Agenda of Regional Council Meeting

	Agenda Item	Action	Person Responsible	Due Date	Status Comment
13	Guppy Road Reserve Land Transfer	Options to provide screening of the more unsightly parts of the Ops Group site from the motorway to be assessed to enable work to be carried out	MA/GH	July 2013
16	Work Plan Looking Forward through June 2013	Details related to the rabbit control operation at Cape Sanctuary and plantings at Waihapua	MA	Immed	Information emailed to Councillors 19 June.

	Agenda Item	Action	Person Responsible	Due Date	Status Comment
12	Annual Plan 2012-13 Progress Report for Nine Months Ending 31 March, Including Reforecasting	Report on Open Spaces – including how much money is available; how much is being paid for maintenance and enhancement of existing areas, options for further investment and Assessment Criteria	MA/GH	June 2013	Was provided as part of staff response on Annual Plan submissions.

HAWKE’S BAY REGIONAL COUNCIL

Wednesday 26 June 2013

SUBJECT: Affixing of Common Seal

Reason for Report

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 119

DP 6481

CT C2/431

- Agreement for Sale and Purchase

(no discount valuation fee paid after 30 June 2012)

1.1.2 Lot 15

DP 3976

CT 54/228

- Agreement for Sale and Purchase

(no discount valuation fee paid after 30 June 2012)

3698

3699

4 June 2013

11 June 2013

1.2

Staff Warrants

1.2.1 M Parker

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

3700

11 June 2013

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

Liz Lambert

General Manager (Operations)

Attachment/s

There are no attachments for this report.

HAWKE’S BAY REGIONAL COUNCIL

Wednesday 26 June 2013

SUBJECT: Recommendations from the Environment and Services Committee

Reason for Report

1. The following matters were considered by the Environment and Services Committee on Wednesday 12 June 2013 and are now presented to Council for consideration and approval.

Decision Making Process

2. These items have all been specifically considered at the Committee level.

Recommendations

The Environment and Services Committee recommends that Council:

Low Flow Notifications

2. Adopts the proposed Low Flow Notification policy, starts communicating with affected consent holders regarding the changes, and

3. Instructs the Manager – Resource Use and Group Manager Resource Management to make minor implementation changes if needed to ensure the new system delivers the appropriate outcomes.

Land Management Operational Plan

4. Adopts the Land Management Operational Plan 2013-14, subject to any amendments agreed by the Committee.

Biosecurity Operational Plans

5. In accordance with the requirements of the Biosecurity Act 1993; after the inclusion of any amendments made as a result of the Committee’s consideration, adopts the:

5.1 Animal Pest Operational Plan 2013/14

5.2 Plant Pest Operational Plan 2013/14

5.3 Phytosanitary Operational Plan 2013/14.

Councillor Remuneration

6. Resolves the level of payments set out below to be made to Councillors in positions of responsibility for the period after the 2013 elections until the end of the 2013/14 financial year, consistent with the funding pool advised by the Authority, and recommends to the Authority that these payment levels be included in the determination for the period after the 2013 elections until the end of the 2013/14 financial year. That up to six positions of responsibility be allowed for but that where the Chairman or the Deputy Chairman of Council holds a Committee Chair that no further payment is made for this responsibility. In such a case the extra allowance is returned to the general fund. Based on the current committees this will be:

Role

Position of Responsibility Remuneration

Deputy Chairman of Council

$58,375

Chairman of:

Corporate & Strategic Committee

Environment & Services Committee

Regional Planning Committee

Regional Transport Committee

Hearings Committee

$58,375

7. Resolves the level of remuneration for the Chairman of the Maori Committee be set, for the remainder of the 2013/14 financial year from the date of appointment subsequent to the 2013 elections, at the salary for an elected member of Council without committee chairman responsibilities and notes that this payment of the salary is not funded from the net Council remuneration pool advised by the Authority.

8. Resolves that the level of meeting fees and travel allowance paid to members of the Maori Committee be increased to $270 per day and $0.77 per km from the date of appointment subsequent to the 2013 elections.

9. Resolves that tangata whenua appointed members of the Maori Committee (excluding the Chairman of the Maori Committee) who are appointed to Plan hearings that are not related to resource consent hearings be remunerated at the rates set out in the applicable Local Government Elected Members Determination for all hearing time, as defined in that determination.

10. Notes that the following information reports were received at the Environment and Services Committee meeting held on 12 June 2013

10.1 RMA Delegations

10.2 Recognising Community Environmental Initiatives

10.3 Maungaharuru-Tangitū Inc Treaty Settlement

10.4 Statutory Advocacy Update.

Mike Adye

Group Manager

Asset Management

Iain Maxwell

Group Manager

Resource Management

Liz Lambert

General Manager (Operations)

Attachment/s

There are no attachments for this report.

HAWKE’S BAY REGIONAL COUNCIL

Wednesday 26 June 2013

SUBJECT: Heat Smart Programme Review and 2013 Budget Impacts

Reason for Report

1. This report is to update council on the progress made to reach National Emission Standards through the HBRC Heatsmart programme, and to review planning assumptions and targets in the light of performance to date.

2. To make Council aware of the impacts related to the recent 2013 budget announcements regarding the withdrawal of government funding for clean heat.

3. To seek Council approval for changes to the HBRC loans and grants in light of government funding changes.

Background

HBRC Position

4. The HBRC Heatsmart programme is ahead of schedule to meet the numbers required to achieve NES targets set by the Government. This year there have been 3 exceedances of the standard in Hastings, where this time last year there had already been five. The programme is having a positive effect reducing emission levels for domestic burning which creates 87% of the PM10 pollutants in the air.

