful in holding the Westshore coastline seaward of the 1986 measurements.
We will maintain river mouths so that they do not flood private land above a specified contour	Incidences of flooding of private land above levels as specified in the River Opening Protocol	Years 1-10 - Private land above a specified contour is not flooded as a result of a river mouth being closed	There has been no reported incidences of private land flooded as a result of the river mouth being closed.
Where appropriate, we will make public access available to the Council owned land associated with flood control and drainage schemes and encourage and facilitate development of improved recreational amenities	Number of sign posted vehicle accesses provided Km of pathway constructed and maintained on the Council owned land	Years 1-10 - All 40 vehicle access areas will be maintained in accordance with the Asset Maintenance Contract (this includes rubbish collection, mowing, fencing etc) Years 1 – 10 - To be defined by level of service review but dependent on Rotary Pathways Trusts	· Vehicle access areas are well maintained and signposted and are frequently used by the public.

Level of Service Statement	Level of Service Measure	Performance Targets Years 1-3 in detail Years 4-10 outline	Progress Achieved to Date
We will identify, assess and promote awareness of hazards with the risk potential to cause a Civil Defence emergency event so that the regional community is better prepared	Percentage of surveyed residents that are aware of hazard risks & can identify earthquake, flooding, and tsunami as major hazards in Hawke’s Bay	Years 1 – 10 - Awareness of earthquake, flooding/heavy rainfall and tsunami hazard risks show an increase over time Specific target >50% of residents can identify tsunami as one of the region’s major hazards by 2018. As measured in a three yearly survey	The last survey in 2008 asked residents to identify hazard risks to their livelihood: · 94% identified earthquake · 60% identified flooding/heavy rain · 34% identified tsunami The survey is planned in Sept 2011 has been postponed.
	Number of hazards research projects commissioned each year	Years1 – 10 - At least one new research project commissioned each year	2 hazard projects commissioned this year · Development of a Joint HB Hazard Strategy for the treatment of hazard risks in the land use planning environment. · Further Tsunami Inundation Mapping.
	Satisfaction of Territorial Authorities and professionals involved in land use planning decision making with the quality, format & relevance of hazard information supplied	Years 1 – 10 - All Territorial Authorities and planning professionals are satisfied with the quality, format and relevance of the hazard information supplied/available as assessed by an evaluation and feedback form	Survey in June 2011 with 67% rating the quality of hazard information from the HBRC as excellent, very good or good, while 33% gave no response. 83% said the information was relevant.

Level of Service Statement	Level of Service Measure	Performance Targets Years 1-3 in detail Years 4-10 outline	Progress Achieved to Date
We provide reliable warning of flooding from the region’s major rivers to at risk communities, namely the Wairoa, Tutaekuri, Ngaruroro and Tukituki Rivers	Percentage of time that priority telemetered rainfall and river level sites are operational throughout the year	Percentage of time that priority telemetered rainfall and river level sites are operational throughout the year Year 1 95% Year 2 95% Year 3 95% Years 4 -10 98% average for all key sites	The percentage of time the priority sites were operational is recorded together with causes of any breakdowns. The operational time was 98.1% for key sites and 97.7% for all sites, for the period which is a good result indicating that the system is reliable with good back-ups of essential equipment.
A flood forecasting system is available on the web to advise the community on likely rainfall and flooding	Percentage of the region covered by a flood forecasting model	Percentage of the region covered by a flood forecasting model Year 1 50% Year 2 50% Year 3 60% Years 1-10 75%	The area covered to date by the flood forecasting models includes the Wairoa catchment, Ngaruroro, Tutaekuri and Tukituki. These are all large catchments and represent more than 50% of the catchments that would benefit from a flood forecasting model.
		Years 1-10 No decrease in model performance	The model performance is good; it is a useful tool. Predicting the amount of rainfall and where it will fall is where the greatest error will occur.
	Age of information available on web during storm events	Years 1-10 no change	Currently this is only updated for an event that exceeds a 20% AEP (1 in 5year event).
	Peak flood forecast river flows agree within 25% of the actual flows	Years 1-10 no decrease in performance	There has been good agreement to date and sound advice has been able to be passed on to emergency managers, particularly in the Wairoa region.

Item	Topic	Councillor / Staff
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GENERAL SUBJECT OF THE ITEM TO BE CONSIDERED	REASON FOR PASSING THIS RESOLUTION	GROUNDS UNDER SECTION 48(1) FOR THE PASSING OF THE RESOLUTION
Port of Napier Limited - Board of Directors Appointments	7(2)(b)(ii) To protect information which otherwise would be likely unreasonably to prejudice the commercial position of the person who supplied or who is the subject of the information.	The Council is specified, in the First Schedule to this Act, as a body to which the Act applies.

LTP Workshop 1 – (13 October 2011)

Land Use

Water Quality

Water Demand

People and Community

Statutory Planning

Investment

Strategic Alliances

Fit for Purpose Organisation

Asset Management Plans

Significant Forecasting Assumptions

Financials and Project Budgets

Executive Discussion on Budgets (No 1)

Executive Discussion on Budgets (No 2)

Develop Council report for PowerPoint Presentation to Council

LTP Workshop 3 – (31 January 2012)

Council Budget Presentation

Finalise Draft LTP (3 weeks)

Audit Review completed

Council Paper on Draft LTP sent to Council

Council Meeting to adopt draft LTP

Final Print (2.5 weeks)

Consultation commences (5 weeks)

Consultation ends

Council considers submissions

Changes made to LTP (where appropriate)

LTP to Audit

LTP Distributed to Council

Council adopt final LTP