Agenda of Regional Council Meeting

	Agenda Item	Action	Responsible	Due Date	Status Comment
1	Recommendations from Corporate & Strategic Committee	Councillors to forward names to CE for appointment to Council Appointments Committee	Councillors	9 April	Paper to make appointments at 28 May Council meeting
2	Recommendations from Corporate & Strategic Committee	Local Governance Statement to be published & publicly available	L Hooper		Final proof completed and being published
3	Monthly Work Plan Looking Forward	Investigate effective means of including dates of upcoming events. Paper content to reflect work being carried out in the immediate future, not historic	Exec	30 April	Refinement of content will be ongoing

HAWKE’S BAY REGIONAL COUNCIL

Wednesday 30 April 2014

SUBJECT: Recommendations from the Environment and Services Committee Meeting Held 9 April 2014

Reason for Report

1. The following matters were considered by the Environment and Services Committee on Wednesday 9 April 2014 and are now presented to Council for consideration and approval.

Decision Making Process

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

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.

Infrastructure Asset Insurance

2. Adopts the HBRC Disaster Damage Risk Management Policy included following recommendation 11.

Coastal Strategy

3. Agrees to work with in collaboration with Napier City Council, Hastings District Council and Treaty of Waitangi settlement groups with mana whenua mandate over the portion of coast being considered, on the development of a strategy for the management of the coast between Clifton and Tangoio.

4. Agrees that the project will be governed by a Joint Committee made up of 2 elected members from each of Napier City, Hastings District and Hawke’s Bay Regional Councils and up to three Iwi representatives.

5. Agrees to continue discussions with He Toa Takitini, Mana Ahuriri Inc, and Maungaharuru Tangitū Trust, seeking their agreement to participate in the Strategy development process and nominate one representative from each organisation to sit on the Joint Committee to oversee the project

6. Agrees that the Joint Committee will be delegated the authority to determine its terms of Reference, the Terms of Reference for a Technical Advisory Group, and the scope and timeline for the project, taking into account the size of the project and the resource available to it.

7. Notes that resourcing requirements for HBRC’s involvement in the development of the Strategy will be included in the draft LTP 2015-25.

8. Appoints Councillor Beaven and Councillor Scott as the HBRC representatives on the Joint Committee.

Regional Pest Plan review

9. Establishes a working group of 3-5 councillors to assist staff in:

9.1 Establishing a timeline and scope for reviewing the Regional Pest Management plans, and

9.2 Completing the review process.

10. Appoints the following Councillors to the working group:

10.2 Councillor Christine Scott

10.3 Councillor Rex Graham

10.4 Councillor Dave Pipe

10.5 Councillor Fenton Wilson

10.6 Councillor Rick Barker (on his agreement)

11. Notes that the following reports were received at the Environment and Services Committee meeting on Wednesday 9 April:

11.1 Follow-ups from previous Environment and Services Committee meetings

11.2 Nimmo-Bell Alternative Investments Report

11.3 Science Reports, including:

11.3.1 Karamu Characterisation Report

11.4 National Horticultural Field Days

11.5 QEII National Trust Presentation

11.6 Statutory Advocacy.

HBRC Disaster Damage Risk Management Policy

1. Background

This policy supersedes HBRC’s Disaster Damage Risk Management Policy adopted by Council in 2007, and subsequent decisions regarding this issue.

This review (March 2014) has confirmed that HBRC continues to face considerable ongoing financial risk from a natural disaster event.

This policy deals specifically with disaster damage risks to HBRC owned or administered infrastructure assets, and the requirement for HBRC to respond to an event that causes major disruption to the community.

In addition to its role as the manager of flood control and drainage schemes throughout the region, HBRC will play a significant role in any response as a result of its civil defence responsibilities including resourcing to the civil defence emergency coordination centre, and the provision of reconnaissance and hazard information to input to the response planning and decision making. There may also be a significant cost in securing information and data arising from the event, especially a flood event. Significant flood events provide a valuable source of data to enable verification of models and assumptions made as part of HBRC staff flood hazard assessment and flood control and drainage activities.

HBRC may qualify for Central Government assistance for the reinstatement of HBRC infrastructure assets in the event of a disaster however such assistance is more likely to be forthcoming following a significant disaster affecting the Heretaunga Plains. Central government assistance is less likely to be available for a disaster event impacting a small portion of the region.

While HBRC should meet the expectations of central government by implementing this policy, HBRC acknowledge that central government and LAPP funding may not be available to cover the costs of every disaster. This policy also makes some provision to cover that risk.

2. Financial Risk Management Initiatives

HBRC will mitigate its financial risk associated with a disaster event. The following will make up HBRC risk mitigation approach.

2.1 Disaster damage to Council-owned fixed assets

· Insurance policies will be held with appropriate indemnity or replacement value cover; and

· Assets will continue to be effectively maintained.

2.2 Disaster damage leading to Third Party liability

· The employment of suitably qualified and experienced staff and robust decision making processes.

· Appropriate and relevant HBRC policy and sound technical practices for maintaining HBRC assets thereby minimising any exposure through negligence.

· An insurance policy will be held to cover this risk.

2.3 Disaster impact on Council’s Business Continuance Capability

· A Business Continuance Plan will be maintained and regularly updated which contains specific actions and ongoing requirements to help check systems to enable HBRC to continue to operate after a disaster.

2.4 Sound maintenance of infrastructure assets

· Infrastructure assets will be maintained in accordance with asset management plans. This will include an annual programme of maintenance and a regular assessment of asset condition.

· Where feasible and economic this may include improvements to increase asset resilience to damage from a natural disaster.

2.5 Use of surplus operating funds and reprioritisation of maintenance and capital works

· Following any disaster event the first call to fund the reinstatement costs of infrastructure assets will be any surplus operating funds held by the Scheme under which the assets are administered.

· The second call will be through the reprioritisation of the maintenance or capital expenditure programme for that Scheme.

· Scheme depreciation reserves will only be utilised where a depreciable asset requires replacement, in which case the difference between the depreciated value of that asset and its replacement cost can be sourced from the relevant depreciation reserve. Note that if the new asset results in an increase in the level of service provided by the Scheme, the difference between the cost of the new asset and the replacement cost of the current asset will be a cost on the Scheme.

· Only after these options have been fully assessed and funding from these sources committed, will Council agreement to funds from other financial reserves being drawn on be sought.

2.6 HBRC held financial reserves

· Financial reserves will be held to mitigate HBRC’s financial exposure to natural hazards. The following reserves will be held by HBRC

o The Wairoa District Flood Reserve

o The small schemes disaster reserve

o The Heretaunga Plains Schemes disaster reserve

o The Regional Disaster Reserve

2.7 Membership of LAPP

· HBRC will maintain its membership of the Local Authority Protection Programme (LAPP) and meet the requirements of LAPP.

2.8 Maintain proper planning for risk management

· In order to comply with the criteria set out in the National Civil Defence Emergency Management Plan, HBRC will maintain proper planning for risk management. Implementation of this policy will demonstrate this.

3. Criteria for Contributions and Withdrawals From Reserves

Criteria for contributions and withdrawals from these reserves are:

3.1 The Wairoa Flood Reserve

The reserve will be managed such that the capital purchasing power of the reserve sum, less any capital authorised to be withdrawn from the reserve by HBRC, shall be maintained by increasing the reserve each year by 2.5% from interest earned by the reserve.

The balance of interest earned by the reserve shall be used to subsidise work undertaken through the Wairoa Rivers and Streams Scheme to manage and reduce flood risk to public and/or community infrastructure within the Wairoa District.

Council may authorise capital sums to be drawn from the reserve to undertake specific major flood mitigation or erosion protection projects within the Wairoa District or for flood recovery works in the same area.

3.2 The Small Schemes Disaster Reserve

The small schemes disaster reserve shall provide for the following flood control and drainage schemes:

· Upper Tukituki Flood control scheme

· Upper Makara flood control scheme

· Paeroa Scheme

· Porangahau flood control Scheme

· Poukawa Drainage Scheme

· Ohuia – Whakaki Drainage Scheme

· Esk River flood control Scheme

· Whirinaki Flood Control Scheme

· Maraetotara River Control Scheme

· Kopuawhara Flood Scheme

· Te Ngarue River Control Scheme

· Opoho Scheme

· Kairakau Community Scheme

The following assets within the Wairoa Rivers and Streams Scheme:

o Tawhara Flood detention dam and outlet channel

o Tuhara Drain

o Nuhaka Railway Drain

The reserve shall be made up of all of the current Scheme disaster reserves held by each of the above Schemes. As at 30 June 2013 the combined balance was $680,768.

Each Scheme will contribute annually to the reserve in proportion to the value of Scheme assets, the vulnerability of the scheme assets (vulnerability factor) and the vulnerability of the Scheme (scheme factor). Annual contributions will be calculated as follows.

(Value of asset class) x (vulnerability factor) x (scheme factor)/1000

All Schemes with no assets, e.g. Te Ngarue and Porangahau shall contribute a fixed amount of $20 per km, x a scheme vulnerability factor, of river channel under the Scheme.

Annual contributions shall be made to the reserve as set out in Table 6 each year that the reserve balance is below the LAPP excess (i.e. currently $1,259,000). Interest earned by the reserve shall be credited to the reserve. Annual contributions may increase each year in accordance with inflation.

When the reserve balance is above the LAPP excess the Group Manager Asset Management and Group Manager Corporate Services may agree to a discount on the annual contribution from each scheme. No annual contributions from schemes will be made if the reserve balance is in excess of 2 times the LAPP excess. If the reserve is over 2.5 times the LAPP excess the Group Managers may agree to return money from reserve income to the Schemes.

At Council discretion individual schemes will be eligible to draw up to 100 times their annual contribution from the reserve, provided the reserve holds adequate funds.

The following costs may be eligible for payment from this Reserve.

· The cost of reinstatement of assets identified on the LAPP asset schedule, or their replacement with alternative assets that will reinstate a similar level of service provided by the original assets, less any provision held within the Scheme depreciation fund for reinstatement of that asset, up to a maximum of the LAPP excess or central government threshold, whichever is the greater.

· The cost of repair works within a scheme area (excluding district wide schemes). Eligible repair works may include channel works which improve flood flow capacity, bank protection works where this work will assist in protecting a residential dwelling (however this could be subject to a contribution from the building’s owner to recognise any private good, and may be subject to the owner providing details of other insurance claims made or received), or any other works subject to Council approval. The Reserve will not be used for the purchase of land. Where land upon which an asset has been sited is lost, the asset should be relocated.

3.3 The Heretaunga Plains Scheme Disaster Reserve

The Heretaunga Plains Schemes disaster reserve shall provide for the following flood control and drainage schemes.

· The Heretaunga Plains Scheme – Rivers

· Napier Meeanee Drainage area

· Brookfields Awatoto Drainage area

· Pakowhai Drainage area

· Muddy Creek Drainage area

· Haumoana Drainage area

· Karamu and Tributaries Drainage area

· Raupare Twyford drainage area

· Tutaekuri-Waimate Drainage area

· Puninga Drainage area

The reserve shall be made up of all of the current Scheme disaster reserves held by each of the above Schemes. As at 30 June 2013 the combined balance was $1,799,022.

Value of asset class x vulnerability factor x scheme factor/1000.

Annual contributions shall be made to the reserve as set out in Table 7 at any time that the reserve balance is below the LAPP excess. (i.e. currently $1,259,000). Annual contributions may increase each year in accordance with inflation.

When the reserve balance is above the LAPP excess the Group Manager Asset Management and Group Manager Corporate Services may agree to a lesser amount being contributed from each scheme or a contribution from this reserve being made to the regional disaster reserve. No Scheme contributions will be made if the reserve balance is in excess of 1.5 times the LAPP excess. If the reserve is over 2.0 times the LAPP excess the Group Managers may agree to return money from the reserve income to the Schemes.

At Council discretion individual schemes will be eligible to draw from the reserve up to 100 times their annual contribution from the reserve, provided the reserve holds adequate funds.

Withdrawal from the reserve will only be considered after consideration of deferment of routine annual maintenance and programmed capital works. Any payments from the reserve shall be at the discretion of Council.

The following costs may be eligible for payment from this Reserve.

· The cost of repair works within a scheme area. Eligible repair works may include channel works which improve flood flow capacity and bank protection works, however where this work will assist in protecting a residential or commercial building this may be subject to the owner providing details of other insurance claims made or received and agreeing to an appropriate contribution, or any other works subject to Council approval.

3.4 The Regional Disaster Reserve

This reserve is to be managed such that the value of its investments (including any cash) remains within the range of $2.75m - $3.75m and that its investments exceed $3.75m in value and some investments may be sold and the proceeds credited to Council’s general funding operating account.

A return of 2.5% on average balance held by the reserve during the year will accrue as an increase in the value of the reserve, when the Reserve has a value in excess of $3M. The earnings in excess of the 2.5% per annum will be credited to Council’s general funding operating account.

The regional disaster reserve may, at Council discretion, provide for the following.

a. The cost of responding to and managing an event. This could include:

· Unbudgeted staff time

· Plant and equipment hire including helicopters

· Employment of unbudgeted external resource to support staff in the response.

b. The cost of reinstatement of any uninsured assets. This includes recreational assets that are not part of a flood protection and drainage Scheme, i.e. pathways and associated assets that are not constructed on a stopbank, and assets within open space areas.

c. Any difference between the deductable (excess) on any insurance or LAPP policy and the threshold for eligibility for central government assistance, which is unable to be funded through Scheme disaster Reserve or other funds.

d. Any unfunded reinstatement costs above the excess of any insurance policy and the threshold for eligibility for central government assistance because central government determines that HBRC is not eligible for central government assistance because the disaster does not trigger the criteria set out in the Guide to the National Civil Defence Plan, and/or LAPP is unable to provide cover for whatever reason.

e. The possibility of the cost of reinstating the level of service provided by the assets costs considerably more than their estimated replacement or optimised replacement value, and central government and/or HBRC’s insurers refuse to cover a portion of that cost.

f. The cost of any works that are considered betterment but are necessary to reinstate community protection, or because the community demands a higher level of protection.

g. Liability as a member of LAPP in the event that the LAPP fund is exhausted.

4. Criteria for the Build Up, Use and Maintenance of Disaster Damage Insurance Excess Reserves

· Reserves will always be a funding call of last resort e.g. if priorities can be re-established to cover the expenditure, or if unbudgeted income is received these sources of funds will be used.

· All efforts will be made to maximise any disaster recovery contributions from Central Government or any other sources.

5. Provision to Meet Disaster Damage Insurance Excesses and Commitments

5.1 Regional Disaster Reserve

The required reserve will be managed in accordance with HBRC’s investment policies.

5.2 Flood and Drainage Schemes

The Group Manager, Asset Management and Group Manager Corporate Services have delegated authority to manage the Small Scheme disaster reserve and the Heretaunga Plains Scheme Disaster reserve in accordance with HBRC’s investment policy.

6. Frequency of Disaster Damage Risk Management Reviews

Reviews will be carried out at least once every six years.

Mike Adye

Group Manager

Asset Management

Liz Lambert

Chief Executive

Attachment/s

There are no attachments for this report.

HAWKE’S BAY REGIONAL COUNCIL

Wednesday 30 April 2014

SUBJECT: Adoption of the RWSS Investment Statement of Proposal for Public Consultation

Reason for Report

1. Having received a business and investment case from Hawke’s Bay Regional Investment Company Ltd to invest in the Ruataniwha Water Storage Scheme HBRC has advised HBRIC Ltd that any decision to invest up to $80 million in the RWSS is subject to HBRC:

1.1. having received and being satisfied with its own legal advice on the RWWS documents and all related legal matters;

1.2. having received and being satisfied with its advice from the RWSS Business Case Assessment process and advisers;

1.3. having received and being satisfied with its advice from the Alternative Investments Analysis process and advisers;

1.4. having received the Draft and Final Decisions of EPA Board of Inquiry processes on Plan Change 6 and the RWSS Resource Consents and being satisfied that the RWSS can proceed as proposed under the decisions made;

1.5. having undertaken a Special Consultative Procedure of public consultation regarding whether or not to invest in the RWSS via HBRIC Ltd, and having made its determination to make such an investment; and

1.6. receiving confirmation from HBRIC Ltd that all Conditions Precedent to Financial Close of the investment by all investing parties in the RWLP have been either satisfied or waived by agreement of the parties.

2. This agenda item sets out, for Council’s consideration, the proposed Summary for the Statement of Proposal and the Statement of Proposal to trigger the Special Consultative Procedure, as envisaged by 1.5 above. The other processes identified in para.1 above are at various stages of completion and must all be achieved if any final investment is to be made.

3. At the Council Meeting on 31 October 2012 it was resolved that a special consultative process should be undertaken to determine community views on Council’s investment in the Ruataniwha Water Storage Scheme.

4. The Statement of Proposal is appended as Attachment 1.

5. The Summary of the Statement of Proposal is appended as Attachment 2.

6. The proposed distribution of these statements to interested parties in the community was set out in the paper to the Corporate and Strategic Committee on 16 April which outlined the proposition for consultation on the Statement of Proposal.

Special Consultative Procedure

7. For a number of councillors this will be the first time that they will experience decision-making under a Special Consultative Procedure. It is worthwhile explaining how it works, as interpreted following findings of the courts through case law.

8. The Special Consultative procedure is a process involving an exchange of information between two parties (in this case HBRC and the Hawke’s Bay community). HBRC provides its proposal(s) to resolve a particular issue, or information about the issue or problem, in return the community provides its views on the issue or problem. The third element of the consultative process involves the local authority considering the information it received during the earlier part of the process and deciding whether and how that should affect its proposal or its view on the issue.

9. From time to time community groups may claim that “their views were ignored” or “the council didn’t listen” or even “the community voted against this decision”. That is to misunderstand the nature of consultation under a model of representative democracy. The results of consultation are a source of information into a decision-making process, not a substitute for information. A local authority is obliged to consider information received during a consultation process with an open mind, but consultation need not be determinative.

10. Nor does consultation involve one party presenting or telling the other what it intends to do. The party doing the consultation may bring a proposal or working plan to the process (as is proposed in the attached Statement of Proposal). This does not mean that the proposal is “the final word”, indeed HBRC must demonstrate a willingness to hear views and consider change (even if these means starting anew).

Statement of Proposal – Key Points

11. The Statement of Proposal examines two options – that HBRC invests up to $80 million in the Ruataniwha Water Storage Scheme (RWSS) or that HBRC not invest. No other options have been considered, as:

11.1. If the RWSS is to proceed it will rely upon up to $80 million from HBRC as a key investor (so no intermediate figures are seen as feasible for the project); and

11.2. The specific resolution from 31 October 2012 as to undertake the Special Consultative Procedure on this proposed investment, and did not envisage that HBRC would consider investments in any other projects as part of this proposal.

12. The Statement of Proposal includes the key elements of the RWSS:

12.1. The environmental rationale for the construction of long-term sustainable water storage infrastructure on the Ruataniwha Plains;

12.2. The economic objectives of this investment – particularly improving agricultural production and productivity, while enhancing environmental management of the Tukituki catchment;

12.3. The proposed governance and management of HBRC’s investment through the Ruataniwha Water Limited Partnership (RWLP);

12.4. The risks of investing in RWLP, and the conditions precedent which address these risks.

13. In addition the Statement of Proposal refers interested parties to additional reports, already publicly available, that provide further detailed information on the RWSS.

Preferred Option

14. The preferred option set out in the Statement of Proposal is based upon the recommendations of Council’s investment company – HBRIC Ltd – who have been tasked by Council with preparing a business case for Council on the RWSS. The business case was delivered to HBRC on 26 March 2014 and referred to Deloitte for an independent peer review.

15. Upon receiving the Business and Investment Case for the Ruataniwha Water Storage Scheme Council noted that the HBRIC Ltd business case states that:

15.1. investment by Council, via HBRIC Ltd, in the RWSS to a quantum of up to $80 million is essential, together with a large level of Crown Irrigation Investment Ltd (CII) debt funding, in order for the project to set a water price that is financially viable for both water users and investors.

15.2. the RWSS will make an important contribution to achieving Council’s strategic environmental objectives for the Tukituki river and catchment as set out in Land Water Us 2050 and Proposed Plan Change 6, by:

15.2.1. ensuring a sustained minimum flow on the Makaroro River below the dam of 1.23 cumecs, which will sustain more than 20% of the 7-Day Mean Annual Flow of the Tukituki at Red Bridge;

15.2.2. providing for up to four flushing flows per year of up to one million cubic metres each to assist Council to manage and mitigate periphyton build-up in the lower Tukituki in particular, thus enhancing the ecological and recreational status of the river;

15.2.3. providing water to sustain minimum flows set for the Waipawa River at the RDS gauging site and Tukituki River at Tapairau Rd (also ensuring that current consent holders linked to those flows are not adversely affected by the scheme);

15.2.4. enabling existing water users supplied by run-of-river and connected groundwater takes (which negatively affect the low flows of Waipawa and Tukituki rivers) to be supplied with stored water as an alternative; and

15.2.5. there are six substantial environmental management, mitigation and offset projects included in the RWSS project ranging from the catchment headwater to the lower estuary.

15.3. the RWSS Consents will require, at their own cost, Ruataniwha Water Limited Partnership (RWLP) and Ruataniwha Water GP Ltd (RWGP) as the entities, respectively, owning and operating the Scheme, to undertake comprehensive water quality monitoring of 15 variables monthly and two variables annually at 16 sites throughout the catchment, commencing 24 months before any water is supplied, and that the data from these measurements will be integrated with Council’s own environmental monitoring programmes.

15.4. the proposed Production Land Use Conditions of the RWSS consents:

15.4.1. requires that production land water users being supplied by the RWSS must prepare Farm Environmental Monitoring Plans (FEMP) which must be regularly audited;

15.4.2. ensures the limits for nitrogen/nitrate management set in Proposed Plan Change 6 (which are based on site-specific toxicity guidelines developed by NIWA) and phosphorus emissions (no net increase in emissions at a sub-catchment level) are met;

15.4.3. requires E coli levels in surface and groundwater, and a range of other environmental monitoring and management requirements that are, individually and collectively, at least as stringent and generally more stringent than are applied to irrigated land use elsewhere in New Zealand;

15.4.4. requires that stock are excluded from all lakes, wetlands, permanently or intermittently flowing rivers on any property supplied by the RWSS.

