Agenda of Council - 4 June 2019

Item 6: Deliberations on Annual Plan Consultation Document 2019/20

Council

4 June 2019

REPORT R10127

Deliberations on Annual Plan Consultation Document 2019/20

1. Purpose of Report

1.1 To provide supporting information and officer recommendations to assist with deliberations on the Annual Plan 2019/20 Consultation Document including a proposed amendment to the Long Term Plan 2018-28 for Community Housing.

2. Summary

2.1 Council has heard submissions on the Annual Plan 2019/20 Consultation Document and must now consider matters raised by submitters as well as any new issues which have arisen that may impact on the Annual Plan.

3. Recommendation

That the Council

1. Receives the report Deliberations on Annual Plan Consultation Document 2019/20 (R10127) and its attachments (A2199462, A2198507, A2195528 and A2198769).

4. Background

4.1 Council’s Annual Plan 2019/20 Consultation Document was open for submissions from 29 March to 2 May 2019, and was made available on Council’s website, at Nelson Public Libraries and the Customer Service Centre, and a summary was delivered to all Nelson households through a special edition of Our Nelson.

4.2 364 submissions were received, including 81 submissions on the proposed amendment to Community Housing and three late submissions. 77 people spoke at the hearings on 14, 15 and 16 May.

4.3 318 submissions were made by residents or organisations based in Nelson, 33 by residents of Tasman with the remainder outside the Nelson/Tasman region. Over 64% submissions were made online, 22% by email, with others either hand delivered, posted, or provided to Council at drop-in sessions or at libraries.

4.4 Alongside the Consultation Document for the Annual Plan, was the proposal to amend Council’s Long Term Plan 2018-28 to provide for divesting Council’s 142 community housing units. Also consulted on at the same time was the Wakatu Square proposal to sell some of Wakatu Square. The Community Housing proposal will be discussed in a separate report at this meeting.

4.5 At this Council meeting of 4 and 6 June 2019, Council will deliberate on submissions, ensuring that the reasons for decisions are made clear so that this can be conveyed to submitters as per the Local Government Act 2002, Section 82(1)(f): ‘that persons who present views to the local authority should have access to a clear record or description of relevant decisions made by the local authority and explanatory material relating to the decisions’.

5. Potential disposal of land in Wakatu Square

5.1 Alongside the Annual Plan, Council undertook a concurrent special consultative procedure on the potential sale of a section of the eastern end of Wakatu Square and Wakatu Lane to Cephas for the purpose of developing an integrated shopping precinct. An integral part of Cephas' project was securing an anchor tenant as part of the development.

Cephas had made public that the anchor tenant was Farmers. Very recently, the developer has advised Council that Farmers has withdrawn and the development will not be proceeding as previously planned. As a consequence, it no longer wishes to purchase Council land. One of Council's conditions of sale was that Cephas secure a significant anchor tenant. There will, therefore, be no deliberations on submissions, but submitters will all be thanked for their input and the ideas and suggestions provided will inform the City Development team’s work on the City Centre Programme.

6. Discussion

6.1 This report covers the main issues raised in the submissions, ordered by activity category. Single issue or submitter-specific issues are covered in Attachment 1, the spreadsheet of responses to submitters.

6.2 The spreadsheet does not duplicate material covered in the body of this report, e.g. it does not contain responses on Natureland submissions as these are covered in the parks and active recreation activity section below.

6.3 There is also a section on additional decisions, covering changes that have occurred since the Consultation Document was written and therefore require direction from Council as to any adjustment to the Annual Plan budgets and Council’s work programme.

6.4 Where a change is proposed to a matter that has undergone consultation, officer recommendations have been provided. If there is no recommendation, the programme or project will remain as set out in the Long Term Plan 2018-28 or the Annual Plan Consultation Document and supporting documents.

