Archive | Councils

Council OKs budget for consultation, signs off contributions policy

Auckland Council made a number of important decisions this week – its annual budget & development contributions policy at the top of the list.

The budget, for the July 2019-June 2020 year, goes out for public consultation in February and will be approved at the end of June.

The contributions policy has been through consultation, including a number of workshops with developers. Some changes were presented yesterday, which I’ll detail in a subsequent item.

Both went quickly through the council’s governing body yesterday after considerable debate at earlier sessions.

Unfortunately, my own website battles have got in the way of the stories, so, for today, you can check out details on council links, and I’ll aim to point to specific areas in both the budget & contributions policy for Monday.

Links from this week’s finance & performance committee and governing body meetings, on budget & development contributions:
Annual budget 2019-20 item for public consultation
Mayoral proposal for the annual budget 2019-20
Mayoral proposal for the annual budget 2019-20
Annual budget 2019-20 – consultation material overview 
Rates &fee issues for annual budget 2019-20 
Proposed changes to the urban rating area 
Proposed increases in regulatory fees and deposits 
Annual budget 2019-20 – consultation material overview
Rates & fee issues for annual budget 2019-20
Proposed changes to the urban rating area 
Proposed increases in regulatory fees & deposits
November workshop – Auckland Council’s debt strategy
Contributions policy 2019    
Draft contributions policy 2019 – analysis of feedback received 
Contributions policy for adoption Contributions supporting analysis – transport unit of demand factors 
Local board views 
Attachment C – development contributions stakeholder presentations workshop minutes
Attachment E – development contributions workshop minutes
Attachment G – development contributions discussion workshop minutes
Annual budget 2019-20 – consultation material overview
Rates & fee issues for annual budget 2019-20
Proposed changes to the urban rating area
Proposed increases in regulatory fees & deposits 

Attribution: Council documents & meetings.

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Assessment of north-west community facilities shortfall nears decision time

An Auckland Council report on community facilities in the north-west – and recommended action – will go to the 4 relevant local boards this week.

The area investigated covers 150km2, represents just 3% of the region and had an estimated population of just 34,230 last year.

But that population is expected to balloon by 350% through to 2046. In the east at the moment, the new Millwater subdivision out from Silverdale is hemmed in by the Northern Motorway. From there to Kumeu at night, all is pitch black, but that won’t last much longer.

The council investigation area included parts of the Rodney, Upper Harbour & Henderson-Massey local board areas.

Report authors principal policy analyst Antonia Butler & southern community policy team leader Elizabeth Fitton-Higgins said the north-west’s population was growing faster than the Auckland average, which would put pressure on existing community services & facilities and create demand for new services.

Council staff investigated the provision of community facilities across the north-west over the last financial year to identify gaps now & likely in future.

Their key findings:

  • The baseline population is aging but new developments are bringing in younger people, families & increasing ethnic diversity, which will impact service needs
  • Economic & geographic disparity restricts access and creates barriers to participation for some residents, particularly those in rural areas and in lower socio-economic areas such as parts of Westgate & Massey
  • A pool & additional sport & recreation space are priorities for many residents, and
  • There is some capacity within existing facilities and opportunities to better target services to increase participation in low user groups.

The recommended key moves to address the findings are:

  • Address condition issues at Kumeu Library to maintain service levels
  • New aquatic provision from 2026, ideally near Westgate
  • Additional recreation/leisure space in Rodney by 2026 and further recreation space in the longer term (2036) in the Henderson-Massey or Upper Harbour area to support 4 additional indoor courts
  • Potential additional multi-purpose community space in Whenuapai from 2026 and Kumeu from 2036, subject to the impact of new provision in Westgate, the rate of growth across the area and the needs of emerging communities.

The local boards will be asked to endorse the report’s findings & consequent next steps – to assess options, start strategic cases for change and develop an indicative business case.

Rodney local board agenda item
North-west community facilities provision investigation summary report
Bob Dey Property Report diary, week 17-23 September 2018

Attribution: Council committee agenda.

