Agenda of Finance and Performance Committee

PALMERSTON NORTH CITY COUNCIL

Finance and Performance Committee MEETING

19 August 2019

Order of Business

NOTE: The Finance and Performance Committee meeting coincides with the ordinary meeting of the Audit and Risk Committee. The Committees will conduct business in the following order:

- Finance and Performance Committee

- Audit and Risk 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. Deputation - Cycling Plan Delays/Changes Page 7

6. Confirmation of Minutes Page 9

“That the minutes of the Finance and Performance Committee meeting of 17 June 2019 Part I Public be confirmed as a true and correct record.”

7. Quarterly Performance and Financial Report - Quarter Ending 30 June 2019 Page 17

Memorandum, presented by Stuart McKinnon, Finance Manager.

8. Treasury Report - 12 months ending 30 June 2019 Page 105

Memorandum, presented by Steve Paterson, Strategy Manager - Finance.

9. Local Impact Procurement Policy Page 115

Memorandum, presented by Julie Pedley, Procurement Manager.

10. Sound System Replacement - The Regent Theatre Page 127

Memorandum, presented by Bryce Hosking, Manager - Property.

11. Whakarongo Residential Subdivision Update Page 133

Memorandum, dated 23 July 2019 from Bryce Hosking, Manager – Property.

12. E-Waste recycling reduced fees update Page 143

Memorandum, presented by Stewart Hay, Waste Management Manager.

13. Update on Infill Lighting Required to Achieve Compliance in P and V Categories Page 149

Memorandum, presented by Robert van Bentum, Manager - Transport and Infrastructure.

14. Review of Rating System - Terms of Reference Page 157

Memorandum, presented by Steve Paterson, Strategy Manager - Finance.

15. Committee Work Schedule Page 169

16. 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
17.	Minutes of the Finance and Performance Committee meeting - Part II Confidential - 17 June 2019	For the reasons setout in the Finance and Performance Committee minutes of 17 June 2019, 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), Acting General Manager – Strategy and Planning (David Murphy), General Manager - Community (Debbie Duncan), Chief Customer and Operating Officer (Chris Dyhrberg), General Manager - Marketing and Communications (Sacha Haskell), Sandra King (Executive Officer) 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 Executive Leadership 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.

Democracy Administrators (Carly Chang, Natalya Kushnirenko, and Penny Odell), 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 17 June 2019, commencing at 9.02am

Members

Present:

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

Non Members:

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

Apologies:

The Mayor (Grant Smith) and Councillor Aleisha Rutherford.

Councillor Vaughan Dennison entered the meeting at 9.05am during consideration of clause 32. He was not present for clause 31.

32-19

Apologies

Moved Susan Baty, seconded Tangi Utikere.

The COMMITTEE RESOLVED

1. That the Committee receive the apologies.

Clause 32-19 above was carried 13 votes to 0, the voting being as follows:

For:

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

Councillor Vaughan Dennison entered the meeting at 9.05am

33-19

Deputation - Traffic Management – Awapuni

A number of representatives from the Awapuni Community made a deputation regarding the proposed loss of parking in the Awapuni shopping area. A document was tabled outlining the key concerns.

Prior to March 2019 there had been no consultation with businesses in the area. On street parking was essential and if parking was lost it would create a large economic loss for the local businesses.

The shopping area was well-used by the community and the business owners were keen to be part of the solution, noting that proper process and trials were needed.

The desired outcome for the community representatives was to postpone current action so that further consultation could be undertaken with business owners.

Moved Brent Barrett, seconded Gabrielle Bundy-Cooke.

The COMMITTEE RESOLVED

1. That the Finance and Performance Committee receive the deputation for information.

Clause 33-19 above was carried 13 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, Lorna Johnson, Duncan McCann, Karen Naylor, Bruno Petrenas and Tangi Utikere.

Did not Vote:

Councillor Jim Jefferies.

34-19

Confirmation of Minutes

Moved Susan Baty, seconded Leonie Hapeta.

The COMMITTEE RESOLVED

1. That the minutes of the Finance and Performance Committee meeting of 15 April 2019 Part I Public be confirmed as a true and correct record.

Clause 34-19 above was carried 13 votes to 0, the voting being as follows:

For:

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

Did not Vote:

Councillor Adrian Broad.

35-19

Update on College Street Transport Upgrade

Memorandum, dated 7 June 2019 presented by the Transport & Infrastructure Manager, Robert van Bentum.

Elected Members agreed that no further work on the shopping area should be undertaken until the relevant businesses were consulted and the outcome reported to Council.

Moved Susan Baty, seconded Lorna Johnson.

The COMMITTEE RECOMMENDS

1. That the memorandum titled `Update on College Street Transport Upgrade’ dated 7 June 2019 be received.

2. That no further work on the College Street Transport Upgrade (Awapuni shopping area) progress until the relevant businesses have been consulted and the outcome of this to be reported back to Council.

Clause 35-19 above was carried 13 votes to 0, the voting being as follows:

For:

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

Did not Vote:

Councillor Susan Baty.

The meeting adjourned at 10.17am

The meeting resumed at 10.35am

36-19

Camp Kilsby Scouting NZ: Application for Grant from Council to fund Development Contribution Fee

Memorandum, dated 31 May 2019 presented by the City Planning Manager, David Murphy.

Moved Vaughan Dennison, seconded Karen Naylor.

The COMMITTEE RECOMMENDS

1. That the Council approve the application by the Camp Kilsby - Scouting NZ for a grant to fund Development Contribution fees, to the value of $4,136.25 (GST inclusive), associated with the establishment of a community and leisure facility scouting hall at 315 Hewitts Road, Palmerston North.

Clause 36-19 above was carried 12 votes to 0, with 2 abstentions, the voting being as follows:

For:

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

Abstained:

Councillors Leonie Hapeta and Duncan McCann.

37-19

BPO Quarterly Report

Report, dated 6 May 2019 presented by the Transport & Infrastructure Manager, Robert van Bentum.

Moved Lorna Johnson, seconded Tangi Utikere.

The COMMITTEE RESOLVED

1. That the Committee receive the update for the Wastewater BPO Project as detailed in the report titled `BPO Quarterly Report’ dated 6 May 2019.

Clause 37-19 above was carried 14 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 and Tangi Utikere.

38-19

Amendment to Fees and Charges

Memorandum, dated 30 April 2019 presented by the Strategy Manager Finance, Steve Paterson.

Moved Karen Naylor, seconded Jim Jefferies.

The COMMITTEE RECOMMENDS

1. That it be noted that at the Finance and Performance Committee meeting on 15 April 2019 oral advice was given that the fees and charges for online service consenting (Building Services) as identified on page 79 of the Finance and Performance Committee agenda dated 15 April 2019 should be amended with the following:

Value of work less than $125,000 $86

Value of work more than $125,000 up to $2.5m 0.0748%

Value of work more than $2.5m $1,868

2. That the fees and charges for Building Services effective from 1 July 2019 include the fees and charges for online consenting services at the levels outlined in recommendation 1.

Clause 38-19 above was carried 13 votes to 1, the voting being as follows:

For:

Against:

Councillor Vaughan Dennison.

39-19

Palmerston North Airport Ltd - Final Statement of Intent for 2019/20

Memorandum, dated 5 June 2019 presented by the Strategy Manager Finance, Steve Paterson.

Moved Susan Baty, seconded Jim Jefferies.

The COMMITTEE RECOMMENDS

1. That the Palmerston North Airport Ltd Statement of Intent for 2019/20 be endorsed.

Clause 39-19 above was carried 14 votes to 0, the voting being as follows:

For:

40-19

Fees and Charges - Confirmation Following Public Consultation

Memorandum, dated 5 June 2019 presented by the Strategy Manager Finance, Steve Paterson.

Moved Lorna Johnson, seconded Jim Jefferies.

