Archive | Finance

Council value for money review gets tick tomorrow

Auckland Council goes to the basics of the super-city tomorrow when its finance & performance committee will formally institute a “value for money” programme review aimed at lifting efficiency savings from $183 million in 2014-15 to $300 million/year by 2025.

The cost-effectiveness review programme also lifts the supervision of council-controlled organisations – particularly the big ones, Auckland Transport, Watercare Services Ltd & Ateed (Auckland Tourism, Events & Economic Development Ltd) – from sniping when one of those organisations steps out of line, to a closer performance audit.

When the super-city council was formed at the 2010 council elections, the new council had a number of key tasks to do, all at once: rationalise services & expenses, equalise costs to ratepayers across all the old 7 territorial council areas, and establish what the new council should & shouldn’t do. On top of that broad equalising, the council had major plans to create for specific areas and, for the whole region, the unitary plan that would combine regional policy statements & district plans in one document.

Given tight timeframes for everything it was doing, the new council didn’t try to go back to ground level in 2010 and decide then exactly what it should be doing across the whole region but, naturally, chose to work with the previous councils’ programmes and whittle them down to a consistent presentation.

Now, the work starts in earnest.

Section 17A of the Local Government Act requires councils to review “the cost-effectiveness of current arrangements for meeting the needs of communities within its district or region for good quality local infrastructure, local public services and performance of regulatory functions”. A review must consider options for the governance, funding & delivery of infrastructure, services & regulatory functions.

The review laid out for the finance & performance committee by value for money programme manager Sally Garrett introduces “a framework to evaluate expenditure and to provide greater accountability to the governing body & the ratepayer on what is being achieved with public expenditure. The objective of the programme is to analyse cost-effectiveness in a systematic manner across the Auckland Council group and to provide a basis on which more informed decisions can be made on long-term planning priorities.”

The first 3-year review programme starts with 2 phases, initially focusing on activities & services considered high priority to assist in the development of the 2018 long-term plan. Ms Garrett says in her report to the committee it’s assumed each review will take 2-4 months and that up to 4 reviews can be run at the same time.

The first 4 reviews will be:

  • 3 waters – water, wastewater & stormwater budget categories
  • Domestic waste – domestic waste services including refuse, recycling, inorganics & organic services
  • Organisational support – communications & engagement services across the council group, followed by a rolling series of reviews including transactional services, payroll, finance, information systems, procurement, human resources, customer services & legal functions, and
  • Investment attractions & global partnerships – how investment attraction & global partnership services are delivered across the group.

Under the programme, expert panels will be appointed in April-May, data for the first 4 reviews will be collected & analysed from May-August, and conclusions & recommendations will flow from July-September.

The woman managing the programme, Sally Garrett, has a long history in this type of work, first in her 5 years as a principal in Ernst & Young’s management strategy group, then for 6 years as Watercare’s business services general manager. During 3 years as an independent consultant, Ms Garrett assisted the royal commission on Auckland governance and put together the programme for Auckland City Council to manage the transition to the super-city council, including overseeing the due diligence phase and the migration of staff & assets.

She joined Auckland Council in 2012 to manage the finance transformation programme and was appointed to run the value for money programme in 2015.

Attribution: Committee agenda.

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Goff gets agreement on council budget consultation and starts to tighten grip on CCOs

Auckland Council’s finance & performance committee held a 9-hour session yesterday which indicated some directions under the new mayor, Phil Goff: a closer watch on its commercial operations, a tighter rein on costs and a bigger role for local boards.

Helped by committee chair Ross Clow’s clear intention to keep things flowing, the council made progress without the usual surfeit of political speech-making, with mostly succinct questioning, and an awareness of the subject matter as it had been circulated early enough to be digested.

Mr Goff made it clear right from his first meeting that questions would be questions, and he’s drilled the message home. His next task is to convince the boards of the council-controlled organisations that they aren’t autonomous, that when the council wants an answer it should be given a proper one, and that those organisations will have to lift their performance – not just by a smidgeon, but by multi-million-dollar shifts in both savings & earnings.

