Agenda of Council - 13 April 2017

Council

13 April 2017

REPORT R7483

Amended Deed of Agreement for Regional Landfill Business Unit and Terms of Reference for Joint Committee

1. Purpose of Report

1.1 To approve the amended Deed of Agreement between Council and Tasman District Council (TDC) necessary for the establishment of a regional landfill business unit and the Terms of Reference for the joint committee.

2. Summary

2.1 In September 2016, Council resolved to enter into an agreement with TDC to establish a Regional Landfill Business Unit and in October 2016, a joint application was lodged with the Commerce Commission to authorise the proposed arrangement.

2.2 The Commerce Commission published a draft determination on 17 March 2017 that it should grant conditional authorisation and proposed the following conditions:

· Amendment of the Deed of Agreement to confirm that any operating surpluses from the business unit will be used solely to fund the waste management and minimisation services of Council and TDC, and

· Council and TDC to disclose in annual reports the amount of any operating surplus received from the joint business unit and how any such surplus is being applied.

2.3 It is recommended that the amended Deed of Agreement and the Terms of Reference be approved by Council in order to establish a regional landfill business unit. A separate report in relation to the establishment of the joint committee to govern the business unit will be presented to Council.

3. Recommendation

That the Council

Receives the report Amended Deed of Agreement for Regional Landfill Business Unit and Terms of Reference for Joint Committee (R7483) and its attachments (A1742987, A1740538, A1742918, A1740535, A1742942 and A1742760); and

Approves, subject to equivalent approval from Tasman District Council, the Deed of Agreement for the Nelson Tasman Regional Landfill Business Unit (A1740538), and the Terms of Reference for the Nelson Tasman Regional Landfill Business Unit as a joint committee of Tasman District and Nelson City Councils (A1740535); and

Confirms, subject to equivalent confirmation from Tasman District Council, that the Terms of Reference (A1740535) constitutes an agreement as required under Schedule 7, clause 30A, of the Local Government Act 2002; and

Updates the Nelson City Council Delegations Register to include the Nelson Tasman Joint Landfill Business Unit delegations (A1742760).

4. Background

4.1 Council and TDC own and operate the only two landfills in the Nelson-Tasman region. TDC operates the Eves Valley landfill in Waimea West, near Brightwater and Council operates the York Valley landfill in Bishopdale, Nelson.

4.2 Both councils are also responsible for promoting effective and efficient waste management and minimisation within their boundaries. This obligation is set out in Part 4 of the Waste Minimisation Act 2008. In April 2012, a Joint Waste Management and Minimisation Plan (‘JWMMP’) was adopted by the councils. A key action arising from this plan was to investigate a joint landfill as a matter of priority.

4.3 Council and TDC have worked together to develop a joint landfill proposal and in 2016 a joint business unit, governed by a joint committee, was proposed. Both councils consulted with their communities; TDC amended its Long Term Plan 2015-2025 to allow for the arrangement as Eves Valley was listed as a strategic asset and TDC’s Significance and Engagement Policy therefore applied. Amendment of Council’s Long-Term Plan 2015- 2025 was not necessary as the York Valley landfill is not a strategic asset and the final form of the arrangement is not materially different to that which was contemplated in the Long-Term Plan.

4.4 In its draft Annual Plan 2016/17, Nelson City included a proposal to create a joint venture model as the preferred option for the management of Tasman District and Nelson City landfills. The proposal attracted seven submissions, all of which were in support of the proposal. Council did not amend its Annual Plan as a result of the submissions, and a final Annual Plan was adopted 2 June 2016. The Annual Plan stated that the arrangement would be operational by 1 July 2017.

4.5 In July 2016, Council considered a draft Deed of Agreement for the proposal and a draft Terms of Reference for the joint committee.

4.6 On 22 September 2016, both councils considered an amended Deed of Agreement and draft Terms of Reference. Each of the councils resolved to enter into an agreement to establish a regional landfill business unit. Council resolved as follows:

THAT the Council:

Receive the amended report Nelson City and Tasman District Regional Landfill - Proposal to Establish a Business Unit (R6390) and its attachments (A1625909, A1625154, A1625160 and A1628550);

Approve delegated authority to the Mayor and Chief Executive Officer to sign a Deed of Agreement with Tasman District Council that commits Nelson City Council to a Regional Landfill arrangement, including the payment of $4.2 million from Tasman District Council to Nelson City Council. This delegation is to only be exercised if:

a) all necessary legal processes have been completed to ensure the proposal complies with the Local Government Act 2002, Waste Minimisation Act 2008 and Commerce Act 1986; and

b) the Agreement is not materially altered from that attached to this report (A1625154).