The COMMITTEE RECOMMENDS

1. That the fees and charges for Planning & Miscellaneous Services, as scheduled in Attachments A and B of the memorandum titled `Fees and Charges – Confirmation Following Public Consultation’ dated 5 June 2019, be approved, effective from 1 July 2019.

2. That the fees and charges for Trade Waste Services, as scheduled in Attachment C of the memorandum titled `Fees and Charges – Confirmation Following Public Consultation’ dated 5 June 2019, be approved, effective from 1 July 2019.

Clause 40-19 above was carried 14 votes to 0, the voting being as follows:

For:

41-19

Papaioea Place Redevelopment Quarterly Update

Memorandum, dated 8 May 2019 presented by the Property Manager, Bryce Hosking.

Moved Susan Baty, seconded Gabrielle Bundy-Cooke.

The COMMITTEE RESOLVED

1. That the memorandum dated 8 May 2019 and titled `Papaioea Place Redevelopment Quarterly Update’ be received for information.

Clause 41-19 above was carried 14 votes to 0, the voting being as follows:

For:

42-19

Committee Work Schedule

Moved Susan Baty, seconded Vaughan Dennison.

The COMMITTEE RESOLVED

1. That the Finance and Performance Committee receive its Work Schedule dated June 2019.

Clause 42-19 above was carried 14 votes to 0, the voting being as follows:

For:

Exclusion of Public

43-19

Recommendation to Exclude Public

Moved Susan Baty, seconded Vaughan Dennison.

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
16.	Minutes of the Finance and Performance Committee meeting - Part II Confidential - 15 April 2019	For the reasons set out in the Finance and Performance Committee minutes of 15 April 2019, held in public present.
17.	Pioneer City West Private District Plan Change Request	Negotiations	s7(2)(i)

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), General Manager - Marketing and Communications (Sacha Haskell), Sandra King (Executive Officer) 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 Executive Leadership 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.

Committee Administrators (Penny Odell, Rachel Corser and Natalya Kushnirenko), because of their knowledge and ability to provide the meeting with procedural advice and record the proceedings of the meeting.

City Planning Manager (David Murphy), because of his knowledge and ability to assist the meeting in speaking to his report and answering questions, noting that such officer will be present at the meeting only for the item that relates to his report.

Clause 43-19 above was carried 14 votes to 0, the voting being as follows:

For:

The public part of the meeting finished at 11.00am

Confirmed 19 August 2019

Chairperson

PALMERSTON NORTH CITY COUNCIL

Memorandum

TO: Finance and Performance Committee

MEETING DATE: 19 August 2019

TITLE: Quarterly Performance and Financial Report - Quarter Ending 30 June 2019

PRESENTED BY: Stuart McKinnon, Finance Manager

APPROVED BY: Grant Elliott, Chief Financial Officer

David Murphy, Acting General Manager - Strategy & Planning

RECOMMENDATION(S) TO Council

1. That the Committee receive the June 2019 Quarterly Performance and Financial Report and note:

a. The June 2019 financial performance and operating performance.

b. The June 2019 capital expenditure programme progress together with those programmes identified as unable to be completed this financial year.

2. That the Committee note that the capital expenditure carry forward values in the 2019/20 Annual Budget will be increased by a net $4,065,000 to the amount of remaining programme budgets.

1. ISSUE

To provide a quarterly update on the performance and financial achievements of the Council for the period ending 30 June 2019. This is the fourth quarterly report for the year.

2. BACKGROUND

Details of operating and financial performance are included in the following sections. Reports are against the goals as detailed in the 10 Year Plan 2018-28.

3. Compliance and administration

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

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 a plan under the Driven and Enabling Council Strategy

The action is: to enable Council to exercise governance by reviewing financial performance and operating performance and provide accountability for these to the public.

Contribution to strategic direction

As above

Attachments

1.	June 2019 Quarterly Performance and Finance Report (Summary) ⇩
2.	June 2019 Quarterly Performance and Finance Report (Performance Measures) ⇩
3.	June 2019 Quarterly Performance and Finance Report (Supplementary materials) ⇩
4.	June 2019 Quarterly Performance and Finance Report (2019/20 carry forward adjustment request) ⇩

PALMERSTON NORTH CITY COUNCIL

Memorandum

TO: Finance and Performance Committee

MEETING DATE: 19 August 2019

TITLE: Treasury Report - 12 months ending 30 June 2019

Presented By: Steve Paterson, Strategy Manager Finance

APPROVED BY: Grant Elliott, Chief Financial Officer

RECOMMENDATION(S) TO Council

1. That the performance of the treasury activity for the 12 months ended 30 June 2019 be noted.

1. ISSUE

To provide an update on the Council’s treasury activity for the 12 months ended 30 June 2019.

2. BACKGROUND

The Council’s 10 Year Plan Budget for 2018/19 forecast additional debt of $38.71m would need to be raised during the year to fund the $47.89m of new capital expenditure programmes (including assumed carry forwards from 2017/18). In June 2018 the Council resolved to specifically authorise the raising of up to $39m of additional debt.

Council’s Financial Strategy (updated version adopted 25 June 2018) contains the following ratios which the Council has determined to be prudent maxima:

• Net debt as a percentage of total assets not exceeding 20%

• Net debt as a percentage of total revenue not exceeding 200%

• Net interest as a percentage of total revenue not exceeding 15%

• Net interest as a percentage of annual rates income not exceeding 20%

The Treasury Policy (embracing the Liability Management and Investment Policy), adopted in December 2017 and updated on 25 June 2018, also contains a number of other criteria regarding debt management.

3. Performance

Following the latest annual review published on 29 April 2019 Council’s S&P Global Rating’s credit rating remained unchanged at AA / A-1+.

Schedule 1 attached shows the details of Council’s debt as at 30 June 2019. Debt levels were within the policy parameters outlined in section 2 of this report.

The summarised gross term debt movements are shown in the following table:

10 Year Plan Budget for year (2018/19)

$000

Actual – 3 months (2018/19)

$000

Actual – 6 months (2018/19)

$000

Actual – 9 months (2018/19)

$000

Actual – 12 months (2018/19)

$000

Debt Balance at 1 July 2018

New Debt #*

Debt repayments #

106,153

38,710

99,875

15,000

(2,875)

99,875

30,000

(2,875)

99,875

30,000

(17,875)

99,875

37,000

(15,675)

Closing Balance

Comprising:

Bank advance (on call)

LGFA short term advance

LGFA & Council stock

144,863

112,000

10,000

102,000

127,000

10,000

117,000

112,000

10,000

102,000

121,200

2,200

10,000

109,000

# A portion of the Council’s debt is drawn on a daily basis – daily drawdowns & repayments are not included in these figures but the net draw or repayment for the year to date is shown as part of new debt or debt repayment as appropriate.

* $15m new debt was raised in July originally to pre-fund debt maturing in March 2019, however later used to fund capital expenditure undertaken in the latter part of last year and paid for early this year. A further $15m of new debt was raised in December 2018 to pre-fund maturing debt in March 2019. This sum was placed on short term deposit until March 2019 at an interest rate that more than covered the cost of borrowing.

Net debt at 30 June 2019 was $120.2m (i.e. gross $121.2m less short-term deposits of $1m compared with $98.875m at 1 July 2018 (i.e. gross $99.875m less short-term deposits of $1.0m).

Movements in recent years are shown in the following graph:

Actual finance costs incurred during the 12 months (including interest, line fees & the effects of payments relating to swaps) amounted to $6.02m compared with the budget for the year of $7.284m.

The Council has entered financial instruments related to its debt portfolio utilising swap trading lines established with Westpac and ANZ. The details of these are shown in Schedule 2 attached.

The value of these instruments is measured in terms of its “mark-to-market” i.e. the difference between the value at which the interest rate was fixed and the current market value of the transaction. Each of these transactions was valued at the date they were fixed and again at the reporting date. Financial reporting standards require the movement in values to be recorded through the Council’s Statement of Comprehensive Income (Profit & Loss Account). They have been revalued as at 30 June 2019 and show a decrease in book value of $1.07m for the quarter and $3.55m for the year.

