Agenda of Finance and Performance Committee

PALMERSTON NORTH CITY COUNCIL

Finance and Performance Committee MEETING

20 March 2017

Order of Business

Pursuant to Sections 46A(7) and 46A(7A) of the Local Government Official Information and Meetings Act 1987, to receive the Chairperson’s explanation that specified item(s), which do not appear on the Agenda of this meeting and/or the meeting to be held with the public excluded, will be discussed.

Any additions in accordance with Section 46A(7) must be approved by resolution with an explanation as to why they cannot be delayed until a future meeting.

Any additions in accordance with Section 46A(7A) may be received or referred to a subsequent meeting for further discussion. No resolution, decision or recommendation can be made in respect of a minor item.

3. Public Comment

To receive comments from members of the public on matters specified on this Agenda or, if time permits, on other Committee matters.

(NOTE: If the Committee wishes to consider or discuss any issue raised that is not specified on the Agenda, other than to receive the comment made or refer it to the Chief Executive, then a resolution will need to be made in accordance with clause 2 above.)

4. Confirmation of Minutes Page 7

“That the minutes of the Finance and Performance Committee meeting of 20 February 2017 Part I Public be confirmed as a true and correct record.”

5. Notice of Motion: Library Refurbishment Project Page 15

6. Palmerston North Airport Ltd - Interim Report for 6 months to 31 December 2016 Page 17

Memorandum, dated 6 March 2017 from the Strategy Manager Finance, Steve Paterson.

7. Palmerston North Airport Ltd - Draft Statement of Intent for 2017/18 Page 35

Memorandum, dated 6 March 2017 from the Strategy Manager Finance, Steve Paterson.

8. New Programme for Infeed Conveyor Upgrade at Awapuni MRF Page 63

Report, dated 23 February 2017 from the Water & Waste Services Manager, Robert van Bentum and the Rubbish and Recycling Engineer, Natasha Hickmott.

9. Central Energy Trust Wildbase Recovery - Establishing the Project Steering Group Page 73

Report, dated 8 March 2017 from the Senior Property & Parks Planner, Aaron Phillips.

10. Urgent Replacement of Lift Pumps Maxwells Line Page 81

Memorandum, dated 6 March 2017 from the Waste Water Asset Engineer, Phil Burt and the Water & Waste Services Manager, Robert van Bentum.

11. Committee Work Schedule - March 2017 Page 85

Committee Work Schedule, dated March 2017.

12. Exclusion of Public

To be moved:

“That the public be excluded from the following parts of the proceedings of this meeting listed in the table below.

The general subject of each matter to be considered while the public is excluded, the reason for passing this resolution in relation to each matter, and the specific grounds under Section 48(1) of the Local Government Official Information and Meetings Act 1987 for the passing of this resolution are as follows:

General subject of each matter to be considered		Reason for passing this resolution in relation to each matter	Ground(s) under Section 48(1) for passing this resolution
13.	Minutes of the Finance and Performance Committee meeting - Part II Confidential - 20 February 2017	For the reasons setout in the Finance and Performance Committee minutes of 20 February 2017, held in public present.

This resolution is made in reliance on Section 48(1)(a) of the Local Government Official Information and Meetings Act 1987 and the particular interest or interests protected by Section 6 or Section 7 of that Act which would be prejudiced by the holding of the whole or the relevant part of the proceedings of the meeting in public as stated in the above table.

Also that the persons listed below be permitted to remain after the public has been excluded for the reasons stated.

Chief Executive (Paddy Clifford), Chief Financial Officer (Grant Elliott), General Manager, City Enterprises (Ray McIndoe), General Manager, City Future (Sheryl Bryant), General Manager, City Networks (Ray Swadel), General Manager, Customer Services (Peter Eathorne), General Manager, Libraries and Community Services (Debbie Duncan), Human Resources Manager (Wayne Wilson) and Strategic Communications Manager (Mark Torley) because of their knowledge and ability to provide the meeting with advice on matters both from an organisation-wide context (being members of the Council’s Management Team) and also from their specific role within the Council.

Legal Counsel (John Annabell), because of his knowledge and ability to provide the meeting with legal and procedural advice.

Governance and Support Team Leader (Kyle Whitfield) and Committee Administrators (Penny Odell and Rachel Corser), because of their knowledge and ability to provide the meeting with procedural advice and record the proceedings of the meeting.

< add officers who are authors of reports or their substitutes > because of their knowledge and ability to assist the meeting in speaking to their report and answering questions, noting that such officer will be present at the meeting only for the item that relate to their respective report.

<add third parties, e.g. authors of third party reports being considered>, because of their knowledge and ability to assist the meeting in speaking to their report/s [or other matters as specified] and answering questions, noting that such person/s will be present at the meeting only for the items that relate to their respective report/s [or matters as specified].

PALMERSTON NORTH CITY COUNCIL

Palmerston North City Council

Minutes of the Finance and Performance Committee Meeting Part I Public, held in the Council Chamber, First Floor, Civic Administration Building, 32 The Square, Palmerston North on 20 February 2017, commencing at 9.03am

Members

Present:

The Mayor (Grant Smith) and Councillors Susan Baty (in the Chair), Brent Barrett, Rachel Bowen, Adrian Broad, Vaughan Dennison, Lew Findlay QSM, Leonie Hapeta, Jim Jefferies, Lorna Johnson, Karen Naylor, Bruno Petrenas, Aleisha Rutherford.

Apologies:

Councillor Gabrielle Bundy-Cooke, Councillor Duncan McCann and Councillor Tangi Utikere (for lateness).

Councillor Tangi Utikere entered the meeting at 9.37am during consideration of clause 4. He was not present for clauses 1 to 3 inclusive.

1-17

Apologies

Moved Susan Baty, seconded Jim Jefferies.

The COMMITTEE RESOLVED

1. That the Committee receive the apologies.

2-17

Confirmation of Minutes

Moved Susan Baty, seconded Leonie Hapeta.

The COMMITTEE RESOLVED

1. That the minutes of the Finance and Performance Committee meeting of 28 November 2016 Part I Public be confirmed as a true and correct record.