5. Since the inception of the programme activity associated with the scheme can be valued in excess of $11.3m, with more than 11,000 homes improving insulation, clean heat or both. The financial contribution through EECA has been $3.5m, to date, $1.6m through MfE and $6m through the HBRC loan and grants scheme. Hawke’s Bay shows the second highest uptake nationally with 20% of dwellings accessing the EECA funding, and the highest uptake for clean air grants through MfE.

6. Previous planning assumptions used to set the targets for the programme will now be reviewed and updated to reflect higher than expected uptake and changed grant/loan ratios.

Insulation

7. HBRC has provided a loan facility for insulation in order to comply with EECA requirements for accessing clean heat funding. EECA were funding between 33% (up to $1300) and 60% with HBRC lending the balance, with no ceiling. The HBRC loan values range from $268 to $7459 with an average HBRC loan value being $1850. The Government’s new insulation scheme will be targeted at low income/high health needs families. In order to reach this 100% funding on top of EECA’s 60%, third-party funding will be sought from trusts, Iwi or community groups who wish to support the high health needs/low income families. EECA is running an RFP (commenced 27^th May) to select service providers who are able to bring third-party funding to this new programme. This RFP process is likely to be completed by August 2013. For HBRC this will mean fewer providers having EECA contracts. This core of service providers will be tasked with delivering 16,000 fully-funded low-income homes a year nationally (approximately 480 in Hawke’s Bay).

8. The funding for EECA for the next three years is based on having third party contributions of 40% and allocations will be targeted at those with the greatest need. As such those previously entitled to 60% contributions from EECA will get 100% funding and will not need HBRC loans, but numbers will be limited. The 33% funding up to $1300 will not be available from EECA and the HBRC loan numbers and average cost are therefore likely to increase. However, there are likely to be service providers who may not be low-income focused providers, who will be keen to remain part of the HBRC loan scheme. For service providers this will prove important from both a funding and marketing perspective, as access to funding will be a key issue for general income ratepayers who want to insulate their homes, but no longer qualify for an EECA subsidy once allocations run out after September. From a HBRC perspective, the benefit of retaining the insulation component of the scheme will help provide for warmer, drier homes for ratepayers and improved health for the community – at no cost of the general ratepayer. Given that there is likely to be an increase in demand for loans and that the average loan cost will increase, it is proposed that ‘floors and ceilings’ be introduced for insulation loans with a minimum of $1000 and a maximum of $4500 and that the current $170 admin fee becomes a ‘pre- payment’ requirement rather than part of the loan.

Clean Heat

9. In September 2012 EECA announced that it would be focussing its remaining resources on insulation as the clean heat market was ‘mature’ with 90% of heating being replaced without access to government funding. Sufficient allocation was secured by HBRC to support the 2012-2013 targets for clean heat. This allocation has now been fully utilized and EECA will close off all clean heat payments at the end of June 2013.

10. The $100k income threshold for clean heat required by EECA is no longer required with effect from July 2013. The declaration on HBRC application forms is impractical to check for every applicant, and is now redundant as an EECA requirement. The financial impact of removing this self declaration is negligible. There have been four application refusals in the last eighteen months. It is proposed to remove this requirement from clean heat grant and loan applications.

11. In the May 2013 budget it was announced that the clean air grants from the Ministry for the Environment would also stop with effect from June 2013. This annual $1.1 m supported grants to homes within designated airsheds. Annually funding for 2500 homes was available nationally for converting to clean heat, 1129 (45%) this year were taken up in Hawke’s Bay.

12. The impact on ratepayers is a loss of incentive to change, valued at $2000 (EECA grants) for low income and $1000 for general income families. In order to bridge the gap, and retain incentive it is proposed that the loan facility be revised to a maximum of $4500 for clean heat loans to reflect the average cost of replacing a non compliant fire with a compliant heat source. The cost consequence is estimated at $120k over the life of the programme. To be consistent with the loans for insulation it is also proposed to introduce a $1000 minimum loan for clean heat.

13. It was assumed for planning purposes that peak activity would match fire phase out years in The Air Plan, however, following government announcements, positive communications and media coverage, there has been a rush to access the last of the EECA funding before it is withdrawn.

Heatsmart applications by month to 18 June 2013

14. There has been a significant shift to clean heat grants rather than loans. It was assumed the balance would be 50/50 with loans and grants, but actual uptake is 65/35 in favour of grants. Grants are easier for the ratepayer, however, a combination of high numbers and a shift in the loan grant ratio impacts on the scheme balance with a need for more borrowing against reduced income (there is no administration fee associated with grants) which requires borrowing per annum that averages $1m per year over the remaining 12 years of the programme. This borrowing allows us to smooth the scheme balance without altering the targeted rate.

Future EECA Inputs

15. The 2013 Budget announced a new insulation programme called Warm Up New Zealand: Healthy Homes which targets those with low income/high health needs in our community. As part of the transition to a new programme for those most in need, EECA is keen to ensure HBRC’s engagement in supporting retrofitting through its Heatsmart Programme in the successful way that has been achieved so far.

16. While clean heating is no longer part of the scheme, for insulation, there will be sufficient general income (33%) allocation for the current Warm Up New Zealand: Heat Smart scheme to continue through to approximately the end of September 2013.

17. At present EECA provides two key elements which support the HBRC Heatsmart Programme – namely auditing for quality assurance, and designation of accepted products.

18. For those local providers with an EECA contract (with or without third party funding) the current audit process will be continued up to 30 June 2014, or until an alternate audit mechanism is agreed, whichever comes first. EECA will be maintaining a list of accepted products with its new WUNZ: Healthy Homes low income service providers. HBRC can utilize the same list of accepted products.