15.5. the RWSS will make substantial contributions to Council’s strategic regional economic development objectives, and that:

15.5.1. the RWSS is projected to generate $250 million per year of ongoing value-added (i.e. not gross) economic benefits in total, and the one-off benefit of the construction project is estimated as being $410 million over the construction period;

15.5.2. the value added on-farm is projected to be $73 million/year; the value added to farm support and services industries is projected to be $63 million/year; and the value added to processing and processing support industries is projected to be $120 million/year;

15.5.3. the regional economic multiplier of the value added on-farm is 3.4, and thus the added-value economic benefits of the RWSS are distributed through the wider regional economy, consistent with the findings of ex-post studies of the economic benefits of the Opuha water storage dam; and

15.5.4. the ongoing economic impact of value added from the RWSS is estimated to have a Net Present Value of $3.7 billion, discounted at 5% over 70 years.

15.6. the RWSS is projected to have substantial employment and social benefits, and is projected:

15.6.1. to generate more than 2,500 full-time equivalent jobs, widely distributed over the agriculture, manufacturing, wholesale and retail trade, transport and communications, rural contracting, utilities and construction, and other services employment sectors; and

15.6.2. to generate ongoing household income of $60 million/year in farming and farm-support industries (likely to be significantly concentrated in Central Hawkes Bay) and $67 million/year in processing and processing support industries (likely to be more widely distributed throughout the region).

15.7. in relation to engagement and agreements with mana whenua and kaitiaki:

15.7.1. HBRIC Ltd has entered into an agreement with Te Taiwhenua o Tamatea (Tamatea) that provides for ongoing close engagement between RWLP, the intended owner of the RWSS, and Tamatea through the life of the RWSS and that both the Concession Deed between Council and RWLP and the Project Agreement between HBRIC Ltd and RWLP require acknowledgement of and adherence to this agreement;

15.7.2. Council and HBRIC Ltd have entered into two Joint Memoranda with Ngati Kahangunu Iwi Incorporated (NKII) and Te Taiwhenau o Heretaunga with Te Taiwhenua o Tamatea (ToHTT) a party to the first and confirming their agreement to the second, which, inter alia, provides for engagement of all the Memoranda parties in a Kaitiaki Runganga (expanding the membership of the Mana Whenua Working Group of the Tamatea Agreement) and for additional monitoring activities in the lower Tukituki, both of which have been added to the proposed RWSS Consent Conditions presented to the Board of Inquiry (BoI); and

15.7.3. the Joint Memoranda noted in 9.2 above are also acknowledged in the Concession Deed and the Project Agreement documents in the same manner as the Tamatea Agreement, requiring adherence to what is agreed in the Memoranda.

15.8. in regard to Council’s Proposed Plan Change 6:

15.8.1. the BoI must decide on Plan Change 6 first, then decide whether the Resource Consents sought for the RWSS are in conformance with its decisions on Plan Change 6;

15.8.2. the key decision to be made by the BoI that could affect the RWSS is likely to be between what Council has proposed as nitrate limits for the Tukituki which are based on nitrate toxicity to fish, OR much lower nitrate limits as sought by a range of submitters (15% to 20% of Council’s proposal); and

15.8.3. if the BoI decides to impose lower nitrate limits than proposed by Council there would be significant consequences for the RWSS in regard to whether, and how, it could manage nitrate emissions within a lower set of limits.

15.9. in regard to the consents sought for the RWSS via the BoI process:

15.9.1. no expert engineering evidence was submitted that contested the design, location, foundation conditions, engineering geology and seismology in regard to the dam and related infrastructure or the proposed operation of that infrastructure;

15.9.2. no expert engineering evidence was submitted that contested the design, location or proposed operation of the distribution system and its infrastructure such as canals, pipelines, outfalls etc.

15.10. in relation to the Environmental Protection Authority (EPA) decision-making process:

15.10.1. a Draft Decision on Proposed Plan Change 6 and the RWSS Consents is expected on 15 April 2014; (Note: these have been received) and

15.10.2. a Final Decision must be made by 28 May 2014.

15.11. that HBRIC Ltd and co-investors in the intended RWLP, are finalising a Design and Construction contract that is, to the maximum extent practicable, on a fixed cost fixed time basis for the Dam and Distribution infrastructure, which:

15.11.1. will be subject to expert panel oversight in the final design stage prior to application for building consent from Waikato Regional Council;

15.11.2. is able to deliver an increased volume of 104 million cubic metres of water per year (a significant increase from the 91 million cubic metres projected at Feasibility stage) without affecting the residual or flushing or other environmental flows required in the RWSS Consents;

15.11.3. provides water to all users on piped distribution at a pressure of 3.5 bars at the farm gate (a significant improvement on nil pressure and supply up to 2km from farm gate projected at Feasibility stage); and

15.11.4. enables a contracted water price of 23 c/cubic metre plus a variable charge for pressurization of up to 3 c/cubic metre (in the mid range of 22-25 c/cubic metre projected at Feasibility stage).

15.12. That:

15.12.1. HBRIC Ltd has received Expressions of Interest (EoI) for 47 million cubic metres of water/year to be purchased, and that HBRIC Ltd is now engaged on a process of seeking confirmed contracts for purchase under a standard Water User Agreement that requires compliance with all Land Use Conditions of the RWSS Consents submitted to the BoI process; and

15.12.2. achieving a target level of 40 milllion cubic metres/year of contracted water, or such other volume as is agreed by the parties investing in RWLP, is a Condition Precedent for Financial Close

15.13. That:

15.13.1. the RWSS is intended to be owned and operated as a modified Build, Own, Operate and Transfer project over a 70-year Concession Period, governed by a Concession Deed between Council and RWLP, the intended Owner of the RWSS Assets and Infrastructure during the Concession Period, and also by a Project Agreement between HBRIC Ltd and RWLP;

15.13.2. Ruataniwha Water GP Ltd, the General Partner of the RWLP, will be the Operator of the RWSS Assets and Infrastructure during the Concession Period;

15.13.3. investors in RWLP will hold shares in RWGP in the same proportions as their ownership in RWLP;

15.13.4. local eligible investors, including farmers who have contracted for water from the RWSS, will have their investment aggregated by another Limited Partnership (Tukituki Investment LP) which will invest the aggregated amount in RWLP. It is also expected that, to the extent that there is local iwi investment in the RWSS, a similar separate LP (or LPs) will make any local iwi investment in RWLP;

15.13.5. at the end of the Concession Period ownership of the RWSS Assets and Infrastructure will be handed back to Council/HBRIC Ltd or successor, except that, to the proportional extent of ownership of the RWLP by local investors LP, and any local iwi LP, such owners will have continuing proportional ownership of the Assets and Infrastructure, or of the entity succeeding RWLP that owns the Assets and Infrastructure.

15.14. In regard to the capital structure and capital raising process:

15.14.1. equity ownership in RWLP is expected to be subscribed for, at Financial Close, by a combination of HBRIC Ltd, a number of institutional investors, Tukituki Investment Limited Partner (TILP), and possibly by an Iwi LP;

15.14.2. the capital raising process will continue until Financial Close and will not be confirmed until all Conditions Precedent are satisfied and/or waived by agreement of the investor parties;

15.14.3. it is expected that HBRIC Ltd will subscribe for up to $80 million of equity in RWLP, with a current likely investment amount of $72 million, of which $63 million will be in cash and $9 million of already expended development expenditure and intellectual property which will be recognized by the allocation of equity interests;

15.14.4. it is expected that CII will provide debt financing to the RWLP subject to their investment terms being met, the conditions precedent being met and shareholder approval;

15.14.5. the different equity investors will have different terms reflecting, inter alia, their different target rates of return, priority for cash-flows generated from water sales, and whether they have interests terminating at the end of the Concession Period or have ongoing equity interest beyond the Concession Period;

15.14.6. the terms negotiated and agreed between the investor parties, at Financial Close, have been (or will have been) negotiated and agreed between the parties on an arms-length, commercial basis.

15.15. In relation to the terms under which HBRIC Ltd proposes to invest in RWLP:

15.15.1. HBRIC Ltd will accept a low priority for cash-flows during the uptake period before the exit of CII, in order to ensure an acceptable water price and to encourage uptake;

15.15.2. during the uptake period, HBRIC Ltd will make a lower rate of return (base-case modelled at 5% post-tax internal rate of return (IRR), from both cash yield and incremental increase in value of interests) than institutional investors over that period;

15.15.3. after the uptake period, for the remainder of the Concession Period, HBRIC Ltd will make the same return as all other investors (base-case modelled as 10% post-tax IRR) – a good rate of return for a “brownfields” infrastructure investment);

15.15.4. the lower rate of return and slower rate to profitability that HBRIC Ltd proposes to accept on its investment in RWSS/RWLP are consistent with the provisions of its Statement of Intent (SoI) with Council, when the investment is intended to “Help achieve Council’s regional strategic economic development objectives by investing in assets that will benefit the Hawke’s Bay Region as a whole.” (Pages 3 and 4 2013/2014 SoI)

15.15.5. As noted in 7 above, the RWSS is projected to make substantial contributions to Council’s regional strategic economic development objectives.

15.16. That the Directors of HBRIC Ltd have given detailed consideration to extensive negotiations with counterparties in regard to investment quantum, risk and return, and have exercised their judgment, in particular, on the following key points:

15.16.1. the quantum proposed of up to $80 million to be invested by HBRIC Ltd (depending in part on the amount of capital raised via TILP) is appropriate and necessary (together with the large amount of CII funding) to achieve a water price that is viable for users, that will encourage uptake, and will also make the project viable for commercial investors;

15.16.2. the 5% post-tax IRR on HBRIC Ltd’s investment that is modelled in the base case over the uptake period is necessary (together with the low interest rate on CII debt) both to set an appropriate water price and to enable early cash-flows to be prioritised to institutional investors (delaying these cash-flows would be more expensive for the project and for HBRIC Ltd overall);

15.16.3. the HBRIC Ltd rate of return during the uptake period is less than a commercial rate of return, but this is acceptable under HBRIC Ltd’s Statement of Intent in order to achieve regional economic development;

15.16.4. the HBRIC Ltd rate of return during the uptake period being less than a commercial rate of return also reflects environmental contributions noted in 4 above;

15.16.5. the 10% post-tax IRR return that is modelled in the base case for HBRIC Ltd (and all investors) after the uptake period and CII has exited the project is an appropriate and good commercial rate of return on the investment;

15.16.6. HBRIC Ltd’s low rate of return during uptake and commercial rate of return post the uptake period mean that HBRIC Ltd should be a long-term investor in the project, at least until significantly more than halfway through the first consent period;

15.16.7. there is some level of risk that, under a slow uptake scenario, a significant fraction of the CII debt will have to be repaid as a lump sum under a “hard exit” by CII, after about year 15 of the project. In such a situation, which is considered unlikely, HBRIC Ltd could be required to fund in the order of $12-24 million of that payback. HBRIC Ltd has a number of options to fund such a payment, if that eventuates, or to avoid making its contribution by allowing other local investors to take up or expand their equity interests in RWLP; and

15.16.8. the level of governance representation that HBRIC Ltd will have in the Ruataniwha Water General Partner Ltd (which will operate the project) is considered appropriate for the proportion of equity interests held by HBRIC Ltd.

15.17. Discussions have been held between HBRIC Ltd and Council management regarding the level of dividends HBRIC Ltd can forecast in comparison with reduced cash flows to Council from interest and other cash yields from its current investments, and:

15.17.1. Council's cash investment into HBRIC Ltd is projected to be in two tranches – circa $22 million in 2014/15 and circa $41 million in 2015/16;

15.17.2. Discussions to date indicate that in the years after 2015/16 there is unlikely to be significantly less cash-flow from HBRIC Ltd to Council's operating budget than would be received by Council if the current investments were maintained;

15.17.3. In 2014/15 there may be a shortfall of circa $400,000 between forecast dividend payments and the reduction in Council's cash-flow from its existing investments as a consequence of withdrawing $22 million from cash-generating investments, and a shortfall of circa $2,750,000 in 2015/16 as a consequence of withdrawing a further $41 million from cash-generating investments;

15.17.4. HBRIC Ltd holds the view that these cash-flow differences for Council in 2014/15 and 2015/16 cannot be prudently met by HBRIC Ltd requiring a higher level of dividend from Napier Port than is currently projected in Napier Port's Statement of Corporate Intent, particularly in 2015/16; and

15.17.5. Council and HBRIC Ltd management will continue to discuss how to mitigate the impact on Council's cash flows of changing $63 million of Council's investment portfolio from cash-generating investments to growth investments from which cash-flow can not be expected for a period of time.

15.17.6. HBRIC Ltd’s cash distributions from the RWSS become more reliable after the three to five year period post-construction, and increase significantly after the uptake period which will enable HBRIC Ltd to meet shareholder dividend requirements.

15.18. The following Conditions Precedent that must be either satisfied or waived by agreement before Financial Close:

15.18.1. Granting of resource consent for RWSS, which in turn is recommended as being workable by all investors;

15.18.2. Subscription of a minimum of 40 million cubic metres (m³) of water contracts (Water User Agreements);

15.18.3. Securing the private and public funding required to build Scheme infrastructure;

15.18.4. A bankable construction contract with construction risk allocation adequately addressed through a fixed-time, fixed-cost arrangement.

15.19. In the counter-factual situation where the RWSS does not proceed either because of BoI decisions or because Council declines to make the investment proposed in the RWSS, that:

15.19.1. Plan Change 6, in whatever form is decided by the BoI, will become effective, without the RWSS, including increased minimum flows, water allocation limits, nutrient management limits etc.

15.19.2. the environmental minimum and flushing flows set out in 4.1 to 4.3 will not be provided;

15.19.3. existing water users linked to minimum flows on Waipawa at the RDS gauging site and Tukituki at Tapairau Rd will not be shielded from the increased minimum flows set out in Proposed Plan Change 6;

15.19.4. existing water users supplied by run-of-river and connected groundwater takes will suffer economic impacts from the increased minimum flows in the catchment set out in Proposed Plan Change 6;

15.19.5. the contributions to strategic regional economic development, amounting to more than $4 billion, set out in 7.1 to 7.4 will not be generated; and

15.19.6. the employment (>2,500 jobs) and household income benefits (>$125 million/year) set out in 8.1 and 8.2 will not be generated.

Deloitte Business Case Peer Review

16. Deloitte was appointed by HBRC in January 2014 to undertake an independent peer review of the Business and Investment Case presented by HBRIC Ltd to HBRC. The independent peer review of the business case is an important part of the overall assessment process for HBRC and has relevance for the assessment of options in the Statement of Proposal.

17. The final written report by Deloitte is to be made public by the end of April. An interim report was presented to the Corporate and Strategic Committee meeting on 16 April and the findings contained in that presentation are summarised in the Statement of Proposal.

18. In particular, Deloitte was tasked with addressing:

18.1. Whether HBRC can have comfort that its exposure to calls on capital can be limited to its current funding envelope of $60-80million;

18.2. The circumstances under which HBRC may be required to contribute additional capital and where possible the quantity of those potential calls and the risks that such calls could eventuate;

18.3. The extent to which HBRC can have comfort that the projected returns on its investment have been accurately calculated and are based on reasonable assumptions;

18.4. How investment returns could vary under different scenarios;

18.5. Any other matters that Deloitte consider ought to be brought to HBRC’s attention in connection with its assessment of the business case.

19. Deloitte has identified the key interlocking components of the business case from a financial perspective as being:

19.1. The up-front capital investment in the physical infrastructure of the RWSS;

19.2. The business model which drives the operating cash flows necessary to provide the investor returns;

19.3. The ownership model and related investment structure that allocates capital, risk and return to the different investor;

19.4. Fundamentally however the critical factor is demand – how long it takes to get to full uptake and the profile of this uptake.

20. In assessing these factors as the core building blocks of the project, Deloitte has satisfied itself as to the reasonableness of the assumptions supporting these building blocks and the way the financial model has been constructed and returns calculated within the HBRIC Ltd business case. They have then used the model to:

20.1. Assess the overall return on capital from the project under different uptake scenarios;

20.2. Demonstrate how the internal rate of returns have been calculated;

20.3. Use sensitivity analysis to identify which assumptions matter and which are immaterial in terms of the financial case;

20.4. Identify the implications for HBRC capital requirements and returns under different scenarios.

21. The key risk to the project as identified by Deloitte is how long the project takes to get to full uptake of water. This is important for two reasons:

21.1. If the level and pace of uptake are lower and slower respectively than the base case then there is a risk that HBRC will be called upon for additional capital (together with all other investors)

21.2. There is a risk that HBRC’s rate of return may be lower than that estimated in the business case e.g. the business case assumes a rate of return of 6.9% at full uptake, but this could range between 6.4 and 7.4% depending on the level and speed of uptake.

22. Deloitte is very confident that the risks from any overruns in capital costs during construction are very well covered by the fixed price, fixed time contract and will not impact upon HBRC.

Conclusion

23. The Special Consultative Procedure is one element of the six-part investigations that are being undertaken before HBRC will confirm to HBRIC Ltd any decision to invest up to $80 million of new equity in HBRIC Ltd for the RWSS.

24. HBRC has advised HBRIC Ltd that any final decision is subject to HBRC:

24.1. having received and being satisfied with its own legal advice on the RWWS documents and all related legal matters;

24.2. having received and being satisfied with its advice from the RWSS Business Case Assessment process and advisers;

24.3. having received and being satisfied with its advice from the Alternative Investments Analysis process and advisers;

24.4. having received the Draft and Final Decisions of EPA Board of Inquiry processes on Plan Change 6 and the RWSS Resource Consents and being satisfied that the RWSS can proceed as proposed under the decisions made;

24.5. having undertaken a Special Consultative Procedure of public consultation regarding whether or not to invest in the RWSS via HBRIC Ltd, and having made its determination to make such an investment; and

24.6. receiving confirmation from HBRIC Ltd that all Conditions Precedent to Financial Close of the investment by all investing parties in the RWLP have been either satisfied or waived by agreement of the parties;

25. A decision on adopting the attached Statement of Proposal, and the Summary of the Statement of Proposal, does not commit Council to a final decision on its investment but fulfils an undertaking given by Council in October 2012 to consult the public on the investment.

Decision Making Process

26. The recommendations in this paper cover the proposal to carry out a special consultative process for the establishment of the proposed Investment Company. This special consultative process is in accordance with the provisions of the Local Government Act 2002.

Recommendations

1. That Council adopts the Summary of Statement of Proposal and the Statement of Proposal covering the proposed Hawke’s Bay Regional Council investment of up to $80 million in the Ruataniwha Water Storage Scheme and approves these as the basis for public consultation to be undertaken under the Special Consultative Procedure provisions of the Local Government Act 2002.

Liz Lambert

Chief Executive

Attachment/s

1 View	RWSS Investment Statement of Proposal
2 View	RWSS Summary of Statement of Proposal

RWSS Investment Statement of Proposal

Attachment 1

STATEMENT OF PROPOSAL –

INVESTING IN THE RUATANIWHA WATER STORAGE SCHEME

1. INTRODUCTION

Hawke’s Bay Regional Investment Company Limited (HBRIC Ltd) has developed a business plan to invest in the Ruataniwha Water Storage Scheme (RWSS). It has recommended to its owner, Hawke’s Bay Regional Council (HBRC) that HBRC invest up to $80 million in accordance with its intention to do so as announced in its Long Term Plan 2012-2022 (LTP 2012-2022).

The RWSS involves:

· Constructing a reservoir and dam in the Tukituki Catchment in Central Hawke’s Bay to collect and store water.

· Developing and implementing a system to distribute water to farm gates and other supply points to irrigate land in Central Hawkes Bay.

· Operating the distribution system to deliver stored water to farmers and other users on a commercial basis (i.e. customers pay a price for distribution that makes the system financially viable).

· Hydro-electric power generation

Investment in RWSS should generate both short and long term social, cultural and economic benefits for the Hawke’s Bay region and improve long term returns from HBRC’s investment portfolio.

LTP 2012-2022 included a proposal that HBRC invest up to $80 million in RWSS, (including its initial investment in feasibility studies) in partnership with other public and private sector investors and subject to full evaluation of the proposal.

Following public consultation on the LTP 2012-2022 and the establishment of HBRIC Ltd, HBRC transferred its initial investment in feasibility and other studies on the RWSS to HBRIC Ltd, assigning it the task of taking the proposed investment through technical and financial evaluation; applying for consents required under the RMA and managing the consenting process; commissioning contractors to build the reservoir and dam and distribution system and formulating a robust plan for funding the investment in conjunction with iwi, interested investors, farmers, and others. HBRIC Ltd has completed these tasks and, supported by a Business Case, sought HBRC’s approval for its investment proposition and funding sufficient to enable HBRIC Ltd to acquire an approximately one-third share in the entity owning the RWSS.

Public meetings to discuss the issue of potentially investing in the RWSS were held as part of the LTP 2012‑2022 consultation process. Following this, and in the consideration of comments and submissions received from the public, HBRC resolved to undertake a process of special consultation under the Local Government Act with the intention of enabling HBRC to hear submissions and make appropriate decisions in 2014.

The Special Consultative Procedure (SCP) involves releasing a proposal for public comment. HBRC has now begun the procedure by adopting this Statement of Proposal as a statement of its intent. HBRC wishes to invest in RWSS and this Statement of Proposal provides an evaluation of the proposed course of action.

2. SUMMARY OF PROPOSAL

The RWSS is a long-term sustainable water storage infrastructure investment intended to help unlock high value agricultural production in the Ruataniwha Plains by collecting, storing and distributing water in an efficient and effective way to irrigate around 25,000ha of agricultural land on the Ruataniwha Plains.

Invested funds will be used to construct a dam and reservoir on the upper Makaroro River and an associated distribution system to store high winter water flows for irrigation use during summer when the pressure on water available in the Tukituki catchment is highest, as well as generating hydro electricity.

As a consequence RWSS will help mitigate environmental degradation of the Tukituki catchment, while providing the opportunity to generate significant regional economic and social benefits by providing a stable and reliable source of water through irrigation to enable more productive and higher value farming on the Ruataniwha Plains.