The Council’s Treasury Policy contains guidelines regarding the measurement of treasury risk as follows:

· Interest rate risk is managed by the Council maintaining the ratio of debt that is subject to floating versus fixed interest rates within pre-set limits.

· Funding and liquidity risk is managed by the Council maintaining a pre-set portion of its debt in a range of maturity periods eg < 1 year, 1 – 3 years, 5 years +.

The position compared to the policy is illustrated in the graphs in Schedule 3. The overall ratio of fixed v floating interest rate debt is based on the assessed level of total debt in 12 months’ time.

As at 30 June 2019 all policy targets had been met.

Council’s credit lines with the banks include a $18m four-year credit facility with Westpac Bank (maturing 31 July 2020) and a revolving $25m three-year facility with ANZ Bank (maturing 31 March 2022).

4. conclusion & next steps

Finance costs for the 12-month period (including interest, line fees & the effect of swaps) was $6.02m compared with budget for the year of $7.284m.

In conjunction with Council’s treasury advisors hedging instruments are regularly reviewed in an effort to ensure the instruments are being utilised to best advantage as market conditions change. The level of hedging cover is also reviewed as the forecasts of future debt levels are revised.

Council’s borrowing strategy is continually reviewed, in conjunction with Council’s treasury advisors, to ensure best advantage is taken of Council’s quality credit rating.

A further performance report will be provided after the end of the September 2019 quarter.

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 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 This report outlines the outcomes of a fundamental administrative activity of the Council.
Contribution to strategic direction	Managing the Council’s treasury activity is a fundamental component of day to day administration of the Council.

Attachments

Schedules 1 - 3 ⇩

PALMERSTON NORTH CITY COUNCIL

Memorandum

TO: Finance and Performance Committee

MEETING DATE: 19 August 2019

TITLE: Local Impact Procurement Policy

Presented By: Julie Pedley, Procurement Manager

APPROVED BY: Grant Elliott, Chief Financial Officer

RECOMMENDATION(S) TO Council

1. That Council approves and implements a Local Impact Procurement Policy.

1. ISSUE

Protecting and encouraging local industry is a key component of PNCC’s economic and strategic policies. Council recognises there are benefits to the community from purchasing locally and wishes to encourage businesses who support the local community, the local economy and Council’s strategic objectives. The Finance and Performance Committee requested a review of Council’s procurement strategy and policy as it relates to purchasing from local businesses/suppliers. In addition, there have been questions raised by staff and leadership as to how Council might be able to add criteria in tender evaluations recognising the efforts of businesses/suppliers who make significant contributions to the local community.

Currently, the only method available to analyse “local” supplier spend is by looking at the geographic location (post code billing data) of our suppliers.

Council cannot simply institute a policy of “buying local” by using the geographic location of a supplier as criteria for making purchases and awarding contracts. This practice (e.g. only Palmerston North businesses are provided an advantage in evaluations) would expose Council to risk as we must ensure that all suppliers have a full and fair opportunity to compete for Council business.

However, the Council often has valid business requirements that benefit from suppliers having a local presence or impact. Business needs related to local support, local expertise, local innovation, local development and broader community impacts are “local contribution factors” which have valid business merit. These factors are not associated to a supplier’s geographic location and therefore are non-discriminatory.

Council’s procurement framework and practices can have a significant positive impact in addressing local economic development objectives and a Local Impact Procurement Policy will provide Council staff a route to achieving our strategic goals including Goal 1 – An Innovative and Growing City.

2. BACKGROUND

In May 2019, the four aspects of community well-being – social, economic, environmental and cultural – were reinstated into the Local Government Act 2002. The Local Government Act now states that local authorities are “to play a broad role in promoting the social, economic, environmental, and cultural well-being of their communities, taking a sustainable development approach”. These changes to the purpose of local government place emphasis on achieving public value in the future rather than just reducing cost in the present. This change recognises that public spending strategies can deliver the goods and services a community needs while also achieving other objectives such as economic and community development for the same or less money.

The long-term community impact of awarding contracts to suppliers who make positive contributions to our region and community can, in some cases, outweigh the short-term advantages of a cheaper supplier from out of town.

The potential benefits of supporting “local” suppliers include:

· Businesses and jobs are created/sustained

· Consumer/household spending from employed workers is created/sustained

· Spending on local fees is sustained (business license renewals, utilities, etc.)

· Additional local spending is generated/sustained (business/retail spending, etc.)

· More businesses/residents are drawn to the community

· Local economy diversiﬁes and becomes more competitive (competition lowers costs)

· Local spending raises capacity, expertise and innovation of local people and businesses

· Local solutions support a more inclusive supply chain and can offer opportunities to Pacifica, Maori and Iwi businesses

· Local solutions result in environmental benefits of shorter commutes, less congestion, less pollution and less habitat loss

In many cases, local businesses have an inherent advantage when tendering for contracts as they have local knowledge, local staff and local sub-contractors and suppliers.

A purely geographic analysis shows that 48.5% of Council’s spend is associated to businesses based in Palmerston North. This percentage does not vary in any significant way when comparing low-value transactions to medium or high value contracts.

Most City Councils in New Zealand do not currently have a “Buy Local” policy, yet some have implemented strategies that enable those involved within the local community to score higher in the non-price attributes of tender evaluations. Many councils are in the process of evaluating their policies to align with the new Government Procurement Charter. The new Government Procurement Charter emphases that councils should actively attract an increasingly diverse and localised supplier mix.

As Council considers a “buy local” strategy, it will be important to ensure that the advantages of contracting with local providers are very clear in order to meet the requirement of Section 17A of the Local Government Act and Council’s cost-effective evaluations. Any change to Council’s procurement policies should align with government procurement principles, the recently amended Community Well-Being Amendment to the Local Government Act, the Government Procurement Charter, the OAG’s basic principles of public spending, the Broader Outcomes procurement initiatives of MBIE’s New Zealand Government Procurement group, as well as the best practices of the soon to be released Government Procurement Rules which have an emphasis on ‘public value’.

Defining “Local”

A local supplier can be defined in various ways - from a neighbourhood, to a city, to a regional district or the entire nation. Obviously, the narrower an area is defined, the harder it becomes to obtain the variety of services and competition. But the larger the area, then the variety of services and ability to deliver can increase.

Defining when a supplier should be considered “local” can be challenging. For example, a “national” business that employs 100 local residents and spends $10m per year on local services and subcontractors, contributes a significant amount to the local economy. However, a business that has a “local” registered office but subcontracts all the work to others outside the area may contribute only a minor amount to the local economy. Also, major national or international companies may not have headquarters in a local city but have a small business owner running a franchise location.

“Local” could also be defined by the extent to which the business/supplier provides employment to local residents. These people will in turn spend their wages on other local goods and services, and so on – creating a local multiplier effect. A business that predominantly produces locally, employs locally, uses local industries and obtains other local goods and services would generally have a much higher impact on the local economy than say a business that imported products to the area and added little extra value. That is not to say that a service that is over-priced should be accepted just because it is local. At all times, PNCC should be achieving ‘public value’ for the community. A much more expensive service will cost the users/ratepayers and could have a negative impact on the local economy.

3. NEXT STEPS

A Local Impact Procurement Policy needs to allow for evaluations of what suppliers BRING to our region, rather than focusing on what region suppliers are FROM.

Public spending can produce wider public benefits in multiple ways, but these benefits can vary significantly and be hard to measure in a quantitative manner. Due to the need to balance multiple factors and considerations related to defining “what is local”, it is recommended that Council evaluates how businesses/suppliers contribute to the local economy and community relative to others. This can be accomplished by incorporating a “Local Contribution Assessment” into procurement evaluations.

Local Contribution Assessment

The Local Contribution Assessment seeks to determine the resulting local benefits that would be provided to the Palmerston North economy and community if a particular supplier was awarded a contract.