19. One of the issues HBRC is considering is how to limit the number of service providers within the Heatsmart scheme to avoid new companies wanting to join the scheme without adequate quality records, or attempting to expand the HBRC scheme with a range of new products (such as wall insulation, heat transfer system, or double-glazing).

20. The solution proposed is to limit the service providers within the scheme to those who are EECA-approved service providers as of 1 July 2013. Those with contract extensions will be given additional allocations which are likely to last through to the end of September 2013. By setting a cut-off date this proposal would effectively restrict the number of service providers to those who currently work with HBRC, have a rolled-over EECA contract, and have a proven track record of quality. Anyone who is external would need to prove their ability to enter (possibly by undertaking an introductory period of self-funded audits prior to admission).

21. EECA will continue to support HBRC in providing a limited audit function after June 2013 in order to maintain quality control for clean heat. HBRC will continue to recommend EECA approved products, promote energy star ratings and limit new providers where applicable to those familiar with EECA audit standards and processes. Where appropriate, HBRC will continue to recommend insulation through EECA providers.

21.1. Fires – Hastings Airshed installations are covered by TA permits for quality audit, however, Napier currently has a provider audit rather than installation and as such inspection of every install is in the process of being developed. For the next twelve months EECA will support HBRC in providing a 5% sample audit, (list as provided by HBRC)

21.2. Heat Pumps – as no permit is required by TAs, EECA will continue to provide a sample audit service within the HBRC airsheds up to June 2014 at no cost to HBRC, or the customer, activated by lists provided by HBRC. It is estimated that 500 heatpumps will be installed over the next twelve months.

22. By July 2014 the audit process is intended to be self supporting financially, with no cost to HBRC or the ratepayer.

	Heatsmart - Summary Activity Report
	Loan Type			2012/13						11 Months to 31 May 2013
				LTP						Pro Rata							Actual
				Budget				Reforecast		Reforcast			Actual				Over Reforecast
				Volumes				Volumes		Volumes			Volumes				Target 92%


	Insulation Loans			600				700		642			688				107%

	Clean Heat Loans			450				350		321			375				117%

	Clean Heat Grants			300				800		733			840				115%

	TOTAL			1,350				1,850		1,696			1,903				112%

	EXPENDITURE (EXCL GST)
	Loan Type			2012/13							11 Months to 31 May 2013
				LTP							Pro Rata					Actual
				Budget			Reforecast				Reforecast			Actual		Over Reforecast
				$000			$000				$000			$000		Target 92%


	Insulation Loans			1,140			1,273				1,167			1,250		107%

	Clean Heat Loans			1,255			911				835			989		117%

	Clean Heat Grants			183			506				464			535		115%

	TOTAL			2,578			2,689				2,465			2,774		112%
HBRC Heatsmart - Total Number of Loans & Grants to 31 May 2013


		2009/10			2010/11				2011/12					2012/13				Total
Details		No.	$		No.	$			No.			$		No.	$			No.	$

Insulation Loans		150	291,536		221	429,593			471			816,098		688	1,250,155			1,530	2,787,382

Clean Heat Loans		97	260,935		143	384,501			297			731,212		375	988,612			912	2,365,260

Clean Heat Grants		52	32,900		124	74,447			442			271,402		840	534,756			1,458	913,505


TOTAL		299	585,371		488	888,541			1,210			1,818,712		1,903	2,773,523			3,900	6,066,147

Decision Making Process

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

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

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

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

23.4. The persons affected by this decision are ratepayers in the region in Airsheds covered by HBRC Air Plan Rules.

23.5. Options that have been considered include maintaining current loan and grant allowances.

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

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

Recommendations

That Council:

2. Approves:

2.1 the clean heat loan thresholds to be $1000 minimum and $4500 maximum

2.2 the insulation loan thresholds to be $1000 minimum and $4500 maximum

2.3 removal of the current $100,000 income threshold

2.4 communication of the changes with effect from 1 July 2013.

Mark Heaney

Heat Smart Programme Coordinator

Liz Lambert

General Manager (Operations)

Attachment/s

There are no attachments for this report.

HAWKE’S BAY REGIONAL COUNCIL

Wednesday 26 June 2013

SUBJECT: Significant Initiatives Update

Reason for Report

1. Significant Council resources are being directed toward various initiatives which reflect the Council’s evolving agenda and it is considered important that Council is more consistently informed on progress in areas that have a high external profile.

Water Metering

2. 1509 are reporting their water use. This includes the consents that need to report their annual take by July this year.

3. 448 consent holders, covering 693 individual resource consents are now using the Council’s web entry system to report their water use. This is an increase of 25 individual resource consents since the last quarterly update.

4. 445 consents are reporting their water use via telemetry and are using the Council web site to view their data. Their data is telemetered to the Council and we now display the water use on our web site for their use.

5. There are a further 350 consents reporting their water use via the portable pump program.

6. The uptake of consent holders using either telemetry or the Council web entry system has surpassed the projected target of 677 consent holders using these methods by June 2013.

7. Consent holders have been combining consents (e.g. irrigation and frost on one combined consent instead of two separate consents) so the overall number of water take consents are dropping slightly.

Heretaunga Groundwater Modelling

8. Sustainable management of the water resources in the Heretaunga Plains necessitates access to appropriate tools, including mathematical models. Development of a coupled surface-groundwater model for the Heretaunga Plains is currently in the planning phase. The objectives of the model have been defined using science experience and policy and stakeholder requirements as:

8.1. Conceptualisation - what are the components of the Heretaunga Plains groundwater system?

8.2. Interpretation - how does the groundwater system function “now”?

8.3. Prediction - how is the groundwater system likely to function in future in response to increased demand, the impact of climate change and other factors?

