Agenda of Finance and Performance Committee

PALMERSTON NORTH CITY COUNCIL

Finance and Performance Committee MEETING

17 December 2018

Order of Business

NOTE: The Finance and Performance Committee meeting coincides with the extraordinary meeting of the Sport and Recreation Committee. The Committees will conduct business in the following order:

- Sport and Recreation Committee

- Finance and Performance Committee

1. Apologies

2. Notification of Additional Items

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. Declarations of Interest (if any)

Members are reminded of their duty to give a general notice of any interest of items to be considered on this agenda and the need to declare these interests.

4. 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.)

5. Confirmation of Minutes Page 7

“That the minutes of the Finance and Performance Committee meeting of 19 November 2018 Part I Public be confirmed as a true and correct record.”

6. 2018 Rating Valuations - Impact on Rating Incidence Page 15

Memorandum, dated 3 December 2018 presented by the Strategy Manager Finance, Steve Paterson.

7. Papaioea Place Redevelopment Quarterly Update Page 25

Memorandum, dated 29 November 2018 presented by the Property Manager, Bryce Hosking.

8. Committee Work Schedule Page 29

9. Disposal of Excess Land at the McGregor Street Drainage Reserve Page 33

Memorandum, dated 19 November 2018 presented by the Property Manager, Bryce Hosking.

10. 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
11.	Minutes of the Finance and Performance Committee meeting - Part II Confidential - 19 November 2018	For the reasons setout in the Finance and Performance Committee minutes of 19 November 2018, 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 (Heather Shotter), Chief Financial Officer (Grant Elliott), Chief Infrastructure Officer (Tom Williams), General Manager – Strategy and Planning (Sheryl Bryant), General Manager - Community (Debbie Duncan), Chief Customer and Operating Officer (Chris Dyhrberg), Human Resources Manager (Wayne Wilson), General Manager - Marketing and Communications (Sacha Haskell), Acting Operations Manager (Ray McIndoe) 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.

Acting Governance and Legal Team Leader (Sheryl Bryant) and Committee Administrators (Penny Odell, Rachel Corser and Courtney Kibby), because of their knowledge and ability to provide the meeting with procedural advice and record the proceedings of the meeting.

[Add Council Officers], 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], 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

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 19 November 2018, commencing at 9.00am

Members

Present:

Councillor Susan Baty (in the Chair) and Councillors Adrian Broad, Gabrielle Bundy-Cooke, Vaughan Dennison, Lew Findlay QSM, Leonie Hapeta, Jim Jefferies, Lorna Johnson, Karen Naylor and Bruno Petrenas.

Non Members:

Councillors Brent Barrett, Rachel Bowen, Duncan McCann, Aleisha Rutherford and Tangi Utikere.

Apologies:

The Mayor (Grant Smith) (for lateness, on Council Business) and Councillors Gabrielle Bundy-Cooke (early departure), Leonie Hapeta (early departure) and Duncan McCann (early departure).

When the meeting resumed at 9.38am Councillor Rachel Bowen was not present. She entered the meeting again at 9.39am during consideration of clause 85. She left the meeting again at 12.30pm during consideration of clause 91. She was not present for clauses 84 and 91 to 93 inclusive.

When the meeting returned into Part I at 10.47am The Mayor (Grant Smith) was present. He was not present for clauses 83 to 86 inclusive. He was present for the continuation of clause 85 (following clause 86).

Councillor Leonie Hapeta left the meeting at 12.18pm during consideration of clause 91. She was not present for clauses 91 to 93 inclusive.

Councillor Lew Findlay left the meeting at 12.37pm during consideration of clause 92. He was not present for clauses 92 to 93 inclusive.

Councillor Gabrielle Bundy-Cooke left the meeting at 12.41pm during consideration of clause 92. She was not present for clauses 92 to 93 inclusive.

83-18

Apologies

Moved Susan Baty, seconded Jim Jefferies.