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Corrected: Council asset disposal policy up for Penlink-related argument

Published 16 September 2018, corrected 17 September 2018 (it’s not a reserve):
20 years after a Whangaparaoa Peninsula section was acquired for widening of the peninsula’s main road, nearly 3 years after the Auckland Transport board determined it was no longer needed for that purpose and 2 years after the rationalisation process began, an Auckland Council committee will determine on Tuesday whether the site will be sold.

That’s the easy question. The more difficult one – which the council’s finance & performance committee is most likely to reach to maintain consistency – is that the return from the sale should go into the general council pot, not to a local preference.

Through the 8 years of the super-city Auckland Council, the council has determined that funds from asset disposal should be assigned to priorities wherever they occur in the region, not necessarily to the locality of the disposal.

The property up for a disposal decision on Tuesday, 8 Hiwi Crescent in Stanmore Bay, was bought by the former Rodney District Council in 1998 to enable widening of the main peninsula road. It’s 100m uphill from a busy new supermarket – and from the start point for the long-mooted Penlink crossing of the Weiti River, which gets on to transport infrastructure priority lists from time to time and then gets knocked off again.

Correction: I wrote initially that the vacant 809m² section was declared a reserve while the roadworks were awaited. That’s been questioned and I can’t find any reference to the reserve status tonight. Council property arm Panuku Development Auckland has a disposal budget to meet ($24 million by 30 June next year), has undertaken consultation and has concluded it’s time for this asset to go. A neighbour has expressed interest.

The Hibiscus & Bays Local Board endorsed its sale, but asked that any sale proceeds be allocated to a relevant Penlink transport infrastructure budget, and will make a presentation to the council committee’s Tuesday meeting to argue that point.

The committee’s advice is that such an allocation wouldn’t accord with council financial policy.

8 Hiwi Crescent, Stanmore Bay property information    
Finance & performance committee, Tuesday 18 September at 9.30am, Town Hall:
8, Disposal recommendations report September 2018
30R Birmingham Rd, Otara, property information 
8 Hiwi Crescent, Stanmore Bay, property information 
Bob Dey Property Report diary, week 17-23 September 2018

Attribution: Council committee agenda.

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Council funding inquiry terms released, and Selwood questions their constraints

The Government released the terms of reference yesterday for a Productivity Commission inquiry into local government Funding & financing arrangements, and Infrastructure NZ said they’d constrain an objective assessment of all options.

Finance Minister Grant Robertson.

Finance Minister Grant Robertson announced the inquiry at the Local Government NZ annual conference on 15 July, saying it would investigate the drivers of local authority cost pressures and provide recommendations for how councils can maintain & deliver services & infrastructure in cost-effective ways.

In the terms of reference, Mr Robertson & Local Government Minister Nanaia Mahuta said local government cost pressures had grown significantly since the Shand inquiry report was issued in 2007, and that rates & payment increases had outpaced increases in the local government cost index.

They said some high-growth councils – Auckland is the most notable – were coming close to covenanted debt limits, constraining their ability to finance further infrastructure investment, while other councils took on very little debt.

Broad scope, but….

The scope of the inquiry seems wide: “Where shortcomings in the current system are identified, the inquiry is to examine options & approaches for improving the system of local authority funding & financing.”

Among other approaches, the Productivity Commission is asked to “bring new & innovative thinking to these issues”, investigate cost pressures, examine funding & financing models and how to manage transition to new models, and consider regulatory changes.

The ministers ruled out of scope some aspects of council finance which had already been well canvassed – mechanisms for rating Maori freehold land & Crown land, the valuation system & practices, and substantial privatisation.

The final report is due by 30 November 2019.

Inquiry director Steven Bailey said: “The commission has previously completed inquiries into local government regulation, better urban planning, using land for housing & housing affordability and is looking forward to assessing & analysing this sector further.”

He said the commission would publish an issues paper in October, outlining its proposed approach, the context for the inquiry and a list of key questions to be addressed.

So, what’s missing?

Stephen Selwood.

Infrastructure NZ chief executive Stephen Selwood saw ruling privatisation out of scope as precluding an inquiry into asset recycling, which had been a big success in New South Wales and has been started on a smaller scale by Auckland Council through its property agency, Panuku Development Auckland.