9. A fit-for-purpose model will help answer basic resource management questions, such as:

9.1. What seasonal fluctuation in basin-wide groundwater level may be regarded as sustainable?

9.2. What is the relationship between localised fluctuation in groundwater level change and the risk of seawater intrusion?

9.3. What is the magnitude of basin-wide connection between the Heretaunga Plains groundwater system with spring, stream and river flows, both over time and spatially?

10. The data required to develop a “fit-for-purpose” groundwater model depend on the model objectives – as the complexity of the questions increase, the data requirements increase substantially.

11. The strategy being followed to develop the model will include:

11.1. Use of an expert panel approach to refine model objectives and identify a model development approach, as well as associated data requirements

11.2. Use of in-house and external resources to develop the model

11.3. Collection of additional field data to support future model development.

12. The capabilities of the model will increase over time, as data become available. This flexible, adaptive approach will to an extent future-proof the model, allowing it to respond to future management requirements or stakeholder questions as they arise.

Tangoio Soil Conservation Reserve

13. Staff are continuing to work with the Crown agency responsible for the Reserve (LINZ) in order to clarify ownership arrangements. The Management Plan for the Reserve is due to be reviewed. This is programmed to be done by the end of the 2013 calendar year and is expected to be brought to Council for consideration and adoption early in 2014.

Flood Control and Drainage Schemes

14. Temporary repairs have been done to enable the Ohuia pump station to operate at its capacity over the winter. These temporary repairs will be monitored with a detailed inspection to be done next summer as soon as water levels allow. Remedial works necessary will then be reviewed.

15. Following Council adoption of the Hearing Panel report on the remedial work on the Makara No 1 dam, Damwatch (a specialist dam consulting group and involved in the initial emergency work and the assessment of options) has been commissioned to complete the design. Detailed design is expected to be completed in late August or early September 2013. As part of the design process the Damwatch design will be peer reviewed prior to seeking a building consent for the project. Once the design peer review is completed staff will:

15.1. Make application for a building consent

15.2. Prepare tender documentation and seek tenders for the construction works

15.3. Place an order for the concrete discharge pipes and have them delivered to the site.

Biosecurity

16. Preparation for the review of the Regional Pest Management Strategies has commenced. The programme for completion of these reviews cannot be finalised until new regulations have been passed in accordance with the requirements of the Biosecurity Amendment Act, however consultation with industry groups (particularly with regard to an extension of the Regional Phytosanitary Pest Management Strategy) to increase the range of pests covered has commenced.

Resource Management Plan Changes

17. The table below documents the current status of various Plan Change processes.

Change	Indicative notification timeframe
Regional Coastal Environment Plan	N/A (awaiting Minister of Conservation’s approval of coastal marine area-related provisions before RCEP made operative)
Taharua strategy and plan change for Mohaka River catchment	Ongoing. Update report presented to Regional Planning Committee meeting on 5^th June 2013 following meetings with key landowner in Taharua catchment post withdrawal of Eco-N product from market. Extension to the time frame for plan change notification proposed in the Draft Annual Plan. Council to consider RPC’s recommendations at meeting on 26 June 2013, including proposal for community engagement around a Taharua/Mohaka ‘Choices’ discussion document early 2014.
Built Environment RPS Change (‘Change 4’)	Notified on 7 December 2011. Council’s decisions on submissions issued on 26^th March 2013. One appeal lodged by Transpower NZ Ltd against some of those decisions. Change 4 to become operative after that appeal is resolved.
Land Use and Water RPS Change (‘Change 5’)	Notified on 2 October 2012. Hearing by panel of commissioners. Council’s decisions on submissions issued on 5^th June 2013. Period for lodging appeals expires mid July. No appeals lodged at time of writing.
Tukituki Plan Change (‘Change 6’)	Notified on 4 May 2013. 80 submissions received. Ministers of Conservation and Environment have called-in Change 6 and Ruataniwha Water Storage Scheme applications and directed the ‘Tukituki Catchment Proposal’ to a Board of Inquiry. EPA intent publicly notifying the Tukituki Catchment Proposal in July 2013, when submissions invited on Change 6 and RWSS applications.
Greater Heretaunga / Ahuriri area (aka ‘TANK’ project)	Update report presented to Regional Planning Committee meeting on 5^th June 2013. Council has resolved to take an integrated approach to managing the surface and groundwater resources of the Heretaunga zone which includes Tutaekuri and Ngaruroro rivers, Karamu and Clive rivers and the Heretaunga Plains groundwater system. The TANK stakeholder Group has met seven times to date and a field trip has been undertaken. Extension to the time frame for plan change notification proposed in the Draft Annual Plan.

Transport

18. The Land Transport Management Amendment Act was passed and enacted by Parliament on 13 June 2013. The Act’s three main components are to:

18.1. Simplify the LTMA's planning and funding framework;

18.2. Streamline the LTMA's tolling and public-private partnership provisions; and

18.3. Implement a new public transport operating model.

19. There are also changes to the make up of Regional Transport Committee’s which are currently being worked through.

20. The Cycling Workshop, entitled Maximising the Return for Hawke’s Bay, was held on Friday, 24 May. The workshop was extremely successful with over 90 participants attending. The input from the Workshop is now being collated for inclusion in a draft Regional Cycling Plan. It is expected that a draft Plan will be available for initial consultation in August.