The COMMITTEE RESOLVED

1. That the Committee receive the apologies.

Clause 83-18 above was carried 15 votes to 0, the voting being as follows:

For:

Councillors Brent Barrett, Susan Baty, Rachel Bowen, Adrian Broad, Gabrielle Bundy-Cooke, Vaughan Dennison, Lew Findlay QSM, Leonie Hapeta, Jim Jefferies, Lorna Johnson, Duncan McCann, Karen Naylor, Bruno Petrenas, Aleisha Rutherford and Tangi Utikere.

The meeting adjourned at 9.01am

The meeting resumed at 9.38am

When the meeting resumed Councillor Rachel Bowen was not present.

84-18

Confirmation of Minutes

Moved Susan Baty, seconded Vaughan Dennison.

The COMMITTEE RESOLVED

1. That the minutes of the Finance and Performance Committee meeting of 15 October 2018 Part I Public be confirmed as a true and correct record.

Clause 84-18 above was carried 14 votes to 0, the voting being as follows:

For:

Councillors Brent Barrett, Susan Baty, Adrian Broad, Gabrielle Bundy-Cooke, Vaughan Dennison, Lew Findlay QSM, Leonie Hapeta, Jim Jefferies, Lorna Johnson, Duncan McCann, Karen Naylor, Bruno Petrenas, Aleisha Rutherford and Tangi Utikere.

85-18

Uplifting of report regarding Proposed Increase to the Admission and Concession Rates at The Lido and Freyberg Aquatic Facilities

Memorandum, dated 15 October 2018 presented by the Property Manager, Bryce Hosking.

Councillor Rachel Bowen entered the meeting at 9.39am

Moved Susan Baty, seconded Vaughan Dennison.

The COMMITTEE RECOMMENDS

1. That the report dated 24 September 2018 and titled `Proposed Increase to the Admission and Concession Rates at The Lido and Freyberg Aquatic Facilities’ be uplifted from the table.

2. That the information contained in the report dated 24 September 2018 and titled `Proposed Increase to the Admission and Concession Rates at The Lido and Freyberg Aquatic Facilities’ as attached to the memorandum titled “Uplifting of report regarding Proposed Increase to the Admission and Concession Rates at The Lido and Freyberg Aquatic Facilities’ dated 15 October 2018 be received.

Clauses 85.1 and 85.2 above were carried 14 votes to 0, with 1 abstention, the voting being as follows:

For:

Abstained:

Councillor Rachel Bowen.

86-18

Recommendation to Exclude Public

Moved Susan Baty, seconded Lorna Johnson.

The COMMITTEE RESOLVED

“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
13.	Follow Up - Aquatic Facilities	Third Party Commercial	s7(2)(b)(ii)

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

Chief Executive (Heather Shotter), Chief Financial Officer (Grant Elliott), Acting Chief Infrastructure Officer (Ray Swadel), Acting General Manager – Strategy and Planning (David Murphy), General Manager - Community (Debbie Duncan), Acting General Manager – Customer (Sheryl Bryant), Human Resources Manager (Wayne Wilson), General Manager - Marketing and Communications (Sacha Haskell), Acting Operations Manager (Ray McIndoe) 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.

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

Property Manager (Bryce Hosking) and External Contracts/Leisure Assets Officer (Glen Finlayson) 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 86-18 above was carried 15 votes to 0, the voting being as follows:

For:

The meeting returned into Part I at 10.22am

When the meeting returned into Part I The Mayor (Grant Smith) was present.