6.5 Following Council’s final decisions, response letters to submitters will be cleared with the Chair of the relevant Committee

7. Public Transport

7.1 A number of submitters requested that Council support an improved bus service. The requests were based on submitter views that this would result in improved public services, reduced carbon emissions and improved traffic flow.

7.2 Council will be undertaking a full review of Public Transport services in the next financial year. This review will be undertaken in conjunction with, and co-funded by, Tasman District Council in order to achieve a co-ordinated public transport network in the Nelson-Tasman region. The proposed scope will include consideration of:

· What public transport would be appropriate in a Smart Little City, especially when climate change factors are taken into account;

· The adequacy of current bus routes and timetables for bus patrons;

· Future demand, growth and potential future routes and the supporting infrastructure required, for example cycling and personal mobility parking;

· Current barriers to use of public transport;

· The infrastructure and facilities required to make public transport a more attractive transport option;

· Opportunities to implement bus priority measures to reduce journey time;

· How different fare structures would affect passenger numbers;

· Options for service improvements, such as extending routes to cover more residential areas and potentially outlying areas, including to and from the airport;

· Options to provide better levels of service to key centres of employment and activity such as Nelson Marlborough Institute of Technology (NMIT), Vanguard Street fringe area, the hospital and colleges;

· Different delivery models for public transport such as on-demand buses (booking a bus through an app or phone call) and community buses;

· Technology improvements, including electric buses, apps, information and ticketing; and

· Provision to the City Centre, including the City Centre terminus upgrade, bus routing, and adding more bus stops in the City Centre area.

This work will be undertaken in conjunction with the Nelson Future Access Project, and is expected to inform the next Long Term Plan and Nelson Public Transport Plan due in 2021. There were a number of suggestions from submitters on public transport that officers have provided interim information on, and these are set out below.

Priority bus lanes

7.3 Several submitters (including 20149, 19787, 20200, 20201 and 20174) proposed that buses be provided with priority exit from bus stops to move back into the traffic flow in order to improve the service provided.

7.4 There are laws in other countries including Australia, Singapore and the United Kingdom, that drivers must give buses right of way. However, there is currently no such law or rule in New Zealand. In 2016, New Zealand Buses requested that government develop a new traffic law to give commuter buses the right of way over cars, but this has not been progressed. Officers have requested an update from the Ministry of Transport as this approach may be afforded higher priority under the current Government Policy Statement on Transport.

7.5 Many buses have a sign on the back of them saying "Please let the bus go first” but this is a courtesy request and has no legal weight. Notwithstanding this, officers will encourage the local bus company to install these signs on the back of all NBus services.

Discounted or free bus services

7.6 Several submitters (19819, 20085 and 20181) proposed that Council provide discounted or free bus services.

Free NBus service - The cost of the current bus service per year is approximately $1.7M, of which $475,000 is currently funded from rates, $129,000 from TDC, $48,000 from Supergold and $367,000 from a New Zealand Transport Agency (NZTA) subsidy. There is potential for the cost of services funded from rates to increase from $475,000 up to $1.5M if free NBus services were introduced to everyone. In addition, there are a number of factors that would require significant further investigation to be able to estimate the cost of running a free NBus service. The factors which could significantly increase the costs include:

· A risk that the service would no longer be eligible for the NZTA farebox recovery subsidy (currently $367,000 per annum);

· Additional costs of increased services to meet “new” demand; and

· The availability of buses of an appropriate standard, and drivers in order to respond to the increased demand in the short-term.

Free fares for NMIT students - This was investigated in the 2017 Bus Service review and estimated to cost in the order of $40,000 per year. Since then, Council has been working with NMIT on a Travel Plan to improve the use of active transport. This work is ongoing and could include NMIT contributing to the cost of free fares, similar to other tertiary institutions around the country.

Free fares for under 18 year olds - This requires additional investigation to identify the underlying demand for school services which are not currently being met by NBus, SBL, Bromwell’s commercial school services, Ministry of Education, or other private school services. It is proposed that this fare structure be investigated further as part of the public transport review later this year. Officers have noted that central government has recently announced that community services card holders may receive assistance with public transport costs and will consider the implications of this in the review.