In assessing the “local contribution” of suppliers, Council should take into account the following 10 factors.

Local Contribution Assessment factors

Does the supplier?

· provide local employment

· use local suppliers/subcontractors/services

· manufacture/produce locally

· build local capacity - train and develop local residents

· contribute to local community (cash or kind)

· collaborate with local agencies/communities

· look for local innovative solutions

· provide discounts for locals

· own and/or lease local property

· provide local resources during emergencies

Note: The above intentionally does not incorporate any factor related to the physical address of a supplier’s location(s).

The Local Contribution Assessment approach would provide Council a process that recognises there is a benefit to the wider community in utilising the services of suppliers that are “Local Contributors”. It would provide Council a method to give “Local Contributors” a leg up, not a hand out, and assist in providing ongoing benefits to families by keeping jobs and profits in the local region and keeping the local economy prosperous and competitive. Since this policy is not based on geographic locations, it would not only support the growth of local businesses but could also assist in encouraging regional and international businesses to consider supporting the economic growth of Palmerston North.

The Local Contribution Assessment should be one of many criteria utilised in evaluating and sourcing suppliers. The Local Contribution Assessment criteria would be given a scoring weighting (incorporating the factors of local community and economic impact into the overall qualitative assessment of tenders). Procurement evaluation criteria should also include standard measures such as price, service delivery and fit-for-purpose metrics, along with new broader outcomes initiatives related to social procurement and sustainability factors.

Preferred Suppliers

PNCC will develop supplier panels for specific spend categories and develop a Preferred Supplier Register to enable efficient and effective sourcing for transactions under 15% of the specified sum (currently $240,000). Suppliers who are approved to be a Preferred Supplier, or those accepted into a supplier panel, will have been evaluated on the Local Contribution Assessment factors in order to evaluate their capability and capacity to benefit the local economy. Preferred Suppliers who are deemed to make significant local contributions to Palmerston North will be designated as “Local Impact Providers”.

Supplier Provided Local Contribution Plans

For procurements over 15% of the specified sum (currently $240,000), suppliers will be required to prepare a Local Impact Plan detailing how they will maximise their contribution to the local economy and community of Palmerston North (as per the dimensions in PNCC’s Local Contribution Assessment).

Suppliers’ Local Impact Plans will be evaluated on the 10 criteria incorporated in the Local Contribution Assessment. The Local Contribution Assessment will be considered a non-price attribute and be given a weighting of 5-15% (to be decided on a procurement-by-procurement basis).

Sustainable Procurement

Palmerston North City Council has an opportunity to be at the forefront of a growing national and global movement for sustainable procurement. The consideration of “local impact” factors addresses the economic component of sustainable procurement. A Local Impact Procurement Policy will work in conjunction with other sustainable procurement initiatives related to the achievement of broad social and environmental outcomes.

Pillars of Sustainable Procurement

4. Compliance and administration

Does the Committee have delegated authority to decide? If Yes quote relevant clause(s) from Delegations Manual <Enter clause>		No
Are the decisions significant?		Yes
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
The recommendations contribute to Goal 1: An Innovative and Growing City
The recommendations contribute to the outcomes of the Economic Development Strategy
The recommendation contributes to the achievement of action/actions in Not Applicable This is a new initiative requested by Council.
Contribution to strategic direction	A Local Impact Procurement Policy is one component of a broader, more strategic Sustainable Procurement Framework which will provide Council an important lever in driving achievement of strategic goals. This new policy will support Council’s strategic objectives while providing an effective operational method for procurement best practices in line with Goal 5 – A Driven and Enabling Council. A Local Impact Procurement Policy will also aid in the achievement of the Economic Development Strategy by ‘supporting local businesses and industries to grow and develop’, encouraging new opportunities to attract investment to Palmerston North and the Manawatū region and helping entrepreneurs and enterprises, small and large, to compete in our local market. The Local Impact Procurement Policy will also support the City Development Strategy which states that Council ‘will drive entrepreneurship and innovation by providing the support, infrastructure, opportunities and conditions to enable traditional sectors to diversify and expand, and new industries and new economies to grow to create the employment opportunities that sustain and expand our city’s future’.

Attachments

Proposed Local Impact Procurement Policy ⇩

PALMERSTON NORTH CITY COUNCIL

Memorandum

TO: Finance and Performance Committee

MEETING DATE: 19 August 2019

TITLE: Sound System Replacement - The Regent Theatre

Presented By: Bryce Hosking, Manager - Property

APPROVED BY: Tom Williams, Chief Infrastructure Officer

RECOMMENDATION(S) TO Council

1. That Council provide a one-off capital grant to The Regent Theatre Trust to the value of $134,300 + GST to replace and upgrade the sound system in the Regent Theatre Building.

OR

2. That Council provide a repayable loan to The Regent Theatre Trust to the value of $134,300 + GST to replace and upgrade the sound system in the Regent Theatre Building, and that Chief Executive will be given delegated authority to negotiate the specific terms and conditions of this loan if this is the preferred option.

1. ISSUE

1.1 The Regent Theatre Trust have advised Council that the sound system in the Regent Theatre building is approaching the end of its economic life and requires replacing and upgrading to meet the requirements of the activities within the Theatre.

1.2 The sound system is not fixed to the building and not considered part of the building fabric. It is regarded as a Tenant fitout item and a non-Council-owned, non-fixed asset. This means it is typically the responsibility of the Tenant to install, maintain and service, and replace if, and when, required.

1.3 Council has a capital renewal programme for works at all the Council-owned cultural facilities including the Regent Theatre, however, as it is deemed a fitout item, there is no provision in the current 10-year plan for the full replacement or contribution towards replacement of the sound system.

1.4 The report titled ‘Review of Asset Renewal Process for the Regent Theatre Trust’ was presented to the Arts, Culture and Heritage Committee on 17 June 2019 to discuss the above.

1.5 The Arts, Culture and Heritage Committee agreed and confirmed that the sound system in the Regent Theatre was a Tenant fit-out item and a non-Council-owned, non-fixed asset, however, requested the report be “left on the table” until Finance and Performance in September 2019 to be considered with additional information.

1.6 In particular Council wanted to consider:

· Further information, context, and more detail regarding the current system;

· Costings for the replacement of the sound system;

· Alternative funding opportunities the Regent Theatre could explore;

· The Regent Theatre Trust’s financial situation around this matter;

· Council’s options in respect to this matter.

1.7 This report addresses these items.

2. Further information

Background Information

2.1 The Regent Theatre is recognised as a key venue for hosting major live entertainment productions, not only for the city of Palmerston North but for the wider central North Island region.

2.2 The theatre provides the facility and resources to enable the presentation of all forms of live entertainment as well as hosting conferences, seminars and all forms of meetings and functions from awards ceremonies to weddings. Having a fully functional and reliable sound system is essential to meeting this demand.

2.3 At the time of the restoration in the mid-late 1990’s, there was limited knowledge as to the theatre’s future needs regarding technical resourcing, especially in respect to a sound system.

2.4 A reasonably extensive sound system was installed at the time; however, this system was only designed to cater for a small sized concert or an awards ceremony.

2.5 Due to the considerable cost for theatre users to hire alternative sound equipment, the theatre’s sound system has been used for applications beyond its designed capabilities and has failed on several occasions. The system now requires the Regent Theatre Trust undertake constant and sometimes significant repairs and maintenance.

2.6 Local theatre groups undertake large stage productions (Cats, Phantom of the Opera, Wicked etc.) and currently they need to budget for and outlay significant funds to source alternative sound system solutions rather than use the Regent’s inadequate and unreliable in-house system. This average additional cost of this is around $30,000 per production. A cost which is understandably increasing each year.

2.7 Commercial stage productions have traditionally toured with their own sound systems. However, this is also becoming cost prohibitive. If a venue has a sound system capable of their requirements and they can eliminate that expense when touring. The Regent Theatre Trust believe the promoter of these productions will consider these venues very favourably.

