Archive | Governance

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
Attachments
10-year Budget 2018-2028 – roadmap
10, 10-year budget 2018-28 – mayoral proposal items for consultation
Attachments
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
Attachments
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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Pt England reserve law passed, but still rankles with mayor & board chair

The Point England Development Enabling Bill became law on Wednesday after a 7-month jaunt through the parliamentary process, enabling the Government to complete a Treaty of Waitangi settlement with Ngati Paoa.

The bill was introduced to Parliament on 7 December, passed its first reading 6 days later, its second reading on 23 May and committee stage on 21 June. It returned for its third reading on Tuesday and was given royal assent on Wednesday.

Auckland mayor Phil Goff and Maungakiekie-Tamaki Local Board chair Josephine Bartley said they accepted Parliament had a sovereign right to dispose of the land and they didn’t oppose the treaty settlement, but they remained concerned about the use of special legislation to lift reserve status outside normal statutory processes.

The new law allows for largescale housing development on 11.7ha of the reserve, enabling Ngati Paoa to build 300 houses on the reserve land as part of its treaty settlement.

Mr Goff said: “While the council is supportive of action to accelerate house building in Auckland, this bill raises a number of issues. This legislation prescribes to Auckland Council what it must do with land vested in & administered by the council under the Reserves Act. This prescription circumvents the statutory powers of a local authority responsible for public reserve land under the act.

“That the minister [Nick Smith, former housing minister and now Minister of Building & Construction] intends to micro-manage Auckland’s future rather than give residents the opportunity to have their say sets a worrying precedent. Going forward, the minister needs to promise Auckland that he will consult the council & Aucklanders on matters that affect their future.

“Auckland Council will now engage with the Government to ensure the loss of reserve land is properly managed and that decisions are made by locally elected representatives with public consultation.”

Ms Bartley said: “Our community has been denied the right to shape its own future. There is nothing more that residents can do now. Sadly this bill may further endanger wildlife and reduce green space in Maungakiekie-Tamaki & Auckland.”

Attribution: Parliament, council releases.

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Last-ditch attempt to derail Pt England bill questions super-city rationale

As the Point England Development Enabling Bill heads to its third reading in Parliament tomorrow – and therefore enactment – Maungakiekie-Tamaki Local Board chair Josephine Bartley posed a last-minute question about the rationale for governance changes made in 2010.

It’s not likely to change the course of the legislation, which will turn 11.7ha of the 48ha Point England Reserve over to housing, 2ha for a marae, as part of a Treaty of Waitangi settlement with Ngati Paoa.

But, in an era of carefully ensuring all those who ought to be consulted are consulted before decisions are made, Ms Bartley has asked why Building, Construction & former Housing Minister Nick Smith has usurped powers the Government gave local boards when they were established as part of the super-city governance structure.

She wrote to Dr Smith on Friday: “With the change in Local Government in Auckland in 2010, the Maungakiekie-Tamaki Local Board is responsible for local parks & reserves in our area.

“We aim to make decisions & plans for our parks & reserves based on community engagement. The minister, Dr Nick Smith, in his supplementary order paper [for the bill] circumvents this by stating that no grazing & farming will take place on Point England Reserve, and that Auckland Council must provide sportsfields on the headland where the dotterels & other shore birds are.

“As a local board, we opposed the Point England Development Enabling Bill because of the lack of consultation by the Government with our community and the dangerous precedent it sets of circumventing legislation that protects reserves.

”Again we are being stood on by Government and are being told what to do in our local reserve. If this is the case, then what was the point of the Auckland super-city structure put in place by Government to empower local decision-making?

“I have asked the minister for a meeting to remind him of the issues with this bill and his supplementary order paper on behalf of our local board & Tamaki community.”

Earlier stories:
26 May 2017: Pt England housing development bill passes second reading
19 December 2016: Bill to enable housing on Pt England Reserve passes first reading
7 December 2016: Ngati Paoa to build 300 homes on Pt England Reserve, talks continue on reserve upgrade

Attribution: Board release.

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Bob Dey Property Report diary, week 26 June-2 July 2017

The diary lists council meetings & agendas, hearings & submissions, economic release dates, events, Parliament order paper items and securities.

Council links

All Auckland Council agendas can be reached via http://infocouncil.aucklandcouncil.govt.nz/. The council livestreams (and archives) Town Hall meetings and some other meetings. You can check those at http://councillive.aucklandcouncil.govt.nz/.