Clause 2.1 above was carried 13 votes to 0, the voting being as follows:

For:

The Mayor (Grant Smith) and Councillors Brent Barrett, Susan Baty, Rachel Bowen, Adrian Broad, Vaughan Dennison, Lew Findlay QSM, Leonie Hapeta, Jim Jefferies, Lorna Johnson, Karen Naylor, Bruno Petrenas and Aleisha Rutherford.

3-17

Ashhurst and Bunnythorpe Rubbish Transfer Stations

Memorandum, dated 2 February 2017 from the Rubbish and Recycling Engineer, Natasha Hickmott and the Water & Waste Services Manager, Robert van Bentum.

Moved Grant Smith, seconded Leonie Hapeta.

The COMMITTEE RECOMMENDS

1. That the report entitled ‘Ashhurst and Bunnythorpe Rubbish Transfer Stations’ dated 2 February 2017 and the findings be received to inform decisions in respect of proposed changes to general rubbish gate fees charged at the Ashhurst and Bunnythorpe Transfer Stations.

Clause 3.1 above was carried 13 votes to 0, the voting being as follows:

For:

4-17	Fees and Charges Review Report, dated 8 February 2017 from the Strategy Manager Finance, Steve Paterson. Councillor Tangi Utikere entered the meeting at 9:37a.m.
	Moved Bruno Petrenas, seconded Jim Jefferies. During discussion an amendment was put to Council regarding the increased cost for dog fees for preferred owners for 2017/18 year. The COMMITTEE RECOMMENDS 1. That the report entitled ‘Fees and Charges Review’ dated 8 February 2017 be received and the current status of fees and charges be noted. Trade waste 2. That the Proposal to adopt updated fees and charges for Trade Waste Services effective from 1 July 2017 as attached in Appendix 2, ‘Fees and Charges Review’ dated 8 February 2017, be approved for public consultation and the Chief Executive be authorised to undertake the necessary consultative process under sections 82 and 150 of the Local Government Act 2002. Planning & Miscellaneous 3. That the Statement of Proposal (and the associated summary) to adopt updated fees and charges for Planning Services and Miscellaneous Services effective from 1 July 2017 as attached in Appendix 3, ‘Fees and Charges Review’ dated 8 February 2017 be approved for public consultation and the Chief Executive be authorised to undertake the necessary consultative process under sections 83 and 150 of the Local Government Act 2002. Building 4. That the fees and charges for Building Services, as proposed in Appendix 4, ‘Fees and Charges Review’ dated 8 February 2017 be adopted and following public notification take effect from 1 July 2017, or in the case of those fees and charges relating to earthquake-prone buildings, such later date as may be required by the commencement order for the Building (Earthquake-prone Buildings) Amendment Act 2016. Animal Control 6. That the fees and charges for the Impounding of Animals (in terms of section 14 of the Impounding Act 1955) and for Dog Registration and Dog Impounding (in terms of section 37 of the Dog Control Act 1996) as proposed in Appendix 6, ‘Fees and Charges Review’ dated 8 February 2017 be adopted, and once following public notification, take effect from 1 July 2017. Burial & Cremation 7. That the fees and charges for Burial and Cremation, as proposed in Appendix 7, ‘Fees and Charges Review’ dated 8 February 2017 be adopted and following public notification take effect from 1 July 2017. Service Connections 9. That the fees and charges for Service Connections, as proposed in Appendix 9, ‘Fees and Charges Review’ dated 8 February 2017 be adopted and take effect from 1 July 2017. Waste Transfer Stations – Ashhurst & Bunnythorpe 10. That the fees and charges for general waste at the Ashhurst and Bunnythorpe Transfer Stations, as proposed in Appendix 10, ‘Fees and Charges Review’ dated 8 February 2017 be adopted and take effect from 1 July 2017. Rubbish Bags 11. That as proposed in Appendix 11, ‘Fees and Charges Review’ dated 8 February 2017 the Council enter agreements with retailers to set the maximum retail price for Council’s official rubbish bags at $2.50 including GST per bag from 1 July 2017. Waste Collector’s Licence Fee 12. That the Proposal to set a waste collector’s licence fee of $500 including GST from 1 July 2017 as attached in Appendix 12, ‘Fees and Charges Review’ dated 8 February 2017 be approved for public consultation and the Chief Executive be authorised to undertake the necessary consultative process under sections 82 and 150 of the Local Government Act 2002.
	Clause 4.1-4.4 inclusive, 4.6-4.7 inclusive and 4.9-4.12 inclusive above was carried 13 votes to 0, with 1 abstention, the voting being as follows: For: The Mayor (Grant Smith) and Councillors Brent Barrett, Susan Baty, Rachel Bowen, Adrian Broad, Vaughan Dennison, Lew Findlay QSM, Leonie Hapeta, Jim Jefferies, Lorna Johnson, Karen Naylor, Bruno Petrenas and Aleisha Rutherford. Abstained: Councillor Tangi Utikere.
	Moved Jim Jefferies, seconded Grant Smith. Environmental Health 5. That the fees and charges for Environmental Health Services (in terms of regulation 7 of the Health (Registration of Premises) Regulations 1966 and regulation 83 of the Food Hygiene Regulations 1974) as proposed in Appendix 5, ‘Fees and Charges Review’ dated 8 February 2017 be adopted and following public notification, take effect from 1 July 2017.
	Moved Jim Jefferies, seconded Grant Smith. The COMMITTEE RECOMMENDS Clause 4.5 above was carried 12 votes to 0, with 2 abstentions, the voting being as follows: For: The Mayor (Grant Smith) and Councillors Brent Barrett, Susan Baty, Rachel Bowen, Adrian Broad, Vaughan Dennison, Lew Findlay QSM, Jim Jefferies, Lorna Johnson, Karen Naylor, Bruno Petrenas and Aleisha Rutherford. Abstained: Councillors Leonie Hapeta and Tangi Utikere.
	Moved Lorna Johnson, seconded Bruno Petrenas. The COMMITTEE RECOMMENDS Sportsfields 8. That the fees and charges for Sportsfields, as proposed in Appendix 8 ‘Fees and Charges Review’ dated 8 February 2017 be adopted and take effect from the summer season 2017/18.
	Clause 4.8 above was carried 10 votes to 3, with 1 abstention, the voting being as follows: For: The Mayor (Grant Smith) and Councillors Brent Barrett, Rachel Bowen, Adrian Broad, Lew Findlay QSM, Jim Jefferies, Lorna Johnson, Karen Naylor, Bruno Petrenas and Aleisha Rutherford. Against: Councillors Susan Baty, Vaughan Dennison and Leonie Hapeta. Abstained: Councillor Tangi Utikere.
	Moved Lorna Johnson, seconded Leonie Hapeta. The COMMITTEE RECOMMENDS 13. To freeze the increase in dog fees for preferred owners for 2017/2018.
	Clause 4.13 above was carried 8 votes to 5, with 1 abstention, the voting being as follows: For: Councillors Brent Barrett, Susan Baty, Rachel Bowen, Adrian Broad, Lew Findlay QSM, Leonie Hapeta, Lorna Johnson and Bruno Petrenas. Against: The Mayor (Grant Smith) and Councillors Vaughan Dennison, Jim Jefferies, Karen Naylor and Aleisha Rutherford. Abstained: Councillor Tangi Utikere.