Costings for Replacement and Funding Opportunities

2.8 The Regent Theatre Trust have obtained quotes for the supply and install of the new sound system. The raw cost of this is $402,808 + GST. This does not include any contingency or project management costs that may be incurred.

2.9 The Trust have successfully applied to the New Zealand Lotteries Commission to fund 66% of raw cost of the system. This equates to $268,508 + GST. The remaining balance of $134,300 + GST needs to be sourced separately.

2.10 Additionally, Council Officers are recommending a 5% contingency be allowed for in addition to the raw cost to allow for any unforeseen costs and add-ons. This equates to $20,000 + GST. The Trust have taken this on board and are allowing for this contingency through their ‘Friends of the Regent’ funds. However, this has meant they are unable to factor in contributions from these funds towards the $134,300 + GST shortfall.

2.11 The Regent do not have any other confirmed or pending funding streams to contribute towards this project.

2.12 The Regent Theatre Trust is requesting Council’s assistance in funding the balance.

The Regent Theatre Trust’s Financial Situation

2.13 If the Trust was to fund the balance of purchase of the sound system through their cash reserves, it will have a serious impact on the theatre’s operational cash flow.

2.14 At the time of writing this report, the Trust report to having around $330,000 in cash reserves. If they funded the balance of the purchase price this would reduce the Trust’s current cash reserves to around $194,830.

2.15 The Regent Theatre Trust is committed to a joint venture agreement with Abbey Musical Theatre through Regent on Broadway Promotions. Part of this agreement is to annually provide seeding capital funding which is estimated to be $100,000.

2.16 Although these funds are recovered following presentation of the production, it does mean a substantial portion of the Trust’s cash reserve is tied up for 6 – 12 months.

2.17 Taking the above into consideration, it is estimated the Trust’s cash reserves would be reduced to just $94,830 which is not enough to comfortably service the theatre’s operational commitments. This is especially crucial through the months of limited income; January – March of each year.

2.18 For clarity, budgeted monthly expenses for the facility are approx. $43,000. This does not include any unexpected expenses and is only known operational costs.

2.19 An additional consideration is The Regent Theatre Trust’s Statement of Intent (SOI) indicates that the Trust will continue to have a small increase to their future year’s income. This increase could be used to service repayments of a loan.

3. Council’s Options

3.1 Despite the sound system being considered a non-Council-owned, non-fixed asset, Council Officers acknowledge the need to, and significant positives of, replacing and upgrading the existing sound system in the theatre.

3.2 Council have 4 options at this stage:

1. Provide a capital grant to The Regent Theatre Trust for the full $134,300 shortfall. This would be additional, unbudgeted expenditure;

2. Provide a loan to the Regent Theatre Trust for the full $134,300 shortfall. The terms and conditions of this loan will be negotiated by the Chief Executive;

3. Provide partial funding for the $134,300 shortfall either via Council’s preference of a capital grant or loan;

4. Do not provide any funding and instruct The Trust to either obtain additional external funding or pay for the balance via their cash reserves.

3.3 Council Officers have considered all information presented in this report, as well as the associated report which was “left on the table” titled ‘Review of Asset Renewal Process for the Regent Theatre Trust’ that was presented to the Arts, Culture and Heritage Committee on 17 June 2019.

3.4 Council Officers recommend Council proceed with either Option 1 or 2 (in Clause 3.2 above) and provide either a one-off capital grant or a repayable loan to the Trust.

4. NEXT STEPS

4.1 If in the case of a loan being granted, the Chief Executive will negotiate terms and conditions of said loan with The Regent Theatre Trust for the replacement of the sound system.

4.2 The Regent Theatre Trust accept the quotes for the supply and install of the new sound system and arrange for sound system be replaced as practical.

5. Compliance and administration

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

The recommendations contribute to Goal 2: A Creative and Exciting City
The recommendations contribute to the outcomes of the Creative and Liveable Strategy
The recommendations contribute to the achievement of action/actions in the Arts Plan The action is: Develop plans for the seismic strengthening and enhancing the city’s existing arts and culture buildings to achieve the Council’s aspirations and meet the community’s needs.
Contribution to strategic direction	A robust renewals programme and facilities management model will help ensure the city’s existing arts and culture buildings are achieving the Council’s aspirations and meet the community’s needs.

Attachments

Nil

PALMERSTON NORTH CITY COUNCIL

Memorandum

TO: Finance and Performance Committee

MEETING DATE: 19 August 2019

TITLE: Whakarongo Residential Subdivision Update

Presented By: Bryce Hosking, Manager - Property

APPROVED BY: Tom Williams, Chief Infrastructure Officer

RECOMMENDATION(S) TO Finance and Performance Committee

1. That the Finance and Performance Committee receives the report titled ‘Whakarongo Residential Subdivision Update’ dated 23 July 2019.

1. development update

Overview of the Development

1.1 In a broad sense, the project can be split into 3 phases:

1. Design, Planning and Consenting;

2. Project Management and Delivery of Physical Works; and

3. Marketing and Selling of Sections.

1.2 Council has engaged Veros Property Services as the lead development consultant to manage delivery the programme on its behalf. 4Sight Consulting and Land Development Engineering (LDE) have been engaged for the overall design and subdivision-specific stormwater design respectively.

1.3 It is anticipated that the resource consent application for the development will be submitted in September 2019. The District Plan includes a specific Structure Plan and suite of planning provisions for the Whakarongo Residential Area that will direct the subdivision design and development.

1.4 For transparency reasons, an independent commissioner will make the decision on the resource consent application for this development.

Delays due to Stormwater Management

1.5 Council’s resource consent has been considerably delayed due to a greater than anticipated requirement in the entire Whakarongo growth area for how stormwater is dealt with. This has required Council’s stormwater team to work with consultants to develop stormwater management plan and modelling for the entire growth area.

1.6 Council, as the developer, need to ensure that whatever individual stormwater management plan and design is put forward was consistent with that of the greater area.

1.7 Council’s development addresses stormwater in several ways including, but not limited to:

· Utilisation of the existing stream through the development

· Catchment reserve pond as seen in the layout plan. This reserve will not be a permanent pond but be a designed basin type reserve in the development, that can act as both a natural aesthetic feature, but also as a pond as required in an extreme weather event.

1.8 While the stormwater modelling and plans have been a source of delay in submitting the resource consent, given the importance of a robust solution for the whole growth area, it was important to not do this in isolation.

1.9 For clarity, Council was originally anticipating submitting for consent in March 2019, so roughly a 6-month delay.

Subdivision Design and Layout

1.10 Once developed the site will create around 115 residential sections. Sections will be of a variety of sizes so to appeal to a wide variety of purchasers by giving options regarding design, build type and purchase price.

1.11 Attached is the current proposed layout of the site. While this is close to the final layout of the site which will be submitted for consent approval, it may be subject to minor changes once stormwater planning and designs for the greater Whakarongo growth area are completed.

1.12 One of the key goals of this development was to illustrate best practise over all areas of the Design, Planning and Consenting phase. Key considerations are:

· Iwi Engagement – Involving Iwi throughout the process and design.

· Urban Design Principles – The Structure Plan for Whakarongo Residential Area identifies a range of specific urban design ambitions for subdivision development that occurs within the area.

· Road Hierarchy – There are three road typologies within the area, these include a Collector Road, Local Road and Laneway.

· Pedestrian Connectivity and Cycleways – A key outcome for the subdivision has been the connectivity through and across the site and to existing and future developments adjacent to the site.

· Sustainability – Creating places that protect and enhance natural features, ecosystems, water quality, culture and heritage, reduced energy use and waste production.

· Accessibility – Creating a safe and accessible place for all including the site’s interaction with the rail corridor and acoustics.

· Legibility – The layout of a space, the built form, open space, paths, barriers, landmarks and edges that creates an understandable place and are resilient and allow adaptation over time as things change.