Environmental Protection Authority

Board of inquiry hearing:

East-West link, hearing opens Tuesday 27 June at 9am, Ellerslie recourse, Ascot stand, and is scheduled to run for 8-10 weeks (sitting 9-5, Tuesday-Friday the first week, Monday-Thursday thereafter)
Link: Hearing index

Auckland Council

Governing body:

Thursday 29 June at 9.30am, Town Hall:
Summary of the Tupuna Maunga Authority operational plan 2017-18
Final Tupuna Maunga Authority operational plan 2017-18
10, Annual budget 2017-18 (annual plan), for adoption (detailed governing body plan & local body agreements still to come)
Revenue & financing policy
11, Rates setting 2017-18 
12, City Rail Link agreements, for approval (first in public meeting, then in confidential)

Committees:

Forums, panels & boards:

You can check council meeting agendas through this link: http://infocouncil.aucklandcouncil.govt.nz/

In this round of local board meetings, they’re considering relationship agreements with mana whenua, Auckland Transport monthly reports, local grant applications, environment work programmes (including many small projects by locals), and park, reserve, community facility & library work programmes, refreshes of the Auckland Plan maintenance contracts that start on 1 July (Project 17), and Panuku Development Auckland 6-monthly reports at some boards.

Auckland city centre advisory board, Wednesday 28 June at 3pm, 135 Albert St

Papakura Local Board, Wednesday 28 June at 4.30pm, Papakura, council service centre, 35 Coles Crescent:
14, Leona McKenzie memorial seat, Short St, Opaheke
Recommendation
Attachments
Auckland Transport processes to install a memorial seat on a street berm
Auckland Transport application for encroachment form
Information relating to applying for a corridor access request
Auckland Transport fee schedule – corridor access requests
Information from the Ministry of Education website regarding community-funded property
Maps illustrating the distance of parks to the Opaheke School 
Leona McKenzie memorial seat report considered at 26 April 2017 Papakura Local Board meeting
Local board agenda, April 2017, item 22 (pages 81-96)
Related story, 25 June 2017: Take a rest after reading this one – but not on a memorial bench

Hearings:

Meadowbank, 6-14 Meadowbank Rd, application by Meadowbank Developments Ltd (Chris Jones – Southside Group Ltd, Arcus Property Ltd – Arrow International Group Ltd, Cary Bowkett, Alistair & Warren Dryden – Dryden Developments Ltd) for 65-unit residential development comprising a 6-storey apartment building & 3-storey terrace building; council planner Catherine Raeburn has recommended consent; hearing Monday 26 June at 9.30am, Town Hall

Parnell, 24 York St, application by NYS Developments Ltd (Colin & Jan Pauling) to build 6 new residential units through the addition of 3 storeys to the existing building to create a 6-storey building with a communal rooftop area, hearing Thursday 6 July at 9.30am, Town Hall

Submissions:

Dairy Flat, 244 Postman Rd & Wilks Rd, application by Sunrise 9 Trustees Ltd (John Hamilton) for combined subdivision & land use consent for a 43-lot rural residential development, a utility lot & taxi way, including area to site hangars; submissions close Tuesday 11 July

Highbrook, 11 Cryers Rd, application by Establish ECE Ltd (Logan Whitelaw & Paul Rodgers) for a mixed use development comprising 2 buildings – Building C containing a purpose-built childcare centre  providing for 107 children and a 24/7 gym, Building B a 1402m² double-storey retail, commercial & office building; submissions close Wednesday 19 July

Whenuapai, 106 Totara Rd & 50-52 Brigham Creek Rd, application by Whenuapai Land Co Ltd (Cameron Wilson – Oyster Capital Ltd) to build Z service station; submissions close Thursday 20 July

Auctions:

Barfoot & Thompson, apartments & commercial Thursdays at 10am, residential Tuesday-Friday at 10am & 1.30pm, 34 Shortland St
Bayleys, Total Property commercial, Wednesday 28 June at 11am, residential Wednesdays at 2pm, Bayleys House, Wynyard Quarter, 30 Gaunt St
City Sales, apartments, Wednesday 5 July at 12.30pm, 445 Karangahape Rd
Colliers, commercial, Wednesday 12 July at 11am, SAP House, 151 Queen St
NAI Harcourts, Tuesday 27 June at 1pm, Takapuna, 128 Hurstmere Rd
Ray White City Apartments, Thursdays at 12.30pm, 2 Lorne St

Economy:

June

Building consents, May, Friday 30 June
Trade – overseas merchandise, May, Tuesday 27 June