That seismic shift in performance would be worth far more than a bed tax, in both dollars & perception, though that tax is still on the wishlist.

The council finance committee’s main tasks yesterday were to go through the quarterly reports of the council-controlled organisations and of the council itself, approve the pro forma half-yearly accounts to 31 December and, toward the end of the day, discuss the letters of expectation the mayor had written for the council-controlled organisations and, the last, to put finishing touches to the public consultation document on the council’s annual budget, to go out in the New Year.

The committee agreed to one amendment to the mayor’s consultation proposal – put by new councillor Desley Simpson and seconded by the mayor – to seek other operating revenue streams to minimise the impact for ratepayers.

A proposal from councillors Wayne Walker & John Watson to consult on introducing chemical-free weed control in public parks & reserves & urbanised areas, including the option for a targeted rate to fund any additional costs, was defeated, though not entirely rejected. A number of councillors supported the principle but there was debate on costs and some aspects of implementation, and the mayor said that, if it was to be introduced, it ought to be done properly & after thorough examination.

The third amendment, proposing such a review, became a note to be forwarded to the council’s environment & community committee.

The revised budget consultation proposal goes to the council’s governing body for approval tomorrow.

This story outlines the main business of yesterday’s meeting, but not the real content – the debates & position-taking. I’ll try to get that extra story posted for Friday.

Attribution: Council committee meeting.

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New mayor wants bed tax, fuel tax & new housing tax

Auckland mayor Phil Goff released his budget plan today to restrict rate rises and raise significant new revenue while restraining borrowing and supporting underpaid & vulnerable residents.

His proposal goes to Auckland Council’s finance & performance committee on Wednesday, returns to that committee on Tuesday 13 December and on to the council’s governing body 2 days later for approval to be put out to consultation.

  • I’ll be adding new pages to this story this evening as I read through the proposal, which runs to 68 points & 15 pages.

Mr Goff has proposed restricting rate rises to a 2.5%/year average and introducing:

  • a visitor levy (bed tax)
  • a targeted rate for new largescale housing developments, and
  • a regional fuel tax.

In a release out this afternoon, Mr Goff said: “Ratepayers have shouldered the responsibility for the growth of our city and cannot be expected to continue to do that on their own. This proposal shares that responsibility more fairly across all of those who benefit from living & doing business in our city.”

Mr Goff said his proposal delivered on his campaign commitment to restrict rate rises: “I made a commitment to restrict the annual average rate rise to 2.5%, down from 3.5%, and that is what this proposal delivers.”

The proposal would implement his commitment to a living wage for council employees and contribute an additional $500,000 to co-ordinating work to support homeless Aucklanders: “This proposal puts the people of this city first by taking a responsible & fair approach to tackling Auckland’s growth challenges, and seeking to support those who most need help to live a decent life in our city.”

Mr Goff noted that significant work was underway at the council to find efficiencies across the council group, which includes Auckland Transport, Ateed (Auckland Tourism, Events & Economic Development), Panuku Auckland Development, Regional Facilities Auckland & Watercare Services Ltd.

“We are taking a responsible fiscal approach by ensuring that Auckland Council is more efficient and delivers value for money while finding innovative ways to raise extra revenue to support growth.

“Accommodation providers & other businesses benefit most directly from the funding the council puts into attracting visitors to the city and supporting major events. That is why I am proposing a new visitor levy to be collected by hotels, motels & B&Bs to replace ratepayer spending by Ateed in this area.

“We are also ensuring that we remain well within the council’s debt cap to avoid a potential credit downgrade which would force ratepayers to fund millions of dollars in extra interest costs.”