8. Water Supply

Future water supply

8.1 Submitter 20062 supported Council’s investment in future-proofing regional water supplies. Another submitter (19956) proposed that given the drought this year, housing development be restricted until a long term water supply has been secured.

8.2 Council is very aware of the need to secure economical potable water sources for the city into the future. The existing river water sources, including the Maitai Dam, are expected to provide sufficient water for the foreseeable future. However, during drought conditions when river flows are low, some water restrictions will be required. Council’s contribution to the Waimea Community Dam also guarantees the city future access to water in the Waimea aquifer should this be required.

Improvements to water outcomes

8.3 Several submitters made suggestions on how outcomes for the water activity could be improved. These included, increasing education to encourage residents to conserve water, encouraging saving of roof water (20084 and 20203) and prioritising replacement of asbestos pipes (20041).

8.4 Ongoing publicity and information on how residents can reduce water use, and encouraging water saving will be undertaken during the year. Council is also reviewing the use of water tanks as part of the development of the Whakamahere Whakatū Nelson Plan.

8.5 The Nelson water supply network uses pipes made from a range of materials. All of these materials are safe to use for drinking water. Council has a programme to renew older pipes across the city as they reach the end of their service lives and this is focussed on replacing old asbestos cement pipes.

Water budgets

8.6 The Thompson Property Group (20194) requested that Council applies the same policy for water leaks for commercial rate payers as for residential properties.

8.7 Officers considered whether the Water Leaks Policy should be amended during the Long Term Plan 2018-28 process. It was concluded that commercial ratepayers have greater opportunities to recover the costs of water losses than residential ratepayers, and the current policy settings provide a balanced response to the problem for the greatest number of customers.

9. Wastewater

Wastewater overflows

9.1 Submitter 19908 proposed that a top priority for Council should be to reduce sewage overflows during heavy rain events and, that this was an important consideration as a result of climate change increasing heavy rainfall events.

9.2 Council’s resource consents include a requirement to reduce overflows, and officers recognise the risk of overflows as a result of climate change. These risks are factored into Council’s planning processes and work programmes, for example the Inflow and Infiltration and Wastewater Model Upgrade projects and Activity Management Planning.

New public dump station

9.3 The national and Nelson branches of the New Zealand Motor Caravan Association Inc (NZMCA) (19977 and 20055) requested Council support for the construction of a new public dump station for wastewater. The national body offered a financial contribution towards the requested facility and support for any application that Council might make to the Ministry of Business Innovation and Enterprises Tourism Infrastructure Fund.

A similar request was made by the national branch of NZMCA to the Long Term Plan 2018-28. The response to that submission was that officers would consider whether a further dump station in Nelson is required as part of the development of the Long Term Plan 2021-31. Currently there are dump stations at the Mobil Petrol Station in Tahunanui and at a number of camping grounds. A new dump station will open shortly at the new NPD service station on St Vincent Street.

Officers have undertaken a high level assessment for constructing and operating a new dump station. The cost for construction would typically vary from $290,000 to $460,000 and excludes any allowance for land purchase. Operation and maintenance would be in the order of $20,000 to $60,000 p.a.

Officers consider that current provision is adequate for the time-being and that options will be further considered and brought back to Council through the Long Term Plan 2021-31

Composting toilets and recycling of grey water

9.4 Several submitters (20084, 20160, 20203 and 20226) requested that Council encourage or make mandatory composting toilets for new properties and/or assist with retrofitting systems to recycle black and grey water. Support for these changes was based on the benefits of reducing the use of potable grade water to take waste away, increasing resilience during periods of drought, providing employment opportunities and reducing pressure on Council’s infrastructure.