21. Record numbers carried on Council’s public transport services in May 2013.

Land Management

22. An operational plan for the 2013/14 financial year has been developed and considered by the Environment and Services Committee at its meeting on 12 June, and is expected to be adopted by Council at this meeting. This has shifted the focus for the Land management team. Implementation of this operational plan is an important part of the Tukituki Plan change policy.

23. HBRC has forestry assets covering approximately 640ha. This includes forest blocks in Central Hawke’s Bay, Wairoa, Waihapua, and Tutira Country Park, and includes approximately 55ha of high UMF manuka. Further plantings of approximately 50ha are programmes this winter on Waihapua and 80ha of high UMF manuka at Tutira. Staff plan to update management plans for these forestry assets by the end of 2013, and prepare a report for Council consideration early in 2014.

Heat Smart

24. An update on the Heat Smart programme is included in this Agenda for Council’s consideration as a separate item.

Open Spaces

25. Part two of the Regional Parks Network Plan is being developed. This will establish objectives, policies and methods for the management of the overall Open Space areas and will provide the framework for the development of individual management plans for each of the open space areas.

26. An asset management plan is being prepared for HBRC pathway assets. This will be presented to Council for consideration and adoption late in 2013.

Treaty Settlements

27. HBRC continues to engage with the Crown and Treaty claimant groups on matters pertinent to the Regional Council. Key developments since the last update have been the signing of the Deed of Settlement by Maungaharuru-Tangitu Iwi Inc on 25 May 2013 and the finalising of the draft legislation to establish the Regional Planning Committee as a permanent committee.

Strategic Alliance with Department of Conservation (DoC), Greater Wellington, Horizons and Hawke’s Bay Regional Council (Nature Central)

28. A work plan has been agreed between the parties for the 2013/14 financial year and its implementation has commenced. Restructuring in Department of Conservation is having some impact on the project, however it is expected that this process will be well advanced by August 2013.

Decision Making Process

29. 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 ‘Significant Initiatives Update’ report.

Mike Adye

Group Manager

Asset Management

Helen Codlin

Group Manager

Strategic Development

Iain Maxwell

Group Manager

Resource Management

Liz Lambert

General Manager (Operations)

Andrew Newman

Chief Executive

Attachment/s

There are no attachments for this report.

HAWKE’S BAY REGIONAL COUNCIL

Wednesday 26 June 2013

SUBJECT: Annual Plan 2012-13 Update on Financials for 11 Months to 31 May 2013

Reason for Report

1. This Annual Plan Progress Report is an abridged report and covers the first eleven months of the 2012/13 financial year ending 30 June 2013. This report consists of commentary on financial results to 31 May 2013 and various financial reports.

Summary of Financial Position to 31 May 2013

2. The actual result covering the Hawke’s Bay Regional Council’s (HBRC) general funded operations for the first eleven months of 2012/13 is a surplus of $811,631. This compares with the Annual Plan budget deficit of $704,490 and a reforecast deficit including carry forwards of $2,154.

3. The carry forward amount of $632,500 was approved by HBRC on 11 June 2013 as part of the internal submission to the 2013/14 Annual Plan.

Comment on Financial Results for Eleven Months to 31 May 2013

Groups of Activities

4. This report establishes that the net expenditure on groups of activities for the first eleven months is 90% of the reforecast net funding requirement including carry forward adjustments, as against a pro-rata comparative of 92%. The comparative figure for the same period last year was 88%.

5. Strategic Planning shows a net expenditure of 81% of reforecast. There are a number of Tukituki Plan Change costs that have been paid by HBRIC Ltd on behalf of HBRC as there was joint work completed with the RWSS work and billed on one invoice. These costs will be invoiced back to HBRC in June and would have had the effect of increasing the net expenditure percentage to 90% of reforecast.

6. Land Drainage and River Control shows a net expenditure of 80% of reforecast. Several projects are running slightly behind budget expectations due to reduced work programmes resulting from the drought (mainly mowing and spraying) and no significant flood events occurring during the year. The next month will also see significant winter planting and the final two months invoicing from our Operations. This will increase the net expenditure close to reforecast by year end.

7. Regional Resources shows a net expenditure of 89% of reforecast. There were substantial carry forwards approved for this activity group due to a large portion of science time been spent on the Tukituki choices programme. Project spending should continue to accelerate over the next month to be in line with reforecast at year end.

8. Regulation shows a net expenditure of 116% of reforecast. Expenditure on regulation is close to reforecast at 85%, however billing for the compliance project is well below the reforecast requirement as the majority of compliance billing is completed in June. Once this billing has been completed this should bring the net expenditure for the Regulation group of activities close to reforecast by year end.

9. Biosecurity shows a net expenditure of 90% of reforecast. Biosecurity staff advise that project costs should continue to progress over the next month and net expenditure is expected to be very close to the reforecast by year end.

10. Emergency Management shows a net expenditure of 33% of reforecast. There are two components to Emergency Management groups of activity: Hazard Assessment and HBRC Response and HB Civil Defence Emergency Management (CDEM) Group. While the revenue for both components are on budget (as the revenue for this activity is generated from the Emergency Management rate), the expenditure on a pro-rata basis is low.

10.1. Expenditure on the Hazard Assessment and HBRC response projects is currently at 81% of reforecast. Engineering projects were slow to commence due to additional engineering time being required on the RWSS and Makara flood and drainage scheme. There was also a vacant Asset Engineer position during the whole year which has reduced the amount of time spent on these projects. It is anticipated that expenditure on these hazard management projects will continue for the rest of the financial year but there may be some under spend.