The mayor has set out a series of recommendations for consultation and promotes these initiatives:

  • Raising up to $30 million from a new visitor levy to replace ratepayer funding currently spent on attracting visitors and supporting major events
  • Introducing a targeted rate for new largescale developments to pay for major new infrastructure, increase Auckland’s housing supply and discourage landbanking
  • Seeking Government support to implement a regional fuel tax to help close the $400 million gap in transport infrastructure funding which the Government & council identified through the Auckland transport alignment project
  • Bidding for a significant share of the Government’s housing infrastructure fund
  • Generating savings from efficiencies across the Auckland Council group
  • Introducing a living wage for council employees, and
  • Contributing $500,000 to co-ordinating work to support homeless Aucklanders.

The uniform annual general charge would rise by 2.5% and the business rates differential, which has been programmed to decline to zero over several years, would remain unchanged from this year’s figure.

The visitor levy (bed tax) has been proposed for Auckland many times and has been fought off by the hospitality sector. Its proponents have regarded it as separate from rates – although that income is what hotels use to pay their rates, in the same way that every other landlord uses rent to pay rates.

“The initiatives that I’m promoting will require collaboration with central government, businesses & our communities. We want to work openly & honestly with all of our partners to make sure that Auckland is one of the world’s best performing cities.

“Given it is only 4 weeks since inauguration, there is still a lot of work to be done. Many of these initiatives will fall under the long-term plan, but it is important to start consulting Aucklanders now.”

Following the December meetings on what should go out to consultation, the council is scheduled to adopt its consultation document & supporting material on 9 February, run the budget consultation through February-March, confirm decisions to be incorporated into the budget on 1 June and adopt the budget on 29 June.

Earlier stories:
22 July 2015: Corrected: Councils want tax reshuffle, innovation a long way off
29 June 2009: ARC overcomes canning of fuel tax, sets 3.9% rate rise
8 October 2008: Penlink gets tick along with electrification, ferries & tickets in first bite of regional fuel tax
13 November 2006: Stadium on the wharf will require a bed of new tax
6 November 2005:
Council looks more closely at bed tax
2 March 2004: Councillors opt for bed tax report
2 March 2004: Christmas present: new tax
2 March 2004: On the road to a supercity
16 August 2002: Councillors opt for bed tax report

Mayoral proposal for 2018 annual plan pdf
Local authority funding project

Attribution: Mayoral release.

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No ticks yet for mayoral candidates though Goff makes start on fiscal policy

2 candidates for Auckland’s mayoralty have committed to a “ratepayer protection pledge” guaranteeing they won’t vote for any rate or levy hikes exceeding 2%/year in the next council term, and a third candidate has written a policy to cap the residential average rise at 2%. But the candidate most likely to win if the right of politics vote is split 3 ways, Phil Goff, released a fiscal policy yesterday designed to restrict rate rises to an average of 2.5%.

The call for a ratepayer protection pledge was made last week by the Auckland Ratepayers’ Alliance, created by the NZ Taxpayers’ Union, and won support from mayoral candidates John Palino & Mark Thomas. Victoria Crone had already written her own policy with the 2% cap.

Mr Goff’s version of crimping the always-up thinking includes requiring every council department to make savings that would contribute to a new efficiency target of at least 3% of overall spending.

All these percentage thinkers have it wrong.

Picking a number to cut rates by is a great way of ensuring the arms & legs will be cut off, leaving a corpulent policy and no ability to implement it. Auckland City Council did that several years ago.

When the new super-city council was created in 2010, it should have looked at what it needed to do and stuck with it. But the council, in that first year, had an almighty project on its hands to bring consistency across a region that previously had 7 territorial councils & one regional council and, at budget time, it did the usual exercise of seeing what could be left out.

Starting at “what to do” instead of “what not to do” sets the parameters, which can be reviewed.

An example of how to do things badly is in consent processing, an area of the council where customers pay for the service. A predetermined percentage cut would mean that, as the need for inspections rises, fewer people would be available. But, by investigating efficiencies – in this case, including policies set by both government & council – a leaner yet better performance might be possible.