5-17

Treasury Report for 6 months ended 31 December 2016

Memorandum, dated 1 February 2017 from the Strategy Manager Finance, Steve Paterson.

Moved Adrian Broad, seconded Jim Jefferies.

The COMMITTEE RECOMMENDS

1. That the performance of the treasury activity for the 6 months ending 31 December 2016 be noted.

Clause 5.1 above was carried 14 votes to 0, the voting being as follows:

For:

6-17

Quarterly Performance and Finance Report - Quarter Ending 31 December 2016

Memorandum, dated 3 February 2017 from the Financial Accountant, Keith Allan and the Head of Community Planning, Andrew Boyle.

Moved Jim Jefferies, seconded Karen Naylor.

The COMMITTEE RESOLVED

1. That the Committee receive the December 2016 Quarterly Performance and Financial Report and note:

a. the December 2016 financial performance and operating performance.

b. the December 2016 capital expenditure programme progress together with those programmes identified as unable to be completed this financial year.

Clause 6.1 above was carried 13 votes to 1, the voting being as follows:

For:

The Mayor (Grant Smith) and Councillors Susan Baty, Jim Jefferies, Brent Barrett, Rachel Bowen, Adrian Broad, Vaughan Dennison, Lew Findlay QSM, Lorna Johnson, Karen Naylor, Bruno Petrenas, Aleisha Rutherford and Tangi Utikere.

Against:

Councillor Leonie Hapeta.

7-17

Electricity Costs 2014/15 to 2016/17

Memorandum, dated 10 February 2017 from the General Manager - City Networks, Ray Swadel and the Financial Accountant, Keith Allan.

Moved Tangi Utikere, seconded Karen Naylor.

The COMMITTEE RECOMMENDS

1. That the breakdown of electricity costs for the 2014/15 and 2015/16 financial years as apportioned to the Activities and Sub-Activities in Appendix A of the report titled “Electricity Costs 2014/15 to 2016/17” dated 10 February 2017 be received.

Clause 7.1 above was carried 14 votes to 0, the voting being as follows:

For:

8-17

Conference Opportunity - Women in Local Government Leadership Summit 2017

Memorandum, dated 9 February 2017 from the Governance & Support Team Leader, Kyle Whitfield.

Moved Aleisha Rutherford, seconded Lorna Johnson.

The COMMITTEE RESOLVED

1. That the Committee approve the attendance of 4 elected member(s) to attend, with expenses paid, to the Women in Local Government Leadership Summit being held in Wellington on 18 April 2017 through to the 21 April 2017.

2. That registrations of interest be invited from elected members wishing to attend, with expenses paid, and advise the Governance and Support Team Leader, Kyle Whitfield, by 12 noon Friday 24 February 2017.

Clause 8.1 above was carried 8 votes to 5, with 1 abstention, the voting being as follows:

For:

Councillors Susan Baty, Jim Jefferies, Brent Barrett, Rachel Bowen, Leonie Hapeta, Lorna Johnson, Aleisha Rutherford and Tangi Utikere.

Against:

The Mayor (Grant Smith) and Councillors Adrian Broad, Vaughan Dennison, Lew Findlay QSM and Bruno Petrenas.

Abstained:

Councillor Karen Naylor.

9-17

Committee Work Schedule - February 2017

Committee Work Schedule, dated February 2017, by Kyle Whitfield.

Moved Susan Baty, seconded Jim Jefferies.

The COMMITTEE RESOLVED

1. That the Finance and Performance Committee receive its Work Schedule dated February 2017.

Clause 9.1 above was carried 14 votes to 0, the voting being as follows:

For:

Exclusion of Public

10-17

Recommendation to Exclude Public

Moved Vaughan Dennison, seconded Jim Jefferies.

The COMMITTEE RECOMMENDS

“That the public be excluded from the following parts of the proceedings of this meeting listed in the table below.

General subject of each matter to be considered		Reason for passing this resolution in relation to each matter	Ground(s) under Section 48(1) for passing this resolution
1.	Claim - CC2605/16	Legal Privilege	s7(2)(g)
2.	Pacific Drive Extension Local Purpose Road Reserve	Commercial Activities	s7(2)(h)

Also that the persons listed below be permitted to remain after the public has been excluded for the reasons stated.

Legal Counsel (John Annabell), because of his knowledge and ability to provide the meeting with legal and procedural advice.

Claims Management Officer (Jo-Anne Dulieu), Head of Building Services (Leigh Sage) and Road Planning Team Leader (David Lane) because of their knowledge and ability to assist the meeting in speaking to their report and answering questions, noting that such officer will be present at the meeting only for the item that relate to their respective report.