The meeting adjourned at 10.22am

The meeting resumed at 10.47am

85-18	Uplifting of report regarding Proposed Increase to the Admission and Concession Rates at The Lido and Freyberg Aquatic Facilities - Continued Memorandum, dated 15 October 2018 presented by the Property Manager, Bryce Hosking. In discussion Elected Members agreed that a 4.6% increase to the admission and concession rates would be appropriate based on the information provided. Free swimming for under 5 year olds was also something Elected Members wanted to explore further.
	Moved Lorna Johnson, seconded Karen Naylor. The COMMITTEE RECOMMENDS 3. That the Committee approve a 4.6% increase to the admission and concession rates for the Lido and Freyberg Aquatic Facilities to be effective from 1 July 2019.
	Clause 85.3 above was carried 16 votes to 0, the voting being as follows: For: The Mayor (Grant Smith) and Councillors Brent Barrett, Susan Baty, Rachel Bowen, Adrian Broad, Gabrielle Bundy-Cooke, Vaughan Dennison, Lew Findlay QSM, Leonie Hapeta, Jim Jefferies, Lorna Johnson, Duncan McCann, Karen Naylor, Bruno Petrenas, Aleisha Rutherford and Tangi Utikere.
	Moved Lorna Johnson, seconded Aleisha Rutherford. 4. That the Chief Executive be instructed to report back on the cost of providing free swimming for children under 5 years old at the Lido and Freyberg Aquatic Facilities, to be reported at the February 2019 Finance and Performance Committee meeting.
	Clause 85.4 above was carried 16 votes to 0, the voting being as follows: For: The Mayor (Grant Smith) and Councillors Brent Barrett, Susan Baty, Rachel Bowen, Adrian Broad, Gabrielle Bundy-Cooke, Vaughan Dennison, Lew Findlay QSM, Leonie Hapeta, Jim Jefferies, Lorna Johnson, Duncan McCann, Karen Naylor, Bruno Petrenas, Aleisha Rutherford and Tangi Utikere.

89-18	2018 Rating Valuations Memorandum, dated 5 November 2018 presented by the Strategy Manager Finance, Steve Paterson. Elected Members believed it was important to be proactive and look at the strategies that could be used to minimise the rating impact of the new valuations.
	Moved Susan Baty, seconded Leonie Hapeta. The COMMITTEE RECOMMENDS 1. That it be noted the 2018 City rating revaluation has been completed and new values, with an effective date of 1 September 2018, has been authorised for implementation by the Valuer-General through the issue of an unqualified audit opinion on 26 October 2018.
	Moved Karen Naylor, seconded Lorna Johnson. 2. That the Chief Executive be instructed to provide a report identifying options to minimise the rating impact of the new valuations.
	Clause 89-18 above was carried 16 votes to 0, the voting being as follows: For: The Mayor (Grant Smith) and Councillors Brent Barrett, Susan Baty, Rachel Bowen, Adrian Broad, Gabrielle Bundy-Cooke, Vaughan Dennison, Lew Findlay QSM, Leonie Hapeta, Jim Jefferies, Lorna Johnson, Duncan McCann, Karen Naylor, Bruno Petrenas, Aleisha Rutherford and Tangi Utikere.

90-18

New emergency operations centre (EOC) Fit Out - Programme 1513 Budget Adjustment

Memorandum, dated 1 November 2018 presented by the Head of Emergency Management, Stewart Davies.

Moved Vaughan Dennison, seconded Leonie Hapeta.

The COMMITTEE RECOMMENDS

1. That approval be given to bring $200,000 forward one year in the LTP from 2019/20 to 2018/19 for Programme 1513 – New emergency operations centre (EOC) Fit Out to enable timely design and consenting of the fit out.

Clause 90-18 above was carried 16 votes to 0, the voting being as follows:

For:

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

91-18

Detailed Costings of Infill Lighting Required to Achieve Compliance for P and V Category Street Lights

Memorandum, dated 17 October 2018 presented by the Transport & Infrastructure Manager, Robert van Bentum.

Councillor Leonie Hapeta left the meeting at 12.18pm

Councillor Rachel Bowen left the meeting at 12.30pm

Moved Tangi Utikere, seconded Vaughan Dennison.

The COMMITTEE RESOLVED

1. That the Committee receive the report titled “Detailed costings of infill lighting required to achieve compliance for P and V category street lights” dated 17^th October 2018.