10.2. Expenditure on CDEM projects is currently at 60% of reforecast. CDEM staff have advised that there are some large expenses to be paid in June for liquefaction research ($65,000), EMIS ($20,000) and GECC equipment ($15,000) which will increase external costs towards the budgeted amount. However internal time budgeted to the CDEM projects is well under budget which is contributing to the low net expenditure figures. The main reason for this is that a major CDEM exercise was deferred to next year which reduced the amount of time spent on the project by HBRC staff acting in their civil defence roles.

11. Transport shows a net expenditure of 184% of reforecast. Expenses are on budget but the timing on receiving income from NZTA for the Road Safe programme is in arrears and will be caught up by year end.

12. Governance and Community Representation shows a net expenditure of 84% of reforecast. This is down on the pro-rata budget but there is considerable expenditure expected in June for completion of the Winder prosperity study and targeted assistance payments covering strategic partnerships.

Operations Group

13. Operations Group reports a profit of $430,505 for the eleven months to 31 May 2013. $203,705 of the surplus relates to HBRC activities that will be credited to the river control and flood protection schemes at the end of the financial year.

14. The remaining $226,800 is surplus relating to work carried out under contract for external parties. This surplus reflects an increase in external work completed over budget.

Regional Income

15. Total regional income receipts represent 93% of forecast for the first eleven months of the financial year, as against a pro-rata of 92%. The main issues in regional income are:

Investment Company

15.1. The returns budgeted to be received from investments in the Ruataniwha and Ngaruroro water investments will not be achieved for the 2012/13 year. The LTP budgeted for a minimum return of 6% on the advances to Hawke’s Bay Regional Investment Company Limited (HBRIC Ltd) for investment in the Ruataniwha and Ngaruroro projects. At its meeting on 31 October 2012 HBRC resolved that no interest would be paid on the advances required for phases 1 and 2 of the RWS project.

Other Investments

15.2. Napier leasehold land rental revenue was budgeted in the Annual Plan at $935,000 for the six months ending 31 December 2012. It was assumed in the LTP that HBRC would have sold the Napier leasehold cash flows by 1 January 2013. As negotiations are still underway for the sale of these cash flows, the rental income from leasehold property has continued beyond the first six months of the 2013/14 financial year and has been reforecast to $1,772,000 for the 2012/13 year.

15.3. Interest on investment term deposits is tracking at 90% as against a reforecast pro-rata of 92%.

Other Activities

15.4. The Disaster reserve interest and dividends shows a large negative for the eleven months. This is due to the increasing cost of commercial insurance cover for disaster damage being paid within the first three months of the financial year but being funded from dividend and interest from the Regional Disaster Damage reserve over the 12 month period.

General Funding for Capital Projects

16. The general funding requirement for capital projects is $177,095 or 56% of budget due to Targeted rates exceeding expenditure. Capital expenditure on flood and drainage schemes will accelerate for the remaining month of the financial year and loan repayments for sawfly remediation will be paid by the end of June. This will increase the net expenditure closer to budget. As the majority of these capital projects are scheme funded, any work that is not completed this year will continue next year.

Healthy Homes – Summary Activity Report

17. Reforecast figures were underestimated last month.

18. The unprecedented volume of activity for May and June is the direct result of good communications, advertising in the media and exposure to the public at the Home Show.

19. The public message to access funding from the Government before it runs out, successfully ensured record numbers of applications for grants and loans.

20. An update of the Heatsmart programme is contained in a separate report.

Volumes

Loan Type		11 Months to 31 May 2013
Loan Type	LTP Budget Volumes	Re-forecast Volumes	Pro Rata Re-forecast Volumes	Actual Volumes	Actual Over Re-forecast Target (92%)
Insulation Loans	600	700	642	688	107%
Clean Heat Loans	450	350	321	375	117%
Clean Heat Grants	300	800	733	840	115%
Totals	1,350	1,850	1,696	1,903	112%

Expenditure (excluding GST)

Loan Type		11 Months to 31 May 2013
Loan Type	LTP Budget $000	Re-forecast $000	Pro Rata Re-forecast $000	Actual $000	Actual Over Re-forecast Target (92%)
Insulation Loans	1,140	1,273	1,167	1,250	107%
Clean Heat Loans	1,255	911	835	989	117%
Clean Heat Grants	183	506	464	535	115%
Totals	2,578	2,689	2,465	2,774	112%

Non-recoverable Costs of Consent Appeals and Direct Referrals to the Environment Court

21. For the year to date costs for appeals and referrals to the Environment Court have amounted to $80,983. This includes staff time and external costs.

22. Three appeals have been finalised. The AFFCO consent order has been signed off by the Environment Court. The Twyford appeals have been withdrawn. The appeal against NCC wastewater outfall was settled at the Environment Court hearing on 6 December 2012.

23. The declaration on the Whakarire Ave breakwater has been considered by the Environment Court. This determined that the activity, as proposed, is a non-complying activity. NCC have now withdrawn their application and indicated they will resubmit a proposal at a later date.

24. Drafting of evidence has proceeded on the Mexted et al appeals. There was some possibility of a revised proposal being submitted which may have helped resolve the appeals. However these have not been advanced to date. A separate appeal was lodged with the High Court over the extent of the evidence provided by the appellants. This resolved that the evidence on coastal erosion was admissible and could be presented to the Environment Court hearing by the appellant. HBRC are looking to facilitate a caucusing of coastal process experts.

25. The following table summarises costs for appeals that were still ongoing at the start of this financial year. Costs to date for the 2012/13 year to date are shown in the shaded column. Costs for previous years are also shown and these are summed to provide a running total for each appeal.