2. background

2.1 Palmerston North City Council owns an area of 9.63ha within the upper terrace of the Whakarongo residential growth area off James Line.

2.2 The land was acquired by Council for cemetery purposes but was no longer required. As obliged under the public works process the land was offered back to the previous owners to purchase, but no offer was received.

2.3 Given no offer was received, the parcel of land was subsequently rezoned for residential use.

2.4 The Long-Term Plan anticipates that Council will develop this land and funding has been allocated to begin in the 2018/19 financial year through Programme 1485.

District Plan

2.5 The District Plan includes a specific Structure Plan and suite of planning provisions for the Whakarongo Residential Area that will direct the subdivision design and development.

2.6 Palmerston North City Council views this as an opportunity to initiate development at Whakarongo and deliver a subdivision consistent with the requirements of the recently reviewed District Plan.

3. NEXT STEPS

3.1 Submit the resource consent application for approval by the independent commissioner and Council’s regulatory team.

3.2 Begin procurement of contractors and start physical works on the site once resource consent is granted. Works can begin as soon as practically possible.

3.3 Sell the sections in the property marketplace.

4. Compliance and administration

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?		Yes
Are the recommendations inconsistent with any of Council’s policies or plans?		No

The recommendations contribute to Goal 1: An Innovative and Growing City
The recommendations contribute to the outcomes of the City Development Strategy
The recommendations contribute to the achievement of action/actions in the Housing and Future Development Plan The action is: Housing development is initiated at Whakarongo.
Contribution to strategic direction	Progressing a Council-led housing development at Whakarongo (2018/19 onwards).

Attachments

Whakarongo Residential Subdivision Layout ⇩

PALMERSTON NORTH CITY COUNCIL

Memorandum

TO: Finance and Performance Committee

MEETING DATE: 19 August 2019

TITLE: E-Waste recycling reduced fees update

Presented By: Stewart Hay, Waste Management Manager

APPROVED BY: Tom Williams, Chief Infrastructure Officer

RECOMMENDATION(S) TO Finance and Performance Committee

1. That the information provided in the Memorandum titled ‘E-Waste reduced fees update’ be received by the Finance and Performance Committee.

2. That the Committee concludes their discussions on a zero fee e-waste trial for a 6 month period.

1. ISSUE

1.1 Following consideration of a report titled ‘E-Waste Recycling at Ferguson Street – First Six Months of Reduced Fees’ at the February 2019 Finance and Performance Committee meeting, the Committee requested a further reduced fees update.

2. BACKGROUND

2.1 Council historically provided e-waste recycling services on a full cost recovery basis, whereby the fee charged for items covered the transport and reprocessing costs.

2.2 For a majority of items, the cost of responsibly recycling and re-processing items to recover the valuable materials far outweighs any returns achieved. As a result, significant funding is required to support e-waste recycling and recovery.

2.3 To encourage an increase in the quantities of e-waste being diverted from landfill to recycling and recovery, Officers recommended a reduction in the fees and charges effective 1 July 2018 (19 March 2018 Finance and Performance Committee Meeting). The proposal was adopted by Committee. However, an additional resolution was adopted as follows:

That fees for household e-waste categories of ‘TV and Electronics”, ‘Consumer Electronics’ and ‘Other’ excluding photocopiers, be set to $0 on a trial basis, for a 6 month period FY19, subject to a financial analysis report being bought back to Finance and Performance April 2018.

2.4 A report was presented to the 23 April 2018 Meeting of the Finance and Performance Committee, presenting information on e-waste recycling and a financial analysis of setting the fee for e-waste to $0, excluding photocopiers for a period of 6 months in 2018/19. The following recommendation were made at this meeting:

That the decision on zero waste fees be deferred until after the results of the first six months of reduced fees are available.

That the Chief Executive report back on options for Palmerston North City Council to increase e-waste recovery in the city.

That the report, estimating an additional cost of $300,000 for a six month trial of e-waste charges for $0 for ‘TV and Electronics’, ‘Consumer Electronics’ and ‘Other’ excluding photocopiers be received.

2.5 A report was presented to the 19 November 2018 Meeting of the Finance and Performance Committee, titled ‘E-Waste Recovery Options in Palmerston North’, presenting information on current actions to increase e-waste diversion and impact on the reduced fees for the period July – September 2018. Potential options to increase e-waste recovery was also included in the report. The following recommendations were made at this meeting:

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.

That the Chief Executive be instructed to lobby Central Government to introduce a mandatory product stewardship for e-waste diversion.

2.6 A report was presented to the 18 February 2019 Meeting of the Finance and Performance Committee, titled ‘E-Waste Recycling at Ferguson Street – First Six Months of Reduced Fees’. This report was received by the Finance and Performance Committee.

2.7 No decision on the trial for zero e-waste fees was concluded at this Committee Meeting.

3. E-Waste diversion – twelve months 1 july 2018 – 30 June 2019

3.1 The fees and charges were reduced effective 1 July 2018 as adopted by Council following the fees and charges report presented to the 19 March 2018 Finance and Performance Committee.

3.2 The fees and charges for e-waste were unchanged effective 1 July 2019.

3.3 A summary of the quantities received in the twelve-month period 1 July 2018 – 30 June 2019 are shown in Table 1 below, along with a comparison of the quantities received in 2017/2018 (1 July 2017 – 30 June 2018).

Table 1: E-Waste – Quantities of items received July 2018 – June 2019

Item	Qty (2018/19)	Qty (2017/18)
TV’s and Computers
Desktop Computers and Servers	90	201
Small Computer Items (e.g. speakers/keyboards/docking stations/hubs/modems/switches/routers)	652	494
Copier Toner (per kg)	13*	-
UPS	45	9
Laptops and Tablets	386	231
Computer Monitors	541	331
Printers/Scanners/Fax Machines	551	442
TV’s	1030	464
Photocopiers	12	13
Consumer Electronics
Mobile Phones/GPS/Digital Camera’s	4	1
Stereos/Car Stereos/Gaming Consoles	462	119
Miscellaneous (per kg)	553*	579*
DVD/VCR/CD Players	304	179
Household Appliances
Small Appliances (e.g. Heaters/fans/toasters/kettles/blenders/alarm clocks/phones/cameras)	797	253
Medium Appliances (e.g. vacuum cleaners/microwaves)	577	287
Large Appliances (e.g. fridges/freezers/washing machines/dryers/dishwashers)	95	30
TOTAL ITEM COUNT	5,547	3,054

* Not included in total item count as this is a weight figure

3.4 Table 1 above shows that in the first twelve months of reduced fees the number of e-waste items bought into Ferguson Street for recycling is almost double the number received in 2017/2018.

3.5 A total of approximately 56.5 tonnes of e-waste was recycled in 2018/2019, which is an increase of 23.5 tonnes from 2017/2018, where 33 tonnes of e-waste was recycled.

3.6 Prior to the reduced fees effective 1 July 2018, Council provided the E-waste recycling service on a full cost recovery model, whereby the costs for transport and processing of each item were recovered through the fees charged. Council staff costs for managing the E-waste service were not recovered through the e-waste fees, these are recovered as part of the operating costs in running the Ferguson Street Recycling Centre.

3.7 Prior to presenting the reduced fees for e-waste, Officers undertook a sensitivity analysis and estimated that at current e-waste levels the reduced fees would require Council funding support of $15,000 per annum. If e-waste levels increased, the Council funding support would increase, with Officers estimating that if E-waste levels increased by 100% (doubled) then an additional $32,000 per year would be required.

3.8 The reduced fees at Ferguson Street for accepting E-Waste required Council funding support of $21,400 for 2018-2019. This figure is less than estimated previously by Officers.

3.9 Officers have noticed a small decrease in the number of computer related e-waste items since the introduction of the Tech Collect service in October 2018 – this relates to items that Council charge a small fee for but are free through the Tech Collect service. Other items appear to have remained consistent.