Note an intention to form a Joint Committee with Tasman District Council. The Joint Committee will be delegated powers and responsibilities to govern and control York and Eves Valley landfills through the proposed Regional Landfill Business Unit. The purpose of the Joint Committee and its terms of reference may be subject to amendment to address any conditions of approval by the Commerce Commission.

5. Discussion

5.1 The points below relate to the implementation of the 22 September resolution. The authority delegated to the Mayor and Chief Executive has not been exercised, as completing all necessary legal processes has taken until now, and because it seems more appropriate to report the matter to Council again, in light of a new triennium.

5.2 All councillors – with particular emphasis on those who elected in October 2016 – were offered the opportunity for briefing on the background of this matter. The report of 22 September 2016, and the attachments (the draft Deed of Agreement for the regional landfill business unit; the regional landfill business unit structure; the draft Terms of Reference; and the s17a review of services) have been made available to councillors on Teamsite.

Legal processes - Commerce Commission

5.3 This section details the legal processes referred to in (a) of the resolution, focusing on the Commerce Act 1986.

5.4 During the development of the Deed of Agreement, legal advice suggested that the proposed arrangement could lessen competition and potentially breach aspects of the Commerce Act. Section 61 of the Commerce Act provides that the Commerce Commission may grant authorisation for arrangements that may otherwise breach certain provisions of the Act. In general, the Commission is able to grant an authorisation for an arrangement if it is satisfied that the public benefit of the arrangement outweighs the detriment arising from the loss of competition. The Councils determined that an application should be made to authorise the arrangement.

5.5 On 18 October 2016, a joint application with TDC was lodged to the Commerce Commission for authorisation of the proposed arrangement.

5.6 On 17 March 2017, the Commerce Commission published a draft determination (Attachment 1) that it should grant conditional authorisation. The Commission is proposing the following:

· that the deed of agreement be amended to confirm that any operating surpluses would be ‘for each Council to apply any such surplus solely for funding any waste management and minimisation service, facility or activity (either jointly or independently).” and

· “For the duration of the authorisation, each Council’s annual report must clearly disclose the amount of any operating surplus received from the RLBU and record how any such surplus is being applied in a manner that is consistent with this condition.”

5.7 The Commission invited submissions on the draft determination. The submissions closed on 31 March 2017 and no further submissions were received.

5.8 It is expected that the Commission will issue a final determination, with no changes to the conditions, by mid-April. If the final determination is not issued by 13 April 2017, the recommended resolutions will be made subject to the final determination.

Deed of Agreement

5.9 The Deed of Agreement (Attachment 2) has been prepared by external legal counsel, Mr Julian Ironside. Officers consider the amendments required by the Commission to be minor in nature and acceptable. It is the view of officers that the Waste Minimisation Act already requires Council to use any surpluses from the landfill for waste management and minimisation.

5.10 Council currently spends approximately $1.8M on waste management and minimisation within the solid waste activity.

5.11 The Deed of Agreement has been amended in accordance with the Commerce Commission’s proposals and the amended Deed of Agreement is attached to this report as Attachment 2.

5.12 It is recommended that the amended Deed of Agreement be approved by Council in order to establish a regional landfill business unit.

5.13 Changes between the draft Deed presented on 22 September 2016 and now are show in Attachment 3.

Terms of reference

5.14 The resolution of 22 September 2016 proposed establishing a joint committee for governance of the business unit. Establishment of a joint committee is governed by clause 30A in Schedule 7 of the Local Government Act 2002 which requires the two councils to reach agreement on:

(a) the number of members each local authority or public body may appoint to the joint committee; and

(b) how the chairperson and deputy chairperson of the committee are to be appointed; and

(c) the terms of reference of the committee; and

(d) what responsibilities (if any) are to be delegated to the committee by each local authority or public body; and

(e) how the agreement may be varied.

5.15 The Terms of Reference for the joint committee, which were also prepared by Mr Ironside, address the above-mentioned matters. The Terms of Reference are attached to this report at Attachment 4.

5.16 Changes between the draft Terms of Reference presented on 22 September 2016 and now are shown in Attachment 5.

5.17 At a joint workshop on 28 March 2017, representation of Māori was raised. Councillors were informed that Council and TDC intend to shortly commence a review of the relationship between councils and Nga iwi o Te Tauihu o Te Waka a Maui to ensure principles to guide the relationship were established. Clause 7 of the Terms of Reference relates to Māori representation on the landfill business unit. Councillors acknowledged appointment may follow the review.