9.5 There are a number of successful composting toilet systems operating in the city but they do require a level of diligence by the homeowner that means they are not a practical or attractive option for everyone. There are also important public health considerations when alternative wastewater systems are proposed for smaller residential properties in the city.

9.6 Council supports improving the resilience of the community and implementation of systems to recycle wastewater. An example is the recently constructed return pipeline from the Bell Island treatment plant which has the potential to provide treated wastewater for industrial or irrigation purposes. Progress on the use of treated wastewater is dependent on further treatment of the wastewater and customer demand and this is being addressed by the NRSBU General Manager.

Wastewater budget

9.7 Nelson Grey Power Association Inc (20107) raised concerns that $260,000 of additional funding is required in 2019/20 for the calibration and flow monitoring of wastewater.

9.8 The additional funding is to support the wastewater model which is critical for good forward planning and to understand weaknesses within the system. The scope of the project changed since the Long Term Plan budgets were developed as a result of technical input and cross linkages with the inflow and infiltration strategy.

9.9 The assessment of required budgets is refined throughout the lifecycle of a project, however until the tender process is completed, the final budget is unknown. The current construction market is very tight with a lot of private development across the Nelson Tasman region resulting in construction companies being committed to other work. In response to this demand construction companies are bringing additional resources into Nelson, but this has the effect of increased costs being passed onto clients. This has resulted in some necessary adjustments to budgets.

10. Stormwater and Flood Protection.

Support for ongoing investment in stormwater systems

10.1 Two submitters (20155 and 20058) supported ongoing investment in Council’s stormwater systems, citing the effects associated with heavier rainfall and climate change as reasons why this investment is important to the city.

10.2 Council has a significant programme of work in place to deliver stormwater and flood protection projects. This includes the development of stormwater strategies and watercourse assessments to identify habitats and ecological values that require protection, as well as highlighting opportunities to improve the stream environment. A planning response to the increased future flood risk will be formulated through the new Whakamahere Whakatū Nelson Plan.

Rainwater retention tanks

10.3 Submitter 19844 proposed that all new houses incorporate rainwater tanks. Climate change and heavier rainfall events can lead to an increased volume of stormwater being discharged into streams, having a detrimental effect on fish habitats. The submitter was also concerned that the increased runoff from properties is overloading the current stormwater system.

10.4 While there is a requirement for stormwater detention on larger developments, there is no stormwater related requirement for rainwater storage for re-use, as this does not ensure tanks will have available capacity during storm events. The city stormwater system still needs to be developed and maintained at current service levels i.e. for a 1 in 15 year storm event. The suggestion does have merit, however, in relation to water conservation, particularly in light of the recent drought. Council is supportive of measures that increase community resilience, such as capturing and storing water.

10.5 Nelson’s water patterns, which can include long dry summers, mean that suburban household water tanks are likely to be empty well before any drought is over. Officers will consider this issue as part of the development of the Whakamahere Whakatū Nelson Plan and submitters will have the opportunity to provide feedback when the Draft Plan is released for feedback in 2019-2020.

Support for “non-engineering” solutions for managing stormwater limiting hard surfaces and concreting of properties

10.6 Three submitters (19868, 20084 and 20203) proposed that Council reduce reliance on engineering solutions for managing stormwater. Suggestions included adopting a bylaw to limit the amount of hard surface allowed on properties. Reasons set out by submitters included the advantages of allowing rainwater to soak into the ground and allowing the soil underneath to “breathe”.

10.7 The risk of additional runoff being generated from developments is looked at closely under current planning arrangements. New development involving creation of additional lots and additional impervious areas exceeding 50m2 are required to include temporary storage or soakage for stormwater. This is to ensure that runoff is not increased as a result of development. In the case of larger subdivisions, new detention dams are often constructed for this purpose.

Stormwater flowing from Pearce Way onto Davis Drive

10.8 Submitter 19842 has requested that Council undertakes work to stop runoff from Pearce Way onto Davies Drive properties.