The net result for me is a cross against all those candidates – no ticks.

The Hide ploy

When Act MP Rodney Hide set up the super-city council, a central ploy was to ensure politicians couldn’t get their hands on the commercial businesses of the council, which were semi-quarantined in “council-controlled” organisations.

Thus Auckland Transport, Watercare Services & a few other arms of the council were almost, but not quite, autonomous. But their budgets are, in the end, up for approval by the council, and the council needs to know what justifies the figures, so the semi-autonomy concept could never work satisfactorily.

Mr Goff’s fiscal policy shows a determination to turn those organisations, effectively, back into departments: “A particular focus will be on combining council & council-controlled organisations’ procurement systems and progressively moving towards shared services for the group in terms of back office functions such as finance & human resources.”

Are council departments the way to go? They could be, but New Zealand experience tells you that politicians never fund services & infrastructure adequately when they have direct control – and direct exposure to the reactive votes – which was a big part of isolating them from this risk.

Tax allocation & infrastructure funding

Mr Goff – former housing minister & leader of the opposition – set out brief policy yesterday on 2 issues which deserve far more consideration than politicians have given them: allocation of tax income and financing of infrastructure.

If you allocate tax income according to geographic population, Auckland may well be receiving less than its due. On the same basis, would cycleways – or new housing subdivisions – get any funding? Few people are riding bikes because it’s dangerous or impractical, and nobody lives in these unbuilt subdivisions yet, but logic tells you that funding is required if change is to occur.

Extending that logic, you could argue that these subdivisions should be built somewhere else that’s cheaper, where the land is available, and therefore that the focus should be on shifting jobs to centres outside Auckland.

He advocated replacing the interim transport levy on rates with a petrol tax, as was previously proposed by the council & rejected by the Government, and later switching to a congestion charge or toll. In all cases you can argue that someone is benefiting without paying, and someone is paying without benefiting. Mr Goff’s view on roads was that those who benefit from reduced congestion should pay.

His views on tax & funding: “Working with central government to expand its infrastructure fund and investigate infrastructure bonds: While more than half of New Zealand’s growth is in Auckland, the extra gst & income tax collected goes to central government. I will advocate for Auckland to get its fair share of that extra revenue to pay for servicing that growth.

“To reduce the risk of even greater gridlock & a worsening housing crisis, we need an additional $17-20 billion for core infrastructure to support future urban land areas. It is inappropriate & unfair to fund that solely through the blunt tool of raising rates. We need to find alternative innovative funding sources such as sharing more Government revenue with council, public-private partnerships or raising infrastructure bonds.

“I will also advocate for the removal of the flat levy on rates to pay for a shortfall in transport infrastructure funding in favour of a road charge. This could be in the form of a petrol tax that is later replaced by a congestion charge or toll. It is only fair that those who benefit most from using the roads contribute to the cost of reducing congestion.

“Implementing this fiscal policy will be an important step towards restoring ratepayer & Government confidence in Auckland Council by ensuring that in future it works effectively & efficiently in the best interests of the people of this city.”

Mr Goff is getting somewhere, but should be far further advanced on these policies. I think Orakei board member Mark Thomas has done far better in advocating detailed policies, with assessments of how they would work & their impacts.

Candidate websites:

Attribution: Candidate policies.

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Updated: Council resumes bond offer, sets interest rate

Update: The interest rate was set at 3.338%.

Auckland Council opened a $100 million bond offer Thursday, closing Friday, with the ability to accept as much again in oversubscriptions. Fully subscribed, it will take council bonds traded on the NZX debt market over $1 billion.

The interest rate on the 10-year secured, unsubordinated fixed-rate bonds will be set on Friday after a bookbuild, allotments made next Wednesday, trading to open on Thursday 28 July. The council said the indicative margin over the swap rate was 0.9%/year.

The council announced its intention to issue the bonds in mid-June, then decided immediately after the Brexit vote in the UK to defer it because of the uncertainty.