5.18 Officers are of the view that the Terms of Reference are acceptable and note that the Terms of Reference may be amended at any time by mutual agreement between the councils provided the variation is in accordance with the Deed of Agreement and meets the requirements of the Local Government Act 2002.

5.19 It is recommended that Council approve the Terms of Reference for the joint committee for the governance of the business unit. A separate report in relation to the establishment of the committee will be presented to Council.

5.20 An update to the Delegations Register is required to reflect this new committee (Attachment 6.)

6. Options

6.1 The options available to Council are set out below. The recommended option is to approve the amended Deed of Agreement for the establishment of a regional landfill business unit and approve the Terms of Reference for the joint committee.

Option 1 (Preferred): Approve Deed of Agreement and Terms of reference
Advantages	· Establishment of Regional Landfill Business Unit which will deliver the benefits of a regional approach (capital and operational efficiency, reduction of commercial risk and waste minimisation). · Joint landfill business able to commence on 1 July 2017. · Formation of joint committee prior to commencement of business operations on 1 July 2017.
Risks and Disadvantages	· None known.
Option 2: Decline to amend Deed of Agreement and seek a change to the determination by the Commerce Commission and decline to approve the Terms of Reference
Advantages	· None known.
Risks and Disadvantages	· Delay in establishment of business unit and committee. · Delay in realisation of the benefits of regional approach. · Reputational damage. · Loss of goodwill between Council and TDC.
Option 3: Approve the Deed of Agreement and seek to change the Terms of Reference
Advantages	· Potential opportunity to alter the Terms of Reference.
Risks and Disadvantages	· Failure to reach agreement with TDC on amendment. · Delay in establishing the committee for governance prior to operations commencing. · Officers cannot advise on any appropriate amendments, believing all have been incorporated.

7. Conclusion

7.1 Council and TDC have considered the benefits of a regional approach to waste management and have reached agreement on the establishment of a regional landfill business unit, subject to approval of the arrangement by the Commerce Commission.

7.2 The amended Deed of Agreement meets the Commerce Commission’s draft proposals and the Terms of Reference of the joint committee are considered by officers to be acceptable.

7.3 Approval of the Deed of Agreement and the Terms of Reference is the next step in establishing the business unit and commencing the joint landfill operations.

Nikki Harrison

Group Manager Corporate Services

Attachments

Attachment 1: A1742987 - Draft determination Nelson City Council and Tasman District Council 17Mar2017 ⇩

Attachment 2: A1740538 - Deed of Agreement ⇩

Attachment 3: A1742918 - Deed of Agreement amendments table ⇩

Attachment 4: A1740535 - Terms of Reference ⇩

Attachment 5: A1742942 - Terms of Reference amendments table ⇩

Attachment 6: A1742760 - Nelson Tasman Regional Landfill Business Unit Delegations ⇩

Important considerations for decision making

1. Fit with Purpose of Local Government

The decision will support the delivery of effective and efficient waste management and minimisation services to the community.

2. Consistency with Community Outcomes and Council Policy

The recommendation aligns with the following Community Outcomes:

· Our infrastructure is efficient, cost effective and meets current and future needs

· Our Council provides leadership and fosters partnerships, a regional approach and community engagement.

3. Risk

The approval of the Deed of Agreement and Terms of Reference poses no risk; it will allow for the establishment of the regional business unit and joint committee and the commencement of operations on 1 July 2017.

4. Financial impact

Approval of the amended Deed of Agreement and Terms of Reference has no financial impact. The requirement to use landfill operating surpluses solely to fund waste management and minimisation is consistent with the original intent of the agreement.

5. Degree of significance and level of engagement

Approval of the amended Deed of Agreement and the Terms of Reference is of low significance because there will only be a small impact on the users of York Valley and the residents of Nelson City; therefore no further engagement will be undertaken in addition to that which was carried out as part of the consultation on the Long-Term Plan 2015 – 2025.

6. Inclusion of Māori in the decision making process

Māori have not specifically been consulted on this report.

7. Delegations

This is a decision for full Council.

Council

13 April 2017

REPORT R7481

Establishment of Joint Committee for Regional Landfill Business Unit

1. Purpose of Report

1.1 To establish a Joint Committee of Council and Tasman District Council (TDC) as the governance structure for the Nelson Tasman Regional Landfill Business Unit.