Clause 91-18 above was carried 14 votes to 0, the voting being as follows:

For:

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

92-18	E-Waste Recovery Options in Palmerston North Memorandum, dated 30 October 2018 presented by the Waste Management Manager, Stewart Hay. Elected Members queried whether any lobby to Central Government had taken place regarding a mandatory product stewardship for e-waste diversion. Councillor Lew Findlay left the meeting at 12.37pm Councillor Gabrielle Bundy-Cooke left the meeting at 12.41pm
	Moved Brent Barrett, seconded Jim Jefferies. The COMMITTEE RECOMMENDS 1. That the information provided in the Report dated 30 October 2018 and titled ‘E-Waste Recovery Options in Palmerston North’ be received and used to inform the preparation of a further Report on the results of the first six months of reduced E-Waste Recovery fees to be considered by the Finance and Performance Committee in February 2019.
	Clause 92.1 above was carried 12 votes to 0, the voting being as follows: For: The Mayor (Grant Smith) and Councillors Brent Barrett, Susan Baty, Adrian Broad, Vaughan Dennison, Jim Jefferies, Lorna Johnson, Duncan McCann, Karen Naylor, Bruno Petrenas, Aleisha Rutherford and Tangi Utikere.
	Moved Adrian Broad, seconded Karen Naylor. 2. That the Chief Executive be instructed to lobby Central Government to introduce a mandatory product stewardship for e-waste diversion.
	Clause 92.2 above was carried 12 votes to 0, the voting being as follows: For: The Mayor (Grant Smith) and Councillors Brent Barrett, Susan Baty, Adrian Broad, Vaughan Dennison, Jim Jefferies, Lorna Johnson, Duncan McCann, Karen Naylor, Bruno Petrenas, Aleisha Rutherford and Tangi Utikere.

93-18

Committee Work Schedule

Moved Susan Baty, seconded Jim Jefferies.

The COMMITTEE RESOLVED

1. That the Finance and Performance Committee receive its Work Schedule dated November 2018.

Clause 93-18 above was carried 12 votes to 0, the voting being as follows:

For:

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

The meeting finished at 12.55pm

Confirmed 17 December 2018

Chairperson

PALMERSTON NORTH CITY COUNCIL

Memorandum

TO: Finance and Performance Committee

MEETING DATE: 17 December 2018

TITLE: 2018 Rating Valuations - Impact on Rating Incidence

DATE: 3 December 2018

PRESENTED BY: Steve Paterson, Strategy Manager Finance, Finance

APPROVED BY: Grant Elliott, Chief Financial Officer

RECOMMENDATION(S) TO Council

1. That it be noted the new rateable land values will significantly alter the incidence of rates both within and between the differential rating groups of property and, in particular, transfer a significantly greater share of the rates to the residential sector with greater than average increases in rates on residential properties with lower values.

2. That it be noted it is possible to alter the incidence of rates by mechanisms such as altering the level of the uniform annual general charge or the differential surcharges applying to the general rate or a combination of both.

3. That the Chief Executive be instructed to develop a scenario for public consultation through the 2019/20 annual budget process that seeks to moderate the effects of the revaluation on rates incidence by changing the level of the uniform annual general charge and the differential surcharges for the general rate.

1. ISSUE

The 2018 city rating revaluation with an effective date of 1 September 2018 has been implemented and will become the base for value based rates from 1 July 2019. The Committee at its November meeting resolved to instruct the Chief Executive to provide a report identifying options to minimise the rating impact of the new valuations. This report responds to that instruction.

2. BACKGROUND

2.1 Recap of valuation outcomes

The report considered at the Committee’s November meeting provided detail about the revaluation outcomes.

In this latest revaluation the capital value of the City has increased by 28.7% and the land value by 56% as shown in the following table:

Summary changes by Category

Sector	No. of rating units	2018 CV ($000)	% Change	2018 LV ($000)	% Change
Farming	297	499,820	13.1	412,001	12.9
Crop & Specialist	94	90,598	22.9	62,255	29.1
Forestry	17	8,825	13.0	8,084	13.1
Lifestyle	1,499	1,042,220	24.5	527,523	40.8
Residential	28,484	11,914,872	36.3	7,047,543	67.9
Commercial	1,083	2,016,616	17.7	825,204	29.0
Industrial	1,018	1,453,097	24.8	662,501	37.3
Other	763	1,795,567	24.4	475,614	58.9
Utilities	81	714,465	-5.3	33,504	10.6
TOTAL	33,336	19,536,079	28.7	10,054,327	56.0

For rating purposes the Council uses a differential rating system for the general rate that categorises properties as shown in the following table. There has been a significant movement in the share of the total land value from Non residential and Rural & Semi-Serviced to Residential. This will lead to the residential sector bearing a greater share of the general rate than previously.