The council has $825 million of bonds listed on the NZX debt market:

  • $250 million maturing 30 March 2020, paying 3.04%/year (AKC090)
  • $250 million maturing 24 September 2020, paying 4.017%/year (AKC080)
  • $200 million maturing 25 March 2024, paying 5.806%/year (AKC070), and
  • $125 million maturing 18 December 2018, paying 4.41%/year (AKC060).

The council said its new bonds were expected to be assigned a long-term credit rating of AA from Standard & Poor’s and Aa2 from Moody’s.

Attribution: Council releases.

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Council budget & rates approved in quick time

Auckland mayor Len Brown cut short the debate on the council’s budget & rates yesterday when he told councillors at the governing body meeting little had changed in the annual plan, so the only new decisions were on the look & substance of the documents.

The mayor has tried over the first 6 years of the super-city council to prevent relitigation of issues through the committee process and into the governing body’s meetings while the minority – notably Cllrs Cameron Brewer, Christine Fletcher, Dick Quax & George Wood – have sought new ways to relitigate.

Cllr Fletcher tried for “a short discussion” on the uniform annual general charge and Cllr Wood insisted he had a right to speak, that just because issues had been debated at committee level didn’t mean they shouldn’t be debated again by the governing body.

Mr Brown stopped them both: “There has been very little by way of change in this annual plan (and) we have had the debate around the annual plan,” he said. As for the rates proposal, that was debated thoroughly in May.

“I accept every year there will be a debate on the uniform annual general charge because it is the equity lever. The community had a massive debate during the long-term plan consultation. Then we had another debate in May, the most extensive debate outside the interim transport levy. The vote was clear.”

The approved recommendations were for an average general rates increase of 2.4%, a uniform annual general charge of $394/property, the interim transport levy to continue and the farm/lifestyle block differential to be unchanged.

The 2.4% average general rates increase plus transport levy will work out at an average rise of 2.5% for residential & farm/lifestyle ratepayers, 1.9% for businesses.

The transport levy is $182.85 including gst for business properties, $113.85 for residential, farm/lifestyle and properties with no road access.

The proposed urban residential rate in the dollar of capital value is $0.00253439 and business $0.00693795.

Governing body agenda
11, Annual plan, adoption of the annual budget 2016-17
12, Rates setting 2016-17

Earlier stories:
27 June 2016: Council to set rates on Thursday
13 May 2016: The rating numbers council will vote on today

Attribution: Council governing body meeting.

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Brexit vote stalls council & Kiwi Property bond offers

Auckland Council decided yesterday, and Kiwi Property Group Ltd today, to defer the bond offers they announced last week because of the uncertainty following the Brexit vote in the UK.

The council said last Wednesday it was considering a retail bond issue of fixed-rate secured bonds to the public in New Zealand & institutional investors.

Kiwi Property said on Friday it was considering an issue of 7-year fixed-rate senior secured bonds to New Zealand institutional & retail investors, to be offered this week.

Earlier story:
27 June 2016: Kiwi Property to make bond offer this week

Attribution: Company & council releases.

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Council to set rates on Thursday

Auckland Council votes to approve its annual rates on Thursday, for the year starting on Friday.

The recommendations are for an average general rates increase of 2.4%, a uniform annual general charge of $394/property, the interim transport levy to continue and the farm/lifestyle block differential to be unchanged.

The 2.4% average general rates increase plus transport levy will work out at an average rise of 2.5% for residential & farm/lifestyle ratepayers, 1.9% for businesses.

The transport levy is $182.85 including gst for business properties, $113.85 for residential, farm/lifestyle and properties with no road access.

The proposed urban residential rate in the dollar of capital value is $0.00253439 and business $0.00693795.