Appeal Summary as at 31 May 2013
Name	Date Council Approved Appeal Defence	Estimate of Appeal costs as Advised to Council	Actual Costs of Appeal (Appropriate Years)				Comments
Name	Date Council Approved Appeal Defence	Estimate of Appeal costs as Advised to Council	2010/11	2011/12	2012/13 to date	Total to date	Comments
Twyford / Raupare (402109)	Wed 25 May 2011	Noted $150,000 on similar appeal	$22,506	$25,050 ext* $49,450	$3,182 ext $5,201	$77,157	The Appeal has been withdrawn. Council are working with Twyford groups to explore water management options. Closed.
AFFCO (402046)	Wed 23 Sept 2009	Not estimated	$81,321	$39,783 ext $46,307	$4,143 ext $4,820	$132,448	Appeal has now been settled. Closed.
Mexted, Williams and Malherbe (402051)	Thurs 10 June 2010	Not estimated	$8,366	$38,513 ext $49,956	$24,585 ext $28,263	$86,585	Appeal ongoing - Environment Court scheduled and deferred. May be settled by consent order. HBRC facilitating expert caucusing.
NCC BTF Waste water outfall (402113)		Not estimated		$24,320 ext $28,043	$25,707 ext $31,089	$59,132	Appeal settled by agreement. Minor condition change approved by Environment Court.
Whakarire Ave Breakwater (514219)		Not estimated			$10,050 ext $11,610	$11,610	Declaration to the Environment Court to determine activity status of proposed activity. Decision pending.
*External costs				$127,666	$67,667		The sum to date for external legal and consulting advice
Total costs			$112,193	$173,756	$80,983	$366,932	Total includes internal staff time plus external costs.

Balance Sheet

26. Public Equity, which reflects the net value of all the HBRC’s assets and liabilities, has decreased by $948,000 or 0.2% since the beginning of the year. This incorporates all of the operating transactions for the eleven months including the $2.9m received from HBRIC for the Napier Port interim dividend, reserve movements and the loss on sale of leasehold land of $2.1m. The next distribution from HBRIC for the Napier Port final dividend will be received in June.

27. Property, plant and equipment have increased by $720,000 or 4.0% due to purchases of Motor Vehicles, Computer and Hydrology Assets and the transfer to the Raffles Street property from Investment.

28. Infrastructure assets have increased $6,439,000 or 4.7% from the beginning of the year. Substantial payments for infrastructure were made to capital projects for Healthy Homes ($2.6m), Cycleways ($1.0m) and Ruataniwha Water Scheme ($1.8m).

29. Intangible assets have decreased by $3,337,000 or 48.0% since the beginning of the year reflecting the transfer of feasibility costs of the RWSS to Advances to council-controlled organisations in the Balance Sheet.

30. Investment property has decreased by $14,890,000 or 22% since the beginning of the year reflecting the disposal of endowment leasehold land properties and the transfer of the Raffles Street property to Property Plant and Equipment.

31. Accounts receivable have increased from the beginning of the year by $392,000. This is slightly higher than this time last year. It includes the amount owed by HBRIC for HBRC staff time utilised on the RWSS project which will be paid by the end of the financial year.

32. Advances to council-controlled organisations have increased $5,856,000 from the beginning of the year reflecting the transfer from Intangible assets of the RWSS feasibility costs of $3,550,000 and $2,306,000 for costs in relation to the next phase of the project.

33. Borrowings have decreased by $1,375,000 from the beginning of the year due to scheduled repayment of loans. No loan draw downs have occurred so far this year.

34. Trade and Other Payables have decreased since the beginning of the year by $2,711,000 as year end invoices have been paid and accruals have been reversed.

35. Income in advance shows movement of $1,110,000 due to the accrual of rate revenue in advance. Rates revenue is split evenly over the year and is recognised as income every month.

36. Total cash, cash equivalents and financial assets show an increase of $562,000 since the beginning of the year. This reflects the substantial receipts from the sell down of leasehold property offset by HBRC operating requirements, capital programmes and funding RWSS costs.

Cash Reserve Investments

37. The average rate of interest being earned on liquid investments is currently 4.19%. This rate is slightly higher than the rate assumed in the 2012/13 year of the LTP 4.15% for both short and long-term bank investments.

38. The pie chart in the attachment entitled “Allocation by Institution” shows the percentage of Council investments placed with various institutions. Council policy requires that no more than 25% of investments be placed with any non government–guaranteed institution of groups of associated institutions.

Decision Making Process

39. 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 Annual Plan 2012-13 Update on Financials to 31 May 2013 report.

Manton Collings

Corporate Accountant

Paul Drury

Group Manager

Corporate Services

Attachment/s

1 View

Financial Reports for 11 Months ending 31 May 2013

HAWKE’S BAY REGIONAL COUNCIL

Wednesday 26 June 2013

SUBJECT: Part 2 - Prosperity Report - Potential Costs and Savings of Local Government Reorganisation

Reason for Report

1. The second and final part of the Hawke’s Bay Prosperity Study by McGredy Winder & Co has been received by Council. The issues and options identified in the first part of the study have been further refined through various work programmes, with the exception of the costs and savings information presented around local government reorganisation.

2. Given that the Local Government Commission is presently considering the structure of local government in Hawke’s Bay the Council considered it would be helpful to that conversation to seek factual information around the potential costs and savings of various local government options.

Discussion

3. A copy of the report “Potential Costs and Savings of Local Government Reform in Hawke’s Bay” is attached.

4. The report is based upon the development of a financial model that looks at the activities undertaken by the councils in Hawke’s Bay and identifies savings in those activities based on different local government structures to those that exist. The baseline for the model is the current long-term plans of the five Hawke’s Bay councils. The model is driven by assumptions as to the percentage change in costs for each activity, for each year in the long-term plan after the implementation of the re-organisation.