Mr Selwood also questioned leaving rating Maori freehold land & Crown land out of the inquiry.

Mr Selwood said: “It is particularly disappointing that ‘asset recycling’ – the process of selling down public shareholding in one public asset in order to invest in another more valuable asset – has been precluded from the terms of reference.

“Asset recycling is enabling Australia to respond faster & much more effectively to their growth challenge than New Zealand.

“New South Wales alone will spend $A14.7 billion on transport improvements this year compared to around $3 billion across New Zealand – twice what we are on a per capita basis. It has been able to do this by selling down nearly $A50 billion of underperforming assets in the last 5 years and using the proceeds to deliver heavy rail, light rail & roading, as well as urban redevelopment, schools & health investment.

“With better services and fewer public funding constraints on development, the Aussies are addressing homelessness & deprivation whilst investing tens of billions in road & rail transport infrastructure.

“Research has shown the asset recycling programme in New South Wales has very high public support – 61%, with only 9% opposed – when people understand why the programme is in place and where the money is going.

“High growth councils around New Zealand would provide a much better public service by selling down shareholdings in ports, airports or low-performing assets and ‘recycling’ the proceeds to invest in core transport & water.

“In Auckland, partial or full sale of Watercare would enable the council to release billions in capital to invest in stormwater, floodwater & transport infrastructure and would allow the company to leverage its balance sheet to invest in water infrastructure to support growth.

“The opportunity cost of having public money tied up in non-essential services is worse congestion & a prolonged housing crisis.

“If, for some reason, New Zealand is different than Australia and if advice from the OECD, World Economic Forum & others on good capital management is misplaced, the Productivity Commission is best placed to make that call.”

Rating exclusions

“The same can be said for the rating of Crown & Maori land. It is extraordinary that the Crown considers councils to be core infrastructure providers, but will not pay them to deliver services to Government assets like schools, nor even take advice on the issue.

“It is encouraging that the Government has launched this inquiry, but given the constrained terms of reference that the Productivity Commission has been given, the potential outcomes of the study have been compromised at the outset.”

Terms of reference, local government funding & financing.pdf
2007 Shand Report – local government rates inquiry documents
Department of Internal Affairs: Local government funding project

Earlier story:
16 July 2018: Finance minister calls Productivity Commission in to examine local body funding

Attribution: Ministerial & Infrastructure NZ releases.

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Robertson outlines focus shift from GDP measure to wellbeing

Finance Minister Grant Robertson outlined yesterday how the Government intended to revert to the 2002 version of wealth as a target for the nation – wellbeing, instead of gross domestic product.

In a speech to Local Government NZ’s annual conference in Christchurch, Mr Robertson said the coalition government elected last year recognised that it faced major challenges, and couldn’t tackle them alone. He outlined how central & local government could work together to achieve better outcomes for all New Zealanders.

The central focus of Mr Robertson’s address:

“For us in central government, this means doing things differently and measuring success differently.

“Previous governments have measured success in terms of economic growth – simple measures such as GDP (gross domestic product). But while measures like GDP remain important indicators of economic activity, they do not paint a full picture of people’s wellbeing or living standards.

“Many of our international peers have been envious of the GDP growth New Zealand experienced in recent years. But we’ve also seen increases in statistics that suggest that growth did not result in real tangible improvements to many people’s lives.

“For example, our levels of homelessness have been described as the worst in the OECD; the number of children living in poverty is not something we can be proud about, and tens of thousands of our young people are not in employment, education or training. This is not success.

“We believe that economic growth is a means to an end, not an end in itself. We are taking a broader view of success, by looking at how we improve the living standards & wellbeing of all New Zealanders.

“By placing wellbeing at the heart of what we do, we will be able to measure the extent to which our policies & investments are making real improvements to people’s lives.”

The living standards framework

Enter the living standards framework (LSF), which Treasury is developing: “The LSF uses a set of indicators for the current wellbeing of New Zealanders, and for their future wellbeing, based on the stock of the 4 capitals which determine intergenerational wellbeing: financial/physical, natural, human and social.

“This work will underpin our world-first Wellbeing Budget in 2019. This budget will be the first major step for the Government in applying a wellbeing framework to strategic decisions.