The council set out a capital investment programme of $18.7 billion in its 10-year budget for 2015-25, while capping rates increases at no more than an average of 3.5%. Total council borrowings were forecast to rise from $7.2 billion to $11.6 billion, while assets were forecast to increase from $42 billion to $60 billion in 2024-25. For 2016-17, the 10-year budget forecast rates to increase by 3.2%, with $1.9 billion of capital investment and opex of $3.7 billion, and operating revenue continuing to be less than total opex, in line with the council’s policy of moving towards fully funding depreciation by 2025.

Governing body, Thursday 30 June at 9.30am, Town Hall:
11, Annual plan, adoption of the annual budget 2016-17
12, Rates setting 2016-17

Earlier story:
13 May 2016: The rating numbers council will vote on today

Attribution: Council agenda.

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Council to get finance proposal on HQ plus Graham St building

Auckland Council’s finance & performance committee agreed yesterday to get a “financing proposal” on 2 buildings – its 135 Albert St headquarters & 35 Graham St property administration building – most likely leading to their sale.

Council staff have been working on options for 10 council-owned buildings which Cameron Partners identified for review, but the financial planning manager for council-controlled organisations, Robert Irvine, said the list had been narrowed down due to legal constraints over titles and some being caught up in growth in their areas, such as the former Manukau City Council chamber & offices.

All 10 properties had a 2014 capital value of $311 million, well short of current market value, led by the council’s Albert St tower at $133.5 million. The Graham St property was valued at $32.5 million.

Mr Irvine said in his report: “The preliminary assessment indicates that a full sale & leaseback best aligns with the considerations that underline an ownership versus lease decision. The considerations being: the necessity for holding control of the asset, the level of operational risk an organisation wishes to hold, the financial impact, and the organisation’s capital scarcity.

“Preliminary analysis of Auckland Council’s corporate property portfolio indicates that there is no necessity for maintaining ownership control of the 2 corporate office buildings. It divests some operating responsibilities and will provide debt headroom.”

He said the underlying reason for government organisations to lease assets rather than own appeared to be capital rationing: “Where Auckland Council must borrow in order to fund a property purchase, it could be beneficial to rely on the private sector to provide that capital and simply pay for accommodation through a lease arrangement funded out of rates. This means the capital can be deployed elsewhere. For Auckland Council this could be stormwater & transport infrastructure.”

Chief financial officer Sue Tindal said any decisions the committee makes would then go out to public consultation, such as sale of buildings or airport company shares.

John Tamihere said it could be confusing, “death by a hundred cuts”, but “You have to see how it’s all wired up. What the city needs to get its head around, officers as well, you’re now getting to a level of requirement akin to a Cabinet type of paper and the rigour that goes into a bunch of those.

He said this could require review of the quality of documentation coming before the council.

To a question from Cllr Chris Darby, Kevin Ramsay said the option of bundling the council’s properties into an investment fund would be in the mix when staff reported again.

Cllr Mike Lee expressed concern that sale of the buildings kept being tied into ownership of Ports of Auckland Ltd & Auckland International Airport Ltd shares, and once more dragged in the presence of Independent Maori Statutory Board members at the committee table, which he’s constantly & vociferously opposed.

Cllr Linda Cooper said the 2 groups of assets were being considered separately: “I do want to rationalise some of the buildings we’ve got. We’ve got far too many buildings,” she said.

Cllr Wayne Walker said the council didn’t have a long-term vision for its accommodation, including council-controlled organisations, and an integral part of that was the civic administration building which the council intended to sell.

The call for a report on financing options for the 2 buildings was approved.

Link: Committee agenda

Attribution: Council committee agenda & stream of meeting.

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The rating numbers council will vote on today

These are the numbers mayor Len Brown (pictured) wants Auckland Council to set today for the year starting 1 July:

  • an average increase in rates revenue of 2.4%
  • a uniform annual general charge of $394
  • year 2 of the 3-year interim transport levy (targeted rate) be unchanged at a fixed charge of $113.85 (including gst) for non-business ratepayers and $183.85 (including gst) for business ratepayers
  • draw down from the council’s diversified financial asset portfolio up to $100 million/year over the next 2 years to manage debt ratios within prudent limits
  • $1.945 billion of capex, $3.67 billion of opex, $8.774 billion of closing debt, interest:revenue ratio 11.5%, debt:revenue ratio of 265%
  • the general rate differential for farm & lifestyle properties to stay at 80% of the urban residential rate.