	% of old CV	% of new CV	% of old LV	% of new LV
Single Unit Residential	60.1	63.0	63.0	68.2
Multi Unit Residential	3.2	3.2	3.1	3.3
Miscellaneous	3.0	2.8	2.7	2.5
Non Residential	20.2	18.4	16.0	13.4
Rural & Semi-Serviced	13.5	12.7	15.1	12.6

In addition to that the movement in land values has not been consistent within the residential sector. The most significant movements, in percentage terms, have been for properties in the lower to mid land value band.

This is demonstrated in the following table:

2015 Land values ($)	2018 Land Values ($)	Market Movement
75,000	155,000	106%
100,000	190,000	90%
200,000	320,000	60%
300,000	450,000	50%
400,000	580,000	45%
500,000	710,000	42%
600,000	840,000	40%

The following graph shows the number of properties in each band of %age movement in the land value. For example, 9,214 single unit residential properties had land value increases of between 50% and 75%.

The three-yearly revaluation process is a legislative requirement designed to bring the rates allocation base up to date to make it fairer for all.

The following graph shows the proportion of the total land value for each differential rating category (pre and post revaluation). It also demonstrates the proportion of the total rates assessed on each differential category – showing the actual rates share for 2018/19 and what the respective share would have been for 2018/19 had the rates been set using the new values.

2.2 Why might an intervention to moderate the impact of the revaluation be appropriate?

An intervention may be appropriate if it is considered that the rates that would be assessed based on the updated valuations are unreasonable for a significant group of ratepayers. It may also be appropriate as a holding action or temporary measure if the extent of the change in rates is considered unreasonably high.

This is in the context of the Council’s stated intention to undertake a major review of the rating system in time for changes (if any) to be implemented in conjunction with the adoption of the 2021-31 10 Year Plan. Given the amount of investigative effort and the nature of the public engagement that would be required it would not be practicable to introduce a major system change (such as a change in the rating base from land to capital value) effective from 1 July 2019.

2.3 What type of changes might be possible?

The following three main tools for change are considered in turn:

· A change to the level of the uniform annual general charge (UAGC)

· A change to the differential surcharges for some categories of property

· A new targeted rate (perhaps based on the capital value).

2.3.1 Changing the level of the UAGC

The UAGC is an integral part of the Council rating system. It services to moderate the level of rates (especially for residential properties) by making sure those with low land values pay at least a minimum contribution to fund city services and facilities and those with very high land values do not pay an unreasonably high contribution. There is no direct correlation between land values and ability to pay. Some properties with relatively low land values have comparatively high values of improvements meaning the overall capital value is higher than some properties with high land values.

The UAGC for 2018/19 is $690 per rating unit. It has been the practice to increase the UAGC annually to keep the fixed component of the rates at similar proportions from year to year. Given the higher total rates assessed on commercial/industrial properties the UAGC forms a much smaller part of the individual rates assessed on them compared to residential properties.

Changing the level of the UAGC would impact not only on the total rates contributed by each differential category but also the incidence of rates within each category.

As the spread of residential land value has been reduced through the revaluation (lower land values have increased by 100% or more whilst higher land values have increased by about 40%) it could be argued the UAGC does not need to be so high to be an effective moderator of the rates assessed.

A number of options have been modelled and examples of the outcome are shown in section 2.3.4 below.

2.3.2 Changing the differential surcharges

A fundamental component of the present rating system is that property is grouped by differential category (primarily based on the nature of use) and a general rate is assessed with different rates in the dollar of land value being assessed on each property group.

There are various reasons for this outlined in the funding impact statement in the Council’s 10 Year Plan. Essentially they are based on the broad premise that the land value on its own applied universally does not produce a fair allocation of the rates.