Clause 10.1 above was carried 14 votes to 0, the voting being as follows:

For:

The public part of the meeting finished at 11.40am

Confirmed 20 March 2017

Chairperson

PALMERSTON NORTH CITY COUNCIL

Memorandum

TO: Finance and Performance Committee

MEETING DATE: 20 March 2017

TITLE: Palmerston North Airport Ltd - Draft Statement of Intent for 2017/18

DATE: 6 March 2017

AUTHOR/S: Steve Paterson, Strategy Manager Finance, City Corporate

RECOMMENDATION(S) TO Council

1. That the Palmerston North Airport Ltd draft Statement of Intent for 2017/18 be received and its assumptions endorsed.

1. ISSUE

To present and provide comment on the draft Statement of Intent for Palmerston North Airport Ltd (PNAL) for 2017/18.

2. BACKGROUND

PNAL is deemed a Council-Controlled Trading organisation (CCTO) under the Local Government Act 2002. A CCTO must deliver a draft Statement of Intent (SOI) to shareholders by 1 March each year and adopt it by 30 June. The Council must, as soon as possible after a draft SOI is delivered to it agree to a CCTO’s SOI or, if it does not agree, take all practicable steps under clause 5 of Schedule 8 of the Local Government Act 2002 to require the SOI to be modified.

Attached is a letter from PNAL to shareholders explaining the enclosed draft SOI and outlining the key assumptions.

The SOI contains a new vision “New Zealand’s leading regional airport” and some minor changes to the wording of the mission and nature and cope of activity sections.

It has been assumed the airport will operate as a domestic regional one over the next three years. Further growth in the domestic activity, and as a consequence increased revenue and related operating expenses is forecast.

In addition the capital expenditure programme is targeted toward keeping the infrastructure appropriate for delivering the current level of operation at an acceptable level of service and to make enhancements to existing infrastructure and facilities to meet customer and partner needs.

The SOI contains an assumption that capital expenditure of $18.1 will be phased across the three years, funded in part ($3.6m) from the sale of non-strategic land.

Shareholders’ funds remain significantly greater than 40% of total assets through the three year term of the SOI.

Financial performance targets/forecasts are included vis:

	Draft SOI 2017/18 Budget	SOI 2016/17 Budget
NPBIT : Total assets	3.9%	3.2%
NPAIT : Shareholders’ funds	3.0%	2.5%
Shareholders’ funds: Total assets (>60%)	75%	80%
Interest cover (>2.5)	8.9	10.4
Tangible Net Worth (>$35m)	$51.8m	$50.7m
Dividends - % of NPAT	40%	40%

Non-financial targets relate to:

· Maintaining Civil Aviation Rule Part 139 certification and having no adverse findings from the annual audit

· Maintaining high levels of customer satisfaction (>=90%) measure bi-annually by customer survey

· Serving 639,000 passengers during the 2017/18 year increasing to 758,000 for the following year and 769,000 in the June 2020 year (631,000 in 2016/17 SOI now forecast to be 615,000).

The proposed Annual Budget for 2017/18 assumes PNAL will pay the Council shareholder dividends of $300,000 during 2017/18. The SOI assumes a payment of $530,000 in 2017/18 and payments of $616,000 and $1.112m in the following two years. These significant increases in dividends will obviously be reliant on achieving the assumed growth and the Company meeting the appropriate solvency tests.

The Council’s reason for its shareholding in PNAL is to ensure that the capacity and image of the City’s key transportation gateway is consistent with the Council’s economic development objectives. The Company encapsulates this with specific acknowledgement in clause 10.

As a CCTO PNAL is required under the Local Government Act 2002 to have the following principal objective:

· Achieve the objectives of its shareholders, both commercial and non-commercial, as specified in the Statement of Intent; and

· Be a good employer; and

· Exhibit a sense of social and environmental responsibility by having regard to the interests of the community in which it operates and by endeavouring to accommodate or encourage these when able to do so; and

· Conduct its affairs in accordance with sound business practice.

The Council’s shareholding represents 100% of the issued and paid-up capital.

PNAL’s letter outlines the assumptions which have been made in preparing the draft SOI. These appear reasonable.

3. NEXT STEPS

The Council can either endorse the SOI as presented or make suggestions for change to a greater or lesser extent. No material recommendations are being made for change.

The Company is obliged to consider shareholder comments then decide whether or not to make any changes to the draft when adopting the final SOI before 30 June 2017.

Attachments

1.	Letter from PNAL ⇩
2.	Draft SOI 2017-18 ⇩

Steve Paterson

Strategy Manager Finance

PALMERSTON NORTH CITY COUNCIL

Report

TO: Finance and Performance Committee

MEETING DATE: 20 March 2017

TITLE: New Programme for Infeed Conveyor Upgrade at Awapuni MRF

DATE: 23 February 2017

AUTHOR/S: Robert van Bentum, Water & Waste Services Manager, City Networks

Natasha Hickmott, Rubbish and Recycling Engineer, City Networks

RECOMMENDATION(S) TO Council

1. That the Committee approve the creation of a new 2016/17 Capital New programme for $50,000 for the upgrade of the Infeed Conveyor at the Awapuni MRF with funding to come from the equivalent amount of savings in Programme 721 – Awapuni Landfill Cover and Landscape.