10.9 Stormwater control at the Pearce Way/Davies Drive intersection is scheduled for investigation in 2019/20, and officers will keep in touch with the submitter on the findings, as well as any further action which might be undertaken.

Reduction in stormwater rates

10.10 The Thompson Property Group (20194) proposes that properties that discharge stormwater directly into the Haven, the State Highway 6 drain, or other stormwater system not maintained by the Council be exempt from stormwater charges.

10.11 Stormwater rates are recovered from property owners as a standard charge to ensure the upkeep of the drainage network across the city. The benefits of stormwater and flood control in the city apply for all residents, and not just those properties connected to reticulation. Because all residents directly or indirectly benefit from the stormwater system the request for exemption of rates is not supported.

11. Solid Waste

Rubbish

11.1 Submitter 19863 raised concerns about the number of abandoned shopping trolleys and traffic cones.

11.2 Nelson City Council combats littering of this type through the Litter Act 1979. The Litter Act allows for fines of up to $20,000 per litter event.
Council retrieves and disposes of the litter and investigates the incident in order to respond in an appropriate way.

11.3 There were a number of proposals from one submitter (19906) to improve the solid waste activity. These included reducing solid waste by providing a non-organic large item collection service on a biannual basis, increased collection and use of methane from the landfill, and a weekly kitchen waste service.

11.4 The Nelson Tasman Joint Waste Management and Minimisation Plan includes waste management and minimisation programmes. These are reviewed and implemented by Council through long term and annual planning processes. The submitter proposed actions are best considered as part of the next review of this plan and the 2021-31 Solid Waste Activity Management Plan.

11.5 Current opportunities to manage waste are explained on Council’s website. These include, information on composting garden and kitchen waste, reuse of large "non-organic" items through a re-use shop and support and promotion of "Second Hand Sunday".

Landfill charges

11.6 The Consultation Document included a proposal by the Nelson Tasman Regional Landfill Business Unit (NTRLBU) to increase landfill fees from $141/tonne (incl GST) in 2018/19 to $163/tonne (incl GST) in 2019/20. NTRLBU has delegated responsibility for setting fees. The proposed increase reflects current issues for commodity recycling markets, the costs to run the landfill, aftercare and increased costs for the Emissions Trading Scheme (ETS).

11.7 The contributions (ex GST) to the increase in landfill fees and charges from the above are as follows:

· ETS - $6.23/tonne

· Operations and Maintenance - $8.50/tonne

· Local Disposal Levy - $5.50/tonne

· Aftercare Provision - $3.00/tonne

The NTRLBU is proposing to absorb approximately $4.70/tonne

Four submissions commented on the proposed increase. The submissions have been sent to the NTRLBU to consider at its meeting in July. Officers will report back on the NTRLBU decision in due course.

12. Social

Requests for funding

Community Investment Fund

12.1 Submitter 19804 requested that Council increase the Community Investment Fund (CIF) “back to $400,000” per annum.

There is a misunderstanding among some members in the community that Council has reduced support for the fund.

Council has in fact maintained community sector funding in recent years. The previous Community Assistance Fund had a much broader mandate than the CIF, including sports, environment, arts and events. Home insulation would have been eligible for support under the old criteria, but not under the new CIF criteria. Council chose to ensure that that work continued and transferred $100,000 of the $400,000 to support the warmer homes programme. Offsetting this change the community is supported through a number of new avenues, including the new Community Events Fund ($75,000), Long Term Plan grants and neighbourhood project funding. There is also a proposed additional $50,000 partnership funding in this year’s annual plan that will contribute to social development activity for the community sector.

Royal Humane Society of New Zealand Inc

12.2 The Royal Humane Society of New Zealand Inc (19721) requested that Council provides support for their work programme. The Society’s work may not fit within the criteria for the Community Investment Fund. However, officers will contact the Society to determine whether there is any in-kind support that Council could assist with.