HBRC, through HBRIC Ltd, will establish and invest in the Ruataniwha Water Limited Partnership (RWLP) to own and operate the RWSS. HBRC (through HBRIC Ltd) currently proposes to invest up to $71.5 million (as required in HBRIC Ltd’s Business Case) to own approximately one-third share of RWLP. HBRIC Ltd’s business case states that the eventual investment required from HBRC could be up to $80 million. Other shareholders who will own the remaining two-thirds of RWLP are expected to include institutional and interested infrastructure investors.

In addition Crown Irrigation Investments Limited, a Crown-entity company under the Crown Entities Act 2004, established by the Government to make bridging investments in development of irrigation schemes (and other regional water infrastructure), is expected to provide debt funding to RWLP on favourable terms, and any other financing required will be borrowed on normal commercial terms.

The project cost is expected to be in the vicinity of $275 million and construction of the dam, reservoir and distribution system will take around three years from the date of receiving all regulatory consents. Assuming approvals are received by mid 2014, it is expected operations will commence in the third quarter of 2017.

2.1 Objectives

HBRC’s objectives for this investment are to:

· Help achieve its strategic development objectives for the Hawke’s Bay Region as a whole through establishing and managing a key infrastructure resource to improve agricultural production and productivity while enhancing environmental management of the Tukituki catchment;

· Encourage and enable increased private sector investment in the region’s export oriented agricultural sector;

· Generate economic, social and cultural benefits in the region;

· Help improve management and control of environmental risks over the long term, especially those relating to water quantity and water quality;

· Generate satisfactory tax paid returns to HBRC from the financial performance of the invested assets;

· Quantify and manage particular investment risks

2.2 Nature and Scope of Activities

The nature and scope of RWLP’s activities will be to:

· Own and manage the constructed dam and reservoir together with the land on which they are built, the distribution pipelines, pumps and stations carrying water to farm gates and any other supply points and all other assets and liabilities necessary to operate the RWSS effectively and profitably;

· Raise funds for working capital and development as required by selling bonds, mortgages, preference shares and other debt instruments;

· Assist any subsidiary and associated companies to increase shareholder value and regional prosperity through growth and investment;

· Apply best practice governance procedures within the RWLP and any subsidiaries and other investments it may have now or in the future; and,

· Help achieve HBRC’s regional strategic economic development objectives by investing in assets that will benefit the Hawke’s Bay Region as a whole.

3. DETAILS OF THE PROPOSAL

3.1 rwss

RWSS will consist of an 83 metre high concrete dam on the Makaroro River in the Tukituki Catchment with a reservoir having a maximum storage capacity of approximately 96 million m³, which would be used to irrigate up to 25,000 hectares delivered through a mixed and open canal and piped distribution system to farmers and other users in Central Hawkes Bay. The dam and reservoir system will also include an approximately 6.5kw hydro-electric power station.

As a result of a comprehensive recruitment and selection process OHL/Hawkins joint venture was appointed the preferred design and construction consortium for the RWSS. OHL is a listed Spanish construction company with international operations and Hawkins Infrastructure Limited is New Zealand’s largest privately owned construction company.

It is intended RWSS will eventually deliver approximately 104 million cubic metres of water each year to five zones located across SH2 between Waipukurau in the south and Te Aute in the north.

The following Figure 1 shows the proposed location of the dam and reservoir for RWSS and production land use areas (Zones A to M) that are expected to be able to utilise irrigation water supplied by the Scheme.

RWSS Investment Statement of Proposal

Attachment 1

It is important to note that without HBRC’s investment, RWSS would not proceed. RWSS is a regional infrastructure investment, initiated by HBRC and developed through HBRIC Ltd in partnership with iwi, the private sector and central government agencies and crown entities. The partnership and structure rests upon the participation of HBRC through HBRIC Ltd.

Although the investment sought by HBRIC Ltd at $71.5 million is less than the $80 million provided for under LTP 2012-2022, it is possible HBRC will be asked to eventually increase its funding to the level proposed in LTP 2012-2022 (i.e. $80 million) to ensure completion of RWSS.

3.3 GOVERNANCE

The RWLP Board will consist of five or six directors, two of whom will be independent of the owners, and one of those appointed will be Chairperson. Two directors will be appointed by HBRIC Ltd and others appointed by the other shareholders in proportion to their respective equity investments in RWSS.

3.4 Management

The RWLP will have its own operating management, independent of any owner. The Chief Executive of RWLP will be recruited and appointed by the Board of RWLP.

3.5 ANTICIPATED Operating Performance

RWLP will derive revenues principally from fees paid by users for the distribution of water to them. Its resource consent caps the total amount of contracted water at 104 million cubic metres per annum. In addition RWLP will enter into a concession deed with HBRC to ensure reliability of supply is preserved. The majority of revenue will be controlled by these requirements. RWLP will be contractually committed to supply water volumes and quality to irrigators, and it should also earn some revenue from the sale of electricity generated by a proposed hydro electric power station.

3.6 risks

Like all investments, RWLP has risks. In this case the risks include:

· Design and construction risks – capital costs may be more than expected at the time at which the investment commitment is made and the investor then needs to make up the shortfall which impacts on returns and potentially the viability of the project. Additional risks at this stage include delays and performance.

The Deloitte Peer Review of the Business case considers that this risk has been effectively mitigated through the detailed design and construction contract which contractually passes the risks to the contractor.

· Establishment risks, such as:

o uptake by farmers

o response by investors

Revenue is driven by uptake and the Deloitte Peer Review has identified the level and pace of uptake as the greatest risk to Council’s expected rate of return on its investment. The business case assumes a rate of return of 6.9% at full uptake, but this could range between 6.4% and 7.4% depending upon the level and pace of water uptake.

· Operational risks in course of day-to-day business such as:

o environmental – weather

o regulatory

· External risks, such as:

o unforeseen changes in the international and New Zealand economies, especially those affecting prices for agricultural produce

o changes in the agricultural sector

o changes in government policies

o changes in New Zealand’s business environment

HBRIC Ltd has addressed these risks through a combination of conditions precedent and HBRIC Ltd financial risk minimisation plans and environmental mitigation programme and an Irrigation Management Plan (binding on farmers).

HBRC commissioned Deloitte to undertake a peer review of the HBRIC Ltd Business Case and associated business and financing risks. HBRC will need to be satisfied with the advice received in the Business Case and from the independent peer review from Deloitte before it makes any decision on capital investment in the RWSS.

4. ANALYSIS OF OPTIONS

The options for achieving the objectives outlined above were evaluated in reaching the conclusion that investing in RWSS is the most efficient and effective way of achieving them. These are:

· Invest in the RWSS as proposed; or,

· Status Quo: no investment in RWSS.

The advantages and disadvantages on investing in RWSS as compared with not investing are summarised below.

4.1 ADVANTAGES

1. Economic Benefits

Improving economic benefits through development of agriculture is particularly important for Hawke’s Bay region because its temperate climate and high sunshine hours give it a key competitive advantage in diversity, quality and availability of primary production and in processing food for export. Currently the region contributes 3.4% of New Zealand’s national GDP, however its contribution to the nation’s primary production and processing is 7%, more than double its overall contribution, reflecting the benefit of its competitive edge. This means the region gains relatively more from investment in primary production than do other regions in New Zealand.

Economic benefits from implementing the RWSS will occur as both one-off gains from the initial development and construction phases, and subsequently, annually, from increased production and productivity from farming operations. Independent assessment of these benefits was undertaken by Butcher Partners Limited, an economics research consultancy, and by Nimmo-Bell consultants as part of their investigation into alternative investments.

a. One-off construction and development benefits

Butcher Partners estimated there will be a one-off increase in the region’s GDP of around $410 million as a result of the investments made by farmers in on-farm systems developed to use the water delivered by RWSS to their farm-gates and the construction of the RWSS dam, reservoir and distribution system. These investments are estimated to result in an addition of around $270 million to household incomes and around 4,700 job years of work during construction.

b. Ongoing annual benefits from farming and other operations

The annual economic impacts of the increased agricultural production arising from the RWSS, once at full development, are estimated at additional regional GDP of $136 million, fulltime equivalent employment of 1,310 and additional net household income of $59 million p.a. The tentatively estimated impacts of additional processing activity in the region flowing from the increased agricultural production are additional GDP of $120 million, FTE employment of 1,210 and additional net household income of $67 million p.a.

The estimated annual benefits are summarised in the following Table 5.

Table 5: Estimated Economic Benefits at Full Development of RWSS

Sources: Butcher Partners, Hawke’s Bay Regional Council, March 2014

These benefits would not arise if RWSS was not implemented as a result of HBRC failing to invest in it.

2. Environmental Benefits

Currently the Tukituki catchment suffers from a nutrient imbalance when river flows are lowest in the summer months. This results in excessive phosphorus in the water generating slime and algae growth. This effect is compounded by further reduced water flows and warming of the river as a result of draw off of water under current water allocations to farmers, which exceed Regional Plan limits. These low flows reduce habitat for trout and various taonga species and the slime and algae growth impacts on the recreational value of the river.

HBRC has addressed these issues by proposing Tukituki Plan Change 6 which will set minimum flow levels and set appropriate nutrient levels which will improve environmental outcomes as a result. However imposition of these requirements on their own will reduce agriculture production and productivity and consequently impact adversely on the region’s economy.

The Board of Inquiry has released its draft decision on Plan Change 6 and has granted resource consents for the RWSS. The draft decision has confirmed the increased minimum surface water flows for the catchment and has included nutrient limits for both phosphorous and nitrogen. Together this package is designed to ensure that the Tukituki Catchment Proposal meets the intent of the National Policy Statement for Freshwater Management. Parties are still examining the detail of the draft decision and ultimately its workability.

RWSS will help the regional economy offset the predicted effects of climate change. This is especially important for Hawke’s Bay in the light of NIWA and other forecasts suggesting a drying trend with more droughts in the future.

3. Social Benefits

RWSS is expected to have the following social benefits:

a. Short term boosts to the local, district and regional economy during the construction phase, leading into long term gains in employment relating to farming and farming services in particular;

b. opportunities to change farming practices and increase resilience to droughts;

c. reduced unemployment and increased opportunities for youth, revive vitality amongst local communities, and reduce dependency on welfare benefits;

d. improved career opportunities for college and high school students;

e. water allocation rationalised;

f. new amenity values for reservoir lake;

g. potential for enhanced agricultural and horticultural training in support of land use changes;

h. improved opportunities for technology development and transfer on farms as a result of new farming systems and environmental management practices;

i. improved education, health, sports and recreation and other services;

j. increased demand for farm services based in Waipukurau and Waipawa as well as enhanced business activity in retail and other areas;

k. improvements in quality of life (housing, sports and community activity and services) as a result of flow-on from increased employment, population and improved household incomes; and,

l. strengthening community groups and organisations as a result of increased population and household incomes.

4. Cultural Benefits

HBRC has a key ongoing partnership with Maori in the Hawke’s Bay Region, who make up nearly 25% (Census 2013) of the total Hawke’s Bay population. This relationship together with the requirements of the RMA has resulted in HBRC and HBRIC Ltd including tangata whenua representatives in all stages of the RWSS project development. This has resulted in a number of benefits from RWSS as summarised below:

a. Execution of memoranda by Ngati Kahungunu Iwi Authority, Te Taiwhenua o Tamatea, HBRC, HBRC and a number of Heretaunga hapu to cover cultural value monitoring, preservation of native fish passage, base line and effects monitoring for the Lower Tukituki river as well as new implementation policy in Plan Change 6 which includes cultural values monitoring as part of the wider HBRC Tukituki catchment monitoring;

b. Agreement between Te Taiwhenua o Tamatea and HBRIC Ltd formalising their relationship and providing, amongst other matters:

i. First right of refusal to Te Taiwhenua o Tamatea to contract for work arising from the biodiversity mitigation package proposed to be implemented with RWSS;

ii. Active pursuit of local and tangata whenua employment opportunities as part of the RWSS Design and Construction programme; and,

iii. $50,000 annually will be set aside for education scholarships for tangata whenua with links to the Ruataniwha district.

c. Establishment of a “Kaitiaki Runanga”, whose role is to review, report and recommend in relation to cultural and environmental monitoring during construction and the initial stages of the project, as part of the RWSS resource conditions.

d. He Toa Takitini (the Tamatea and Heretaunga Treaty Settlement Group) has expressed interest in a potential equity stake in the scheme as part of its upcoming settlement with the Crown (see Figure 2 above).

5. Security of supply for users

RWSS provides users with security of supply of water, irrespective of weather, climate and environment conditions, that is not available without the RWSS.

6. Improved Returns on HBRC’s investment portfolio

Over the long term the financial return from investment in RWSS should be shown in both increased value of the investment and an ongoing stream of dividends.

HBRC’s Long Term Plan 2012-2022 assumes that RWSS will eventually generate dividends alone at the rate of at least 6% on its investment. The Business and Investment Case preared by HBRIC ltd assumed a rate of return of 6.9% at full uptake. This could range between 6.4% and 7.4% depending on the level and speed of uptake.

7. Impact on rates

HBRC has structured its proposed investment in RWSS of $71.5 million to be accomplished without requiring any support from its rates income and therefore no rates increases should occur in the future as a result of the investment in RWSS.

This will be achieved by distributions from HBRIC Ltd derived from other investments meeting the cost of funds of the RWSS investment.

Any requirement for investment over the currently proposed figure of $71.5 million, up to $80 million, as proposed in lTP2012-2022, will only be made if HBRIC Ltd is able to meet the cost of funds of the additional investment on the same terms as already applies to the currently proposed investment of $71.5 million.

8. Monitoring and Evaluation

This structure should enhance monitoring and evaluation tools to assess the performance of the RWLP against its objectives and HBRC’s strategic economic objectives while achieving a satisfactory return on the portfolio as a whole. It will ensure:

a. Investments can still be managed, monitored and evaluated on their own individual merits.

b. Any cross-subsidies from one investment to another can be clearly identified and evaluated.

c. Effects of investment decisions made to assist HBRC’s strategic economic development objectives can be identified, monitored and evaluated.

4.2 DISADVANTAGES

1. Environmental Impacts

A very comprehensive mitigation programme has been developed to offset a range of adverse environmental effects that could result from implementation of RWSS unless otherwise addressed. These adverse effects relate to terrestrial ecological effects on the land flooded for the proposed reservoir and effects on the river environment associated with the establishment and structure of the scheme and its ongoing operation.

Although the programme of six projects and implementation of an overall Irrigation Environment Management Plan (“IEMP”), which is binding on farmers and their operations, are expected to fully offset the projected impacts of RWSS and enable the implementation of Plan Change 6 with minimal adverse impact on the regional economy, it is possible the administration or effect of this programme may not deliver the full benefits of mitigation all the time.

Nevertheless the comprehensive nature of the mitigation programme and the IEMP should ensure very little, if any, adverse environmental impact occurs as a result of RWSS.

2. Social Costs

RWSS could also result in social costs including:

a. some loss in amenity values in the valley flooded to accommodate the reservoir;

b. increased health and safety risks from intensified production from dairy and horticulture

c. increased traffic risks from movement of heavy and other vehicles on local roads;

d. increased cost of maintaining local roads;

e. possible values conflicts between existing members of the communities and new entrants attracted by jobs and opportunities; and

f. short term demand for rental housing during the construction phase may put pressure on rents and availability of housing for other renters.

3. Restricted Access to HBRC’s Investment during its establishment phase

HBRC will be unable to realise its investment in RWSS, should it wish to do so, until it is fully established and operating profitably. In effect HBRC’s investment will be “locked away” for at least 10 years.

5. CONDITIONS PRECEDENT

The following conditions precedent need to be satisfied before the HBRC provides any funding to HBRIC Ltd:

1. The EPA granting satisfactory resource consent conditions for RWSS infrastructure and operations, which in turn are recommended as being workable by all investors;

2. Agreements to purchase a minimum of 40 million cubic metres of water contracts (Water User Agreements);

3. Securing the funding required to build and operate the RWSS infrastructure;

4. Obtaining a bankable construction contract which adequately addresses construction risk allocation through a fixed-time, fixed-cost arrangement.

In the event these conditions are not met to the satisfaction of HBRC, no investment will be made in RWSS in this form at this time.

6. preferred option

HBRC believes investment as proposed in the RWSS will realise significant long term social cultural, environmental and economic benefits for the region, while also generating financial returns to HBRC which will help sustain its services to the community in the future.

HBRC therefore recommends investment in RWSS of up to $80 million proceed as outlined in this Statement of Proposal for the following reasons outlined in “7” below.

7. REASONS

Investment in RWSS is a key initiative in helping to deliver HBRC’s strategic development objectives which focus on active management of sustainable natural resources and strengthening the regional economy. In particular:

· RWSS is part of HBRC’s integrated approach to managing the Tukituki catchment with the consequential environmental benefits of minimising the adverse economic impacts of Plan Change 6 as a result of implementing minimum flow restrictions and setting limits on nutrient discharge into the river;

· RWSS is expected to help realise the significant agriculture potential of the Tukituki catchment by providing a reliable supply of water for irrigation

· This should result in significant additions to the regional economy in terms of additional jobs, and add to regional household income and GDP once the scheme becomes fully operational;

· It is a development partnership of private and public sector parties, including HBRC (through HBRIC Ltd), iwi, other Hawke’s Bay investors and central government investing in key infrastructure to support the region and the nation over the long-term; and,

· It will achieve commercial viability and generate value for its shareholders over time.

8. Other information

HBRC has chosen to follow the special consultative procedure set out in the Local Government Act for the investment in RWSS.

HBRC is releasing this proposal on 1 May 2014. Written submissions will be received until 3 June 2014.

HBRC will meet to consider submissions on the proposal on 16 June 2014.

A bibliography of relevant reports that have been prepared during the development of the RWSS project is set out below.

9. BIBLIOGRAPHY

The following papers can be found on this webpage - http://www.hbrc.govt.nz/Hawkes-Bay/regional_development/hbric/Pages/rws.aspx

· HBRIC Ltd - Ruataniwha Water Storage Scheme: Business Case to Hawke’s Bay Regional Council March 2014

· Nimmo-Bell Alternative Investments Report March 2014

· Butchers Partners Ltd Feb 14 - An updated summary of values tables, (incl. present values, regional economic impacts & cost ratios)

· NIWA - re-assessment of return flow from the proposed Ruataniwha Plains Irrigation Scheme – March 2014

· Castalia Strategic Advisors – Ruataniwha Demand Forecast Update – November 2013

· Castalia Strategic Advisors – Ruataniwha Plains Water Storage Project Demand Study – September 2012

The following papers can be found on this webpage - http://www.hbrc.govt.nz/Hawkes-Bay/regional_development/hbric/Pages/RWS-Reports.aspx

· Ruataniwha Water Storage Report: Feasibility Report to Council - September 2012

· Macfarlane Rural Business, Sept 2012: Ruataniwha Water Storage Project Review of Farm Profitability

· BNZ Advisory, September 2012: Financial Feasibility Ruataniwha Plains Water Storage

The following report can be found on this webpage as part of the Tukituki Catchment Proposal evidence - http://www.hbrc.govt.nz/Hawkes-Bay/regional_development/hbric/Pages/rwss-epafinal-assessment-reports.aspx

· Butcher Partners Ltd, May 2013: Ruataniwha Water Storage Scheme - Regional Economic Impacts and Financial Cost Benefit Analysis of the Proposed Ruataniwha Water Storage Scheme

RWSS Summary of Statement of Proposal

Attachment 2

Investing in the Ruataniwha Water Storage Scheme –

Summary of Statement of Proposal

Hawke’s Bay Regional Council (HBRC) wants public feedback on its possible investment of up to $80 million in the Ruataniwha Water Storage Scheme (RWSS).

HBRC initially raised its intent to invest in the RWSS in its Long Term Plan 2012-22 (LTP). HBRC subsequently resolved to transfer responsibility for taking the proposed investment through technical, financial, resource management, construction and funding evaluations to Council’s investment arm – Hawkes’ Bay Regional Investment Company Ltd. (HBRIC Ltd). At the time of this transfer HBRC also resolved to undertake a process of public consultation on its investment decision, should HBRIC Ltd recommend investment.

Having received HBRIC Ltd’s recommendation in March 2014 to invest in the RWSS the Council is now presenting its preferred option – which is to invest up to $80 million in the RWSS - to the public for submissions.

Ruataniwha Water Storage Scheme Proposal

HBRC is proposing to invest in the Ruataniwha Water Limited Partnership (RWLP) to own and operate the RWSS via the release of up to $80 million of new equity to HBRIC Ltd.

The nature and scope of RWLP’s activities will be to:

· Raise funds for working capital and development as required by selling bonds, mortgages, preference shares and other debt instruments;

· Assist any subsidiary and associated companies to increase shareholder value and regional prosperity through growth and investment;

· Apply best practice governance procedures within the RWLP and any subsidiaries and other investments it may have now or in the future; and,

· Help achieve the Council’s regional strategic economic development objectives by investing in assets that will benefit the Hawke’s Bay Region as a whole.

Proposed Ownership and Operating Structure

RWSS will be implemented as a Build Own Operate Transfer (BOOT) arrangement, which means the dam, reservoir and distribution system will be designed, built, operated and owned by a limited partnership of public and private sector interests – the Ruataniwha Water Limited Partnership. At the end of a 70 year concession period these assets will be handed to HBRC (or HBRIC Ltd) noting that iwi and Hawke’s Bay public equity will continue intact.

HBRC’s investment, via HBRIC Ltd., will see it own approximately one-third of RWLP. RWLP will consist of five or six directors of whom two will be appointed by HBRIC Ltd. RWLP will have its own operating management, independent of any owner. It will derive its income primarily from fees paid by users for the distribution of water to them. Its resource consent caps the total amount of contracted water at 104 million cubic meters per annum. In addition RWLP will enter into a concession deed with HBRC to ensure reliability of supply is preserved. RWLP will be contractually committed to supply water volumes and quality to irrigators, and it should also earn some revenue from the sale of electricity generated by a proposed hydro electric power station.

Risks and Risk Mitigation

Like all investments Ruataniwha Water Limited Partnership has risks. In this case these include:

· Design and construction risks

· Establishment risks such as – uptake by famers and response by investors

· Operations risks such as environmental (weather) and regulatory factors

· External risks such as unforeseen changes in the national or international economy, changes in the agricultural sector, changes in government policies, changes in New Zealand’s business environment

HBRC has addressed these risks through a combination of conditions precedent and risk minimisation plans.