Summary of options analysis for

Problem or Opportunity	Capital improvement project at the Awapuni MRF to improve the flow of recycling material onto the sort line and achieve significant annual savings in labour, waste disposal and machine operating costs. The additional funding when combined with scheduled renewal expenditure will enable a significant improvement opportunity to be implemented.
OPTION 1:	Renewal of Key Components of the Existing C1 Infeed Conveyor
Community Views	This programme is required for reliable delivery of the kerbside and public recycling service. Reliable operation of the facility is critical to the quality and cost of delivering the service. Unplanned failure will impact negatively on public perception of Council services.
Benefits	The renewal of the wearing parts of the existing conveyor is the do minimum option and is provided for within this year’s budget. Failure to carry out the work may lead to unplanned outage of the facility and additional cost.
Risks	There is no significant risk in carrying out the renewals, however given the deficiencies of the current conveyor system, further on-going renewal of the wearing parts can be expected. Proceeding with Option 1 would miss the opportunity to reduce overall renewal and operating costs long term under Option 2.
Financial	Renewal of the existing conveyor at a cost of $50,000 has been allocated and approved by Council from Programme 649 –Recycling – Material Recovery Facility Renewals to cover this cost.
OPTION 2:	Upgrade C1 Infeed Conveyor
Community Views	The asset is critical for delivery of the kerbside and public recycling service. The opportunity to upgrade the asset to reduce on-going renewal and operating costs will enhance the reliability of the facility and enhance public perception of the services.
Benefits	The upgrade to the conveyor is predicted to provide significant benefits in terms of reduced labour, waste and machine operating costs of $15,000 per annum in addition to reduced long term renewal costs.
Risks	The design of the improved feed system is an adaptation rather than a direct copy of equipment widely used overseas and in several locations in New Zealand. The company proposed to carry out the work has not installed this equipment before but has carried out all the maintenance and modifications at the facility for the last two years and has a detailed understanding of the performance and practical constraints of the facility. The risk of the modifications not delivering on the improvements is considered extremely low.
Financial	Option 2 ($100,000) is to be funded from a combination of renewal funding not required to repair the existing conveyor ($50,000) under Programme 649 – Recycling – Material Recovery Facility Renewals and savings of $50,000 from Programme 721 – Awapuni Landfill Cover and Landscape.

Rationale for the recommendations

1. Overview of the problem or opportunity

1.1 Council owns and operates a materials recycling facility (MRF) at the Awapuni Resource Recovery Park. The MRF was first commissioned in November 2010, and was designed around a manual sort conveyor system requiring 11 staff to operate. After 18 months of operation in April 2012, a range of plant and equipment upgrades were implemented in order to achieve improved output efficiency and product quality at a significantly lower cost.

1.2 While the current plant arrangement operates effectively there are a number of deficiencies or limitations in respect of the Infeed Hopper and the Incline Infeed Conveyor which impact on both processing efficiency and reliability as described below.

1.3 Infeed Hopper: The variability of material feed from the hopper onto the inclined infeed conveyor (C1) results in uneven loading such that the material feed is lumpy reducing the effectiveness of both manual and mechanical sorting. In addition the hopper requires continuous use of a loader to keep the infeed hopper full of material.

1.4 Incline Infeed Conveyor (C1): A design flaw in the conveyor results in frequent breakdown and high maintenance requirements.

1.5 The proposed new programme to upgrade the C1 conveyor will address the excessive maintenance issues and deliver improvements in material feed rates as well as delivering efficiency improvements and reduced operating costs.

2. Background and previous council decisions

2.1 The Awapuni MRF was first commissioned in November 2010, and was designed around a manual sort conveyor system requiring 11 staff to operate. After 18 months of operation in April 2012, a range of plant and equipment upgrades were implemented in order to achieve improved output efficiency and product quality at a lower overall cost. The improvements, designed by Recycling Design and Technologies (RDT) of Australia included a new infeed hopper, pre-sort platform and ancillary conveyor, a fines screen – to remove fines (<50mm) from the product, an overhead magnet to mechanically sort the steel cans and a refurbished eddy current to divert aluminium cans which has since been removed, due it being ineffective due to its inadequate size.

2.2 Following the upgrades, the MRF has been operated by 7 staff and achieves processing rates of approximately 0.42 tonnes/per man hour.

2.3 Key weaknesses with the current plant include the design and operation of the Infeed Hopper and large Incline Infeed Conveyor. Aside from the variability of material feed and continuous loading requirements for the Infeed Hopper, the Incline Infeed Conveyor has some design flaws which result in significant on-going maintenance costs and downtime. Deficiencies include:

The conveyor belt tightens as it rolls over the top drum causing the belt to twist, placing strain on the cleats, which in turn places strain on the chains. As the cleats are bolted onto the conveyor via brackets that are fixed onto the chains that drive the conveyor, the ‘twisting’ action causes the following issues:

· The bolts fixing the cleats to the conveyor work loose, eventually falling out and tearing the conveyor as they pull out.

· The cleats warp and need to be regularly replaced

· The ongoing twisting action which strains the chains is predicted to reduce the life of the chains by 50% bringing forward the date for their replacement by at least 5 years

2.4 The reliable operation of the recyclables sort line is critical to delivery of the kerbside and public recycling services. Maintenance of the mechanical high wear equipment as well as the downtime represents a significant portion of the cost of operating the facility, so that any opportunity to improve reliability and reduce wear and tear has significant cost benefits for Council.

2.5 The requirement to refurbish the C1 Conveyor is now urgent as on-going minor maintenance and downtime required to keep the facility operating is impacting on the processing capacity of the facility.

3. Description of options

3.1 Option 1 comprises the refurbishment of the infeed conveyor (C1) by replacing the chains, cleats, and bolts and installing packers, similar to those on the other incline conveyors to minimise the strain placed on the chains and sprockets. This would address the immediate maintenance issues.

3.2 Option 2, which has been developed by MJ Custom Engineering, proposes the removal of the Infeed Hopper and C1 Inclined Infeed Conveyor and replacing these with an infeed system comprising two separate conveyors and a metering wheel.

4. Analysis of options

4.1 Option 1 comprising the refurbishment of the existing C1 Conveyor will address the immediate maintenance issues but due to the width of C1 (1.8m) will not resolve the on-going maintenance issues and so will not result in a significant extension to the remaining life of the conveyor. Significant maintenance costs albeit at lower levels than currently experienced are still likely.

4.2 Option 1 does not address the efficiency issues associated with the uneven loading of the sort line and the reliance on the loader to feed product into the MRF. This option can however be delivered within the existing renewal budget allocation under Programme 649 – Recycling Materials Recovery Facility Renewals.

4.3 Option 2 has been developed by MJ Custom Engineering who has been the preferred maintenance contractor at the MRF for the last 2 years. The solution incorporates the use and modification of two conveyors currently in stock but not in use having been supplied in 2010 when the MRF was first commissioned. One conveyor was never installed and the other was removed during the April 2012 modifications. The conveyors, motors and gearboxes are assessed to be suitable for the proposed new infeed arrangement. MJ Custom Engineering has provided a proposal for the design and construction of the metering wheel, modification of the existing unused conveyors and the installation and commissioning of the new infeed area.