Nelson Centre for Musical Arts

12.3 The Nelson Centre for Musical Arts (NCMA) (20067) submitted that although it is “thriving” and has had high levels of community engagement, its current funding does not enable it to meet demand. The shortfall for the 2019 calendar year is expected to be $62,000. The Trust says this reflects high property costs and additional management and staff costs. At the hearings, the Trust requested that Council increase its annual contribution by $70,000. The Trust also advised that because of the operating shortfall it will not be in a position to repay the $680,000 loan from Council, which is due in two years.

It is acknowledged that NCMA has some higher than expected ongoing costs, but officers are concerned that the NCMA’s business model might not be sustainable. Accordingly, on the basis of this submission, the officers’ recommendation is that Council provide half of the requested funding ($35,000 for the first six months), on the provision that an external review of NCMA’s business model be undertaken.

Recommendation

That the Council

Approves an additional $35,000 funding for the Nelson Centre for Musical Arts for the six months from 1 July 2019 to 31 December 2019 on the basis that the Nelson Centre for Musical Arts agrees to Council commissioning an external review of the Centre’s business model, with a report to come back to Council by 30 November 2019.

Mission to Seafarers Nelson

12.4 The Mission to Seafarers Nelson (20166) requested that Council provide funding under the Community Investment Fund (CIF) to support its welfare programme.

12.5 The Mission was awarded a four year CIF agreement of $5,000 per annum in 2013/14. The funding was “to employ a part-time coordinator to ensure the Mission was adequately resourced and providing a welcoming and safe environment for seafarers entering Nelson through the Port”. The Mission has not received any further CIF funding and its 2017/18 CIF grant application was declined by the panel as it did not demonstrate wide community benefit.

12.6 Officers understand that the Mission’s current operations are funded from donations and fundraising, for example from Port Nelson, churches, the Community Organisations Grants Scheme and the Rata Foundation. Elected members requested that officers advise whether the Lyttleton Seafarers Mission received Council support. Officers have confirmed that Mission has received funding from the Lyttleton community board for at least the last three years, including $10,000 in 2018/19.

12.7 Officers will direct this submission to the CIF, and if required follow up with the Mission on completion of an application.

Social Enterprise Te Tau Ihu

12.8 The Social Enterprise Te Tau Ihu (20185) submission outlined a proposal to establish a Social Enterprise Hub in Nelson. The submission listed a number of outcomes that the hub would provide, including social, environmental and economic benefits for the community. The proposal is supported by the Ākina Foundation (www.akina.org.nz). The group is requesting that Council provide funding of $20,000 for a coordinator to undertake community engagement and research, organise events and workshops and work with the Foundation and other hubs around New Zealand to share learnings.

The request for funding should be considered under the Community Investment Fund (CIF) process and officers will direct this submission to the fund, and if required follow up with the submitters on receipt of an application. There may also be an opportunity for this group to work with the Mahitahi Colab.

Youth Facility in Stoke

12.9 The Stoked Steering Group (20142) would like to assist officers in the development of a youth facility in Stoke.

Officers will extend an invitation to Stoked to participate in the next consultation phase of the Stoke Youth Facility project.

Bridge Street Studios

12.10 Bridge Street Studios (20196) requested that Council provide $10,000 towards the theatre portion of the studios that was previously paid by the Ghost Light Theatre. The sudden departure of the theatre means that there has not been be an opportunity to find a replacement tenant.

Council is undertaking a feasibility study to look at community arts space which could be utilised by artists currently using venues such as the Bridge Street Studio. Until this work is completed no change to current funding is proposed

Heritage Policy

12.11 The Broadgreen Society Inc requested that Council update the 2006 Heritage Strategy, and incorporate greater links between this Strategy and the Long Term Plan (LTP), Annual Plans and Council’s website.

The Heritage Strategy is due for review, but was put on hold in 2018/19 as there were a large number of consultation processes planned for this year. It is now scheduled to be reviewed in the 2019/20 year however, this review will be dependent on any other strategy work that is given a higher priority by Council. Closer alignment of strategies will be made as part of the development of the 2021-31 Activity Management Plans and LTP.