July

Accommodation survey, May, Wednesday 12 July
Building consents, June, Monday 31 July
Consumers price index, June quarter, Tuesday 18 July
Dwelling & household estimates, June quarter – tables, Friday 7 July
Electronic card transactions, June, Tuesday 11 July
Household living-costs price indexes, June quarter, Thursday 27 July
Migration, international travel, June, Friday 21 July
QV house price index, Wednesday 5 July
Trade – overseas merchandise, June, Wednesday 26 July
US Federal Reserve, open market committee, Tuesday-Wednesday 25-26 July

Events:

Waterview Connection, now scheduled to open to traffic in early July

Property Council, Thursday 6 July at 7.15-9am, The infrastructure issue: holding Auckland back, Grand Millennium, 71 Mayoral Drive

HotelsWorld, Tuesday-Thursday 25-27 July, Sydney, 4 consecutive events for hotel, resort & serviced apartment operators, investors, developers, lenders & industry professionals

Facilities Integrate 2017, Wednesday-Thursday 27-28 September at 10am-5pm, Greenlane, ASB Showgrounds

Third tripartite economic summit between Auckland, Guangzhou & Los Angeles, Wednesday-Friday 27-29 September (to be confirmed), Guangzhou
Link: Auckland Council update on the tripartite economic alliance between Auckland, Guangzhou & Los Angeles

Building for better lives, Australian national housing conference hosted by Australian Housing & Research Institute, 29 November-1 December, Sydney, International Convention Centre

Parliament:

Provisional order paper, Tuesday 27 June

Government orders of the day:

1, Appropriation (2016/17 Supplementary Estimates) Bill, second reading (introduced 25 May)
2, Energy Innovation (Electric Vehicles & Other Matters) Amendment Bill, third reading
3, Point England Development Enabling Bill, third reading
4, Land Transfer Bill, third reading
6, Local Government Act 2002 Amendment Bill (No 2), second reading (report of the Local Government & Environment Committee presented 15 June)
10, Te Ture Whenua Maori Bill, committee stage
12, Appropriation (2017/18 Estimates) Bill, committee stage, estimates debate
13, Maritime Crimes Amendment Bill, committee stage
16, Rangitane Tu Mai Ra (Wairarapa Tamaki nui-a-Rua) Claims Settlement Bill, second reading (report of the Maori Affairs Committee presented 20 March)
17, Ngati Pukenga Claims Settlement Bill, second reading (report of the Maori Affairs Committee presented 3 March)
18, Ngatikahu ki Whangaroa Claims Settlement Bill, third reading
19, Ngai Te Rangi & Nga Potiki Claims Settlement Bill, second reading (report of the Maori Affairs Committee presented 21 November 2016)
21, Tauranga Moana Iwi Collective Redress & Nga Hapu o Ngati Ranginui Claims Settlement Bill, second reading (report of the Maori Affairs Committee presented 3 March)
25, Residential Tenancies Amendment Bill (No 2), first reading (introduced 23 May)
29, Ngati Tamaoho Claims Settlement Bill, first reading (introduced 22 June)
32, Commerce (Cartels & Other Matters) Amendment Bill, committee stage
33, Taxation (Income-sharing Tax Credit) Bill, second reading (report of the Finance & Expenditure Committee presented 21 March 2011)
34, Insolvency Practitioners Bill, committee stage
35, Regulatory Standards Bill, second reading (report of the Commerce Committee presented 8 May 2015)
36, Nga Rohe Moana o Nga Hapu o Ngati Porou Bill, first reading (introduced 29 September 2008)

Members’ orders of the day:

2, Private International Law (Choice of Law in Tort) Bill, Sarah Dowie, second reading (report of the Justice & Electoral Committee presented 7 June)
3, Local Electoral (Equitable Process for Establishing Maori Wards & Maori Constituencies) Amendment Bill, Marama Davidson, first reading (introduced 11 May)

Extended sittings:

Wednesday 5 July (effective Thursday 6 July from 9am):
Rangitane Tu Mai Ra (Wairarapa Tamaki nui-a-Rua) Claims Settlement Bill, second reading (report of the Maori Affairs Committee presented 20 March)
Ngati Pukenga Claims Settlement Bill, second reading (report of the Maori Affairs Committee presented 3 March)
Ngati Tamaoho Claims Settlement Bill, first reading (introduced 22 June)