An independent peer review of the HBRIC Ltd business case by Deloitte has assessed the core financial building blocks of the project and has concluded that the underlying assumptions used in the business case are reasonable and that the key risk is how long the project takes to get to full uptake of water by farmers. This is important for two reasons:

· If the level and pace of uptake are lower and slower respectively than the base case then there is a risk that HBRC will be called upon for additional capital (together with all other investors)

· There is a risk that HBRC’s rate of return may be lower than that estimated in the business case e.g. the business case assumes a rate of return of 6.9% at full uptake, but this could range between 6.4 - 7.4% depending on the level and speed of uptake.

Deloitte is confident that these risks have been locked down to a material extent through the contracting process.

Advantages of Investing

Economic benefits – will occur as both one-off gains from the development and construction phases, and annually, from increased production and productivity from farming operations due to increased water security. The annual economic impacts of the increased agricultural production resulting from the RWSS, once at full development, are estimated at additional regional GDP of $136 million, fulltime equivalent employment of 1,310 and additional net household income of $59 million. These results incorporate multiplier impacts. The tentatively estimated impacts of additional processing activity in the region flowing from the increased agricultural production are additional GDP of $120 million, FTE employment of 1,210 and additional net household Income of $67 million.

Environmental benefits – the Board of Inquiry has issued resource consents for the RWSS that include conditions requiring flushing flows of the river to reduce periphyton growth and a range of environmental mitigation packages. Together with the increased minimum flows in Plan Change 6 the RWSS will provide for increased resilience to climate change by the Central Hawke’s Bay community.

Social benefits – the RWSS is expected to provide:

· short term boost to the local, district and regional economy during the construction phase, leading in to longterm employment gains relating to farming and farming services in particular.

· opportunities to change farming practices and increase resilience to drought

· reduced unemployment and increased opportunities for youth including career opportunities for college and high school students

· new amenity values from the reservoir lake

· improved opportunities for technology development and transfer on farms as a result of new farming systems and environmental management practices

· increase demand for farm services based in Waipukurau and Waipawa

· improvements in quality of life as a result of improved household incomes and strengthening of community groups and organisations

Cultural benefits – engagement with tangata whenua in all stages of the RWSS project development has led to the establishment of a kaitiaki runanga whose role is to review, report and recommend in relation to cultural and environmental monitoring during construction and the initial stages of the RWSS project

Security of supply – for water users irrespective of weather, climate and environment conditions

Improved returns on HBRC’s investment portfolio – over the long term the financial return to HBRC from investment in RWSS should be shown in both increased value of the investment and an ongoing dividend stream.

Impact on rates – HBRC has structured its proposed investment in RWSS to be achieved without requiring any support from its rates income. Therefore no rates increase should occur in the future as a result of Council’s investment in the RWSS.

Monitoring and Evaluation – the proposed governance structure will enhance monitoring and evaluation tools to assess the performances of the RWLP against its objectives and HBRC’s strategic economic objectives.

Disadvantages of Investing

Environmental impacts – a comprehensive programme of six mitigation projects and implementation of an overall Irrigation Environment Management Plan (IEMP) which is binding on famers and their operations are expected to fully offset the projected impacts of the RWSS. The draft Board of Inquiry decision on Plan Change 6 in relation to nutrient management further minimises the risk of any adverse environmental impacts occurring as a result of the RWSS.

Social costs – the RWSS could result in social costs including:

· some loss in amenity values in the valley flooded to accommodate the reservoir

· increased health and safety risk from intensified production

· increased traffic movements of heavy vehicles on local roads and increased costs of road maintenance

· possible values conflicts between existing community members and newcomers

· short term demand for rental housing may put pressure on housing stock

Access to HBRC Investment funds – will effectively be “locked away” for at least 10 years until the RWSS is fully established and operating profitably.

Conditions Precedent

It is important to note that the following conditions need to be satisfied BEFORE the HBRC provides any capital funding to HBRIC Ltd for the Ruataniwha Water Storage Scheme:

· Satisfactory resource consent conditions that are recommended as workable by investors

· Signed contracts by water users to purchase a minimum of 40 million cubic metres of water

· Securing the funding to build and operate the RWSS infrastructure

· Obtaining a bankable construction contract with a fixed time, fixed cost arrangement

Full Statement of Proposal

This document is a summary of the Statement of Proposal which was adopted by Hawke’s Bay Regional Council on 30 April 2014.

The full Statement of Proposal is available for inspection at the following locations:

On line at: www.hbrc.govt.nz

Regional Council Offices at:

· 159 Dalton Street, Napier

· 26 Ruataniwha Street, Waipawa

· Freyberg Street, Wairoa

Public libraries at:

HBRIC Ltd RWSS Reforecast Paper

Attachment 1

Details of the major budget increases identified in the budget reforecast to 30 June 2014 are set out as follows:

1. HBRC Internal Staff Time ($391k)

An analysis of the time and costs associated with Hawke’s Bay Regional Council project team personnel has been undertaken following a reassessment of tasks required to progress the RWSS through to financial close in June 2014. The original project team personnel budget for phase 2 of the RWSS was compiled in November 2012 totalling $901,490 and at that point 6 staff were seconded for varying percentages of their chargeable time to HBRIC Ltd for the 12 month period from 1 January 2013 to 31 December 2013.

The analysis of project team personnel has identified an additional budget provision of approximately $391k to progress the RWSS through to financial close in June 2014. This cost can be attributed to two key areas which are:

· The full time secondment of the Council Chief Executive to the role of HBRIC Ltd Chief Executive from 1 July 2013. The initial budget had a provision of 60% of time up to 31 December 2013, with the impact of the fulltime secondment for a period up to 30 June 2014 requiring additional budget.

· The extension of the forecast date of financial close from December 2013 to June 2014 and the amount of project team personnel time required in managing the project through the additional work streams identified below and the final phase of work.

2. Other Consultants ($932k)

The significant issue impacting on increased Consultancy Costs is in the D&C phase of work and primarily relate to the extended evaluation and negotiation phase in selecting the preferred consortia. Submissions received in August 2013 were considerably larger and more detailed than expected, requiring substantially more scrutiny and consideration prior to selecting the preferred consortia. This along with an initial capital cost in excess of expectations also required an extended optimisation and refinement negotiation phase from November 2013 to April 2014. Due to the complexity of the submissions a number of additional specialists were appointed to evaluate discrete elements of the submissions received.

It is important to note that the additional cost in relation to the extended evaluation and negotiation phase in selecting the preferred consortia resulted in a reduced capital cost from the original bid of approximately 15%.

Property negotiations in the primary distribution system have also been impacted on by the optimisation phase where modified alignments have been considered as part of realising scheme savings, requiring more extensive landowner negotiations and consideration of additional local consents.

Additional resource has also been provided for the water uptake and sales advisory function which reflects the costs associated with the delay in financial close to 30 June 2014 and the increased focus in obtaining signed water user agreements.

3. EPA Process ($1,052k)

There has been a significant increase in the costs for the EPA Process which has seen the budget provision increase from the original budget by just over $1m. The key areas associated with this cost increase are outlined below:

· Increased HBRC internal staff time to project manage the EPA Process.

· Increased project team consultants’ costs which are mainly attributed to the fact that the hearing extended over six and a half weeks where the original budget established in November 2012 allowed for a four week hearing.

· Increased cost in the provision of evidence from expert witnesses which included 46 statements of evidence as part of Board of Inquiry preparation and the preparation of 42 statements of rebuttal evidence. This by far exceeded the initial evidence requirements identified when the budget was set in November 2012.

· An increase in the costs from the EPA in relation to the Board of Inquiry Process. These increased costs relate to the increased extension of the hearing to six and a half weeks as well as the work arising from twice as many submissions being received by the EPA as expected (EPA assumed 200 and received 380). The nature and complexity of the submissions were also more substantive and voluminous than expected. Another increase in cost relates to the EPA delaying the decision for the final consent by one month.

It is important to note that a majority of the increased costs associated with the EPA Process have been Plan Change related with Council only picking up a small portion of the total EPA Process costs ($516k) in relation to the total overall cost of the EPA Process ($4,160k).

Funding of Additional Costs

When the majority of these additional costs were committed to it was anticipated that these costs would be shared equally amongst HBRIC Ltd and the institutional investors. With the decision by one institutional investor to withdraw as a potential investor it has meant that HBRIC Ltd will be required to fund an additional portion of these costs that it had not previously provided for.

In order for the RWSS to proceed to financial close HBRIC Ltd’s share of total costs are anticipated to be $7.3m. This will require Council to provide additional advances of $2m over and above the $5.3m already advanced for this phase of work.

It is important to note that all development costs incurred by HBRIC Ltd prior to financial close will form part of its total investment quantum in the RWSS.

Recommendations

That the HBRIC Ltd Board recommends to Council that it:

1. Approves the RWSS budget reforecast and makes further advances to HBRIC Ltd of $2m which will cover the period to 30 June 2014.

2. Notes that a substantial portion of the increased costs in the RWSS budget reforecast are in relation to Council’s Plan Change and that as part of the EPA Process that the applicant is obliged to pay.

3. Notes that the additional budget provision will form part of Council’s total investment quantum in the RWSS should the project proceed.

4. Notes that HBRIC Ltd have received the relevant RWSS resource consents.

5. Notes that there is good momentum in water uptake discussions post the draft Board of Inquiry decision.

6. Notes that the confirmed water uptake of 40M cubic metres is essential to making progress in confirming the capital raising, and thus HBRIC Ltd should continue with the water uptake process during the period between draft and final decisions of the Board of Inquiry.

Andy Pearce

HBRIC Ltd

Chairman

Andrew Newman

hbric ltd

chief executive

HBRIC Ltd Draft Statement of Intent 2014-15

Attachment 1

Draft Statement of Intent

For the Year Ending 30 June 2015

Directory

Address:

159 Dalton Street, Napier South, Napier 4110

Registered Address:

159 Dalton Street, Napier South, Napier 4110

Board:

Dr Andy Pearce (Chair)

Mr Jim Scotland

Mr Sam Robinson

Mr David Faulkner

Ms Danelle Dinsdale

Contact:

Telephone – (64) 6 835 9202

Fax – (64) 6 835 3601

Email – Andrew@hbrc.govt.nz

Table of Contents

1. Introduction..

2. Mission Statement

3. Objectives.

4. Nature and Scope of Activities to be Undertaken..

5. Corporate Governance.

6. Ratio of Shareholders’ Funds to Total Assets.

7. Performance Targets and Measures.

8. HBRIC Ltd to be Periodically Valued.

9. Reporting and Information to be Provided by HBRIC Ltd.

10. Acquisition/Divestment Policy.

11. Activities for Which Compensation is Sought From Any Local Authority.

12. Commercial Value of Shareholder’s Investment

13. Accounting Policies.

1. Introduction

This Statement of Intent (SoI) is prepared in accordance with Section 64(1) of the Local Government Act 2002.

The SoI specifies for Hawke’s Bay Regional Investment Company Limited (HBRIC Ltd) and its subsidiaries the objectives, the nature and scope of the activities to be undertaken, and the performance targets and other measures by which the performance of the group may be judged in relation to its objectives, amongst other requirements.

The process of negotiation and determination of an acceptable SoI is a public and legally-required expression of the accountability relationship between the company and its shareholder, the Hawke’s Bay Regional Council (Council).

The SoI is reviewed annually with Council and covers a three year period.

HBRIC Ltd is a council-controlled trading organisation (CCTO) for the purposes of the Local Government Act 2002.

2. Mission Statement

HBRIC Ltd’s mission is:

To optimise the financial and strategic returns to Council from its allocated investment portfolio to assist Council achieve its vision of “a region with a vibrant community, a prosperous economy, a clean and healthy environment, now and for future generations”.

3. Objectives

The objectives of HBRIC Ltd are to:

§ Actively manage its allocated investment portfolio and any new investments it makes, including its shareholding in the Port of Napier Limited (Napier Port), to ensure:

– growth of shareholder value

– increased financial and strategic returns

– investments are secure and sustainable over the long term.

§ Assist Council, in certain major investments such as the Ruataniwha Water Storage scheme, to achieve key environmental objectives of the Council’s strategy.

§ Identify, in conjunction with relevant parties, present and future regional infrastructural needs, and to support the establishment and maintenance of resilient infrastructure in the Hawke’s Bay region.

§ Seek, on behalf of Council, and if material report at the appropriate time on, investment opportunities that have the potential to enhance the economic well-being of the region, and provide an adequate return.

§ Build the financial strength of HBRIC Ltd through appropriately directed commercial investment, in a manner consistent with the approach set out in the Acquisition/Divestment policy (section 10) and through efficient financial practices.

§ Encourage and facilitate subsidiary and associated companies to increase shareholder value and regional prosperity through growth, investment and dividend payments.

§ Ensure that best practice governance procedures are applied to the key regional infrastructure and financial investments that are under HBRIC Ltd’s ownership.

§ Monitor the performance of each subsidiary and associated company against their stated economic, environmental and social performance objectives and against relevant benchmarks, ensure that they have proper governance procedures in place, and promote sustainable business practices.

§ Perform financial, custodial and other functions required by Council which include:

– Grouping together Council’s ownership of its subsidiary companies

– Separation of the subsidiary companies from the ordinary operations of Council

– Smoothing the cash flows to Council from its subsidiary companies

– Enabling diversification of the Region’s income streams for the benefit of ratepayers.

§ Advise Council on strategic issues relating to its investments including, but not limited to, ownership structures, capital structures and rates of return.

In order to balance these objectives, HBRIC Ltd may in appropriate circumstances accept a lower return or slower route to profitability.

4. Nature and Scope of Activities to be Undertaken

The company was established in February 2012 to act as the holding company for Council’s commercial investments.

HBRIC Ltd will:

§ Own and manage the investment assets and liabilities transferred to it by Council from time to time.

§ Make new investments and dispose of current investments in pursuit of its objectives in accordance with its Acquisition/Divestment Policy.

§ Ethically invest in, and manage, a range of financial and physical assets including, but not limited to, property and infrastructure in the Hawke’s Bay Region and elsewhere in New Zealand, shares and equity investments in public listed and unlisted companies; equity in, and loans to, joint ventures; bonds, term deposits, mortgages and other fixed interest securities; and other financial instruments, in accordance with Council’s Investment Policy detailed in its Long Term Plan (LTP) 2012-2022.

§ Raise funds for investment by issuing bonds, mortgages, preference shares and other debt instruments or by reducing its holdings in equity investments in its subsidiary or associated companies, but at no time by selling any of Council’s 100% shareholding in HBRIC Ltd itself.

§ Comply with the LGA provisions requiring a special consultative process, and with Council policies, in regard to any disposal or part-disposal of shares in any Strategic Asset, for example by way of part sales of shares in Napier Port

§ Assist its subsidiary and associated companies to increase shareholder value and regional prosperity through growth and investment.

§ Apply best practice governance procedures within HBRIC Ltd and its subsidiaries and other investments.

§ Enhance Council’s capability to manage an active investment policy.

§ Provide flexibility of operation and access to financial tools not otherwise available to Council directly.

§ Help achieve Council’s regional strategic economic development objectives by investing in assets that will benefit the Hawke’s Bay Region as a whole. Where Council directs, HBRIC Ltd may accept a lower return or slower route to profitability to balance achieving this objective with that of otherwise acceptable returns.

§ Only borrow for new investment purposes (by way of bonds, mortgages, preference shares or other debt instruments) with the specific approval of Council.

§ Advise Council of any material capital expenditure projects by HBRIC Ltd or via its subsidiaries.

§ Only invest in, or dispose of, investments and use all income derived from these activities for Regional Council purposes and functions as defined in statute, that is, they must generate financial and economic and, where appropriate, environmental, social and cultural benefits for the Hawke’s Bay Region, consistent with Council’s Investment Policy.

Port of Napier Limited (Napier Port)

Napier Port is the leading international port in central New Zealand. Its East Coast location close to New Zealand’s main international shipping lane together with excellent road, rail and coastal transport links enables the most efficient pathway to market for an increasing range of exports in an expanded central New Zealand catchment.

The Council beneficially owns 100% of the shares in Napier Port through HBRIC Ltd. Council’s strategic objective is for HBRIC Ltd to continue to beneficially hold a majority of the shares of Napier Port as a key means of assisting economic development of the region. The investment is expected (via dividends) to be a significant source of non-rate revenue for Council and has long term prospects of growth and development. In further developing its investment strategy, HBRIC Ltd will evaluate the risks and benefits of continuing to own 100% of Napier Port.

HBRIC Ltd and Council will be bound by the provisions of the Port Companies Act 1988 in respect of the shareholding in Napier Port.

Ruataniwha Water Storage Scheme (RWSS)

The RWSS is a key means for the Council to achieve its strategic environmental objectives for the Tukituki catchment including restoration of diminished low-flows, protecting aquatic ecosystems and limiting or managing periphyton growth, at the same time as enabling economic development in Hawke's Bay. HBRIC Ltd is committed to designing a project and seeking consents that enable the achievement of these combined objectives, in a manner consistent with Council’s proposed Plan Change 6 for the Tukituki catchment.

HBRIC Ltd has undertaken a detailed feasibility study of the RWSS and run in parallel a number of work streams including the application for resource consents with the Environmental Protection Authority, capital raising, design and construction procurement, and securing water contracts with farmers.

Towards the end of the 2013/14 financial year HBRIC Ltd will develop and present a comprehensive business case and recommendation to Council which will allow it to make an informed decision on its proposed investment in the RWSS. The business case will provide analysis on the key processes and work streams that have been undertaken throughout the feasibility phase of the scheme as well as outlining the most important risks in context of HBRIC Ltd’s investment.

If Council approves the investment in the RWSS, financial and contractual close are likely to occur towards the end of the 2013/14 financial year or the beginning of the 2014/15 financial year.

Ngaruroro Water Storage Scheme

Council has for some time been investigating a water storage scheme in the Ngaruroro catchment. HBRIC Ltd is committed to entering into discussions with Council to determine which entity is best suited to undertake feasibility investigations for the scheme should Council choose to proceed.

5. Corporate Governance

This section gives readers an overview of the company’s main corporate governance policies, practices and processes adopted or followed by the HBRIC Ltd Board.

Role of the Board of Directors

The Board of Directors is responsible to Council for the direction and control of HBRIC Ltd’s activities. The Board is to guide and monitor the business and affairs of HBRIC Ltd in accordance with its mission and objectives as set out in this Statement of Intent.

The Chief Executive has been delegated responsibility for the day to day management of the company, assisted by staff as required. HBRIC Ltd may make use of external advisers from time to time.

All directors are required to comply with a formal Code of Conduct, which is based on the New Zealand Institute of Directors’ Principles of Best Practice.

Following a biennial Board and Director evaluation of skills and competencies required for the Board of HBRIC Ltd, the Chairman will report to Council on the results of each evaluation.

Responsibility to Shareholder

Statement of Intent

In accordance with the Local Government Act 2002, each year by 1 March HBRIC Ltd will submit a draft Statement of Intent for the ensuing year to Council for its consideration. The SoI sets out HBRIC Ltd’s overall objectives, intentions and financial and performance targets. Having considered any comments on the SoI by Council, the final operative Statement of Intent is then delivered to Council (as shareholder) for its approval on or before 30 June each year.

Board Composition and Fees

In December 2013 Council resolved to appoint two new Independent Directors to replace the three Councillor Directors and Managing Director on the HBRIC Ltd Transition Board for the period to 30 June 2014. It is intended that the Transition Board be replaced with an ongoing Board from 1 July 2014, with the Transition Board Directors being eligible for re-appointment.

When an ongoing board has been appointed, each Independent Director will hold their appointment for a period of three years, but retiring by rotation at the Annual General Meeting. All independent directors may be re-appointed for one further three year term or such longer term as Council may decide.

Appointments to the HBRIC Ltd board are made directly by Council.

Fees for the HBRIC Ltd Board are set triennially in accordance with Council policy. HBRIC Ltd will effect an appropriate directors’ and officers’ liability insurance cover at the expense of HBRIC Ltd.

The Board generally meets at monthly intervals, and more often when required.

Expense Reimbursement

HBRIC Ltd will reimburse Council for the ongoing cost of management, accounting and administrative services incurred by Council in providing these services to HBRIC Ltd. HBRIC Ltd will also reimburse Council for specialist advisory, technical and management services it provides to HBRIC Ltd for particular investments. Other services will be contracted between Council and HBRIC Ltd for other investment management and operation as required.

Board Committees

Ÿ Audit and Risk Management Committee

Ÿ Governance, Appointments and Remuneration Committee

Ÿ RWS Board Committee

The Board will determine the need, or otherwise, for continuation of the RWS Board Committee reflecting Council decisions on investment in the RWSS.

Subsidiary Companies

All subsidiary companies are required to submit an annual Statement of Intent to HBRIC Ltd, which will evaluate them and suggest changes as considered necessary, before finalisation by the company concerned. In the event of a new subsidiary company being established the first statement of Intent of the subsidiary company will be referred to the Council for comment. Subsequently, if any material changes are proposed by subsidiaries, HBRIC Ltd will consult with Council on such changes.

Representatives of the subsidiary board and management will meet with HBRIC Ltd at least twice each year, to discuss the company’s strategic direction and any significant issues that arise. The Board also receives such other reports as are necessary to perform its monitoring function. However, HBRIC Ltd does not involve itself in the operational management of the subsidiary companies.

Board appointments

All directors of subsidiary companies (and associated companies, if any) are selected through an open, professionally managed process, for their commercial expertise and aptitude in accordance with Council’s appointments policy, and approved by Council. The requirements of the Port Companies Act 1988 will be adhered to in appointing directors to Napier Port.

Financial results

Directors receive and review parent company financial and other reports monthly, and provide formal consolidated and parent company financial statements to the shareholder twice annually – for the half year to 31 December and for the year ended 30 June.

Joint Ventures

Joint ventures not established as company entities will adhere to the reporting requirements specified for subsidiary companies above.

6. Ratio of Shareholders’ Funds to Total Assets^{^[1]}

The forecast ratio of shareholders’ funds to total assets, and capital structure for the next three years is:

Table 1

Parent Company	Opening 13/14	14/15	15/16	16/17
Shareholder’s funds/total assets	>95%	>95%	>95%	>95%
Net debt ($000)	0	0	0	0
Shareholders’ funds ($000)	186,100	228,302	269,000	269,000

7. Performance Targets and Measures

Financial

The key performance targets of HBRIC Ltd are to achieve or better the financial results set out in the tables below.