Broadgreen House

12.12 The Broadgreen Society Inc requested that maintenance of Broadgreen Historic House be given a higher priority and greater resources and stated that this would enable its collection to be professionally displayed.

The Society also noted that Nayland Road is becoming increasingly congested and requested that visitor parking be provided off Langbein Street.

The Broadgreen Society and its members’ commitment, time and expertise is highly valued. Officers support continued investment in the maintenance of Broadgreen House and developing the facility and its collections for the future, as resources allow. The budgets for 2019/20 includes an additional $30,000 for curatorial services for Broadgreen House, Founders and Isel House.

At this stage Council has not agreed to invest in parking improvements at Broadgreen House, however officers will discuss potential future options with the society.

Multicultural Nelson Tasman

12.13 In its submission, Multicultural Nelson Tasman (20183) included a draft copy of the Top of the South Cross Sector Action Plan for Settlement of Newcomers. This plan was developed under the guidance of Nelson Marlborough Health and includes a number of actions for various agencies, including Council. However, Council was not involved in the development of the draft plan.

Multicultural Nelson Tasman has requested an additional $15,000 in 2019/20 to assist its actions under the plan. These include supporting community events, contributing to delivery of welcoming initiatives and enabling connections and integration of newcomers into the city, as well as making information on the city more readily accessible. The organisation has previously received up to $15,000 through the community events fund for Race Unity Day.

Officers propose that Multicultural Nelson Tasman seek additional funding through either the Community Events Fund or Community Investment Fund, as appropriate.

The Community Partnerships team will also continue to support the refugee and migrant communities through adviser time.

Welcoming Communities initiative

12.14 Multicultural Nelson Tasman’s submission (20183) also referred to the Welcoming Communities Initiative which is supported by central government. This programme provides support for communities to develop a Welcoming Plan, including actions. Funding is $50,000 per annum for three years and this money, together with Council support, is used by most of the nine councils who are piloting the programme to employ a fulltime co-ordinator to develop the Welcoming Plan. There is an expectation that councils provide funding for any initiatives that are assigned to them in the completed plans.

12.15 The Ministry of Business, Innovation and Employment (MBIE) is now calling for applications for the next phase of the programme. It has indicated that a joint application from Nelson, Tasman, and Marlborough councils is more likely to be supported than individual applications, especially if the application included financial support from the three councils to employ a full-time co-ordinator. However, MBIE has indicated that alterative options might be supported, and each application would be considered on its merits.

Officers are supportive of the objectives of the programme, which would support a number of Council’s community outcomes. However, further work is required to put together an application. Officers do not support inclusion of additional funding from Council in the final Annual Plan 2019-20 as further discussions are required with Marlborough and Tasman councils, including whether a Welcoming Plan should be developed externally, rather than by someone employed directly by the councils.

Recommendation

That the Council

Notes that officers will work with potential partners to make an application to the Ministry of Business, Innovation and Employment (MBIE) for inclusion in the Welcoming Communities programme on the basis that no additional funding from Council will be included in the Annual Plan 2019/20; and

Notes that officers will report back on progress to the Community Services Committee.

Smokefree Aotearoa 2025 project

12.16 Nelson Marlborough Health (NMH) (20058) has requested that Council endorse central government’s Smokefree Aotearoa 2025 objectives and work with NMH to develop smokefree policies for the central city. The submission outlines benefits to the community if Council agrees to include this work in its 2019/20 work programme. At the hearings NMH stated that it would be prepared to contribute its officers’ time to assist the development of the policies and would also pay for signage.

12.17 Council has smokefree policies for its playgrounds, sportsfields and Council-run events, and these policies are generally understood to be working well. Council reviewed its smokefree objectives in 2017, and again in 2018 as part of the temporary closure of Upper Trafalgar Street. On both these occasions, a voluntary approach to smokefree was supported.