4.4 Indicative concept drawings for the Option 2 modifications are shown as follows:

Metering Wheel Assembly Location

Co-mingled recycling loaded into plant – Capacity of area significantly more than current infeed conveyor

4.5 The first conveyor will be controlled by an optical eye to manage the flow of product onto the second conveyor and therefore the metering wheel. Product is then metered onto the Inclined Input Conveyor that feeds the pre-sort line. The height of the metering wheel will be adjustable to allow for varying the flow of product into the plant and therefore providing for adjustments to be made to maximise productivity.

4.6 The metering wheel arrangement proposed will allow the infeed area to semi-automate the supply of product to the sorting line. The quantity of product being supplied to the line can be pre-set by the controller. Adjustments can be made to take account of the mix of material being sorted. The metering wheel system is widely used in overseas recycling sort facilities and in Hastings New Zealand. Its operation was observed on site by Officers prior to developing this proposed improvement project.

4.7 Under the current situation the throughput of the plant is largely dependent on the actions of the loader driver. With the metering wheel arrangement proposed, the efficiency of the sort line will be much less reliant on this individual.

4.8 A detailed cost estimate for the work has been provided and updated by the contractor / designer as recently as February 2017. A contingency allowance of 15% has been included in the estimate to cover any unforeseen items and further minor cost increases. Officers will complete a market comparability assessment of the final schedule of work prior to seeking a firm quotation for the work to ensure it represents value for money.

4.9 The benefits of the installation of the metering wheel and upgraded infeed arrangements are reduced operational costs from reduced loader operation, staff time and waste as well as improved recycling product recovery. The specific cost savings are based on the following assumptions:

· Loader Use – Sufficient product for up to one hour of plant running time can be stockpiled by pushing material into the infeed area of the first conveyor resulting in reduced loader operation time of 1.5hrs/day - $7,700 / annum

· Improved Efficiency and Reduced Labour Requirements at Peak Periods – With greater sorting line efficiently it is assumed that the peak product processing capacity will be increased and enable the Christmas/New Year volumes to be processed without employing extra staff. - $4,000 / annum

· Reduced Recyclables Going to Waste – As a result of more efficient screening and sorting, it is estimated that waste volumes will be reduced by 5% by weight per annum or $3,300 / annum as more of the recyclables are removed from the waste stream

· Reduced Maintenance – The proposed Option 2 upgrade is expected to result in a long term lower maintenance profile compared to Option 1. However as both options reduce maintenance costs in the short term no financial benefit associated with maintenance cost reductions has been attributed to Option 2.

4.10 The additional savings due to Option 2 are summarised below and are estimated to be a minimum of $15,000 pa. Based on the capital programme cost of $50,000 the net reductions in cost will be recovered within 4 years, by way of reduced SLA payments to City Enterprises to run the Awapuni MRF.

Reduced loader running costs: Fuel Savings @ 14 litres per hour $16.80 Maintenance Costs @ $3.00 per hour Reduction in loader operation @ 1.5hrs/day = $29.70/day Annual Savings @ 260 days = $7,722	$7,700 pa
Improved Efficiency: Christmas/New Year @ 4 days pa Staff costs per day: $1,000 Annual Savings: 4 x $1,000 = $4,000	$4, 000 pa
Reduced Waste Through improved Recovery of Recyclables: Tonnage @ MRF per annum: 570 T @ 5% reduction, reduced tonnage: 28.5 T Annual Savings 28.5 T x $115 = $3,277.50	$3,300 pa
Option 2 Upgrade – Cost Savings	$15,000 pa

5. Conclusion

5.1 Option 1 is the least cost option involving refurbishment of the existing conveyor. While this addresses the immediate maintenance issues and can be funded from renewals, it does not realise any long term operational cost savings nor contribute to long term reductions in maintenance costs.

5.2 Option 2 providing for the upgrade of the infeed conveyor and installation of a metering wheel is preferred because of the long reliability and reduced operating cost advantages. Accordingly the option has components of both renewal and capital new. To implement Option 2 requires Council approval to use $50,000 of savings from Programme 721 - Awapuni Landfill Cover and Landscape plus renewal funding of $50,000 from Programme 649 – Recycling – Material Recovery Facility Renewals.

6. Next actions

6.1 If Council approves the recommendation to create a new programme of work, Council officers will prepare a short form contract and specification and seek a firm quotation for the work from the preferred provider. If the price is acceptable and is considered to be market comparable then a decision to proceed with the work will be made.

6.2 The majority of the work can be completed off-site, with installation requiring the facility to be idle for only a few days. The contractor has provided an indicative timeline of 12 weeks for the project, so it is expected that the project can be largely completed by 30 June 2017.

7. Outline of community engagement process

7.1 The project is an internal operational improvement project so does not impact directly on any members or organisations in the community. No specific community engagement has therefore been undertaken.

Compliance and administration

7.2 The programme is a small capital new improvement programme which requires Council approval to proceed. Funding is available from savings on a programme at the Awapuni closed landfill site. The project is not considered to trigger any action under the significance policy.

Does the Committee have delegated authority to decide? If Yes quote relevant clause(s) from Delegations Manual <Enter clause>	No
Are the decisions significant?	No
If they are significant do they affect land or a body of water?	No
Can this decision only be made through a 10 Year Plan?	No
Does this decision require consultation through the Special Consultative procedure?	No
Is there funding in the current Annual Plan for these actions?	No
Are the recommendations inconsistent with any of Council’s policies or plans?	No

Attachments

Nil

Robert van Bentum

Water & Waste Services Manager

Natasha Hickmott

Rubbish and Recycling Engineer

PALMERSTON NORTH CITY COUNCIL

Report

TO: Finance and Performance Committee

MEETING DATE: 20 March 2017

TITLE: Central Energy Trust Wildbase Recovery - Establishing the Project Steering Group

DATE: 8 March 2017

AUTHOR/S: Aaron Phillips, Senior Property & Parks Planner, City Networks

RECOMMENDATION(S) TO Council

1. That Council endorse the project management structure including establishment of a Project Steering Group as outlined in Figure One of the Report titled “Central Energy Trust Wildbase Recovery – Establishing the Project Steering Group” dated 8 March 2017.