Table 2

HBRIC Ltd Parent 2014-15 PERFORMANCE TARGETS
Performance Indicator	Target
Net debt to net debt plus Equity	<10%
Interest cover (EBIT/Interest Paid)	>3x
EBITDA/Total Assets	3%
Return on Shareholders’ Funds	3%
Notes: EBIT = Earnings Before Interest and Tax EBITDA = Earnings Before Interest, Tax, Depreciation and Amortisation

Table 3

Consolidated 2014-15 PERFORMANCE TARGETS
Performance Indicator	Target
Net debt to net debt plus Equity	<40%
Interest cover (EBIT/Interest Paid)	>3x
EBITDA/Total Assets	8%
Return on Shareholders’ Funds	5%
Notes: EBIT = Earnings Before Interest and Tax EBITDA = Earnings Before Interest, Tax, Depreciation and Amortisation

The forecasts provided above are provisional, and will be updated on the receipt of updated forecasts from the subsidiary companies.

Distributions to Shareholder

HBRIC Ltd will pay dividends to the shareholder after taking into account its profitability and future investment requirements. The dividends payable to the shareholder will be determined by the Board after consideration of the company’s funding requirements and the requirement to meet the solvency test under the provisions of the Companies Act 1993. Subject to these tests, it is intended that HBRIC Ltd will distribute no less than 100% of the Parent Company’s annual Net Profit after Tax (NPAT) to Council annually by way of dividend. The dividend, subject to an agreed Statement of Intent, for 2014/15 is projected to be $7.56m.

The dividends are forecast to be paid in two instalments in December and June of each financial year, and are also forecast to be fully imputed for tax purposes.

Where adjustments to HBRIC Ltd’s net profit are required by IFRS requirements, and result in non cash revenue or expenditure adjustments, then these amounts, where material, are to be excluded from net profit after tax (NPAT) for the purposes of calculation of HBRIC Ltd’s parent company’s dividend payments to Council.

In addition, HBRIC Ltd may make distributions of capital reserves and/or repurchase its shares from Council, as agreed between Council and HBRIC Ltd from time to time.

Other Performance Measures

In addition to the financial performance measures, the HBRIC Ltd Board will use the following measures to assess its performance over the 2014/15 financial year.

Governance

	Objective Performance target
1.	HBRIC Ltd maintains a strategic direction that is consistent with that of 100% shareholder Hawke’s Bay Regional Council (Council).	HBRIC Ltd develops and maintains appropriate communication lines with Council to ensure HBRIC Ltd remains aware of Council’s strategic priorities. HBRIC Ltd will submit a draft SoI for approval to Council by 1 March 2015.
2.	HBRIC Ltd keeps Council informed of all significant matters relating to HBRIC Ltd and its subsidiaries, within the constraints of commercial sensitivity.	HBRIC Ltd submits regular written reports to Council in the financial year. and presents seminars to Councillors when appropriate. Major matters of urgency are reported to Council at the earliest opportunity.
3.	Corporate governance procedures are appropriate, documented and reflect best practice.	The company’s policies will be developed and reviewed in accordance with a schedule approved by the Board, and the company will work with and assist Council to ensure that there is alignment between Council and company policies.
4.	Directors make an effective contribution to the HBRIC Ltd board, and their conduct is in accordance with generally accepted standards.	The Board will conduct a formal biennial performance evaluation for each HBRIC Ltd director. The next performance evaluation is due for completion by 31 December 2015. The Governance committee will review the training needs of individual HBRIC Ltd directors, and ensure training is provided where required.
5.	HBRIC Ltd’s process for the selection and appointment of directors to the boards of subsidiary and monitored companies is rigorous and impartial.	The process followed for each appointment to a subsidiary or monitored company board is transparent, fully documented and in line with Council’s approved policies and procedures.
6.	Subsidiary companies complete, on a timely basis, Statements of Intent that meet best practice standards.	HBRIC Ltd will engage with subsidiary companies prior to the 2015 SoI round regarding the structure and content of the group SoIs. Subsidiary companies submit draft Statements of Intent to HBRIC Ltd by 1 March 2015. HBRIC Ltd will review Statements of Intent and respond to the subsidiaries and make recommendations to Council, including on any material changes that are proposed, within six weeks of receipt.
7.	Subsidiary companies that are CCTOs comply with the Local Government Act’s requirements that their principal objectives be: · achieving the objectives of its shareholders as set out in the SoI; · being a good employer; · exhibiting a sense of social and environmental responsibility; and · conducting their affairs in accordance with sound business practice.	HBRIC Ltd will review the companies’ performance in the context of these statutorily required objectives.
8.	Investment Policy	The HBRIC Ltd Board will develop an investment policy to achieve the objectives contained in Section 3 of this SoI, subject to the requirement to comply with Council’s overarching investment policy as written in the LTP 2012-2022, and the constraints imposed by asset classifications and support for Council’s strategic objectives. HBRIC Ltd’s investment policy will be subject to Council approval before it is adopted as the policy of the company. This investment policy will be reviewed by HBRIC Ltd from time to time and in any case whenever Council’s own investment policy is revised, and in the course of Council’s preparation of its future Long Term Plans. All such changes will be subject to Council approval.
9.	Strategic Planning	HBRIC Ltd will by 31 December 2014 prepare a two year strategic plan for its business, together with annual operating and capital expenditure budgets, for approval by its Board. The detailed two year plan will be accompanied by an overview of the longer term investment environment (5 years) and strategy options for achieving its objectives taking into account the long term nature of many of its assets. The strategic plan will be tabled with Council and must be aligned with Council’s Long Term Plan (LTP) taking account of the assets owned and managed by HBRIC Ltd and its discretion to manage its own portfolio.

Objective Performance target

HBRIC Ltd maintains a strategic direction that is consistent with that of 100% shareholder Hawke’s Bay Regional Council (Council).

HBRIC Ltd develops and maintains appropriate communication lines with Council to ensure HBRIC Ltd remains aware of Council’s strategic priorities.

HBRIC Ltd will submit a draft SoI for approval to Council by 1 March 2015.

HBRIC Ltd keeps Council informed of all significant matters relating to HBRIC Ltd and its subsidiaries, within the constraints of commercial sensitivity.

HBRIC Ltd submits regular written reports to Council in the financial year. and presents seminars to Councillors when appropriate.

Major matters of urgency are reported to Council at the earliest opportunity.

Corporate governance procedures are appropriate, documented and reflect best practice.

The company’s policies will be developed and reviewed in accordance with a schedule approved by the Board, and the company will work with and assist Council to ensure that there is alignment between Council and company policies.

Directors make an effective contribution to the HBRIC Ltd board, and their conduct is in accordance with generally accepted standards.

The Board will conduct a formal biennial performance evaluation for each HBRIC Ltd director. The next performance evaluation is due for completion by 31 December 2015.

The Governance committee will review the training needs of individual HBRIC Ltd directors, and ensure training is provided where required.

HBRIC Ltd’s process for the selection and appointment of directors to the boards of subsidiary and monitored companies is rigorous and impartial.

The process followed for each appointment to a subsidiary or monitored company board is transparent, fully documented and in line with Council’s approved policies and procedures.

Subsidiary companies complete, on a timely basis, Statements of Intent that meet best practice standards.

HBRIC Ltd will engage with subsidiary companies prior to the 2015 SoI round regarding the structure and content of the group SoIs.

Subsidiary companies submit draft Statements of Intent to HBRIC Ltd by 1 March 2015.

HBRIC Ltd will review Statements of Intent and respond to the subsidiaries and make recommendations to Council, including on any material changes that are proposed, within six weeks of receipt.

Subsidiary companies that are CCTOs comply with the Local Government Act’s requirements that their principal objectives be:

· achieving the objectives of its shareholders as set out in the SoI;

· being a good employer;

· exhibiting a sense of social and environmental responsibility; and

· conducting their affairs in accordance with sound business practice.

HBRIC Ltd will review the companies’ performance in the context of these statutorily required objectives.

Investment Policy

The HBRIC Ltd Board will develop an investment policy to achieve the objectives contained in Section 3 of this SoI, subject to the requirement to comply with Council’s overarching investment policy as written in the LTP 2012-2022, and the constraints imposed by asset classifications and support for Council’s strategic objectives.

HBRIC Ltd’s investment policy will be subject to Council approval before it is adopted as the policy of the company. This investment policy will be reviewed by HBRIC Ltd from time to time and in any case whenever Council’s own investment policy is revised, and in the course of Council’s preparation of its future Long Term Plans. All such changes will be subject to Council approval.

Strategic Planning

HBRIC Ltd will by 31 December 2014 prepare a two year strategic plan for its business, together with annual operating and capital expenditure budgets, for approval by its Board. The detailed two year plan will be accompanied by an overview of the longer term investment environment (5 years) and strategy options for achieving its objectives taking into account the long term nature of many of its assets.

The strategic plan will be tabled with Council and must be aligned with Council’s Long Term Plan (LTP) taking account of the assets owned and managed by HBRIC Ltd and its discretion to manage its own portfolio.

Group strategic, financial and sustainability objectives

Objective Performance target

Subsidiary companies adopt strategies that are compatible with the strategic direction of HBRIC Ltd and Council.

HBRIC Ltd will engage with subsidiary companies prior to the 2015 SoI round regarding key shareholder strategies and, subsequently, review their SoI’s for compatibility with those strategies.

Subsidiary companies adopt strategies that contribute to regional growth.

HBRIC Ltd will encourage subsidiary companies to seek opportunities that are both commercially sound and are capable of enhancing regional growth, and actively engage them with regard to specific opportunities that may arise.

Parent company financial objectives

Objective Performance target

HBRIC Ltd financial and distribution performance meets the shareholder’s expectations.

HBRIC Ltd pays a dividend for the 2015 financial year that meets or exceeds budget, and achieves the other budgeted key performance measures set out in section 7.

HBRIC Ltd’s capital structure is appropriate for the nature of its business.

HBRIC Ltd will review the structure of its balance sheet and may request Council to consider (based on specific business case proposals) shareholder advances or equity injections to fund the progress of the Ruataniwha Water Storage project.

HBRIC Ltd’s investments provide an appropriate return in relation to their business risk, and against external benchmarks.

HBRIC Ltd will periodically review the performance of subsidiary companies and other investments against external benchmarks, and assess the value of the investment in the individual company in relation to its inherent business risk and community benefits.

8. HBRIC Ltd to be Periodically Valued

HBRIC Ltd will provide Council with an independent assessment of the market value of the HBRIC Ltd group. The first such valuation is to be undertaken as at 30 June 2015 and thereafter on 30 June at three yearly intervals.

HBRIC Ltd will monitor its own market value at 30 June in each financial year by undertaking an internal assessment of its ongoing capital value (including valuation of subsidiaries and associates). This will be used assist management of capital, debt and revenue and expenditure streams to achieve the returns set out in Section 7 of this Statement of Intent.

9. Reporting and Information to be Provided by HBRIC Ltd

Statutory information requirements

The company will provide an annual Statement of Intent in accordance with Section 64(1) of the Local Government Act 2002. The directors will include any other information they consider appropriate. Where appropriate, revised forecasts will be submitted to the shareholder.

HBRIC Ltd will submit an annual report to the shareholder. The annual report will include audited financial statements and such other details as are necessary to permit an informed assessment of the company's performance and financial position during the reporting period, and to comply with the requirements of the Companies Act and Financial Reporting Act.

The company will also prepare unaudited interim consolidated and parent company financial statements to 31 December, and a review of the period, that comply with NZ IAS 34 “Interim Financial Reporting” by 28 February in each financial year.

Other information to meet the needs of Council

The company will provide regular reports to Council on its activities and the results of its subsidiary companies. It will operate on a “no surprises” basis in respect of significant shareholder-related matters, to the fullest extent possible in the context of commercial sensitivity and confidentiality agreements.

10. Acquisition/Divestment Policy

HBRIC Ltd will comply with Council’s Investment Policy as set out in the Long Term Plan 2012-22 for acquisitions and divestments.

HBRIC Ltd will periodically review its investments to ensure that continued ownership represents the best option for HBRIC Ltd and Council, and will consult with Council prior to any divestment or major restructuring of a subsidiary company.

11. Activities for Which Compensation is Sought From Any Local Authority

Currently there are no activities for which compensation will be sought from any local authority.

12. Commercial Value of Shareholder’s Investment

HBRIC Ltd’s shareholder’s equity of $177.5 million upon acquisition of 100% of Napier Port’s shares on 25 June 2012 is considered to be a reasonable estimate of the commercial value of Council’s investment in HBRIC Ltd, based on independent valuations of Napier Port.

13. Accounting Policies

HBRIC Ltd will adopt accounting policies that are consistent with New Zealand International Financial Reporting Standards, generally accepted accounting practice and the policies adopted by the Hawke’s Bay Regional Council group.

Nine Months to 31 March 2014 Financials

Attachment 1

SECTION A

Summary of Financial Position to 31 March 2014

The actual result covering the Council’s general funded operations for the first nine months of 2013/14 is a surplus of $160,000. This compares to the pro-rata budget deficit after reforecasting of $833,000. The variation for the nine months is $993,000 favourable. The variations from pro-rata budgets are covered in this report.

Management Comments on Variances from Pro-Rata Budgets
Note Ref	Activity / Revenue	Variation from Pro-Rata $’000 (F) or (U)	Project	Management Comment (major variances)
1	Strategic Planning	$250 (F)	185	Investment Strategies $25,000 (F) relates to work in progress covering internal time charges and consultancy for the investment portfolio. It is expected to be on budget at the end of the financial year.
			191	Regional Coastal Plan $66,000 (F) relates to work yet to commence on scoping possible plan changes necessary to give effect to the NZ Coastal Policy Statement (Awaiting Minister's approval of coastal marine area provisions in the RCEP).
			192	Strategy & Planning $230,000 (F) this project has been reforecast to include considerable costs associated with the Tukituki Plan Change process and expert witnesses which will be received in the coming months.
			151	Hazardous Waste/Substance Management $33,000 (U) relates to a peak of chemical collection early in the year than anticipated.
			196	Statutory Advice $48,000 (U) is associated with preparation of submissions on the Proposed Hastings District Plan, the Change 10 to the Napier District Plan, preparing the Annual Report for the Regional Planning Committee and various other comments prepared for RMA reforms.

2	Regional Resources	$841 (F)	304	East Coast Drylands $53,000 (U) relates to the timing of partner income being received from MPI and Beef & Lamb. This will be received in coming months and the project will balance.
			339	Regional Land Research & Investigations $207,000 (F) due to significant spending to come later this year with model development for Mohaka and TANK.
			340	Land Monitoring $21,000 (F) due to significant spending to come later this year with model development for Mohaka and TANK.
			380	Sustainable Land Management $312,000 (F) due to Regional Land Care Grants (RLS), land users typically carry out the majority of work from November to May each year. The majority of the RLS funds are currently committed to 30 June 2015.
			310	Regional Groundwater Research $154,000 (F) due to model development for TANK and Mohaka has yet to show for this project. This expenditure is occurring now and is expected to be fully spent.
			312	Regional Surface Water Ecology Research $29,000 (F) due to peak water quality sampling runs are occurring now, significant costs associated with this project yet to come through. Expected to be fully spent.
			325	Ground Water Quality $61,000 (F) due to peak water quality sampling runs are occurring now, significant costs associated with this project yet to come through. Expected to be fully spent.
			330	Ground Water Quantity $76,000 (F) due to peak water quality sampling runs are occurring now, significant costs associated with this project yet to come through. Expected to be fully spent.
			331	Coastal Water Quality $91,000 (U) due to increased staff time for the policy investigations for TANK by Coastal Scientists.
			369	Gravel Management $55,000 (F) this project is fully funded by section 36 charges associated with gravel extraction. Gravel extraction volumes are lower than budgeted and accordingly expenditure has been curtailed to reduce the likelihood of a deficit in the project at year end. Expenses are yet to come in to offset the income charged.

3	Regulation	$411 (U)		Compliance programmes are processing on budget but are only invoiced out to the public at the end of the year. Once these have been invoiced the income will offset the expenses to give actual net funding required.

4	Biosecurity	$90 (F)	660	Regional Animal Pest Control $53,000 (F) relates to stage one of the Cape to City approved by Council in November 2013 will be completed and paid out between 1st March and 30 June 2014.

5	Transport	$72 (U)	786	Regional Road Safety $61,000 (U) due to timing of income from external providers.

6	Governance & Community Engagement	$149 (F)	874	Targeted Assistance $22,000 (F) due to contributions to Massey University, HB LASS and various Iwi projects have been progressing but have yet to be invoiced.
			895	Community Engagement & Communications $105,000 (F) This project has been reforecast to include $80,000 of public consultation on the RWS which is proposed to commence over the next few months.

7	Regional Income			Regional Income has just been reforecast therefore there are no significant variances from the nine month actual and the pro-rata reforecast . For more information on the reforecast please refer to the reforecast summary .

Heatsmart Progress Report

· The Heatsmart programme is delivering ahead of target to achieve National Environmental Standards.

· The reforecast volumes for 2013/14 reflect mainly an increase in demand for clean heat grants.

· Insulation loan requests have reduced following EECA cutting general income subsidies and the demand for clean heat loans is unchanged.

Volumes

	2013/14	2013/14	9 Months to 31 March 2014
Loan Type	Annual Plan Budget Volumes	Reforecast Volumes	Pro-Rata Reforecast Volumes	Actual Volumes	Actual over Reforecast Target 75%
Insulation Loans	735	380	285	336	88%
Clean Heat Loans	600	600	450	460	77%
Clean Heat Grants	660	1,440	1,080	1,016	71%
TOTAL	1,995	2,420	1,815	1,812

Expenditure (Excl Gst)

	2013/14	2013/14	9 Months to 31 March 2014
Loan Type	Annual Plan Budget $’000	Reforecast $’000	Pro-Rata Reforecast $’000	Actual $’000	Actual over Reforecast Target 75%
Insulation Loans	1,558	814	611	731	90%
Clean Heat Loans	1,771	2,007	1,505	1,514	75%
Clean Heat Grants	402	886	664	628	71%
TOTAL	3,731	3,707	2,780	2,874

Reforecasting Summary

Each year after nine months HBRC management are asked to examine their cost centres and projects and provide any reforecasting adjustments from the 2013/14 Annual Plan budgets. This is to give the best indication of what the financial result will be at year end.

There have been several major impacts on the 2013/14 Annual Plan budgets that have had to be addressed in the reforecast which will be discussed in this summary.

The table below shows the variances from the 2013/14 Annual Plan and the reforecast.

Regional Income ($239,000 unfavourable)

Regional income is estimated to be lower than the 2013/14 Annual Plan budget by $239,000. The main reasons for this are:

1 Interest rates on deposits are lower than anticipated. The interest rates on deposits are currently tracking at an average of 4.15%, the Annual Plan expected 4.4% (on average for the year). The main reason for this is that the official cash rate stayed at 2.5% for a longer period than anticipated by banks in their forecast when the Annual Plan was prepared.

2 The investment in the rail hub did not proceed, therefore the rate of return on this investment of 7.5% was not achieved. Instead this money needed to be invested in bank deposits at lower rates.

3 The requirement to invest some investment funds in short term deposits, at lower interest rates, as the timing for investment into the RWSS had not been finalised and some funding needed to be kept available in the short term.

4 Offsetting these losses is the income from the Wellington Leasehold properties which were proposed to be sold in the 2013/14 Annual Plan but have been retained due to the good returns achieved and the funding at this stage is no longer being required to fund other investments. Also dividends from HBRIC Ltd have increased by $61,000 due to these dividends being withheld last financial year as the funds were not available.

Tukituki Plan Change - EPA witness, legal and consultancy costs ($235,000 unfavourable)

The Tukituki plan change EPA costs for witnesses, legal and consultancy were significantly higher than originally forecast by$285,000. HBRIC Ltd has funded the majority of this excess as an additional cost to the feasibility study for the RWSS, however Council was left to fund $285,000 of this overrun in costs.

RWSS special consultative process ($30,000 unfavourable)

Council proposes to further inform people in the region about the RWSS and encourage their submissions, to assist Council’s decision on whether or not to invest up to $80 million in the scheme. These costs have been estimated at $80,000. This has been partially offset by use of the contingency fund of $50,000 which is available annually to provide support for projects that arise during the financial year, but have not been included in the Annual Plan.

Staff cost charged to the RWSS feasibility and HBRIC Ltd ($275,000 favourable)

The RWSS project has taken a longer period to finalise than anticipated and an increased number of Council staff and increased hours have been spent on this project. This has resulted in a higher charge for staff costs to this capital project and therefore provided and favourable effect on the operating account.

There are a number of other smaller unfavourable variances such as decreased compliance revenue and section 36 income offset by favourable variances in delays in recruitment of some specialised staff that have also been adjusted for in the reforecast.

After the above adjustments had been made there was a resulting unfavourable movement in the operating deficit. Management believe that there is an expectation from Council to “live within our means” therefore there has been considerable effort to reduce or defer non- essential activities in order to maintain the operating deficit as set out in the Annual Plan 2013/14.

The table below shows where the reductions were made:

Project	Amount of external expenditure reduced	Management Comments
Project 874 – Targeted Assistance	$70,000	Lower than expected costs for Massey University commitments and a reduction in treaty claimant group, Iwi/Hapu costs.
Project 380 – Sustainable Land Management	$60,000	RLS riparian work on the Maraetotara deferred to next year
Project 878 – Sister City	$19,500	No travel planned and a significant reduction in Chinese delegations visiting the Hawke’s Bay.
Project 715 – Flood Risk	$35,000	The external budget of $50k provided for progressing the discussion with the community regarding an appropriate level of flood risk, and developing flood risk mapping for small communities. The engineering team have only just employed an engineer to replace a staff member who left 18months ago. The engineering team has not had the capacity to progress this work. It forms part of the brief for the new engineer.
Project 312 – Regional Surface Water (Tutira)	$26,000	$40,000 for University of Waikato catchment modelling for Lake Tutira has ceased. Due to this project having a component of section 36 income the $40,000 reduction also has the effect of a $14,000 drop in income.
Project 310 – Regional Groundwater Research	$16,500	$25,000 reduction in the $220,000 of costs carried forward for the groundwater modelling for the Heretaunga Basin. Given the scale of the work we are unsure of the final costs but the budgets have been trimmed back in anticipation of reduced costs. Due to this project having a component of section 36 income the $25,000 reduction also has the effect of a $8,500 drop in income.
Project 339 – Regional Land Research and Investigations	$25,000	$25,000 reduction in the $210,000 of costs carried forward for the TANK model. Given the scale of the work we are unsure of the final costs but the budgets have been trimmed back in anticipation of reduced costs.