“Wellbeing is not only driven by central government actions. We recognise the crucial role local government plays in maintaining & enhancing New Zealanders’ wellbeing through the services, infrastructure, regulations & placemaking you provide to your communities.

“This was factored into the original Local Government Act 2002, by requiring local government to focus on promoting the social, economic, environmental & cultural wellbeing of communities, in the present & for the future. However, in 2012 the previous government removed these 4 wellbeings from the act, arguing that local government needed to be ‘streamlined’.”

Wellbeing bill before select committee

The Local Government (Community Wellbeing) Amendment Bill, which is before a select committee, is intended “to restore the wellbeing needs of communities to their rightful place as a central focus of local government decisionmaking, recognising the important role local government plays in ensuring people’s wellbeing.

“There is an obvious overlap with the 4 capitals of the Treasury’s LSF, meaning that both local & central government will soon be working with a closely aligned core focus on improving the wellbeing of our people.”

The power game

The Robertson line also shifts the use of power, which was firmly at the centre under the previous government, until long negotiations wrought change in the Auckland transport alignment project (ATAP) between the Government & Auckland Council.

That revised project was in sharp contrast to the approach of former housing minister Nick Smith over Auckland Council’s questioning of aspects of the government-council housing accord & special housing areas, where the minister told the council that, if it didn’t act quickly, the government would take over the housing area approval process.

Mr Robertson: “The relationship cannot be Wellington telling you what to do. Rather, we want to work with you to help deliver local solutions to local issues.

“For example, with our Provincial Growth Fund we aren’t taking a top-down approach. We aren’t interested in coming to tell you what you’re good at and what you should invest in.

“The ideas are better generated from the ground up. We want you to tell us what would benefit your region. That’s the only way such an initiative will work.

Funding solution required

“But we understand that for local government to be in a position to provide local solutions, you need the ability to finance them.

“We know there has been a huge increase in demand for investment in infrastructure all across the country.

“The previous government did not recognise the scale of development, maintenance & replacement of infrastructure needed to support a rapidly growing population and a surge in international visitor numbers.

“Infrastructure investment plays an important role in increasing housing affordability, by allowing for new developments to take place and catering for increasing demand on existing systems.

“We recognise there are some constraints that are preventing local authorities from effectively funding their obligations and from financing community expectations. Some of these can be described as ‘hard’ constraints, while others may be ‘soft’:

  • Hard constraints could be regulatory or legislative barriers that prevent local authorities being able to fund or finance infrastructure;
  • Soft constraints could be factors that influence the behaviour & practice of local authorities.

“Addressing the challenges of infrastructure funding & financing (IFF) is a key pillar of the urban growth agenda (the UGA). The UGA is an ambitious & far-reaching programme designed to improve housing affordability for New Zealanders by addressing the fundamentals of land supply, development capacity & infrastructure provision.

“IFF is specifically about reforming the existing system to provide a broader range of funding tools & mechanisms, as well as creating alternative financing models. The underlying question is whether there are funding or financing constraints hindering the timely rollout of infrastructure.

“Efficient construction of infrastructure in support of urban developments is, of course, a key determinant of the rate of land supply & therefore housing affordability.

“Different councils face different issues, yet affordability, availability of funding streams & appropriate pricing are key to any solution. We acknowledge that some high growth councils are up against their debt limits, so financing is the key constraint. That’s why we are also exploring the potential for diversifying the available sources of project financing.

“Project financing requires a dedicated revenue stream to service that capital; a revenue stream derived from charges for the provision of the infrastructure.

“The ability to identify & charge beneficiaries influences the viability of those projects, and so provides an important signal as to which projects should proceed & when. So, there is an efficiency element to this work as well.

“Central government will be exploring ways to get past funding & financing barriers. Yet we cannot do this in isolation. This is about partnering with local councils to ensure that you have the tools to provide the much needed infrastructure for your communities.”

Finance Minister Grant Robertson, 15 July 2018: Full speech to Local Government NZ conference

Related stories, 16 July 2018:
Putting change in context
Robertson outlines focus shift from GDP measure to wellbeing
Demolition starts on Mangere regeneration project
Finance minister calls Productivity Commission in to examine local body funding

Attribution: Robertson speech.