2. That the Chief Executive seek expressions of interest from Elected Members for two Central Energy Trust Wildbase Recovery Project Steering Group positions.

3. That the Mayor, Deputy Mayor and Chair of the Finance and Performance Committee form a recruitment panel and make two Councillor appointments to the Central Energy Trust Wildbase Recovery Project Steering Group.

Summary of options analysis for

Problem or Opportunity	The Central Energy Trust Wildbase Recovery project is a large capital project with high levels of community interests with a wide range of project partners and stakeholders. A Project Steering Group is proposed to oversee the construction process and provide support and guidance to the project manager. This report seeks endorsement of the Project Steering Group, approval of the Terms of Reference and two councillor appointments be made to the Project Steering Group.
OPTION 1:	Establish the Project Steering Group and make two Councillor appointments to the Project Steering Group.
Community Views	Community views have not been sought on the establishment of the Project Steering Group. 2015/25 Long Term Plan submissions were split with 37 in favour and 19 opposed to the Wildbase Recovery project. Strong service club and community group support has been received for the project. Public donations, in-kind suppliers and private sponsors have supported the project at high levels.
Benefits	Ensures partner and stakeholder oversight of the construction process. Governance oversight included along with senior management.
Risks	May add to reporting time and decision making at times for the Project Manager, when quick decisions may be required.
Financial	Costs of hosting meetings can be met from within existing operational budgets.
OPTION 2:	Modify the project management structure and/or the Councillor representative numbers on the Project Steering Group.
Community Views	Community views have not been sought on the establishment of the Project Steering Group. 2015/25 Long Term Plan submissions were split with 37 in favour and 19 opposed to the Wildbase Recovery project. Strong service club and community group support has been received for the project. Public donations, in-kind suppliers and private sponsors have supported the project at high levels.
Benefits	Reduction in reporting requirements and time management for the project manager.
Risks	Lack of involvement of partners and stakeholders in the construction phase. Greater risk of key sign-offs on any issues or variations being missed.
Financial	Risk of lack of agreement to variations or changes.
Contribution of Recommended Option to Council’s Strategic Direction	The Project Steering Group ensures engagement with iwi as per the Maori Community Strategy while the project more widely supports actions in the Biodiversity Strategy and Active Recreation Strategy which call for the Central Energy Trust Wildbase Recovery project to be completed.

Rationale for the recommendations

1. Overview of the problem or opportunity

1.1 The Central Energy Trust Wildbase Recovery project is a large capital project with high levels of community interests with a wide range of project partners and stakeholders.

1.2 A Project Steering Group is proposed to oversee the construction process and provide support and guidance to the project manager.

1.3 This report seeks endorsement of the project management structure including a Project Steering Group and the appointment of two councillor members to that Group.

2. Background and previous council decisions

2.1 Council has been approved and consulted on the Central Energy Trust Wildbase Recovery project through various Long Term and Annual Plans and received a variety of updates.

3. Description of options

3.1 Option One: Establish the Project Steering Group and make two Councillor appointments to the Project Steering Group.

3.2 The Project Steering Group and proposed associated project management structure is shown in Figure One.

Figure One: Proposed CET Wildbase Recovery Project Management Structure.

3.3 This structure proposes two Councillors are appointed to the Project Steering Group to work alongside staff and partner representatives.

3.4 Option Two: Modify the project management structure and/or the Councillor representative numbers on the Project Steering Group.

3.5 Council could choose to change parts or all of the project management structure, change the number of Councillors on the Project Steering Group or proceed without a Steering Group.

4. Analysis of options

4.1 Option One: Establish the Project Steering Group and make two Councillor appointments to that Group.

4.2 The project management structure proposed sets out memberships/representations and relationships of the Project Steering Group and other project appointments including Project Control Group befitting a project of this size and community interest.

4.3 The benefits include ensuring all partners to the project have a voice at the table of the Project Steering Group that clear lines of reporting and communication are established and the construction progress can be monitored.

4.4 There is a minor risk of additional reporting and time constraints on the project manager if circumstances arise where swift decision making is required to keep the project on track in terms of time.

4.5 The Project Steering Group ensures engagement with iwi as per the Maori Community Strategy while the project more widely supports actions in the Biodiversity Strategy and Active Recreation Strategy which call for the Central Energy Wildbase Recovery project to be completed.

4.6 Option Two: Modify the project management structure and/or Councillor representative numbers on the Project Steering Group.

4.7 The Collaboration Agreement with Massey University notes a Project Steering Group will be established. This has also been shared with the Wildbase Recovery Community Trust representatives who have an obligation to ensure the publically raised funds are used responsibly. Any modifications of substance concerning the proposed project management structure would need to be consulted back with those partners.

4.8 The timeframe for establishment of the Group is limited as it is anticipated that Council will be making a decision on the award of the tender in the first week of April 2017. Any changes that delay the establishment of the Project Steering Group risk that Group not being established to receive the first months report after construction has commenced.

5. Conclusion

5.1 A Project Steering Group is required to be established as per the Collaboration Agreement with Massey University.

5.2 A Project Steering Group will ensure the construction is well communicated and the various partners hear about progress directly from the project manager and have a direct opportunity to comment on any issues or opportunities that may arise.

6. Next actions

6.1 Complete a Councillor nomination and appointment process.

6.2 Arrange initial introductory Project Steering Group meeting.

7. Outline of community engagement process

7.1 The partners and stakeholders to the Central Energy Trust Wildbase Recovery project will be engaged in the Project Steering Group.