Management Comments on Scheme Balances
Note Ref	Activity	Variation from Reforecast $’000 (F) or (U)	Management Comment (major variances)
1	Makara	50 (U)	Project costs on the Makara dam project have increased from the original budget. 60% of the costs are to be funded through further use of the regional disaster scheme reserve with the reminder to be picked up by the scheme. The final decision on loan funding may adjust the amount funded by the scheme.
2	Upper Tukituki	61 (U)	There has been significant flood damage for this scheme which has increased the costs for this current year. Capital works have been reduced to cushion the one off flood damage costs.
3	Central & Sthn Areas	63 (U)	There has been extensive work on the asset management plan development including the review of rating classifications.
4	Healthy Homes Initiatives (Capital)	117 (F)	Advanced borrowing exceeds level of loans due to lower take up of insulation loans.
5	Tangoio Soil Conversation Reserve	523(F)	The reforecast harvesting income increased from $480,000 to $1,000,000 which will increase the scheme balance once it has been received.
6	Soil Conversation Nursery	55 (F)	Reduction in expenses and the internalisation of the under and overs.
7	Emergency Management	105 (F)	It was determined by management during the year that the Emergency Management projects should be ring fenced in a scheme balance to ensure that any under spend due to the timing of major exercises was not returned to the general funding pool but retained to use for Emergency Management as it was rated for. Emergency management has been waiting to employee an additional role for CDEM Management Officer which will proceed shortly. Any favourable scheme balance will be used in subsequent years to fund specific exercises.

Strategic Planning Group of Activities Summary

Attachment 2

Activity 1 – Economic Development

Service Levels and Performance Targets

Activity 1 – Economic Development

Level of Service Statement

Level of Service Measure

Performance Targets

2013-14

2013/14 Progress Report

for 9 months to 31 March 2014

Regional Economic Development Strategy mission statement: “To make Hawke’s Bay the best location in which to visit, work, invest, live and grow”

Comprehensive visitor strategy in place within an overall regional marketing plan

2013-2014

Continue quarterly reporting to Council on key performance indicators

HB Tourism Ltd (HBT) report to 31 December 2013 showed a positive result, with 5.6% growth in guest nights (Commercial +3%, Private Household Monitor +7%).

‘Hawke’s Bay’ brand and tagline “Get me to Hawke’s Bay’ continue to be used in all communications, with a strong domestic focus with emphasis on families, independent travellers and active boomers.

HBT ran its second annual Summer F.A.W.C! Food and Wine Classic (November 2013) which included 68 events over ten days. Ticket sales for the event increased 21% on 2012.

Revision of the Regional Events Strategy has been a key focus, working alongside TLA partners to grow the number of events for HB as a priority.

Regional Tourism Awards (2^nd annual) held in September 2013.

Trade and media activity continues via travel agent and media being hosted throughout the year.

Long term Regional Economic Development Strategy

2013-2014

Annually review and progress the regional economic development strategy

Two facilitated workshops completed by Business Hawke’s Bay with a recommendation to follow.

Investment for research and development and business development

2013-14

At least $800,000 per annum achieved for Research and Development investment

A total of $947,443 grant funding has been approved for Hawke’s Bay businesses undertaking R & D investment and business development.

Sustainable regional growth

2013-14

Continue to develop and initiate sustainable primary production programmes

Focus on RWSS, including hosting a Regional Leader’s Tour of Mid and South Canterbury to better understand the Socio-Economic impacts of large scale Irrigation and Water Storage Infrastructure projects.

Activity 2 – Strategy and Planning

Service Levels and Performance Targets

Activity 2 –Strategy and Planning

Level of Service Statement

Level of Service Measure

Performance Targets

2013-14

2013/14 Progress Report

for 9 months to 31 March 20143

HBRC will help the community prepare for the future

Number of Embracing Futures Thinking events held

Each year

Host 3 Embracing Futures Thinking events.

No events hosted during the reporting period.

Trends review completed

2013-14

Refresh the Trends and Environmental Scan analysis

Using 2013 Census information and a report on Hawke’s Bay Region – Socio-Demographic Profile 1986-2011 to refreshed demographic trends and making use of Royal Dutch Shell’s new scenario report to review other trends at a global level. This refresh will be used to inform Council’s strategic planning for the Long Term Plan

Agreement reached on Spatial Planning Framework

2014-15

Reach agreement on regional and lower North Island spatial planning framework

No progress initiated on spatial planning framework during the reporting period. For the development of the 2014-15 annual plan, it was determined that this project be put on hold pending the outcome of amalgamation proposals. Meanwhile, Change 4 (Managing the Built Environment) to the Hawke's Bay Regional Resource Management Plan became operative on 1 January 2014). This is another key milestone for the Regional Council’s implementation of the 2010 Heretaunga Plains Urban Development Strategy.

HBRC will integrate land and water and biodiversity management to deliver environmental, economic, social and cultural outcomes

Action plans and monitoring reports prepared for:

- Land and Water Management Strategy

- National Policy Statement for Freshwater Management

Each year

Prepare action plans and monitoring reports for:

1. Land and Water Management Strategy

2. National Policy Statement for Freshwater Management

Hold a Land and Water Symposium to engage the wider community

No specific plans or reports were prepared during the reporting period, but report on progressive implementation of the National Policy Statement for Freshwater Management was adopted and published as part of the 2012/13 Annual Report.

Draft ‘stock take’ on implementation of the Land and Water Management Strategy was presented to the Corporate and Strategic Committee meeting on 12 March 2014.

No symposium was held during the reporting period, but numerous stakeholder engagement processes are currently underway (e.g. Mohaka and Greater Heretaunga/Ahuriri catchment areas).

Regional Biodiversity Strategy completed

Develop a Regional Biodiversity Strategy:

2013-14: Consult on the draft and prepare final Strategy

2014-15: Prepare programme for work relevant to HBRC for inclusion in the next Long Term Plan

The regional biodiversity strategy project has had a number of outputs delivered:

- A regional biodiversity inventory has been completed to assist in prioritisation of activities. Inventory development involved external expert workshops facilitated by HBRC.

- Delivery of the Strategy via a Forum, Accord and Trust has been agreed. The Forum will coordinate on-the-ground activities and monitor progress; the Accord will signal commitment (of Council and external Agencies) to the Strategy; the Trust will prioritise activities and coordinate resources. Further detail on structure and process to be developed.

- Core Working Group (staff and external experts) has developed a Regional Biodiversity Strategy Strawman due to be reviewed by the wider Steering Group (mid April).

- Tangata whenua contributions to strategy development are being led by Te Roopu Kaitiaki o te Wai Maori with some significant outputs to date including draft actions for achieving biodiversity objectives for tangata whenua

HBRC will establish and maintain clear and appropriate policy in a responsive and timely manner that will enable sustainable management of the region’s natural and physical resources

Status of Resource Management Plans and Policy Statements

No more than 2 years elapse from notification of a plan change to decisions on submissions being issued

2013-14

Plan change for Tukituki River Catchment publicly notified May 2013

2014-15

Plan change for Taharua /Upper Mohaka catchment publicly notified Dec 2014

2016-17

Plan change for Greater Heretaunga/Ahuriri Catchment Area publicly notified Dec 2016

Plan Change 6 (Tukituki River Catchment) was called-in by Environment and Conservation Ministers. Hearing by a Board of Inquiry has closed. The Board’s draft decision is expected to be released by 15 April 2014. Significant time and resources have been invested in preparation and pre-circulation of expert evidence (and rebuttal evidence) for the plan change, analysis of evidence presented by submitters, plus Board-directed expert conferencing during the hearing.

Taharua/Mohaka: science investigations and assessments are progressing in parallel with land owner discussions. Stakeholder discussions canvassing wider Mohaka River Catchment have has occurred in targeted interviews, focus groups during the reporting period. Mohaka Consultation Group to be formed as a sounding board for issues, options, choices and plan drafting prior to notification of a plan change.

The collaborative stakeholder group (the TANK Group has met 10 times over the last 12 months and prepared a report outlining 45 ‘interim agreements’ and ways to proceed in 2014. That report was presented to the Regional Planning Committee in February 2014 where the RPC endorsed the TANK Group’s work and agreed to have particular regard to any consensus outcome from the group should one emerge. Previously (August 2012), the Council gave a good faith commitment to support any consensus recommendations (that are consistent with other planning documents) from the TANK Group.

2014-15

Plan change for Natural Hazards publicly notified July 2014

Initial scoping of plan change commenced during the reporting period in liaison with review of the HB CDEM Group Plan. Scoping and work on ‘first draft’ strongly guided by ‘Regional Natural Hazards and Land Use Planning Strategy’.

Regional Coastal Environment Plan

At all times there is a regional plan in force for the HB coastal marine area

New Zealand Coastal Policy Statement (NZCPS) put into action in accordance with statutory requirements

2013-14

Scoping and prioritising of plan changes required to give effect to 2010 NZCPS

2014-15

Start review of coastal hazard zones if re-assessment (Project 322) necessary.

Notify plan change to give effect to 2010 NZCPS

Making the Regional Coastal Environment Plan operative is still awaiting approval from the Minister of Conservation on provisions relating to the Hawke's Bay coastal marine area.

Scoping of 2010 NZCPS implications not commenced during this reporting period.

Coastal processes study (Project 322) completed for Napier/Hastings coastline in Hawke Bay (presented to Environment and Services Committee meeting on 9 April 2014.

Activity 3 – Policy Implementation

Service Levels and Performance Targets

Activity 3 –Policy Implementation

Level of Service Statement

Level of Service Measure

Performance Targets

2013-14

2013/14 Progress Report

for 9 months to 31 March 2014

HBRC will promote integrated management by proactively communicating its policies and responsibilities through dialogue and submissions on district plans, consent applications and central government initiatives

Lodging of submissions on district plans, district planning applications and central government initiatives where there are relevant regional council policies

2012-22

Submissions made on district plans, district planning applications and central government initiatives reported to HBRC’s Environment and Services Committee

Staff of HBRC and territorial local authorities to meet at least twice a year to discuss integration issues and steps to improve the regional and district plan are identified and acted upon

Regular reports on local statutory advocacy activities are presented to both the Maori and Environment and Services committees.

Submissions lodged in February 2014 on proposed Hastings District Plan and Napier City Council’s District Plan Change #10.

HB Council Planners’ Forum has met once during the period. Discussion focussed on RMA reforms and reviews of the Hastings and Napier district plans which were publicly notified in November 2013.

HBRC will help communities without sewers improve the management of domestic wastewater

Number of interest free loans approved

Provide a fund to help the territorial authority-led upgrading of community wastewater systems in communities without sewers ($200,000pa contributions capped at $1,000,000)

Non-regulatory initiatives developed and implemented to complement regional plan policy development that implements National Policy Statements and/or National Environmental Standards

No uptake on fund during reporting period.

No specific non-regulatory initiatives developed (in Project 193) during the reporting period, but a number of initiatives are being considered and developed in parallel to catchment-based regional plan changes (Project 192) such as Plan Change 6 for the Tukituki River Catchment.

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

Maintain a database of potentially and confirmed contaminated sites

2012-22

To administer and maintain the database, including checking of record details, site visits to GPS areas of contamination, transfers to Territorial Local Authorities (TLA) as per agreed protocol and advising landowners of the contaminated sites status of their property

Environmental Activities database completed and access given to Territorial Local Authorities to enable test runs of database. Meetings held with Hastings District and Napier City Councils to progress transfer of information protocols. Checking of information on database continues, with the emphasis currently being on transferring information from the Pattle Delamore Partners (PDP) investigation report on the residential sites over the former Onekawa landfill onto the database. The majority of the residential sites sampled by PDP have been classified as “partially investigated” but those sites not sampled will remain as “not investigated”. HBRC continues to receive requests from residents as to the status of their land. The Environmental Activities database is to be updated to better co-ordinate with the recent changes to the internal HBRC records systems.

A major task will be the addition of residential subdivisions (individual lots) on former orchard land onto the database.

Activity 4 – State of the Environment Reporting

Service Levels and Performance Targets

Activity 4 –State of the Environment Reporting

Level of Service Statement

Level of Service Measure

Performance Targets

2013-14

2013/14 Progress Report

for 9 months to 31 March 2014

HBRC will monitor and provide accurate information to the community so that it understands the State of the Environment (SOE) for Hawke’s Bay

Data quality as assessed against HBRC’s quality assurance system

Amount of State of the Environment monitoring data available through HBRC’s website.

2012-22

Maintain the current level of SOE data on HBRC’s website

Continue to make information from the following monitoring sites available through HBRC’s website:

· All telemetered river flow sites

· All telemetered rainfall sites

· All telemetered climate stations

· All data collected, processed, analysed and stored in accordance with ISO requirements

· Maintain ISO accreditation

In progress

The current level of data availability has been maintained, and consideration is being given to expanding access to various data in response to stakeholder comments.

Data are being collected, processed and stored in accordance with the requirements of the ISO9001:2008-accredited Quality Management System.

The Quality Management System externally audited in December 2013.

State of the Environment Monitoring Report

2012-22

Annual Update State of the Environment Reports available by June each year

2013-14

State of the Environment Monitoring Report available

In progress

Annual update report of routine monitoring for 2013/14 is currently underway.

Preparation of the five-yearly State of Environment monitoring report is underway. Priority will be given to the state of resources in the Tukituki, Mohaka and Greater Heretaunga and Ahuriri management zones.

Regional Resources Group of Activities Summary

Attachment 4

Activity 1 – Land Management

Service Levels and Performance Targets

Activity 1–Land Management

Level of Service Statement

Level of Service Measure

Performance Targets

2013-14

2013/14 Progress Report

for 9 months to 31 March 2014

Viable and resilient farming systems are being achieved through sustainable land use.

Annual reporting on research project outputs and how they have contributed to sustainable land management outcomes.

Ongoing

Continue a programme of research and extension to investigate and field trial issues relevant to sustainable land management in Hawke’s Bay

Actively seek collaboration with primary product organisations undertaking research relevant to HB

The focus of research and extension in the year to date has been to inform processes and programmes being developed to implement the Tukituki Plan Change to achieve a cost effective reduction of phosphorus and sediment in the catchment; including:

· Papanui catchment (Tukituki River tributary) nutrient loss characterisation including:

o A series of water quality measurements (32 sites) repeated 6 times to date.

o A more detailed Soil map

o A map showing the biophysical risk of P loss

· A landholder attitudinal and behavioural survey in the Papanui, Porangahau, Maharakeke, Tukipo, Kahahakuri & Upper Tukituki Corridor catchments was completed 2 November 2013 to benchmark existing attitudes and behaviours around water quality.

· Envirolink funded feedlot study initiated to look at the impacts of intensive livestock operations on P losses via stony soils.

· A review of the Tukituki Catchment Implementation Plan and recommendations for a community engagement process for the Papanui steering group completed – Feb 2014

East Coast Hill Country Resilience strategy development in collaboration with Ministry for the Environment, Ministry of Primary Industries, AgResearch, Federated Farmers, Beef & Lamb, Horizons Regional Council, GW Regional Council, key consultants.

The Land management team continue to build strong alliances and relationships with our strategic partners at a national, regional and local level, this includes

· Dairy liaison meetings – 22 July

· Pan-sector group meetings – 9 July

· Industry Best Practice – Phosphorous MoU – signed by 10 pan-sector representatives as of 31/10/13

· LandWISE Board meetings x 2

· Meetings with individual industry groups – DairyNZ, Beef & Lamb, Ravensdown

· HB Deer Farmers stakeholder meeting

· McCains field staff meeting

· Kate McKinnon trained to deliver Beef & Lamb Land Environment Plans

· MPI NI Forestry Operations Group meeting

· Papanui Stakeholder group (8 landowner & 3 Tamatea Taiwhenua representatives) initiated.

o 3 meetings held to discuss program and objectives

o 2 mauri monitoring framework wananga held with local hapu

o Councillor visit to view program

Outputs achieved through HBRC Regional Landcare Scheme.

Ongoing

Regional Landcare Scheme (RLS) reviewed outcomes to be implemented by June 2014.

Report in the operation plan how RLS activity directly contributes to sustainable land management.

Annual output targets delivered from the RLS investment to be established and implemented as part of the annual operating plan.

An initial review has been completed. The review assesses projects on their effectiveness in achieving environmental change. The process also allows for input from land management staff where they see potential opportunities to increase the environmental outcomes. Ffurther work is now required to reprioritise resources to ensure a more targeted program to support Plan Change 6 implementation.

The operational plan will show the focus of Regional Landcare Scheme activity and alignment with the Regional Afforestation programme and the intensification of land use.

A portion of Regional Landcare Scheme subsidy will be targeted, and the level of subsidy varied, to encourage initiatives that more effectively respond to environmental change.

35,013 x 3m and 2.5m poles were provided to clients. Both nursery yield and demand were well below expectation this season.

· Soil conservation & environmental enhancement projects = 13

· Riparian strip projects = 12,600m plus 9,200 seedlings

· Wetland projects = 10

· QEII covenants supported = 106ha

· Dune projects = 2

HBRC will increase its knowledge of the region’s land, soil and terrestrial habitats so it is aware of any current and likely future issues that may arise. This knowledge will allow for a timely and effective response that enables land sustainably for future generations.

Regional baseline hill country erosion monitoring.

2013-14

Plains erosion monitoring programme to begin by December 2013.

Erosion monitoring repeated (about every 5 years but contingent on any major regional storm event).

Ongoing.

Currently holding discussions with Landcare Research and AgResearch. Several modelling options are available and need to be reviewed. Plains erosion monitoring more difficult than expected and original methodology now considered not suitable for HB region. Next regional erosion base line survey due 2015/16.

Tukituki catchment sediment modelling underway and will improve our knowledge of erosion in this particular area.

In progress.

The Regional afforestation programme is on hold due to low carbon prices.

High UMF manuka is being trialled at Tutira as a possible opportunity for steep erodible hill country land use. A total of 140ha has been planted over the past 3 years. Production from the block will be monitored with sufficient data collected to enable the initiative to be fully assessed in 2018.

HBRC are participants in the High UMF Primary Growth Partnership

Integrated catchment management including staged computer modelling & monitoring of the:

Mohaka

Heretaunga/Ahuriri

Tukituki

2013-15

Catchment models developed for Taharua and the entire Mohaka catchment.

Catchment models developed for Heretaunga area.

A nutrient model was developed by NIWA for the Taharua and wider Mohaka catchment. This model establishes relationships between nitrogen (N) losses from land and N concentrations in stream. Model development and performance was reported by NIWA in 2011/12 (available via the HBRC website http://www.hbrc.govt.nz/About-this-Site/Pages/contact-us.aspx). Additional data collected in 2012/13 and 2013/14 will allow recalibration of the model (for N), and extension of model capability. This is on track. Initial modelling completed. Second stage to begin by May 2014 with completion by 2015

This model framework will be adapted and used to predict growth of attached algae (periphyton) in response to surface water concentrations of N in rivers in the Greater Heretaunga and Ahuriri Plan Change area during 2014/15.

This model framework will be used to predict growth of attached algae (periphyton) in response to surface water concentrations of N in rivers in the Greater Heretaunga and Ahuriri Plan Change area during 2014/15.

Also, a novel two-stage process, based on desk-top assessment of riparian areas using aerial photographs in a Geographic Information System (GIS), was previously developed to determine riparian condition. The results were verified by limited field validation. The procedure allows Council staff to efficiently identify areas where riparian improvement is possible.

The methodology was trialled in the Tukituki River catchment to provide information to underpin policy developed for Plan Change 6. The procedure will be applied to areas within the the greater Heretaunga Plan Change area in 2014/15.

Hawke’s Bay’s land resource is maintained for future generations

Area of erosion prone land with tree cover

Baseline erosion monitoring

See Regional Afforestation Scheme targets

Baseline erosion monitoring programme is carried out every 5 years with the next phase programmed for 2015/16. If a major storm event occurs this date will be moved forward to record that event

Activity 2 – Air Management

Service Levels and Performance Targets

Activity 2–Air Management

Level of Service Statement

Level of Service Measure

Performance Targets

2013-14

2013/14 Progress Report

for 9 months to 31 March 2014

HBRC will have adequate knowledge about the level of air pollutants that may impact on public health and aesthetic values so that it can manage air quality for human health needs and aesthetic values.

State of the Environment monitoring programme for:

Air quality

Climate

2013-22

Monitoring undertaken in accordance with the Regional Air Quality Monitoring Strategy.

2013-22

Report on breaches of the National Environmental Standards (NES) in accordance with the standard.

In progress.

PM₁₀ concentrations^{^[2]} have been continuously monitored in the Napier, Hastings and Awatoto airsheds. The following performance targets have been met -:

less than 5% of data missing, and

75% or more valid data (less than 25% of measured and archived values affected by calibration and instrument fault events).

PM₁₀ screening equipment operated in Waipawa for a period of one year, from December 2012 to December 2013, to determine the requirement for routine continuous monitoring. The NES for PM₁₀ was not exceeded during that time and as a result there are no plans to implement continuous monitoring.

Public health notices were issued for 14 exceedances of the NES for PM₁₀ since 1 July 2013. Hastings had 10 exceedances and Napier recorded 4. An exceedance of the NES for PM₁₀ in Awatoto during March 2014 will be notified at the start of April.

A campaign monitoring concentrations of traffic-related NES contaminants in Napier and Hastings was completed in August. These contaminants include nitrogen dioxide, carbon monoxide, sulphur dioxide and ozone. The concentrations recorded were within the standards.

HBRC will provide financial assistance for those who qualify for insulation and clean heat support.

Number of clean heat systems installed under financial assistance programme.

2013-22

Provide loan assistance to homeowners region wide for home insulation and clean heat under HBRC’s financial assistance programme.

The Heatsmart programme is delivering ahead of target to achieve National Environmental Standards. The number of grants and loans has been reforecast to reflect an increased demand.