Wednesday 9 August (effective Thursday 10 August from 9am):
Rangitane Tu Mai Ra (Wairarapa Tamaki nui-a-Rua) Claims Settlement Bill, committee stage, third reading
Ngati Pukenga Claims Settlement Bill, committee stage, third reading

Submissions

Friendly Societies & Credit Unions (Regulatory Improvements) Amendment Bill, submissions close Thursday 20 July
Inquiry into 2016 local authority elections, submissions close Tuesday 22 August

Submissions to MBIE on fire safety regulations

MBIE (the Ministry of Business, Innovation & Employment) began a review in 2014 of fire regulation changes made in 2012 and has developed 4 proposals to improve clauses & compliance documents; submissions opened on 15 May and close on Friday 14 July
Link: Fire programme

Securities – NZ

Arvida Group Ltd, annual meeting, Friday 7 July at 10.30am, Christchurch, The Piano, 156 Armagh St
Goodman Property Trust, annual meeting, Wednesday 2 August at 1.30pm, SkyCity Convention Centre
Kiwi Property Group Ltd, annual meeting, Friday 28 July at 10am, Christchurch, Hagley Oval Pavilion
Ryman Healthcare Ltd, annual meeting, Thursday 27 July at 10am, Rangiora, Charles Upham retirement village

You can help fill in the gaps – Got an event you want to tell the world about? Click the email tab – [email protected].

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Take a rest after reading this one – but not on a memorial bench

The family of a woman who made crossing the street to & from Opaheke School, Papakura, a safer exercise for 27 years decided to offer a seat outside the school in her memory. It turns out you could dig a rail tunnel through the middle of the city centre more easily.

Leona McKenzie died in February last year aged 82. Her family’s gift of a seat went before the local board in April and was deferred to May, but only made it back on to the board’s agenda for this week’s meeting, on Wednesday evening.

From what I can see in the many pages of documents about what you might think is a simple gift to remember a very special “lollipop lady”, everything has been done by the book. What the record to this point shows, however, is an extraordinary volume of bureaucratic input – not to mention cost to the donor.

People give to their community. Once upon a time Leona McKenzie’s family might have told the school they’d like to see a seat with a plaque on it at the school gate, the school would have thought it was a good idea and it would have been done.

Now, it’s been past the school, Auckland Transport ($1000 non-refundable deposit required for an application for an encroachment licence or lease of airspace, subsoil or road surface), Education Ministry information has been added, a map showing the distance to nearby parks & reserves has been included, mana whenua haven’t yet been consulted.

One part of this intrigues me: the Auckland Transport documentation refers to “Auckland Transport land”. So you’d be wrong in thinking Auckland Transport maintains land on behalf of its owners, the ratepayers of Auckland – or would you? The semantics can make a difference to people’s thinking & actions.

If the local board decides to fund the memorial seat from the locally driven initiatives capex budget, it runs into another problem. As the comprehensive staff report says, “There is no department to drive the project.”

The super-city was formed for the whole Auckland region in 2010 to improve the provision of services and to streamline how things are done compared to the disconnects between the previous 7 territorial councils and the regional council.

And there do need to be checks & balances. But along the journey we’ve lost our way.

Below, the document trail:
Papakura Local Board, Wednesday 28 June at 4.30pm, Papakura, council service centre, 35 Coles Crescent:
14, Leona McKenzie memorial seat, Short St, Opaheke
Recommendation
Attachments
Auckland Transport processes to install a memorial seat on a street berm    
Auckland Transport application for encroachment form   
Information relating to applying for a corridor access request    
Auckland Transport fee schedule – corridor access requests    
Information from the Ministry of Education website regarding community-funded property    
Maps illustrating the distance of parks to the Opaheke School    
Leona McKenzie memorial seat report considered at 26 April 2017 Papakura Local Board meeting   
Local board agenda, April 2017, item 22 (pages 81-96)

Attribution: Local board agendas.

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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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Auditor-general argues for more Westgate deal disclosure but doesn’t see wrongdoing

Auditor-general Lyn Provost told Parliament yesterday, in a report tabled on dealings between the Waitakere City and Auckland Councils and Westgate landowner NZ Retail Property Group Ltd (NZRPG), that both councils could have made better disclosure. But she did not disclose any wrongdoing in the financial arrangements.

Image above: The Westgate layout looking down the North-western Motorway toward Henderson, as it was in 2013.

The Auditor-general’s office looked into specific aspects of Auckland Council’s project to develop a new town centre in Massey North (the council name for what NZRPG always called Westgate) after several people raised concerns about the establishment & management of this new town centre. They questioned whether the public & private costs & benefits of the project had been appropriately balanced between Auckland Council & a private developer.