5. The findings do not reflect a detailed design of a new organisation but are intended to be robust enough to describe the likely levels of savings that could be achieved. They will be useful for:

5.1. Comparing the relative potential for savings between different reform options;

5.2. Understanding the total potential savings from reform; and

5.3. Understanding the key activities where savings may be possible and how critical those savings would be to achieving the total savings estimated.

6. While the model could be used to look at a range of local government structures for the purpose of this report it has been applied to three scenarios:

6.1. Scenario A – a single unitary authority as proposed by A Better Hawke’s Bay to the Local Government Commission

6.2. Scenario B – a single territorial authority and the existing regional council

6.3. Scenario C – two territorial authorities (one from the Tutakeuri River north, the other south of the Tutaekuri River) and the existing regional council.

Key high level assumptions

7. A number of key high level assumptions have been made around the model:

7.1. No change to activities delivered by only one Council – this mainly applies to the regional council, but also to airports and tourist destinations

7.2. No sale of assets (other than those already in long-term plans)

7.3. No change to capital works

7.4. No change to depreciation

7.5. No change to service levels

7.6. Parts of other councils ignored (in this case small parts of Rangitikei and Taupo districts that are administered by HBRC). However the Local Government Commission will need to explicitly consider those areas

7.7. New Councils in operation 1 July 2015 – this is probably unlikely given the timeline for LGC decisions but assuming that any new structure begins at the start of a financial year simplifies the analysis

7.8. Transition Board and transition costs – assumed that there would be a Transition Board established in the year prior to the new structure commencing

7.9. Governance costs – assumed for each scenario

7.10. Detailed design of new councils not attempted

7.11. Redundancy costs equal first year of salary savings – no net savings in staff costs on first year of new operations

7.12. Savings in direct costs start in year 2 or operation or later

7.13. No savings for some activities (e.g. cemeteries, housing for the elderly, solid waste) reflecting the discrete geographic nature of their activities, and their relatively small scale

7.14. Finance costs – assumed no savings from moving to a consolidated treasury.

Summary of Findings

8. The following are the headline learnings from this report.

8.1. Local government expenditure across the five councils in 2012/13 is $284m (excluding capital expenditure).

8.2. The proportion of expenditure by summary group of activities shows the significance of expenditure on core infrastructure, including roading and transport (23.8%), three waters (16.4%) and core recreation and community facilities and services (20.9%).

8.3. The real cost of combined local authority expenditure is forecast to increase by 9% over the ten years of the current LTPs.

8.4. The levels of potential net savings are modest: for Scenario A = 2.8%, Scenario B = 2.2% and Scenario C = 0.7% as a percentage of total expenditure.

8.5. The Auckland experience showed that moving to a common rating system resulted in substantial shifts of the rating burden between different geographic areas of the city. The impact of this sort of change is likely to be far larger for ratepayers than the size of the potential savings identified in the Winder report.

8.6. The report also notes that it is quite possible that even though the cost of delivering current services could be reduced through the reform scenarios there is no corresponding reduction in the level of future rates that the residents of Hawke’s Bay are asked to pay.

8.7. All three scenarios will incur transition costs and the approach that has been assessed would involve doing as much work as possible in the year before the establishment of any new councils to make the transition as smooth as possible.

8.8. The highest transition costs are for Scenario A of $18.4 m, Scenario B has the next highest cost at $14.2M and Scenario C has transition costs of $13.6m.

8.9. The costs of transition would generally fall in the first and second year of a transition process. However the report notes - from the Auckland experience - that there were considerable indirect costs absorbed by each of the merged councils through their transition. The real cost was reflected in considerable extra hours worked by key staff and by delayed or non-delivery of regular work.

8.10. Finally in terms of job numbers the report has assessed a possible reduction in jobs of 70-90 for Scenario A, 70-80 for Scenario B and 30-40 for Scenario C. The report does not breakdown the potential job reductions by activity in order to avoid unnecessary uncertainty and speculation by staff within each activity of council operations.

Next Steps

9. The Local Government Commission (LGC) is currently assessing the Better Hawke’s Bay proposal together with the nineteen alternative proposals received for Hawke’s Bay. As part of its consideration the LGC must assess how a proposed reorganisation promotes good local government by facilitating, inter alia, efficiencies and cost savings.

10. This report identifies that all three scenarios produce efficiencies and cost savings but also notes that those savings may be re-deployed into additional expenditure. It provides a comparator for the various options but shows that overall the savings themselves are not of a significant scale in light of total overall expenditure.

11. The report will be forwarded to the Local Government Commission for inclusion as part of their information gathering and assessment process.

Decision Making Process

12. 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 “Part 2 - Prosperity Report - Potential Costs and Savings of Local Government Reorganisation” report.

Liz Lambert

General Manager (Operations)

Attachment/s

1 View

Potential Costs and Savings of Local Government Reform in Hawke's Bay

GENERAL SUBJECT OF THE ITEM TO BE CONSIDERED	REASON FOR PASSING THIS RESOLUTION	GROUNDS UNDER SECTION 48(1) FOR THE PASSING OF THE RESOLUTION
Ruataniwha Water Storage Scheme Budget Update	7(2)(i) That the public conduct of this agenda item would be likely to result in the disclosure of information where the withholding of the information is necessary to enable the local authority holding the information to carry out, without prejudice or disadvantage, negotiations (including commercial and industrial negotiations).	The Council is specified, in the First Schedule to this Act, as a body to which the Act applies.

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