4. summary

4.1 The fee reduction effective 1 July 2018 has seen a significant increase in the number of electrical items received at Ferguson Street for recycling.

4.2 Officers will work with the communications team to further promote the e-waste service provided at Ferguson Street.

4.3 Officers consider that the current pricing structure for e-waste provides a service that enables responsible recycling while still acknowledging that there is a cost for the of end of life disposal of e-waste in the absence of a government mandated product stewardship scheme for e-waste.

5. Compliance and administration

Does the Committee have delegated authority to decide? If Yes quote relevant clause(s) from Delegations Manual <Enter clause>		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
<Enter text>
The recommendations contribute to Goal 4: An Eco City
The recommendations contribute to the outcomes of the Eco City Strategy
The recommendations contribute to the achievement of action/actions in the Waste Plan The action is: Provide a greenwaste drop-off collection service at Ashhurst and Awapuni, for a small fee, and E-Waste, compact fluorescents and batteries collection service at Ferguson St, for a fee<Enter text>
Contribution to strategic direction	Contribute to the development of future options to assist with the planning of the future direction for the Waste Activity

Attachments

Nil

PALMERSTON NORTH CITY COUNCIL

Memorandum

TO: Finance and Performance Committee

MEETING DATE: 19 August 2019

TITLE: Update on Infill Lighting Required to Achieve Compliance in P and V Categories

Presented By: Robert van Bentum, Manager - Transport and Infrastructure

APPROVED BY: Tom Williams, Chief Infrastructure Officer

RECOMMENDATION(S) TO Finance and Performance Committee

1. That the Committee receive the report entitled “Update on Infill Lighting Required to Achieve Compliance in P and V Categories”.

1. issue

1.1 Officers reported to the November 2018 meeting of Council’s Finance and Performance Committee on the planning and progress being achieved in year one of the implementation of Programme 1367 – Streetlight Infill Improvements. The Committee received the report and requested an update on project progress be provided following the completion of year one (2018-19) of the programme and included this in the Committee work schedule. This report provides this update.

2. background

2.1 Council has approved a seven-year programme of work (Programme 1367) within the 2018-28 LTP which provides for upgrading lighting including installing additional lighting infrastructure to address non-compliance in terms of the light levels provided by the current P and V category street lights installed across the city. Programme 1367 – Streetlight Infill Improvements has a total budget of $5,734,000 with the budget allocated as set out in Table 1 below. The programme has been approved for NZTA funding subsidy under the “Low Cost Low Risk” category and is part of PNCC current roading programme in the Regional Land Transport Plan. NZTA funding of 51% is payable provided the programme of work does not exceed $1m in any one year.

Table 1. Capital New Programme 1367 - Streetlight Infill Improvements.

2018/2019	2019/2020	2021/2022	2022/2023	2023/2024	2024/2025	2025/2026
$446k	$865k	$884k	$904k	$951k	$974k	$710k

2.2 During the previous 2015-25 LTP Council had approved funding for upgrading of existing streetlights throughout the City with LED luminaires to replace less efficient older technology from two programmes:

· Capital Renewal – Programme 74 – Street Light Replacements

· Capital New Programme - 1274 City Wide Street Lighting Upgrade to Current LEDs

2.3 The scope of the LED replacement work comprised replacing luminaires on the existing light poles. The approval of the programme and matching NZTA funding was based on the significant benefits associated with reduced energy costs and reduced maintenance costs due to the longer service life of the luminaires. The scope of work excluded areas of the City where lights were mounted on existing poles carrying above ground power and telecommunications cabling, the assumption being that any LED upgrades could be undertaken when this infrastructure was undergrounded.

2.4 While it was already known that in many areas the existing lighting infrastructure did not meet minimum standards for light levels, the installation of LEDs served to highlight these deficiencies. In response to these issues, Council approved a new programme of work (Programme 1367) to invest in upgrading and installing infill lighting.

2.5 The scope and budget for the programme was prepared utilising information from an external assessment of the lighting levels on the existing roading network which identified the specific streets requiring remedial action. The assessment proposed a three-level priority ranking as well as providing robust and detailed cost estimates for the remedial work to bring lighting in each street up to the required standard. The original cost estimates for the priority rankings in each of the P and V categories are summarised in Table 2 below.

Table 2. Estimated Costs for Streetlight Infill Improvements.

P category total	Estimated cost
Priority rating 1	$1,976,400
Priority rating 2	$1,189,500
Priority rating 3	$37,000
Sub-total	$3,202,900
V category total
Priority rating 1		$1,730,500*
Priority rating 2		$559,500
Priority rating 3		$181,500
Sub-total		$2,471,500
*Includes $240,900 State Highway costs
Total		$5,674,400**

**Cost difference from Programme 1367 budget relates to cost escalations

3. Progress and expenditure update – 2018-19

3.1 The financial year 2018-19 was the first year of implementation of Programme 1367 with an allocated budget of $446,000. The budget was augmented by funding from Programme 74 – City-wide Street Light Replacement to provide a combined total budget of $475,000. The work undertaken during the year included construction as well as detailed design work for both 2018-19 and the 2019-20 financial years. The work was undertaken in packages with several adjacent streets in an area being addressed in each package.

3.2 Procurement of contract works during 2018-19 utilised the tender process which had been followed for the LED light replacement programme. Three suitably certified contractors were invited to tender but only one tender was received.

3.3 The 2018-19 available budget of $475,000 was fully expensed with $64,000 spent on detailed design and $411,000 on physical works. Lighting upgrades were completed in the locations listed below. Design and construction work achievement against budget is summarised in Table 3.

· Chippendale Crescent as well as Gainsborough and Sheraton Groves

· Apollo Parade, Gemini Ave, Saturn Crescent, Jupiter Street and Venus Way

· Kentucky Way, Aintree Crescent, Caulfield Place, and Carbine Court

3.4 One issue which emerged during the year and contributed to higher than estimated costs in some areas was the identification of poor quality asbestos cement buried cable ducts. The condition of the ducts required their renewal and replacement which had not been previously anticipated within the scope of work.

Table 3. Programmes 1367 – Progress Summary- as at 30 June 2019

Programme / Street Location	Design costs	Construction Costs	Cost to Date	Current Status
Chippendale Crescent (incl. Gainsborough and Sheraton)	$10,500	$59,000	$69,500	Completed
Apollo Parade (incl Gemini, Saturn, Jupiter & Venus)	$17,500	$204,000	$221,500	Completed
Aintree Crescent (incl. Caulfield, Kentucky and Carbine)	$14,000	$148,000	$162,000	Completed
Sutherland Crescent (incl. Shetland, Waterford & Kimberley)	$14,000		$14,000	Contract let 2019/20
Panako Place	$3,500		$3,500	Designed
Havelock Avenue	$3,500		$3,500	Designed
Totals	$64,000	$411,000	$475,000

4. work planned and cost estimates for 2019-20

4.1 The programme budget for the 2019-20 year is nearly twice that of the 2019-20 budget at $865,000. Given the capacity constraints in respect of design and construction resources, it is critical that work is advanced as soon as possible. Given that detailed designs for several of the 2019-20 upgrade locations were completed in 2018/19, Officers have taken the opportunity to award construction contracts for two work packages to ensure early progress is achieved.

4.2 With the significant investment required over the next 5 years of the programme and the limited contractor capacity, Officers are working through development of a procurement strategy for the construction works which enables delivery of the 2019-20 and 2020-21 work programmes under competitive terms and prices. As there are only five companies registered to undertake work on the Powerco network, a pre-requisite for completing lighting upgrade work, Officers will be looking to use an invited tender process. Options being considered include establishment of a panel of two or three providers or tendering of the already designed works with the option of further work packages to be priced on a six monthly or annual basis.

4.3 The programme of work for the 2019-20 year has been identified and designs are largely completed. The only delay is the preparation of the plans. Once these are completed in the next few weeks the whole of the 2019-20 programme of work can be tendered. Initial estimates for the work have been prepared and are summarised in Table 4 below. The estimates indicate that the budget is enough to enable most of the scheduled work to be completed. However, to enable detailed design of the 2020-21 works to be completed, one of the locations may need to be deferred until next year.