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Finance minister calls Productivity Commission in to examine local body funding

Finance Minister Grant Robertson.

Finance Minister Grant Robertson said yesterday the Productivity Commission would hold an inquiry into local government funding & financing.

The inquiry will investigate the drivers of local authority cost pressures and provide recommendations for how councils can maintain & deliver services & infrastructure in cost-effective ways.

Addressing the Local Government NZ annual conference in Christchurch, Mr Robertson said: “The Coalition Government has highlighted right from the outset our determination to help local government address the varied increasing cost pressures they have faced in recent years.

“The Coalition Agreement between Labour & NZ First stated that we will hold a public inquiry ‘a decade after Shand’ to investigate the drivers of local government costs & its revenue base.

“Cabinet has agreed the terms of reference for the Productivity Commission inquiry. The commission will be able to build on its previous inquiries into urban planning, housing affordability & local government regulation.”

Mr Robertson said the terms of reference would be released shortly. They require the commission to investigate cost pressures, funding & financing models & the regulatory system for local government.

These include investigation into:

  • Cost & price escalation for services & investment, including whether this is a result of policy &/or regulatory settings
  • Current frameworks for capital expenditure decisionmaking, including cost:benefit analysis, incentives & oversight of decisionmaking
  • The ability of the current funding & financing model to deliver on community expectations & local authority obligations, now & into the future
  • Rates affordability now & into the future
  • Options for new funding & financing tools to serve demand for investment & services. This will appraise current & new or improved approaches for considering efficiency, equity, affordability & effectiveness, and how the transition to any new funding & financing models could be managed, and
  • Constitutional and regulatory issues that may underpin new project financing entities with broader funding powers, and
  • Whether changes are needed to the regulatory arrangements overseeing local authority funding & financing.

Mr Robertson said: “Since the Shand report into local government rates in 2007, local government cost pressures have grown significantly and by more than other costs faced by ratepayers.

“The pressures faced by local councils vary significantly, whether it’s the provision of infrastructure due to growing resident populations, or provision of tourism infrastructure against decreasing rating bases.

“The scale of this issue means an in-depth look is needed into whether our current structures are fit for purpose, and to identify how central government can help by cutting red tape, improving regulation and taking pressure off local government.”

The Shand Report

The Funding local government report resulted from the local government rates inquiry conducted by chair David Shand, Ernst & Young national real estate group head Graeme Horsley & Massey University associate professor Christine Cheyne. They made 96 recommendations in their 2007 report.

2007 Shand Report – local government rates inquiry documents
Department of Internal Affairs: Local government funding project

Related stories, 16 July 2018:
Putting change in context
Robertson outlines focus shift from GDP measure to wellbeing
Demolition starts on Mangere regeneration project
Finance minister calls Productivity Commission in to examine local body funding

Attribution: Ministerial release.

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MBIE publishes guide for managing buildings in emergency

The Ministry of Business, Innovation & Employment (MBIE) has published a guide to help territorial authorities manage buildings in an emergency.

The guide describes the roles & responsibilities of central & local government and of other agencies for managing buildings in an emergency using the 4Rs framework – Readiness, Response, Recovery & Reduction.

It explains what is required for managing buildings in an emergency and provides detailed steps & checklists to help territorial authorities plan for & carry out rapid building assessments.

The guide is in 3 parts:

Part A: How buildings are managed in an emergency and who is responsible
Part B: Preparing for and managing buildings in an emergency
Part C: Appendices – references and resources for managing buildings in an emergency, including readiness and response checklists.

Managing buildings in an emergency – guidance for decision makers and territorial authorities

Attribution: MBIE release.

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Council bond issue fully subscribed

Auckland Council’s offer of $200 million of 5-year unsubordinated fixed-rate vanilla corporate green bonds opened last Monday and closed fully subscribed on Thursday. They’ll be issued on Wednesday with a maturity date of 27 June 2023.

The interest rate is 3.17%/year, reflecting a margin of 0.5%/year over the swap rate for the 5-year period.