7.2 Key milestone achievements will be communicated to the public.

Compliance and administration

Does the Committee have delegated authority to decide? If Yes quote relevant clause(s) from Delegations Manual	No
Are the decisions significant?	No
If they are significant do they affect land or a body of water?	No
Can this decision only be made through a 10 Year Plan?	No
Does this decision require consultation through the Special Consultative procedure?	No
Is there funding in the current Annual Plan for these actions?	Yes
Are the recommendations inconsistent with any of Council’s policies or plans?	No

Attachments

NIL

Aaron Phillips

Senior Property & Parks Planner

PALMERSTON NORTH CITY COUNCIL

Memorandum

TO: Finance and Performance Committee

MEETING DATE: 20 March 2017

TITLE: Urgent Replacement of Lift Pumps Maxwells Line

DATE: 6 March 2017

AUTHOR/S: Phil Burt, Waste Water Asset Engineer, City Networks

Robert van Bentum, Water & Waste Services Manager, City Networks

RECOMMENDATION(S) TO Council

1. That the Committee approve the reallocation of $100,000 from Capital Renewal Programme 54 – Wastewater Mains Renewal to Capital Renewal Programme 65 – Wastewater Pump Station Renewal to enable urgent replacement of two lift pumps at the Maxwell’s Line Wastewater Pump Station within the 2016/17 financial year.

1. ISSUE

1.1 Recent unexpected failures have occurred with two of the lift pumps installed in the Maxwell’s Line wastewater pump station (WWPS). The failures have highlighted deficiencies not previously identified. The Maxwell’s Line WWPS is a critical asset and the reliable performance of all the four pumps is essential to minimise the risk of overflows in the upstream network. Replacement of the two pumps is considered a critical priority. While the replacement is required to mitigate the risk of overflows, the replacement of the pumps provides an opportunity to reduce operating costs. Operating cost reductions are expected through reductions in the high levels of current maintenance/repair costs and the opportunity to use higher efficiency pumping technology with lower overall lifecycle energy costs.

1.2 While the expenditure is critical, the budget for Programme 65 – Wastewater Pump Station Renewals is $39,000 and the majority of this is already allocated. A transfer of $100,000 of currently unallocated funding from Programme 54 – Wastewater Mains Renewals to Programme 65 is proposed to enable the pump replacement to proceed in the current financial year.

2. BACKGROUND

2.1 The Maxwell’s Line WWPS was constructed in 1965 and originally fitted with 3 pumps. In 1996 a fourth pump was installed to provide additional pumping capacity to cope with the increased flows being received at the pump station.

2.2 The pumps handle the incoming flow of the western trunk sewer main which represents approximately 40% of the total wastewater flow from the City. During off peak dry weather periods, typically only one pump is operating with the other pumps gradually coming on line to cope with diurnal peaks during the day or during wet weather periods when inflows peak.

2.3 The pumps deliver flow from the western trunk main at the corner of Pioneer Highway and Maxwell’s Line into a pressure rising main which discharges part way down Maxwell’s Line into the trunk gravity sewer and then to the Totara Road Wastewater Pump Station. Over the past three months two of the four pumps (pumps #3 and #4) have experienced significant failures that required extensive repairs. The respective pumps were installed in 2005 and 1996 respectively and were considered to be well within their expected service life. The pumps have been repaired and put back in service however there is concern about their long term resilience and reliability. Coupled with these reliability concerns are issues being experienced with blockages from foreign materials (e.g. wet wipes) resulting in increased maintenance attendance and costs.

2.4 As part of an on-going replacement programme of work at Maxwell’s Line WWPS, new larger capacity pumps were installed in 2012 and 2016 (pumps #1 and #2). It had been proposed that the two smaller pumps would be replaced and upgraded as part of this replacement programme in the coming years, at a time closer to their expected replacement age of approximately 20 to 25 years. Pump #3 installed in 1996 was the next pump scheduled for replacement.

2.5 However, given the unexpected major failures of both pumps #3 and #4 well in advance of their predicted end of life, it is recommended that the remaining two pumps be replaced immediately.

2.6 In the light of the significant blockage history with the existing pumps which are all from the same manufacturer it is proposed to replace the pumps with another brand. This is based on recent experience with pump replacements at the Massey WWPS, in which smaller more efficient pumps have been installed and have operated with significantly fewer blockages. It is expected that a similar outcome can be achieved at Maxwell’s Line by utilising similar new more efficient pumping technology.

3. Budget issues

3.1 Detailed cost estimates for supply and installation of the replacement pumps have been obtained at $45,000 per unit, comprising $22,000 for pump supply and $23,000 for installation.

3.2 Typically pump replacement would be undertaken as part of Programme 65 - Wastewater Pump Station Renewals, however the entire 2016/17 budget of $39,000 is fully committed to other critical renewals.

3.3 The majority of network renewals funding is allocated to pipe renewals within Programme 54 – Wastewater Main Renewals. This year’s schedule items comprising the programme of work has been designed, priced and contracted for delivery by both City Enterprises and an external pipe lining contractor. At this stage the programme of work has a small amount of unallocated funding, usually retained for unforeseen renewals. It is proposed that the amount of $100,000 (including contingency) be reallocated from Programme 54 – Wastewater Main Renewals to fund the pump replacements. Officers are confident that the current 2016/17 year’s programme of pipe renewals can be delivered within the reduced budget.

3.4 The specific changes to the budget allocations are summarised below.

Prog ID	Description	2016/17 Budget	Proposed 2016/17 Budget	Change
65	Wastewater Pump Station Renewals	$39,000	$139,000	+$100,000
54	Wastewater Main Renewals	$1,400,000	$1,300,000	-$100,000
	Totals	$1,439,000	$1,439,000	$0

Attachments

Nil

Phil Burt

Waste Water Asset Engineer

Robert van Bentum

Water & Waste Services Manager

Susan Baty (Chairperson)
Jim Jefferies (Deputy Chairperson)
Grant Smith (The Mayor)
Brent Barrett	Lorna Johnson
Rachel Bowen	Duncan McCann
Adrian Broad	Karen Naylor
Gabrielle Bundy-Cooke	Bruno Petrenas
Vaughan Dennison	Aleisha Rutherford
Lew Findlay QSM	Tangi Utikere
Leonie Hapeta