The 2016-17 budget would be based on year 2 of the 2015-25 long-term plan, adjusted for the updates set out in the staff reports, and to incorporate the following changes & specific decisions:

  • Auckland Council to continue its public transport concessions
  • additional funding of $1.5 million to Auckland Transport, noting that the remaining $1.5 million estimated cost of the discontinued Government subsidy to come from internal savings in Auckland Transport
  • additional capital funding to Auckland Transport of $30 million in 2016-17 & $20 million in 2017-18 to support the early acquisition of land for capital projects excluding light rail
  • request Auckland Transport work with the NZ Transport Agency & Kiwirail to retain the land at the Waterview Tunnel construction site until the decision on the light rail project has been progressed
  • additional operating expenditure of $150,000 to deliver town & local centre clean-ups.

For Maori property

The mayor has proposed that the Maori freehold land rates remission & postponement policy be amended to include remissions:

  • to adjust rates to the equivalent of those that would have been charged, had the property been valued excluding any potential use that is unlikely to be achieved within Maori ownership
  • to adjust rates to the equivalent of those that would have been charged, had the rateable value of the property been adjusted by 10%, where properties have significant barriers to development such as owners being deceased or not succeeded to
  • for marae & urupa land in excess of the 2ha limit for non-rateability
  • for land returned under treaty settlement for commercial redress, where the land is set aside and protected for cultural, historic or natural conservation purposes or because it is wahi tapu, or used for a marae or urupa
  • that the rates remission & postponement policy be amended to remit fixed charges on Maori land on multiple titles used as single property.

Other specific targeted rate proposals:

  • a 2-year pilot programme be established providing financial assistance of up to $35,000/property to eligible homeowners in Piha, Te Henga, Karekare & Little Oneroa catchments to replace or upgrade their failing systems, funded by a targeted rate set from 1 July 2017
  • a targeted rate be set (at two-thirds of the level set regionally for a full year recycling service) to fund a fortnightly kerbside fully commingled recycling collection in rural Franklin
  • the Brown’s Bay, Glen Eden & North Harbour business improvement districts are extended.

The process:

The mayor’s annual budget proposal is debated this morning by the council’s finance & performance committee. Its recommendations go to the council’s governing body this afternoon for approval, without relitigation.

Mr Brown said in his summary:

The consultation document the governing body adopted in February identified the key changes to the rating policy on which it was seeking feedback – the level of uniform annual general charge, the interim transport levy, a reduced differential for farms over 50ha and the rates remission & postponement policy for Maori freehold land.

Mr Brown said review of the underlying budgets by council-controlled organisations & council staff had identified some cost changes, mostly positive, and a few issues where specific decisions would be required. These specific issues include some aspects of concessionary fares to SuperGold cardholders & senior citizens, additional capital funding for strategic transport land acquisition and release of diversified financial assets. He’s also proposing the inclusion of a small budget for town and local centre clean-ups.

“With regard to rating policy, this proposal is based on minimal change. I am firmly of the view that, after 5 years of massive change as a consequence of the amalgamation of the rating system, it is time to have some stability. I acknowledge the work that Cllr Ross Clow has done to look for alternatives in the way the transport levy is charged and I think that was a debate worth having. However, on balance, I feel that this should be a year of minimal change and therefore my proposal is to remain with status quo for the uniform charge, transport levy & the differential for farms over 50ha.

“I am supporting the recommended changes to the Maori freehold land rates remission & postponement policy and also to the more local targeted rate issues – where supported by the local board. These are all minor and do not undermine the stability principle.