1.2 To appoint the Joint Committee members.

2. Summary

2.1 In September 2016, Council resolved to enter into an agreement with TDC to establish a regional landfill business unit. A joint committee is proposed for the governance of the business unit.

2.2 This report is prepared in anticipation of the Deed of Agreement being approved for establishment of the regional landfill business unit, and the Terms of Reference for the joint committee have similarly been approved by Council.

2.3 The next steps are the establishment of the Nelson Tasman Joint Landfill Committee and the appointment of members to that committee. The Terms of Reference allow Council to appoint two members (at least one of whom will be an elected member of the Council). This was written in this way to give Council the flexibility to bring in specialist skills or retain experienced committee members when necessary. At this stage it is suggested that two councillors are appointed to these roles.

3. Recommendation

That the Council

Receives the report Establishment of Joint Committee for Regional Landfill Business Unit (R7481); and

Establishes, subject to an equivalent resolution by Tasman District Council, the Nelson Tasman Regional Landfill Business Unit as a joint committee of Nelson City Council and Tasman District Council; and

Appoints Councillor ……………........... and Councillor …………..……….. as Council members of the Nelson Tasman Regional Landfill Business Unit.

4. Background and Discussion

4.1 The general background to the joint landfill proposal is set out in the report (R7483) on this agenda that seeks approval of the Deed of Agreement and Terms of Reference for the joint committee.

4.2 On 22 September 2016 the Council and TDC resolved to enter into an agreement to establish a regional landfill business unit and noted an intention to form a joint committee.

4.3 On 18 October last year the councils lodged a joint application to the Commerce Commission to authorise the proposed arrangement. On 17 March 2017 the Commerce Commission published a draft determination that it should grant conditional authorisation for the application. The conditions proposed by the Commission have been included in the Deed of Agreement.

4.4 This anticipates the Deed of Agreement and the Terms of Reference for the Joint Committee have been approved by Council. All reference documents which relate to that decision are included in the report ‘Amended Deed of Agreement for Regional Landfill Business Unit and Terms of Reference for Joint Committee’.

4.5 The regional landfill business unit is to be known as the Nelson Tasman Regional Landfill Business Unit.

4.6 The next steps are the establishment of the Nelson Tasman Joint Landfill Committee and the appointment of members to that committee.

4.7 Council will be the administering council for the business unit. Budgeting for the proposed business unit and joint committee has been included in the Annual Plan 2017/2018.

4.8 It is expected that the committee will meet four times a year in March, June, September and December. The first meeting is expected to be in late April or early May.

5. Options

5.1 There are two options for consideration by Council. The preferred option is to establish the joint committee and appoint members

Option 1: Establish the joint committee and appoint members
Advantages	· Formation of joint committee prior to commencement of business operations on 1 July 2017 ensures effective governance from the beginning.
Risks and Disadvantages	· None known.
Option 2: Decline to establish joint committee or appoint members
Advantages	· None known
Risks and Disadvantages	· Delay in establishing the committee for governance prior to operations commencing. · TDC would need to commit to Stage 3 at Eves Valley which may negate the option of a regional landfill in the long term.

Nikki Harrison

Group Manager Corporate Services

Attachments

Nil

Important considerations for decision making

1. Fit with Purpose of Local Government

The establishment of the Nelson-Tasman Joint Landfill Committee as a Joint Committee of Nelson City Council and Tasman District Council will ensure effective governance over important Council infrastructure and services.

2. Consistency with Community Outcomes and Council Policy

The recommendation aligns with the following Community Outcomes:

· Our infrastructure is efficient, cost effective and meets current and future needs

· Our Council provides leadership and fosters partnerships, a regional approach and community engagement.

3. Risk

The establishment of the Nelson-Tasman Joint Landfill Committee as a Joint Committee of Nelson City Council and Tasman District Council poses no risk; it will ensure effective governance of the Nelson Tasman Regional Landfill Business Unit.

4. Financial impact

The establishment of the committee has no financial impact.

5. Degree of significance and level of engagement

The establishment of the joint committee and appointment of members is of low significance because there will only be a small impact on users of York Valley and the residents of Nelson City; therefore no further engagement will be undertaken in addition to that which was carried out as part of the consultation on the Long Term plan 2015 - 2025.

6. Inclusion of Māori in the decision making process

Māori have not specifically been consulted on this report.

7. Delegations

This is a decision for full Council.