Hawke’s Bay’s air is suitable to breathe

Compliance with National Environmental Standard (NES) for Air Quality

Napier Airshed meets NES: No more than one exceedance by 2016

Hastings Airshed meets NES: No more than three exceedances by 2016 and no more than one exceedance by 2020.

2012 -2013

4 exceedances were measured in Napier.

10 exceedances were measured in Hastings.

1 exceedance was measured in Awatoto.

It is unlikely the targets will be achieved by 2016, but if current uptake to replace non compliant fires is maintained the 2020 target is achievable.

Activity 3 – Water Management

Service Levels and Performance Targets

Activity 3–Water Management

Level of Service Statement

Level of Service Measure

Performance Targets

2013-14

2013/14 Progress Report

for 9 months to 31 March 2014

HBRC will increase its 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 and land 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

2013-15

Establish 1 climate station a year in response to identified requirement.

Monitoring undertaken in accordance with State of the Environment monitoring strategy (reviewed in ~~2012~~ 2013/14 to reflect national reporting and regional consistency).

Upgrade rainfall sites as required to maintain level of service.

In progress.

One climate station was installed at “Pukeoropa”.

The “Glenwood” and “Ben Nevis” stations were upgraded, and work is under way at the “Pukeoropa” and “Kotemaori” stations to automate data transfer.

A rainfall measurement site was installed at the “Makaroro link” station.

Surface water quality and quantity, groundwater quality and level, climate , rainfall and fresh and saline-water ecological monitoring programmes continue according to schedule. These data will contribute to the five-yearly SoE monitoring report that will be completed in 2014.

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.

2013-15

Groundwater abstraction and allocation report prepared for Heretaunga Plains.

Environmental flow, and allocation reports prepared for the:

· Karamu Stream, Tutaekuri River, Ngaruroro River and inflows to the Ahuriri Estuary

Capability required of groundwater model confirmed by defining specifications.

In progress.

A draft Groundwater abstraction and allocation report was prepared for the area of the Heretaunga Plains covered approximately by the Karamu Stream catchment.

Groundwater use and allocation data is a key input to the coupled surface-groundwater model currently being developed for the Greater Heretaunga and Ahuriri management zone.

The technical requirements of the coupled surface-groundwater model have been identified and documented as a draft technical specification. Further defining of technical requirements/objectives still pending.

Knowledge available to inform review of water quality objectives and setting limits.

2013-15

Review of water quality guidelines and objectives completed and reported.

Water quality requirements identified for recognised values, including aquatic habitat, established for Heretaunga Plan Change catchments (Tutaekuri and Ngaruroro Rivers, Ahuriri and Karamu Streams).

In progress.

A range of technical investigations are currently underway to identify water quality requirements for the Tutaekuri and Ngaruroro Rivers and Ahuriri and Karamu Streams. These include ecological assessments, nutrient limitation studies and assessments of dissolved oxygen concentrations in spring-fed streams on the Heretaunga Plains. Analysis and reporting completed by the end of 2014.

Knowledge available to manage nutrient inputs to rivers.

2013-15

Report on Nutrient limits: Ngaruroro River, Tutaekuri.

In progress.

Nutrient limit assessment studies continue in the Ngaruroro and Tutaekuri River catchments. These are key to describing the relationships between nutrient concentrations and freshwater ecological responses.

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

Regional Water Values study.

Undertake a study to assess the value of water from a social, environmental, economic and cultural perspective and review funding policy for HBRC’s water related activities.

In progress.

Regional freshwater values assessments have been completed for a range of values including Salmonid angling, Natural character, Native fish, Native birdlife, Irrigation, Whitewater kayaking and Swimming.

Cultural freshwater values assessments have also been completed for the Tukituki catchment.

Further regional environmental and economic values assessments have also begun.

HBRC will encourage efficient and effective water use to maximise the benefits of the water allocated.

Number of active water user groups.

Implementation of water efficiency tools by Water User Groups.

2013-22

Continue to establish and facilitate Water User Groups on a catchment priority basis.

In conjunction with Water User Groups, investigate and apply for research grants relating to water use and resource allocation efficiency.

Continue to transfer latest water efficiency and allocation information to Water User Groups.

In progress.

Water User Groups are established in the Ruataniwha, Twyford and Ngauroro.

Acting on interest/need to establish additional water user groups in the Heretaunga Plains

Grant application for Twyford area is being progressed although work is continuing to progress where possible

Promoted efficient and effective water use via irrigation training

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

2013-2014

Cumulative total of 1000 consents using telemetry or a web entry system.

In progress.

This project is well ahead of schedule. Currently water use for 1260 consents is being reported using either HBRCs web-entry system (750) or telemetry (510).

Work has continued with the Ngaruroro Irrigation Society by way of assisting with meetings. Work with Twyford has mainly centred on political change but is now back on track to getting water limitation solutions for irrigators. Both of these groups are involved in the Greater Heretaunga plan change TANK group. Work with the Ruataniwha group has mainly been via the Ruataniwha Water Storage Scheme and Tukituki Plan Change.

Allocation limits and water quality limits.

Implementation of National Policy Statement for Freshwater Management.

Refer to other performance targets listed within this table.

In progress.

Much of the surface and groundwater monitoring and investigation work will be used for limit setting purposes.

Access to real-time high quality water use data (through the consent metering project) will be key to improving water use and management.

Activity 4 – Coastal Management

Service Levels and Performance Targets

Activity 4–Coastal Management

Level of Service Statement

Level of Service Measure

Performance Targets

2013-14

2013/14 Progress Report

for 9 months to 31 March 2014

HBRC 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

Ongoing

Weekly monitoring of key recreational sites as per recreational water quality monitoring plan

Recreational water information available on website and social network site within two days of results being available

Identification of pollution sources for sites that regularly exceed guidelines.

Completed.

Recreational water quality monitoring commenced on 4/10/2013 and was completed on the 17/10/14.

Monitoring data reported within the required timeframes on all occasions.

Faecal source tracking analysis allowed for pollution sources to be identified at a number of sites with on-going exceedances.

HBRC will continue to monitor, research and investigate coastal processes to inform coastal planning including climate change and coastal hazards.

Annual coastal monitoring and investigation programme including:

Beach profiling

Storm monitoring

Sediment transport and processes investigation and modelling.

Hazard prediction including tsunami, inundation, erosion, storm surge

Ongoing

Annual monitoring and investigation programme completed and reported each year

Annual surveys of beach cross section series was completed Dec/Jan.

The annual report is programmed to be completed by end of May 2014.

A report entitiled “Global Climate Change & Beach-barrier responses” authored by Komar and Harris has been completed and published.

HBRC will provide long term, relevant and specific information on Hawke’s Bay’s coastal ecosystems, so that it and the community can remain engaged with, and informed of, the current state and potential threats to the health of coastal environments.

Identify the state and health of selected regional beaches, reefs and estuaries;

Identify the state and health of near-shore coastal waters and coastal sediments;

Maintain an operative and relevant Coastal Monitoring Strategy.

Ongoing

Monitoring undertaken in accordance with State of the Environment Monitoring Strategy (2006) and reported on annually.

2013-14

Five-year State of the Environment report compiled

Ongoing

Quarterly reef monitoring surveys for Kairakau, Te Mahia and Hardinge Road reef is currently in progress.

Monitoring of four beaches and four estuaries completed in March 2014.

Preparation of the five-yearly State of Environment monitoring report is currently under way. To be completed by end of 2014.

HBRC will increase its knowledge of coastal ecosystems through targeted research and investigations so that it is better able to understand and respond to the effects of activities on the coastal environment.

Undertaking specific investigation and/or research, and reporting on these outcomes where appropriate

Targeted investigations into coastal receiving environments receiving stormwater discharges.

Saline transition zones in Wairoa, Esk, Maungawhio and Pakuratahi Estuaries will be investigated (weather dependent).

In progress.

A project plan has been developed to deliver this information for the Greater Heretaunga and Ahuriri management zone during 2013/14.

Salinity loggers have been deployed in the Porangahau, Tukituki blind arm, Nuhaka, Wairoa, Waikari and Mohaka river estuaries to determine sea water incursion under lower-flow conditions.

Activity 5 – Gravel Management

Service Levels and Performance Targets Activity 5– Gravel Management
Level of Service Statement	Level of Service Measure	Performance Targets 2013-14	2013/14 Progress Report for 4 months to 31 October 2013
HBRC will monitor and manage river-bed sediment to ensure flood protection schemes work as expected.	River surveys (3-6 yearly) show all scheme rivers have sufficient capacity.	Ongoing No decline in river flood capacity.	Cross section surveys programmed for the 2013/14 year were largely completed over the summer months.
	The average riverbed level where gravel extracted is managed within +/- 200mm of the design grade line.	Ongoing Average riverbed within design grade range.	Done in conjunction with survey
	No incidences of erosion or flooding as a result of undesirable gravel levels.	Ongoing No incidences.	Flooding occurred in November 2013 on land adjacent to the Makaretu River as a result of bed levels being 0.8m above desirable grade level. A number of other complaints from land owners adjacent to other Upper Tukituki rivers are being investigated
River-bed gravel is equitably allocated to gravel extractors.	The gravel allocation process complies with the Regional Resource Management Plan	Ongoing No compliance issues with gravel extraction.	The gravel allocation process has complied with the RRMP and there are no compliance issues. The gravel allocation process for the 2014/15 year has commenced and id programmed for completion May 2014.
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.	Ongoing No reported incidences of adverse impacts following gravel extraction or beach raking activities.	204,000m3 gravel has been extracted in the year to date. 90 consents have been issued. Gravel extraction has been managed to avoid adverse impacts on the ecology. Ecology management plans (EMP’s) for the Ngaruroro and Tutaekuri have been developed and for the other major rivers are currently being developed to manage the ecology more effectively. Gravel extractors are aware of the requirements of the EMP.
Knowledge necessary for sustainable management of riverbed gravel is improved.	Completion of investigation and research work recommended in riverbed gravel scoping study.	Ongoing Annual Programme of work completed.	Modelling work has begun on study of gravel movement in Tukituki and Ngaruroro Rivers. This year work has proceeded on the Tukituki model. Much of the work to date has centred around the effects of the Haumoana groyne proposal and the sediment availability as requested by Council. The model will be extended to cover the next reach in the next quarter. Very useful results are being obtained from this work which will inform decisions on sustainable management of the gravel resource in the future.

Activity 6 – Open Spaces

Service Levels and Performance Targets

Activity 6–Open Spaces

Level of Service Statement

Level of Service Measure

Performance Targets

2013-14

2013/14 Progress Report

for 4 months to 31 October 2013

HBRC will provide public access to, and manage existing Council owned parks and wetlands for multi-purpose benefits.

Levels of service associated with all open space areas are set out in current management plans.

Ongoing

Maintain a current Open Space Vision and Management Plan and, where appropriate, further development programmes for all open space areas and facilities.

Ongoing

Implement management plans to deliver levels of service established.

Regional Open Space network plan adopted by Council November 2013. Plans for a number of individual open space areas are being reviewed.

Current management plans for individual open space areas are being implemented.

HBRC will actively look for opportunities to provide the public with opportunities to enjoy open space available within the region with opportunities assessed against the HBRC Open Space policy and evaluation criteria.

Open space policy and evaluation criteria.

Note $915,000 remaining in HBRC open space and community facilities to provide for opportunities.

Ongoing

Continue to assess affordable open space opportunities in accordance with the open space vision.

Action any opportunities approved by Council.

2013-14

Investigate open space development opportunities with the region’s territorial authorities that align with visitor facilities and attractions and meet policy and evaluation criteria.

No opportunities are currently being pursued.

It is proposed that a borrowing facility be retained to enable development opportunities within existing open space areas to be considered and if approved, to be funded.

Regulation Group of Activities Summary

Attachment 5

Activity 1 – Resource Consent Processing

Service Levels and Performance Targets

Activity 1–Resource Consent Processing

Level of Service Statement

Level of Service Measure

Performance Targets

2013-14

2013/14 Progress Report

for 9 months to 31 March 2014

HBRC will ensure that accurate information about resource consent requirements and processes is readily available.

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

2012-22

No verified reports of inaccurate information being given in relation to resource consent requirements.

2012-22

Electronic application and submission forms, application and submission guides are available through HBRC’s website.

Staff continue to maintain up-to-date application forms and information.

Guidance for change of ownership relating to water permits prepared and distributed.

Electronic application forms have been prepared and the aim is to go live end of April.

HBRC 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.

2012-22

100% of resource consents processed within statutory timeframes.

Year to date all consents have been processed within statutory timeframes.

Activity 2 – Compliance Monitoring

Service Levels and Performance Targets Activity 2–Compliance Monitoring
Level of Service Statement	Level of Service Measure	Performance Targets 2013-14	2013/14 Progress Report for 9 months to 31 March 2014
HBRC 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.	2012-22 90% of programmed inspections/reports completed each year. 95% of monitored consents achieve an overall grading of full compliance.	513 consents monitored out of 950 programmed for the 2013/14 year plus 1588 monitored in conjunction with Water Information Services.
HBRC will provide a 24 hr/7 day a week pollution response service for reporting environmental problems.	Duty management/Pollution Management response system.	2012-22 24 hour duty Management/pollution management response system maintained.	Ongoing service provided

Activity 3 – Maritime Safety & Navigation

Service Levels and Performance Targets

Activity 3–Maritime safety and Navigation

Level of Service Statement

Level of Service Measure

Performance Targets

2013-14

2013/14 Progress Report

for 9 months to 31 March 2014

HBRC will provide local navigation safety control of shipping and small craft movements to ensure the region’s navigable waters are safe for people to use.

The Navigation Safety Bylaws and Port and Harbour Safety Management System.

2012-22

Bylaws to be reviewed in 2016.

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

Marine accidents and incidents are investigated and acted upon using education and enforcement as appropriate.

Region wide risk assessment and review of current work programme with forward looking recommendations by 1 July 2013.

Review community education effectiveness by 1 July 2013.

Safety Management System has been audited by MNZ. Audit passed with no corrective actions required.

Incidents have been investigated with education and enforcement action used where appropriate.

Region wide risk assessment completed.

Reviewed with Continued Coastguard delivery of Community Education programme. Additional strategies employed including media releases and children’s competitions. Prizes donated by local businesses. Successful presence at Waimarama Beach Day and sponsorship of a wearable arts competition with a navigational safety theme.

Activity 4 – Building Act Implementation

Service Levels and Performance Targets

Activity 4–Building Act Implementation

Level of Service Statement

Level of Service Measure

Performance Targets

2013-14

2013/14 Progress Report

for 9 months to 31 March 2014

Process Building Act consent applications within timeframes.

Contract with Waikato Regional Council to process dam consents on behalf of Hawke’s Bay Regional Council (HBRC).

2012-22

Maintain contract with Waikato Regional Council, for the processing of dam building consents.

Contract maintained.

Maintain an accurate Dam Register and help dam owners prepare 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.

2012-22

100% of dams comply with regulation requirements that come into force in July 2012.

No action, regulations still not in force. Latest date is 1 July 2015

HBRC will investigate illegally built dams and will ensure that they are removed or made compliant.

An illegally built dam is made compliant or removed within six months of identification.

2012-22

100% of dams comply with regulations.

No illegal dams [as defined under the Act] identified.

Biosecurity Group of Activities Summary

Attachment 6

Activity 1 – Regional Biosecurity Programmes

Service Levels and Performance Targets

Activity 1–Regional Biosecurity Programme

Level of Service Statement

Level of Service Measure

Performance Targets

2013-14

2013/14 Progress Report

for 9 months to 31 March 2014

HBRC will develop and implement regional pest management strategies that improve biodiversity and economic prosperity.

Pest Management Strategies

Maintain a current Regional Pest Management Strategy.

2013-2014

Review the current Regional Pest Management Strategy (RPMS) and complete new Plan by 2015

The Regional Pest Management Strategy (RPMS) and Regional Phytosanitary Pest Management Strategy have been reviewed with both strategies sealed by Council in March 2013.

A number of initiatives underway will inform the next review of the RPMS some of which will also assist alignment with the Biosecurity Law Reform Act 2012. These initiatives include considering how more effective biosecurity risk management may take place for the Horticulture, pipfruit and viticulture sectors, how “Good Neighbour” rules may be used along boundaries with Crown estate and what the options there may be to integrate additional top predator pests into HBRC’s possum control area programme. Development of cost benefit analysis that are required for each pest to underpin any decision for HBRC intervention in the management of that pest are also well advanced.

Undertake research and investigation to quantify and/or increase the economic, biodiversity or animal/human health benefits of pest control.

Ongoing

Undertake at least one research/investigation initiative annually.

There are five research projects that are currently underway. These include a grass forage trial (rabbits – Tutira/Opouahi), wide scale predator control biodiversity outcomes monitoring (Opouahi), feral cat camera monitoring trial (NZ first of its kind research to establish a monitoring technique for predators) , toxoplasmosis research, and farmer uptake focus groups research for wide scale predator control (Cape to City).

HBRC will provide effective pest management programmes that improve regional biodiversity and economic prosperity.

Regional Animal Pest Control and Bovine Tb Vector Control Programmes

Hectares of rateable land kept at low possum numbers. Low possum numbers means no more than five possums caught per 100 traps set out at night.

By 2016 all rateable land will be reduced to low possum numbers (total rateable land in Hawke’s Bay = 1,000,000 ha).

Rateable land in transition from the Animal Health Board programme:

2013-14: 30,000 ha

2014-15: 30,000 ha

2015-16: 40,000 ha

Rateable land in Possum Control Area (PCA) Programme:

June 2013: 490,000 ha

June 2014: 534,000 ha

Of the PCAs monitored, less than 10% of the monitoring lines exceed 5% trap catch.

At 30 June 2013 a total area of 907,740 ha of rateable land is being kept at low possum numbers. This comprises 507,740ha’s under HBRC’s possum control area (PCA) programme and 400,000 ha of AHB vector control operations under the TBfree NZ programme. Possum initial control has been completed across all productive land within the region.

An area of 16,304 ha is planned for transition from the TBfree programme to HBRCs PCA programme in the 2013/14 year.

Education and trend monitoring utilising chew cards has been completed across 40,288 ha or 7.9% of the PCA programme area. Of the 240 lines completed so far 4.2% of lines have exceeded 5%.

The number of active rook nests treated annually across the region.

Ongoing

Monitoring indicates a downward trend in active rook nest numbers in both areas (North and South of SH5).

Aerial rook control has been carried out and completed in all known rookeries across the region during the 2013 rook breeding season. An additional 26 new rookeries where located across the region, 3 in the eradication zone and 23 in the control zone.

A total of 95 active nests were aerial treated across the eradication zone north of SH5.

A total of 448 active nests were aerial treated across the control zone south of SH5 compared with 686 in the 2012/2013 financial year.

Six rook enquires have been responded to in the year to date.

Response time to rabbit complaints/enquiries.

Ongoing

An initial response is given within 5 working days of receipt of each rabbit related complaint/enquiry

Thirty nine rabbit enquires were received and followed up. All enquires have been responded to within 5 working days of receiving their initial call. Assistance was provided in the form of environmental topic’s, one on one advice, and where appropriate a demonstration on best use of either Pindone rabbit pellets or magtoxin, which is used for fumigating rabbit borrows.

McLean Scale four indicates that there are pockets of rabbits with signs and fresh burrows very noticeable.

Two properties have ongoing rabbit management plans for 2013/14 with initial control scheduled for the winter of 2014.

Responsiveness to properties identified with rabbit populations over McLean Scale 4.

Ongoing

A management plan is prepared within four months for each property identified with rabbit numbers above McLean Scale 4.

Plant Pest Control

Routine plant pest inspections of areas infested with plants controlled under HBRC Regional Pest Management Strategy.

Ongoing

All known infestations of ‘occupier responsibility’ Total Control plant pest sites are visited annually

All known ‘service delivery’ Total Control plant pest sites are visited annually and plants controlled

All Privet sites identified through complaints controlled within 6 months of complaint

The land around all known infestations of Total Control plants is inspected at least every 3 years

All areas of high potential risk are visited annually and checked for possible new plant pest incursions

Total Control Service delivery visits and control have been undertaken on Spiny emex, African feather grass, goats rue, phragmites, yellow water Lilley and White edged nightshade by Council officers. Control work has been completed by contractors for Nassella tussock.

The urban Privet programme has had a total of 176 properties (65 in Wairoa) where Privet has been removed by the contractor or council staff.

A total of 1365 visits have been made this year on total control plant pest properties. Of these 305 were urban visits. Occupiers have undertaken control principally on Apple of Sodom. Control work has been started on Old man’s beard, Chilean needle grass and Cotton thistle.

Control work has been started on Pinus Contorta, Japanese honeysuckle, Australia sedge, and Woolly nightshade.

Fluproponate (Taskforce) has been used for two years now on Chilean needle grass with the benefits of using it starting to show. However there are still some issues to work on with this product. A ‘Best Practise’ on how to use this chemical will be developed in conjunction with other Councils. The aerial application of the chemical has been approved by the Environmental Protection Agency (EPA). Residue and efficacy trials required by EPA are underway to support the retention of Taskforce’s registration.

A monitoring and control programme has continued for Darwin’s barberry in the two known infested areas (Puketitiri and Wakarara), and for Boneseed on the coast south of Cape Kidnappers.

Leaflets were distributed for Blue passionflower in the Taradale and Clive area. Control for Blue passionflower has started. Inspections have been carried out on land around known infestations of other total control plants, as time has allowed.

Two Notices of Direction were issued. These were issued to land users with a high likelihood of Chilean Needle grass on their properties who wanted to sell hay off the property.

A total of 15 Earthmoving machines/mowers were inspected after being washed down before leaving infected sites.

Emergency Management Group of Activities Summary

Attachment 7

Activity 1 – HB Civil Defence Emergency Management Group

Service Levels and Performance Targets

Activity 1– HB Civil Defence Emergency Management Group

Level of Service Statement

Level of Service Measure

Performance Targets

2013-14

2013/14 Progress Report

for 9 months to 31 March 2014

HBRC will reduce the impact of long term natural and man-made hazards to life and property, eliminating these risks if practicable, and if not seek the reduction of their impact.

Assessment of natural and manmade hazards will be completed for at risk areas in Hawke’s Bay.