Auditor-general Lyn Provost.

Mrs Provost said the focus of the office’s inquiry was on Auckland Council’s management & governance of the project from 1 November 2010, when the newly amalgamated council inherited the project from the now dissolved Waitakere City Council.

“One of the concerns raised with us was about the lack of transparency, in particular being unable to access information about the project. In our view, Auckland Council could have made more information about this development available. It is important that local authorities strike the right balance between balancing commercial sensitivity, maintaining legal privilege as appropriate and being open with ratepayers & elected officials. Such openness allows public discussion & debate, and is essential to supporting public sector accountability. This exercise has highlighted once again the importance not just of making good decisions but also of being able to show that good decisions have been made.”

The background

A block in the first Westgate stage, pictured in 2012.

Companies in the NZRPG group owned or controlled much of the land where the new town centre was to be located. As a result, Waitakere City Council entered into a memorandum of understanding with NZRPG in 2004 to establish a collaborative working relationship to design & develop the town centre. In 2010, the council & NZRPG entered into a suite of contractual arrangements for the actual development of the new town centre and the sharing of the costs between them.

“While the focus of my inquiry was on Auckland Council’s management & governance of this project from 2010 onwards, concerns were also raised about Waitakere City Council’s decision to pay the developer $6 million for a street in the existing Westgate shopping centre. Concerns had been raised about this purchase because, usually in a new development, a developer will bear the cost of constructing roads – which then vest in the council at no cost when land is subdivided.

“Accordingly, in order to provide sufficient context, my report sets out additional background detail about the decision-making process undertaken by Waitakere City Council in relation to the purchase, and the basis on which the purchase price was agreed.

“Concerns were also raised with my office about the contractual arrangements between Waitakere City Council (and, subsequently, Auckland Council), Transpower & NZRPG to relocate transmission lines passing over the development, underground. Waitakere City Council entered into an agreement with Transpower to pay the costs of the relocation.

“The evidence supports the need to relocate the power lines for the development of the town to proceed.

Development in 2015: The first stage of the North-west shopping mall completed, ground works started for stage 2 and the public square, Te Pumanawa.

“In the agreement with Transpower, Waitakere City Council accepted the primary responsibility to pay all the cost of relocating the lines – that is, its own 35% & NZRPG’s 65% share of the cost. The share of the costs to be paid by NZRPG would be recovered under a separate agreement between Waitakere City Council & NZRPG.

“Waitakere City Council was clearly aware that, in accepting the primary payment risk, it needed to protect its position in case NZRPG failed to pay its share of the costs. It put in place several mechanisms to provide this protection, including an offsetting agreement.

“Importantly however, although Auckland Transition Agency confirmed the agreement with Transpower, it did not confirm the offsetting agreement. As a result, the agreement with NZRPG to pay its share was legally invalid. As a result, the council was party to a binding contract to pay the full costs of relocating the power lines without having a corresponding binding contract in place to recover NZRPG’s share of the costs from NZRPG.”

Auckland Council inherited the project and the issue relating to the legal invalidity of the agreement, and resolved this issue by entering into a new agreement with NZRPG to share the costs.

“However, in 2012, it then decided to postpone NZRPG’s obligation to pay its share. Council documents indicate that this decision was made because it perceived a risk to the progression of the project. The result of this decision has been that the financial risk borne by the council & its ratepayers will continue until such time as NZRPG’s contribution has been fully paid. As at 20 September 2016, NZRPG had paid about $3 million of the $11.3 million it owed to Auckland Council.”

Mrs Provost said Waitakere City Council carried out several infrastructure works at its own expense, as part of its contractual relationship with NZRPG. This included construction & widening of roads, the development of intersections, provision of water supply & wastewater services, and the design & construction of the town square & library. “The intention was that the council would subsequently recover some of the costs associated with this work through development contributions to be paid by the developer….

“The calculation of development contributions in this project was not straightforward, given the complexity of assessing the balance between the public & private benefits of the development. We have been unable to ascertain or calculate the value of the development contributions, but expect it to be a significant amount of money.”

On 28 October 2010, days before Auckland Council took office, Waitakere City Council reached an agreement with NZRPG to vary the amount & timing of payments of development contributions.

This was recorded in an exchange of letters over 2 working days, but Mrs Provost said the Auckland Transition Agency didn’t confirm the decision.