The Council describes the relationship between the rates charged to each differential group in terms of a factor expressed as a percentage of the rate that would apply if there were no differential rating in place. Each year the Council reviews the differential factors applied to each group. The present factors have remained largely unchanged for a number of years and are shown in the following graph. The graph also demonstrates how the rate in the dollar of land value would be reduced if the new values had been used to set the rates for 2018/19 so that the same total rates income is raised for the Council.

2.3.3 A new targeted rate

A targeted rate can be used as a mechanism for funding a particular activity. The Council’s present system incorporates fixed targeted rates for water, wastewater and rubbish/recycling as there are similar services made available to each residential property.

Targeted rates can also be based on other factors such as the land or capital value and a different rate can be applied to different types of property. During previous rating reviews we have considered funding the transport activity from such a rate, and using the capital value as the base.

However introduction of such a rate would first require an amendment to Council’s Revenue & Financing Policy and as it would significantly alter overall rating incidence, a period of public consultation would be required. Such changes would not be practicable to take effect from 1 July 2019 and therefore should not be considered further at this stage.

2.3.4 Testing a possible approach

A range of possible combinations of changes to the level of UAGC and the differential surcharges for the general rate have been modelled. This has indicated it is possible to develop a scenario that moderates the impact of the revaluation on the incidence of rates, especially for the lower valued residential properties.

Two scenarios were developed further to demonstrate the impact of possible changes. These scenarios were:

· Assume a UAGC of $500 rather than $690; and

· Assume a UAGC of $500 and in addition increase the differential surcharges for the non-residential (commercial/industrial) and rural/semi-serviced differential groups to reduce the impact on the residential group.

The extent of change to the differential surcharges is shown in the following graph:

The following graph demonstrates the proportion of the total rates assessed that would be borne by each differential group for each scenario, compared with the actual for 2018/19.

The table on the following page gives examples of rates for some of the differential categories, based on rateable land values pre and post the city revaluation. Rates are shown for three scenarios using the new values, all designed to generate the same total rates income as the actual for 2018/19. This obviously means that if rates are decreased for some then they will be increased for others.

As can be seen from the table it has been assumed the average land value for a single unit residential property has increased from $143,000 to $243,000. Actual rates for 2018/19 were $2,510. If the UAGC remains unchanged the rates would increase by $171 to $2,681. If the UAGC was reduced to $500 the rates would increase by $109 to $2,619. If in addition to this the differential surcharges were changed (as described earlier) the rates would increase by $22 to $2,532.

3. NEXT STEPS

If the Council determines it wishes to pursue a scenario that moderates the effect of the revaluation by making changes to the level of the UAGC and the differential surcharges for the general rate, Council staff will continue to analyse options that not only take into consideration the new valuations but also incorporate the changes to the total rates requirement for 2019/20. This will then be incorporated into the drafts of the supporting material and consultation document for the proposed Annual Budget for 2019/20.

4. Compliance and administration

Does the Committee have delegated authority to decide?		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
The recommendations contribute to Goal 5: A Driven and Enabling Council
The recommendations contribute to the outcomes of the Driven and Enabling Council Strategy
The recommendations contribute to the achievement of action/actions in Not Applicable
Contribution to strategic direction	Determining rating valuations every three years is a legislative obligation that is required to enable the Council to set rates. The Council is required to prepare Funding Impact Statements that provide the detail of the proposed rating system as a part of each year’s Annual Plan

Attachments

NIL

PALMERSTON NORTH CITY COUNCIL

Memorandum

TO: Finance and Performance Committee

MEETING DATE: 17 December 2018

TITLE: Papaioea Place Redevelopment Quarterly Update

DATE: 29 November 2018

Presented By: Bryce Hosking, Property Manager, Infrastructure

APPROVED BY: Heather Shotter, Chief Executive

RECOMMENDATION(S) TO Finance and Performance Committee

1. That the memorandum dated 29 November 2018 and titled `Papaioea Place Redevelopment Quarterly Update’ be received for information.