Table 4. Programmes 1367 – Plan and Cost Estimate for 2019-20 Works

Programme / Street	Estimated design costs	Estimated Construction Costs	Total Estimated Cost for 2019-20	Current Status
Sutherland Crescent (incl. Shetland, Waterford & Kimberley)	$5,000	$82,000	$87,000	Contract Let
Milten St, Panako Pl, Frimley St, Alexander St, Dampier Ave, Benbow Pl, Raleigh St, Wyndham St, Oban Pl	$10,000	$181,000	$191,000	Designed
Bendigo St, Rosedale Cres, Geraldine Cres, Herbert Ave, Raglan Ave, Drury St, Hinau Pl, Leslie Ave	$11,000	$187,000	$198,000	Designed
Havelock Ave, Chatsworth Pl, Ashton Pl, Dalwood Gr, Pencarrow St, Chatsworth Pl	$12,000	$206,000	$218,000	Designed
Dittmer Dr, Ruha St	$6,000	$98,000	$104,000	Designed
Additional streets to be determined for design work in 2019-20	$67,000		$67,000	To be confirmed
Totals	$111,000	$754,000	$865,000

5. NEXT STEPS

5.1 Officers are currently focussed on finalising the remaining designs and plans for the 2019-20 year and developing the procurement approach ahead of going to tender on the work for the next one or two years.

5.2 While the programme budgets appear to be adequate Officers will continue to monitor the costs against budget. It is intended that the adequacy of the overall programme budget to deliver on the programme outcomes will be reviewed at the end of the 2019-20 financial year, ahead of planning for the 2021-2031 LTP.

6. Summary

6.1 The 2018-19 budget for the first year of Programme 1367 – Streetlight Infill Improvements was fully expensed to deliver upgraded lighting in three blocks of the city. Designs were also completed for two further areas to be implemented in 2019-20.

6.2 The 2019-20 programme scope of work has been confirmed and designs completed. Physical work is underway in two areas where designs were completed in 2019-20. Following completion of the drawings for the balance of the 2019-20 work areas, Officers will finalise a procurement approach to confirm one or more contractors to complete the work in 2019-20 and potentially into 2020-21.

6.3 While 2018-19 costs to complete work in some areas were slightly higher than anticipated, the cost estimates for the scope of work to be completed in 2019-20, indicate that the scope can be completed within the available budget.

6.4 Officers will reconfirm the cost to undertake the remaining five years of infill lighting work later in the current financial year, ahead of development of the 2022-2025 LTP to ensure budgets are adequate to complete the next tranche of work.

7. Compliance and administration

Does the Committee have delegated authority to decide? If Yes quote relevant clause(s) from Delegations Manual <Enter clause>		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 Strategic Transport Plan The actions are: • To identify and implement a package of safety measures across the network. • Maintain street lighting and energy efficiency across the network.
Contribution to strategic direction	Council has a substantial investment in street lighting, which supports safe movement and access for people and goods around the transport system. Programme 1367 contributes to this by raising the standard of existing street lighting to conform with the relevant national standard current today. The benefits to the community are enhanced safety, reduced costs and a more liveable city.

Attachments

Nil

PALMERSTON NORTH CITY COUNCIL

Memorandum

TO: Finance and Performance Committee

MEETING DATE: 19 August 2019

TITLE: Review of Rating System - Terms of Reference

Presented By: Steve Paterson, Strategy Manager - Finance

APPROVED BY: Grant Elliott, Chief Financial Officer

RECOMMENDATION(S) TO Council

1. That the Terms of Reference for the Rating Review as outlined in Appendix Three of this report be endorsed.

1. ISSUE

The Council has resolved that an independent comprehensive review of the City’s rating system be undertaken with a report back in 2020 to allow time for public consultation on any subsequent changes prior to preparation of the 10 Year Plan 2021-31.

To assist with planning, commissioning and timetabling the review it is necessary to determine what is in and out of scope as this will have a significant impact on the time, resources and cost of the review. Some informal poling of elected members was inconclusive hence this report.

2. BACKGROUND

SOLGM (the Society of Local Government Managers) has produced a guide for effective rating reviews.

Amongst other things it cautions about starting a rating review without a clear expectation about what is being sought in terms of an outcome. Rates are principally a form of tax and the basis of allocating the tax in an appropriate and reasonable matter is to an extent a matter of personal opinion. In a sense there is no right or wrong outcome. A rating review can be expensive and time consuming. SOLGM conclude that a rating review is a process for elected members and the community to decide on what is a reasonable and appropriate allocation of rates. Throughout this process the Council’s decisions must comply with rating law and the decision-making law. In doing so the Council must meet the administrative standards expected of tax setters.

SOLGM say “a first principles rating review is a big deal. It will need a high level of elected member engagement, extensive modelling, time and resources. If the review results in a proposal to change the rating allocation, it will probably lead to a high level of community interest with groups expressing strong views about the possible result. Often these groups having competing demands and steering a path through these will be challenging. If elected members are not fully committed to a proposed change the entire process can stagnate and undermine any future proposals.”

SOLGM recommend that “If a rating review’s going to work, there needs to be a good reason for it. And councillors need to agree on what that reason is before deciding if a review should go ahead.”

The rating system does not stand alone. It is devised in the context of the legislative framework shown in the following diagram:

Decisions about what activities will be undertaken by the Council and the level of service of each are included in the 10 Year Plan. The Financial Strategy guides decisions about long term debt and rates levels.

The Revenue and Financing Policy contains the overall policy about how operating costs for each Council activity are to be funded including what share of costs are to be borne directly by identifiable users and the share borne by ratepayers.

Appendix One summarises key elements of the Revenue and Financing Policy with respect to the funding of operating costs (ie the principles for deciding the most appropriate funding source for activities depending on the nature of the benefit and the policy for the use of the various funding sources).

The following chart shows, at the summary level, how this has been translated for the 2019/20 Annual Budget.

The more detailed rating policy and rating system are contained in the Funding Impact Statement section of the 10 Year Plan and subsequent Annual Budgets (Plans).

The current Rating objectives are as follows:

• to encourage growth and confidence in the city by operating a stable, easily understood method of setting rates

• to set rates in a manner which is fair and equitable as between various ratepayers and classes of ratepayer and which is consistent with Council ’s planning objectives

• to ensure that all citizens contribute to the cost of providing city services by charging for use on a user pays basis where practicable

• to foster the sense of a single community by operating a common system throughout the city.

Appendix two contains a brief summary of the present rating system.

The following two charts show at a summary level the structure of the budgeted rates revenue for 2019/20 by rate type and the allocation between the various differential rating categories.

Council has been provided with numerous reports over recent years that summarise the then current rating information database, the rating system and an analysis of rates incidence at the time. The most recent information of this type has been provided following the 2018 city revaluation. As a consequence the Council decided to change the level of the UAGC and some of the differential surcharges for the general rate, to moderate the impact of the revaluation on rates, especially for the lower valued residential properties.

The focus of the proposed rating review should be on determining whether the present rating system appropriately and reasonably allocates the rating requirement to groups of ratepayers and individual ratepayers. If the conclusion is that it does not, the review should recommend changes to the system that would achieve that outcome.

Appendix Three contains a brief Terms of Reference that outlines the proposed focus for the review and the key assumptions to be made during the review.

3. NEXT STEPS

Once the terms of reference for the review are confirmed a more detailed project plan will be developed and an independent facilitator sought.

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	It is a fundamental tenant of government to have an appropriate and reasonable system of setting and assessing taxes. As rates are primarily a tax it is important to review the system from time to time.

Attachments

Appendix One - Extracts from Revenue & Financing Policy
Appendix Two - Summary of present rating system
Appendix Three - Terms of Reference for Rating Review ⇩

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