“I am proposing for 2016-17 that we continue to support the SuperGold cardholders & senior citizens in free use of public transport in the current arrangements. The introduction of the HOP card for these users will enable data gathering to support any future consideration of this ongoing subsidy. I am disappointed that the Government has withdrawn its support in the absence of such information and I intend to write to the minister to express our views. I am proposing that the additional cost of continuing this level of service is 50% funded from within Auckland Transport’s existing budgets and 50% by additional funding from rates.

“I have also proposed partial funding of the additional strategic land acquisition and supported the drawdown of funds from the diversified financial assets portfolio to manage our debt within prudent limits. These assets are not, in my view, core to the functions of council and it is appropriate to utilise them to prudently manage our debt & debt ratios, and by so doing maintain our AA credit rating.

“The net result of these proposals is an interest:revenue ratio of 11.5% and a debt:revenue ratio of 265%.”

Auckland Transport land acquisition:

Auckland Transport asked for $80 million more for strategic land purchase: “The long-term plan includes a number of transport projects which will require land acquisition, and largely these are budgeted close to the time when the project would commence. However, as development is progressing at such speed, it has become apparent that on some sites it would make more sense to designate & potentially acquire the land now before any development takes place and make the acquisition significantly more expensive.”

“3 categories of acquisition are identified – projects that are planned and in the budget but at a later date (effectively this is bringing budgeted expenditure forward); projects that are identified but beyond the current long-term plan and there is an opportunity to designate/secure land now; acquisition associated with a light rail depot that, should that project be approved, would be the most suitable location and will only be available for a relatively short period of time.”

With regard to light rail, the mayor said: “There is still a significant amount of work to do before either ourselves or the Government is ready to give the green light on that project. I recognise the limited opportunities to identify & designate land in critical spots in the central area. I am proposing that we enter into discussion with the NZ Transport Agency, which currently owns the land in question, and seek the ability to keep this land available until there is a decision on the future of light rail. Should this become an urgent matter of consideration before the next budget, then it can be brought back to the council of the day.”

Town & local centre clean-up initiatives:

“During the discussions with local boards, we heard a lot about dissatisfaction with levels of service around basics such as mowing & street cleaning. I am aware that there is a process underway to review the way we deliver some of these services. The outcome of that is expected to be an improved level of service and this will roll out over the next 12-18 months. While this is the underlying issue that needs to be resolved, there are other activities we can leverage for relatively small amounts of budget.

“I am proposing a small budget of $150,000 to deliver a number of town & local centre clean-ups across the region. Resources will be targeted towards those areas that are in high demand for graffiti & other clean-ups. The council’s service providers will support & work with business owners, business improvement districts, business associations & others to remove any graffiti vandalism that is outside the scope of the council’s normal service delivery. Typically this means graffiti that is on private premises such as storefronts, rubbish skips, private signs & fences. The clean-ups will also include litter removal, weeding, and painting of fascias where possible & permitted. This new initiative will help to improve the overall look of local business environments across the region. The service will help to strengthen & enhance the council’s relationships with business owners, business improvement districts & business associations across the region.

“The proposed budget of $150,000/year allows for up to 50 clean-ups throughout the year. At a minimum, and over the first year of operation, 32 clean-up initiatives will be delivered. Town & local centres will be prioritized, based on the council’s extensive data on graffiti ‘hot-spot’ areas as well as call centre information on demand for council services.”

Image above: Mayor Len Brown alighting from a new double-decker bus last November.

  • I’ll update during the day if there’s any major change from the course set out above, and on the final figures adopted.

Finance & performance committee agenda
Alternative sources of financing reports (as one large pdf attachment to 19 November committee agenda)

Earlier stories:
10 February 2016: Council annual plan consultation starts next Monday
11 December 2015: Council back next week to debate rates rise
13 November 2015: Reports released on Auckland’s alternatives to rates

Attribution: Council committee agenda.

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