1. ISSUE

1.1 Stage 1 of the Papaioea Place housing project is funded through Programmes 357 and 1277 – C/fwd of the 2018 10 Year Plan.

1.2 The Finance and Performance Committee Chairperson has requested a quarterly update to be brought back to the Finance and Performance meeting for the duration of the construction period.

1.3 The Construction Programme was received from Latitude Homes in June and presented to Finance and Performance at the 18 June 2018 meeting for information.

2. BACKGROUND

2.1 The Papaioea Place project form of contract is a design and build contract between Palmerston North City Council (Principal) and Latitude Homes (Contractor) of New Plymouth.

2.2 The overall project management is being provided by WT Partnership Advisory from Auckland. The day-to-day project management is being carried out by Council Officers.

2.3 Site meetings and Project Control Group meetings are held on the last Thursday of each month. The most recent meetings being 28November 2018.

3. SUMMARY – PROJECT CONTROL GROUP MEETING 6: 28 NOVEMBER 2018

Health and Safety

3.1 There have been two health and safety incidents on site to date, however, there have been no health and safety incidents reported since the last update to Council dated
29 August 2018.

3.2 There was one incident in early November where it appears a member of the public had tried to light some gib-board offcuts; however, this did not work, and no damage was caused.

Programme

3.3 Block 1a is on programme, whereas, Block 1b is reporting to be three weeks ahead of programme.

3.4 After being reported as being two weeks behind in the last update to Council dated 29 August 2018; Blocks 2a and 2b are now reporting to be only one week behind, and contractors are confident of being back on programme by end of January 2019.

3.5 In summary: Blocks 1a, 1b, 2a, and 2b are on track to be completed 28 February 2019.

Regulatory

3.6 There are no current outstanding matters.

Design

3.7 Latitude Homes are to provide an updated landscape and planting plan for submission to Council as required under the Resource Consent.

Financial

3.8 Variations to date:

Description	Amount ($)
Excavation of soft spots/ Asbestos removal	$37,854
Provision for Sky TV connections	$4,760
Additional light switches	$5,040
Renewal extension of contractor’s professional indemnity insurance (1yr given need to extend contract period)	$9,311
Bond in lieu of retentions	$3,500
Total	$60,465

3.9 These variations can be accommodated within the project contingency as can be seen from the Project Budget Status table below:

Description	Project Budget	Budget Variance	Final Forecast
Construction	$6,646,031	$93,435	$6,552,596
Professional Fees	$265,400	$0	$265,400
Authorities Fees	$55,000	$0	$55,000
Construction Contingency	$332,561	$93,435	$425,996
Project Contingency	$333,000	$0	$333,000
Total	$7,631,992	$0	$7,631,992

4. NEXT STEPS

4.1 Continue the construction programme to complete Stage 1 as per the budget and timeline.

5. Compliance and administration

Does the Committee have delegated authority to decide?		Yes
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
The recommendations contribute to Goal 3: A Connected and Safe Community
The recommendations contribute to the outcomes of the Connected Community Strategy
The recommendations contribute to the achievement of action/actions in the Social Housing Plan The action is: - Upgrade the Papaioea housing complex (by end of 2018/2019).
Contribution to strategic direction	Programme 357 is stage 1 of the Papaioea Place Redevelopment project – to demolish 32 existing units and create 50 new units in their place which will be suitable for tenants to age in place.

Attachments

Nil

PALMERSTON NORTH CITY COUNCIL

Memorandum

TO: Finance and Performance Committee

MEETING DATE: 17 December 2018

TITLE: Disposal of Excess Land at the McGregor Street Drainage Reserve

DATE: 19 November 2018

Presented By: Bryce Hosking, Property Manager, Infrastructure

APPROVED BY: Heather Shotter, Chief Executive

RECOMMENDATION(S) TO Council

1. That Council agree to undertake a boundary adjustment on the McGregor Street drainage reserve, and in doing so, agree to dispose of the excess land by transferring the ownership of said land, at no cost, to the respective neighbours.