2012-22

Advocate to Territorial Authorities for the consideration and inclusion of hazard information as part of their land use planning functions

In conjunction with TAs, provide public advice on the impacts of hazards

Complete changes to the Resource Management Act 1991 statutory plans that reflect the integrated approach of the Joint Hazard Strategy

In Progress

Ongoing. Currently working with HBRC Strategy and Policy Group to develop a change to the RPS to implement a risk based approach and strengthen the requirement for TLAs to consider the impacts of natural hazards when considering land use changes.

Facilitated Napier Tsunami Evacuation Planning Workshop March 2014.

Submission made to the HDC proposed District Plan on strengthening their risk reduction through land use planning

Number of hazards research projects commissioned each year.

2012-22

At least one new research project commissioned each year

In Progress

A project to review the liquefaction potential in Hawke’s Bay, with the CDEM Group leading a partnership of all Hawke’s Bay Councils, local IPENZ members and GNS by January 2015. Access has also been provided to the CGD for HB geotechnical assessments.

A project is being completed to prepare Level 2 tsunami mapping for remote coastal areas in HB based on the findings of the National Tsunami Risk Review Sept 2013.

Percentage of surveyed residents that are aware of hazard risks & can identify earthquake, flooding, and tsunami as major hazards in Hawke’s Bay.

2012-22

Awareness of earthquake, flooding/heavy rainfall and tsunami hazard risks show an increase over time

Specific target more than 50% of residents can identify tsunami as one of the region’s major hazards by 2018

As measured in a 3 year survey

Achieved

The most recent regional survey in 2013, undertaken on behalf of Council by SIL Research, asked residents to identify hazard risks to their livelihood:

· 93% identified earthquake

· 62% identified flooding/heavy rain

· 51% identified tsunami an increase from 33% in 2008

Satisfaction of Territorial Authorities and professionals involved in land use planning decision making with the quality, format & relevance of hazard information supplied.

2012-22

All Territorial Authorities and planning professionals are satisfied with the quality, format and relevance of hazard information supplied/available as assessed by an evaluation and feedback form every 3 years

Achieved

A HB Hazard Research Survey was sent out to the TLA and some other key professionals involve in land use planning decision making with results compiled in Sept 2013. 75% of respondents were satisfied (rating either good, very good or excellent) with the quality of hazard information they received. 100% said the information was relevant.

HBRC will maintain and where appropriate increase the readiness of Hawke’s Bay Civil Defence Emergency Management (HBCDEM) and the community to respond to a civil defence emergency.

HBRC response to a Civil Defence emergency is coordinated, appropriate, effective and efficient.

2012-22

Complete the Review of the HBCDEM Plan

Complete framework for Training Needs Analysis and Training Programme with partner organisations

Complete HBCDEM Group Training Directive

Maintain three yearly exercise programmes

Corrective Actions that the HBCDEM group has responsibility for are implemented in accordance with the Corrective Action Plan

In Progress

The review of the Group Plan has reached a significant milestone in that the final consultation draft was approved by the Joint Committee in September. The plan was notified and hearings on submissions will be held on 11 April.

Not Achieved

Framework for Training Needs Analysis will be dealt with as part of Group Plan

In Progress

The training directive will be completed post the Group Plan review late 2014

The corrective actions plan from the recommendations of the Capability Assessment Report is being reviewed quarterly by the Coordinating Executives Group and has been considered as part of the review of the Group Plan.

The level of support provided to the HBCDEM Group in directing and co-ordinating personnel and resources for response and recovery operations.

2013-14

Completed welfare work plan

Conduct induction training for incoming Joint Committee members post 2013 elections

2012-22

An active Welfare Advisory Group which meets at least 4 times a year

In Progress

The review of the Group Welfare Plan will be conducted post the Group Plan review.

The Welfare Advisory Group is meeting at least quarterly and is making good progress in coordinating welfare planning and cooperation between different welfare agencies.

The percentage of surveyed residents prepared to cope for at least three days on their own.

2012-22

90% residents have enough food stored for three days and had some way of cooking without electricity

75% have enough water stored

As measured by three yearly survey

Achieved

Survey results in 2013 (HBRC survey undertaken by SIL Research) showed 93% had enough food stored, with 89% having some alternative way of cooking without electricity.

68% had enough water stored not including water in the hot water cylinders. An increase from 55% in 2011.

A National MCDEM survey in July 2011 showed 66% of NZers had taken steps to prepare themselves or their household, up from 44% the previous year.

HBRC will ensure that appropriate levels of response capabilities are in place and maintained across the Hawke’s Bay Civil Defence Emergency Management (HBCDEM) Group.

Established Emergency Management Plans including training and procedures.

2013-14

Continue to develop the capability of the Group Emergency Coordination Centre in Hastings.

Complete capacity review of existing Emergency Operations Centre facilities in HBCDEM Group.

2012-22

Maintain Plans and Standard Operating Procedures and ensure Group Emergency Coordination Centres can be ready for operation within 6 hrs of event.

Effectively and efficiently manage any emergency events from initial warning until a safe situation returns.

Achieved

The GECC is equipped fully and operational.
Minor enhancements identified during training and testing are being implemented.

In Progress

Reviews will occur in parallel with the implementation of the national Emergency Management Information System (EMIS).Volcanic Ash Exercise held in November 2013.

Warning system established and operating. 135 warnings or watches of severe weather, volcanic alert level changes, tsunami advice or other hazardous events have been effectively and efficiently managed. Wide level of satisfaction by supporting agencies in the system.

Maintain the CDEM Group’s emergency management and civil defence capacity with the capability of effectively responding to an emergency event.

2012-22

Maintain established teams, training programmes, Emergency Operations Centre, Manuals, in accordance with HBCDEM Group Plan.

Achieved

Contact List of trained team members is maintained.

Development of Training activities incorporating the new EMIS operating platform was completed across the Group in the first half of 2013. There have been technical issues with EMIS nationally and HBRC is slowly making this system operational as these issues are sorted out by MCDEM.

HBRC will ensure the recovery from emergencies is managed in accordance with the scale of the event.

Facilitate and maintain Lifelines Group who have effective input into Civil Defence Emergency Management (CDEM) Group plans.

Dedicated CDEM Group Recovery Manager appointed.

A relevant CDEM Group Recovery Plan is adopted and maintained.

2013-14

An active Lifelines Group which meets at least 4 times a year.

Complete Group Recovery Plan.

Complete an engineering Lifelines work programme.

2012 – 2022

Partner Territorial Authorities have appointed local recovery managers.

Partially achieved

The HB Engineering Lifelines Group has appointed a new Chairman. The Lifelines Group represents essential utilities and infrastructure. There is a requirement under legislation that they need to b be up and running as quickly as possible after an event. The group has commenced a critical sites assessment project.

Hawke’s Bay Recovery Forum was run in December 2013. This forum facilitated the development of a Hawke’s Bay Recovery Plan. This project has commenced and a consultation draft finalised. A workshop will be held in May 2014 to work through the proposed plan and seek feedback.

Transport Group of Activities Summary

Attachment 8

Activity 1 – Regional Road Safety

Service Levels and Performance Targets

Activity 1– Regional Road Safety

Level of Service Statement

Level of Service Measure

Performance Targets

2013-14

2013/14 Progress Report

for 9 months to 31 March 2014

HBRC will engage, co-ordinate and implement sustainable regional road safety initiatives so that Hawke’s Bay roads and pathways are safe and accessible, and that the emotional and financial costs of road traffic crashes are reduced

Effectively implement Regional Safety Action Plans with the relevant objectives of the Regional Land Transport Strategy; Safer Journeys 2020; and the New Zealand Injury Prevention Strategy

2013-22

Regional Safety Action Plans for Wairoa, Napier, Hastings, and Central Hawke’s Bay will be reviewed quarterly with a focus on key issues to be addressed

Road safety programmes are implemented to reduce the incidence and severity of road traffic crashes and to align with the key outcomes and issues in the RoadSafe Strategic Plan

Quarterly Regional Safety Action Plan meetings have been held, with the latest taking place in March.

Programmes have been undertaken as per the RoadSafe Strategic Plan. A report on activities completed for the year to date was presented to the Regional Transport Committee in March 2014.

Activity 2 – Regional Land Transport Strategy

Service Levels and Performance Targets

Activity 2– Regional Land Transport Strategy

Level of Service Statement

Level of Service Measure

Performance Targets

2013-14

2013/14 Progress Report

for 9 months to 31 March 2014

Through the region’s transport strategy HBRC will promote improved integration of all transport modes, land use and efficient movement of freight

Approved Regional Land Transport Strategy in place

2013-14

Implement and report on current RLTS as required by statute

2015

Review of RLTS completed by July 2015

The Regional Land Transport Strategy for 2012-2042 (RLTS) was adopted in June 2012.

The RLTS is monitored by the Transport Advisory Group and regular reports are provided to the Regional Transport Committee.

Three yearly Regional Land Transport Programme approved

2013-15

Implement and report on Regional Land Transport Programme 2012-15 as required by statute

2015-18

Regional Land Transport Programme submitted to New Zealand Transport Agency by July 2015, following public consultation

The Regional Land Transport Programme is monitored by the Transport Advisory Group and regular reports are provided to the Regional Transport Committee.

Activity 3 – Subsidised Passenger Transport

Service Levels and Performance Targets

Activity 3– Subsidised Passenger Transport

Level of Service Statement

Level of Service Measure

Performance Targets

2013-14

2013/14 Progress Report

for 9 months to 31 March 2014

HBRC 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 public transport for the people of Hawke’s Bay

In accordance with Regional Land Transport Strategy

2013-15

Build on the improvements made over the last 3 years and ensure current levels of services are maintained and target any increase in funding towards improving existing services

Improvements made over the last 3-4 years have resulted in increased (and still rising) passenger trips. This period saw a 6.8% increase on the same period last year.

Route 12 (Hastings – Napier) is experiencing over capacity issues at peak times (school term). Additional buses are proposed with costs being offset by a reduction of the express Hastings to Napier service which is under patronised ( and therefore heavily subsided).

Continue improving signage, infrastructure and information at all bus stops

2013-14

Implement bus-stop service level standards (as outlined in Regional Public Transport Plan)

2013-15

Install four additional bus shelters each year (two in Hastings and two in Napier)

In consultation with Hastings District Council bus stop signage has been installed throughout Hastings. Discussions are continuing regarding the installation of similar signage at bus stops in Napier.

Two shelters have been installed in Napier and two will be installed in Hastings shortly. This completes the installation programme for this financial year.

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

2013-15

Increase the number of bus stops in Hastings and Napier to meet the measure in the Regional Public Transport Plan

No new bus stops have been installed during this period. The bus network is under review and further bus stop installations have been delayed pending the final outcome of that review.

Changes in technology to be utilised to provide a better service

2013-14

Investigate online top-ups for smartcards

HBRC is part of a national electronic bus ticketing project to develop a replacement system for regional councils. It is expected that online top-ups will be a feature of this system.

Fare payment systems are to be simple to understand; reviewed regularly and accurately record passenger trip information

Fare levels will be reviewed annually

2013-19

Fare reviews to be undertaken annually

The final stage of a three year fare increase programme will be implemented in October 2014.

Integration with other modes

Improve integration between public transport and walking and cycling

2013-15

Investigate further opportunities for installation of secure bike racks at major bus stops

Opportunities to install bike racks are discussed with local councils. Bike racks on buses continue to be well-used, with over 4325 bikes carried since the carriers were first installed.

Continue to provide and deliver the Total Mobility scheme in Napier, Hastings and Waipukurau for those unable to use public transport due to serious mobility constraints

Membership is increased and service delivered in accordance with New Zealand Transport Authority guidelines

2013-15

Increase by at least 5% a year

Total membership recorded on the Council’s Total Mobility database continues to increase.

Membership at October 2013 – 3184

Membership at March 2014 - 3250

HAWKE’S BAY REGIONAL COUNCIL

Wednesday 30 April 2014

SUBJECT: Monthly Work Plan Looking Forward Through May 2014

Reason for Report

1. The table below is provided for Councillors’ information, to provide them with an indication of issues and activities coming up over the next month in each area of Council.

Group	Area of Activity	Activity Status Update
Asset Management & Biosecurity	Land Management Engineering Upper Makara Scheme Open Spaces	- Papanui catchment pilot implementation for Plan Change 6 to be progressed. 2 further steering group meetings are planned prior to 30 June. Meeting objectives to agree implementation framework to achieve Plan Change 6 outcomes. - Application to Hill Country Erosion fund for continuation of hill country erosion work in Wairoa district and initial work in Tukituki catchment successful. 20 phosphorous management plans are to be completed in Tukituki catchment by 30 June. 6 have been completed to date. - Another Pan sector meeting is programmed to be held prior to 30 June. Key agenda item is to devise a programme of forward work in accordance with MoU. - Asset Management Plans for each of the Flood Control and Drainage Schemes administered by HBRC will be progressed during the month. Plans will need to be adopted by Council late in 2014. - A 30 year infrastructure strategy is also required by the Local Government Act 2002 Amendment Bill. A programme for the development of this strategy will be developed. - Construction work to repair the Makara No 1 Dam progressing however delayed by wet weather. Remaining is completion of dam wall between 8m (current level) and 12m above pipe, and closing of stream diversion channel. Requires 3-4 weeks fine weather. - The development of individual management plans for Pekapeka, Tutira and Pakowhai Regional Parks initiated with objective of completing to draft stage for consultation by 30 June 2014.
Asset Management & Biosecurity	Forestry Coastal Biosecurity	- A review of Council’s forestry portfolio is being undertaken and will be reported back to Council mid 2014. - A review of the Tangoio Soil Conservation Reserve Management Plan has been commenced. The review process will include consultation with a number of stakeholders. Once the consultation process has been completed it will be brought to Council for consideration and adoption. - Harvesting of Stands 2.01 and 2.02 in the Reserve underway. Harvesting is expected to take until May 2014. - Proposal for development of a strategy for coast between Clifton and Tangoio approved by HBRC. Liaison with HDC, NCC and iwi will continue to enable establishment of a governance group. - Cost benefit analysis for individual pest species under the plan and preparation of broad plan review framework underway. - Cape to City trial underway. - Transfer of 16,000ha of land from TBfree programme to HBRC possum control area programme to be achieved by 30 June. Preparations for the transfer of a further 80,000ha in the 2014/15 year being considered.
Corporate Services		- Draft Annual Plan consultation process being undertaken – submissions are to be received by 12 May 2014. - Amended proposal to be received from HBRIC Ltd re funding the shortfall and/or amended drawdown schedule to keep Council’s contributions to RWSS cost neutral.
External Relations/ CE’s office	Communications Strategic Alliances CE’s Office	- Preparation for public engagement process around RWSS Special Consultative Process if approved - Two meetings scheduled in May with OTS, Mana Ahuriri and other parties on proposal for future management of Ahuriri Estuary - Future NZ event – Havelock North Function Centre Wednesday 30 April 5.30pm - Preparation of oral submission to Local Government Commission, if date confirmed.
Resource Management	Client Services	- Contract management process review for Resource Management Group - Preliminary scoping for data systems integration - Science charging process review - Develop with HBDHB a clean heat /insulation programme targeting low decile and rental properties to improve health status
Resource Management	Compliance	- The global consent trial with Twyford Irrigators will be evaluated with a view to forming a template for future consents of the same type. - A draft compliance strategic plan has been completed and in conjunction with recommendations for continued compliance service will be presented to the Executive and Council.
Resource Management continued	Science	- Science investigations for the Greater Heretaunga and Ahuriri management zone continue, including continuing sediment modelling in the Tukituki, and continuing riparian mapping in the TANK area. - Technical Advisory Group formed for the proposed development of a coupled/linked surface-groundwater model has met and decided on the initial approach. - Conduct of fieldwork associated with Greater Heretaunga and Ahuriri management zone plan change continues – surface water quality, estuarine water quality and spring-fed streams. - The Hydrometric Network is currently being reviewed internally. The review includes the potential addition of any NIWA sites and the resulting resourcing required to operate and archive the data according to relevant performance standards. One NIWA site has been adopted by Council to date. - Workstreams associated with the Mohaka Plan Change implementation continue. Hawke’s Bay is working with Environment Bay of Plenty and GNS Science on a collaborative investigation of catchment boundaries. - Workstreams associated with the Tukituki Plan Change implementation continue, with emphasis on phosphorus mobilisation. - Routine seasonal monitoring programmes continue. - First draft of “Mohaka River catchment characterisation report” being edited. Assessing additional investigations for Taharua/Mohaka and requirements for groundwater flow model. - Collating available data for Lake Poukawa. Assessing additional investigations for modelling requirements. - Work continues to plan and execute the programme of work for TANK. - Process for publishing reports to HBRC website being developed with assistance from Corporate
Resource Management	Consents	- Ongoing consent processing - Havelock North Fruit Co. application to take groundwater has been limited notified. A tentative hearing date is proposed for late May. Hearing panel to be appointed. - NCC application for coastal protection structure at Whakarire on hold but likely to proceed to a hearing. - Poukawa group of consents on hold while monitoring is identified and a Catchment Management Strategy is considered which may avoid the need for hearing.
Strategic Development	Resource Management Planning	- Further negotiations with appellants and associated parties on Change 5 following a second 2 day mediation 13-14 March 2014 primarily addressing Fish and Game appeal points. - Board of Inquiry hearing on ‘Tukituki Catchment Proposal’ (including Change 6) completed and BOI’s draft decision issued 15 April. Comments on Board’s draft decision due by 16 May. BOI’s final decision to be issued by 28 May 2014. Work continuing on Implementation Plan - TANK Group reviewing terms of reference and meeting schedule/work programme for Phases 2 and 3 of their tasks leading to preparation of a plan change. - Taharua/Mohaka stakeholder discussions continuing in parallel to science investigations. Includes hui with iwi representatives. - Assess need to make further submissions in relation to Napier City Council’s Plan Change 10 and the proposed Hastings District Plan. - Revising of first draft of HB Biodiversity Strategy following feedback from external Steering Group at 10 April meeting
Strategic Development	Transport	- The Ministry of Transport has advised that consultation on the Draft Government Policy Statement for Land Transport has been delayed until May. - Consultation on draft customer and performance measures for the One Network Road Classification has taken place during March and early April.
Civil Defence & Emergency Management	HB CDEM Group - Draft Group Plan	- Submissions heard on 11 April by Joint Committee Meeting; the outcome of that meeting being some minor changes to the draft plan which will now be sent to the Minister of Civil Defence for her comments.

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 required in terms of the Local Government Act’s provisions, the decision making procedures set out in the Act do not apply.

Recommendation

1. That Council receives the Monthly Work Plan Looking Forward Through May 2014 report.

Mike Adye

Group Manager Asset Management

Helen Codlin

Group Manager Strategic Development

Paul Drury

Group Manager Corporate Services

Iain Maxwell

Group Manager Resource Management

Ian Macdonald

Group Manager/Controller Hawke's Bay Civil Defence Emergency Management

Liz Lambert

Chief Executive

Attachment/s

There are no attachments for this report.

[1] Shareholders’ funds are defined as the sum of paid up capital, capital reserves and revenue reserves of the parent company. Total assets are defined as the total book value of all assets of the parent company as disclosed in the statement of financial position.

[2] PM₁₀ monitoring is measurement of the mass concentration of particulate material smaller than 10 µm, expressed as a 24-hour average value.

Request Status	Request Date	Requested By	Request Summary	Group Manager Responsible for Response
Active	15/04/2014	Ian McIntosh	Various information in relation to the wastewater discharges from the Waipawa, Waipuk and Otane ww treatment plants	Iain Maxwell
Active	4/04/2014	Rex McIntyre	Data request for breakdown of investment made by HBRC and Landowners over the last 25 years regarding 1) Flood protection, 2) Possum Control, 3) Regional Landcare scheme , 4) New pest control projects	Mike Adye
Active	1/04/2014	Marty Sharp - DomPost	Consent applications or Pre applications from Tag Oil	Iain Maxwell
Completed	22/03/2014	Steve Moynihan	Haumoana Groyne System 1. Does the council agree that this is the geomorphological process taking place? 2. Is the council monitoring these impacts? 3. Does the council consider that the impacts need to be evaluated? 4. Does the council consider that there is need for concern over the erosion caused in the river mouth? 5. Does the council believe there is a need for mitigation of these effects?	Mike Adye

Service Levels and Performance Targets Activity 3– Response to Climate Change
Level of Service Statement	Level of Service Measure	Performance Targets 2013-14	2013/14 Progress Report for 9 months to 31 March 2014
HBRC will increase the community’s resilience to climate change	HBRC’s corporate total annual Greenhouse Gas emissions measure in carbon dioxide equivalents (excluding Port of Napier Ltd)	2012-22 Reduce corporate (excluding Port of Napier Ltd) carbon emissions from 2005/06 by: · 10% by 2014 · 20% by 2020 · 30% by 2050	Monitoring of carbon emissions is being undertaken and strategies for reducing those emissions implemented.
	Number of sectors through which HBRC promotes / influences reduction in carbon emissions and adaptation to climate change	*2013* Establish a process to monitor and report regional carbon emissions with the first report completed by 30 June 2013 Funding for conversion of 100 dwellings to solar hot water. 2013-19 Continue to increase HBRC’s influence in initiatives to improve regional resilience to the impacts of climate change. Continue to update and report regional carbon emissions at least every 3 years.	A system to quantify regional green house emissions has been developed by Landcare Research. This requires substantial data gathering. HBRC has yet to receive a business case for the establishment for a Solar Ht Water Scheme from Napier City and Hastings District councils. Provision is still available for loan funding should the scheme be initiated. A number of initiatives included in HBRC Strategic document and LTP are being implemented. A report entitled Global Climate Change and Barrier-beach responses has been completed and published. This predicts a significant increase in risk along the regions coast by 2100. HBRC have initiated the development in conjunction with territorial authorities of a coastal strategy to determine appropriate mitigation of the impact of this hazard. Gathering of information for this report will be commenced in the final quarter of 2013/14. The report may not be complete by 30 June.

GENERAL SUBJECT OF THE ITEM TO BE CONSIDERED	REASON FOR PASSING THIS RESOLUTION	GROUNDS UNDER SECTION 48(1) FOR THE PASSING OF THE RESOLUTION
Hawke's Bay Regional Investment Company Draft 2014-15 Statement of Intent	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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