“Auckland Council subsequently entered into an agreement with NZRPG to formalise the development contributions arrangements. The agreement provides for the offsetting of some of the development contributions owed, as well as the postponement of when some development contributions are to be assessed & paid.

“While there are still development contributions payable by NZRPG before the end of the project, Auckland Council has taken on a greater risk at this stage in the project by the postponement of these payments. Whether the final amount of development contributions is appropriate will need to be weighed up as part of the overall balance of costs between the parties at the conclusion of the project.”

Specific steps taken by Auckland Council

Once Auckland Council became responsible for the project, Mrs Provost said it immediately sought legal advice on the agreements it had inherited.

“It became clear that the Auckland Transition Agency had not confirmed all of the agreements, which was a prerequisite for transfer to Auckland Council. Auckland Council signed replacement agreements to ensure that they were all legally valid. In October 2011, the regional development & operations committee of Auckland Council agreed that a review into probity issues raised at the committee be conducted and that the review be reported back to the committee for further consideration. Auckland law firm Meredith Connell was commissioned to undertake that review.

“In my view, commissioning this review was good practice given the complicated matrix of arrangements between the former Waitakere City Council & NZRPG. The review put Auckland Council in a good position to understand the obligations it had inherited and any risk that it might need to manage.

“The Meredith Connell review was summarised & discussed at the public-excluded part of the June 2012 regional development & operations committee meeting. The committee agreed that the report & associated resolutions remain confidential until the reasons for confidentiality no longer exist.

“Auckland Council has since improved the contractual arrangements with NZRPG, including linking payments more directly to the delivery of work and instituting a better procurement process for subcontractors working on the new town centre.”

Auditor-general’s conclusions

Mrs Provost concluded: “The amount of information provided to the elected members of Auckland Council on this development could have been more comprehensive. Councillors have been concerned about the project and should not need to resort to me to get answers.

“In my view, the risks involved with this development warrant greater involvement by Auckland Council’s governing body in overseeing the project, including its costs. More information & clarity about the issues that management need to refer to the governing body would help this oversight.

“Public concerns have been raised with my office, and directly with Auckland Council, about the lack of transparency with this development. My office received complaints from members of the public who have been unable to access information about the project, including the Meredith Connell report. Similar concerns have been expressed to my office by council members.

“It is important that local authorities strike the right balance between balancing commercial sensitivity, maintaining legal privilege as appropriate and being open with ratepayers & elected representatives to provide transparency about the agreements they enter into and to demonstrate that they are getting value for money. Such openness allows public discussion & debate, and is essential to supporting public sector accountability.

“In my view, Auckland Council could have made more information about this development available. Auckland Council obtained the Meredith Connell advice on a confidential basis and has treated the report as legally privileged & commercially sensitive.

“Given the public interest and that commercial sensitivity has likely reduced with the passage of time, I encourage Auckland Council to consider what information it could now release – including all or some of the Meredith Connell report.”

Link:
Auditor-general’s statement & report

Attribution: Auditor-general’s office.

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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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Minister defers return of bill to redesign local body sector

Local Government Minister Peseta Sam Lotu-Iiga has asked the select committee considering the Local Government Act 2002 Amendment Bill (No 2) to extend the report back date from 28 October to 31 March to allow for further policy consideration & drafting changes.

The bill provides for a broader range of functions to be transferred between local bodies, joint governance arrangements for areas of common or shared interest and greater use of joint council-controlled organisations, including CCOs for water services & transport.

It also allows the Local Government Commission to initiate its own investigations in relation to reorganisations, and provides for local body-led reorganisations to be able to make submissions on reorganisation, including the establishment of multiply owned CCOs, joint governance arrangements, transfers of powers, boundary changes & amalgamations.

The bill was introduced on 9 June and the Local Government & Environment Select Committee had finished its hearings, with nearly 200 submissions made on it. Mr Lotu-Iiga said last Friday the deferral would enable more rigorous analysis of submissions and more constructive dialogue with the local government sector.

He said he’d met Local Government NZ and was pleased the sector supported the general objectives of the reform package.

“It is imperative that steps are put in place to ensure core infrastructure including water, sewerage & roads across New Zealand are well managed.

“I acknowledge some of the concerns raised by local government. Solutions need to be found that promote local democracy, while ensuring better quality services & better value for ratepayers…. Local & central government need to work together to develop practical solutions that will ensure better services for ratepayers for our longer-term future.”

Attribution: Ministerial 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:
Crone
Goff
Palino
Thomas

Attribution: Candidate policies.

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