The bonds will be quoted on the NZX debt market (NZDX).

Attribution: Council release.

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Council considers green bonds for infrastructure funding

Auckland Council said on Wednesday it was considering issuing $NZ green bonds and intended to be the first council in New Zealand to establish a green bond framework.

Mayor Phil Goff said the prospect of green bonds was prompted by the significant investment the council needed to make in infrastructure to lower emissions and to adapt to climate change.

Green bonds are vehicles for raising funds which are invested in assets & projects which have positive environmental & sustainability impacts. They’d allow the council to diversify the pool of funds available to it by tapping into investors who wish to fund ‘green’ infrastructure assets & projects, but otherwise might not invest in infrastructure.

“We are investing significantly in our water infrastructure, to clean up our harbours & waterways, and in public transport infrastructure to reduce emissions & decongest our roads. These projects are an attractive investment opportunity for investors who are allocating larger segments of their portfolios to climate change & green investment activities.”

Attribution: Council release.

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Infrastructure funding requires most scrutiny in mayoral budget

Auckland Council moves forward on Monday with approval for public consultation of the mayor’s budget & long-term plan proposals, as altered in a committee meeting then signed off by the council’s governing body on Monday afternoon.

The documents still have some way to go before being implemented, which will happen on 1 July 2018, days after the final council signoff.

The mayor, Phil Goff, unveiled his proposals a week ago and the detail is all contained in the agenda for Monday’s finance & performance committee.

I’ve entered the many links below, including:

  • the proposals for improving water quality – forever underbudgeted
  • how he proposes to tax non-hotel short-term accommodation providers
  • a proposal to eliminate Auckland Council Investments Ltd, one of the council-controlled organisations devised when then-Act Party leader Rodney Hide, as local government minister, looked for ways to separate council & policy from commercial business management
  • waste management service charges, and
  • finance growth infrastructure.

Auckland Council Investments (ACIL) owns Ports of Auckland Ltd on behalf of the council, and also holds the council’s 22.3% shareholding in Auckland International Airport Ltd. Mr Goff says in his proposal the council could save $1 million/year of opex, but would first need to clarify port company & council roles.

Growth infrastructure funding requires careful scrutiny

The most startling event in all of this comes under the low-key title of “finance growth infrastructure”.

A better system than the old one-off local authority bond issues came in 2009, when the Local Government Funding Agency was formed, and it now has billions of dollars of bonds listed on the NZX to support activity by various councils.

Even so, Auckland Council has been hamstrung for the last 2 years after getting perilously close to its debt ceiling, but with no solution in sight to mounting infrastructure requirements.

The previous government helped out with its Housing Infrastructure Fund, but that never looked like an ongoing, considered solution.

In the mayor’s proposal now, the specific example given for support through the infrastructure partnership model (with the Government) is Watercare’s $1.1 billion Central Interceptor wastewater project, which would facilitate isthmus intensification while also reducing overflows into the harbours.

As with some other mayoral proposals, targeted rates are a preferred option. Making land more useable is one reason for a targeted rate, but making the harbours cleaner redirects the benefits.

This makes it critical that Auckland residents examine how & why funding should be provided, and whether people targeted with project-specific rates will have an option to contest imposition of both the bill & the project.

Agenda items, Auckland Council finance & performance committee, Monday 11 December at 9.30am, Town Hall:
9, 10-year budget 2018-2028 – process overview
10-year Budget 2018-2028 – roadmap
10, 10-year budget 2018-28 – mayoral proposal items for consultation
Mayoral proposal – 20-year budget 2018-28
Transport funding
Transition policy [published separately]
Water quality improvements programme
Natural environment initiatives & funding
Rating of online accommodation providers
Auckland Council Investments Ltd review
11, 10-year budget 2018-28 – other matters for consideration
Waste management service changes
Regulatory fees & charges
Land advisory fees & charges
Business improvement districts (bids)
Rodney Local Board transport targeted rate
Panuku programme options
City centre timing & 2021 events
Non-strategic asset sales
Coastal management
Financing growth infrastructure
12, Local rates pilot

Attribution: Council committee agenda.

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