1. ISSUE

1.1 Council owns a drainage reserve in McGregor Street which also doubles up as a walkway.

1.2 When this reserve was obtained in 1970 an unusual shape of land was taken at the McGregor Street end which are wider than the balance of the reserve, and serve no purpose. This additional land is not required for any purpose and is surplus to Council’s requirements. This is shown by the blue lines in the picture below:

1.3 There are 4 properties which are affected by this:
- 36 and 36A McGregor Street;
- 42 McGregor Street; and
- 2 Pinedale Place

1.4 There is no evidence as to why this was obtained in this way, and up until this process, Council staff were unaware this was situation. There is no right of way easement in place for any of these properties, and it appears they were simply taken in error.

1.5 This is highlighted by the neighbouring properties having historically constructed driveways over the land and the physical fence lines reflect that the land was part of the neighbouring properties. This can be seen in the aerial picture in Clause 1.2, for clarity the fence lines follow the blue lines, existing title boundaries in red.

Disposal Process

1.6 The Palmerston North City Council Delegations Manual which was adopted in February 2017, the decision to dispose of, or sell, any real property must be approved by Council.

1.7 To dispose of the unrequired land and transfer back to the neighbouring properties, Council is required to lodge a boundary adjustment with LINZ to create new titles for the respective land for each of the affected properties.

1.8 Once these titles are created, they can be transferred back to the respective neighbours and amalgamated into their property ownership. This is shown below:

1.9 Consent was needed to be obtained by the affected neighbours as well as their respective banks, as any changes to the titles affect their titles and landholdings.

1.10 These consents have been obtained prior to this report, and have an understanding that this will have an impact on rates payable as their section size increases, so will their rates.

Disposal Options

1.11 As it appears this land was obtained incorrectly, and given the land to be transferred back is used for driveways and access into their properties; Council Officers propose it would be inappropriate to sell this land to neighbours, and would instead be more appropriate for the land to be gifted back to the neighbours at no cost.

1.12 To give context to Clause 1.11, the indicative land value of each parcel only equates to:
- Parcel 1 = $1,500;
- Parcel 2 = $7,500; and
- Parcel 3 = $4,500

Parcel numbers refer to the plan in Clause 1.8.

1.13 Council’s indicative costs in respect to this transaction are:
- Legal fees (Cooper Rapley) = $2,500
- Survey and lodgement costs (Geoworks) = $3,500

1.14 An alternative option could be that Council retain ownership as currently but enter into a long-term right of way agreement to allow the neighbours to continue their access, although this seems relatively impractical given Council has no requirement or use for the excess land, and it was obtained incorrectly in the first place.

2. BACKGROUND

2.1 Council obtained ownership of the drainage reserve in 1970, however, despite being referred to as a ‘drainage reserve’ the parcel of land does not have reserve status under the Reserves Act 1977.

2.2 Given it is not a reserve a boundary adjustment can be achieved, and subdivision consent can be obtained without notification. If the land had reserve status, this process would have had to be notified to the public with the opportunity for submissions.

2.3 This matter was brought to the attention of Council Officers in September 2018 when the property at 42 McGregor Street sold to its current owners. The purchaser’s solicitor raised this as part of the investigations on the title.

3. NEXT STEPS

3.1 Council lodge the boundary adjustment plans and all relevant paperwork to LINZ for new titles to be created for the land to be gifted.

3.2 Once the new titles are created, the respective parcels of land will be transferred to the neighbouring properties and amalgamated with their existing titles.

4. 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
The recommendations contribute to Goal 5: A Driven and Enabling Council
The recommendations contribute to the outcomes of the Driven and Enabling Council Strategy
The recommendations contribute to the achievement of action/actions in Not Applicable
Contribution to strategic direction	- This matter is remedying an error. - Would be considered good customer service and governance to remedy by gifting land to respective neighbours.

Attachments

Nil

Susan Baty (Chairperson)
Jim Jefferies (Deputy Chairperson)
Grant Smith (The Mayor)
Adrian Broad	Leonie Hapeta
Gabrielle Bundy-Cooke	Lorna Johnson
Vaughan Dennison	Karen Naylor
Lew Findlay QSM	Bruno Petrenas