12.18 Notwithstanding this, working with NMH and accepting its offer of additional resources would enable progress to be made faster in this area. Accordingly, officers recommend that Council accept NMH’s offer, subject to its contribution covering the majority of work required for this programme.

Recommendation

That the Council,

Approves in principle the development of policies that support central government’s Smokefree Aotearoa 2025 objectives; and

Approves this work programme on the basis that Nelson Marlborough Health provide the resources required to undertake the policy programme.

13. Parks and Active Recreation

Natureland

13.1 The Annual Plan Consultation Document included a section on the future funding of Natureland. The following four options were outlined in the document:

· Council increases funding by $78,000 from $170,000 to $248,000 per annum. This would be funded from general rates and increase rates by 0.1% per annum.

· Natureland reduces the services that it provides. For this option, the funding would remain at $170,000, and therefore not impact on rates.

· Council confirms the outcomes it is seeking from Natureland then seeks expressions of interest or tenders from other parties to operate the facility. For this option, the funding would not be more than $170,000 (and could be less depending on the outcomes sought), and therefore there would be no impact on rates.

· Natureland Wildlife Trust will close down its facility. If this is the option that is decided, the $170,000 would still be required in 2019/20 to fund costs associated with closing down.

13.2 Of the 183 Annual Plan submissions received on Natureland, 155 submitters were in favour of option one above, i.e. that Council increases operational funding by $78,000 from $170,000 to $248,000 per annum. Twenty eight were not in favour of option one and supported a mix of the other options. Twelve submitters wished to see no funding at all go into Natureland or saw it as non-core business. Of these two wished to see it used for breeding or conservation, one disagreed with funding on ethical grounds, one wished to see changes before providing additional funding, one felt that only a land lease should be provided, one suggested the funding should go elsewhere, one was neutral and one submitter made a proposal for a new venture.

13.3 The Natureland Wildlife Trust (the Trust) has indicated that reducing its services (option two above) would not be an option as the only two areas that could be reduced are education and conservation. These are both areas that the Trust strongly wishes to continue with, and in the case of education is required to do so as part of MPI (Ministry for Primary Industry) requirements for their operation.

13.4 Following media reports that Natureland would not be able to continue operations under current funding allocations a submission was received from Butterfly Forest (20218) detailing a proposal to establish a new Trust. Their proposal is one option to improve the longer term feasibility of Natureland. Officers recommend the Trust be encouraged to work with the Butterfly Forest or other interested parties to strengthen its business model and work towards achieving delivery within the Long Term Plan 2018-28 budget. However, these partnerships may take the Trust some time to develop, and accordingly officers recommend that the funding for 2019/20 be set at $248,000, returning to $170,000 in 2020/21.

Recommendation

That the Council

Approves funding for Natureland Trust for 2019/20 of $248,000; and

Requests that the Natureland Trust explore opportunities with other parties to strengthen the Trust’s business model and achieve delivery within the Long Term Plan 2018-28 budgets.

Brook Waimarama Sanctuary Trust

13.5 The Brook Sanctuary’s submission (20199) outlined the work undertaken by the Trust in the last year and the challenges raising funds in a “competitive” market. In its submission the Trust requested that operating funding for 2019/20 be increased to $200,000. The LTP provided for $250,000 in 2018/19, reducing to $150,000 per annum in subsequent years.

13.6 The Trust also raised concerns about the delays in the adoption of the final Brook Reserve Management Plan (RMP), and commented that without this in place it is unable to proceed with developments, including building an education centre and improved parking. In support of its request for increased funding, the Trust stated that the delay in approving the RMP and subsequent Comprehensive Development Plan (CDP) has meant that it has been unable to implement a revenue stream from full visitor attraction and provision of education services.

13.7 The deliberations report for the Long Term Plan 2018-28 noted that “The existing proposal includes $250,000 operational funding for 2018/19 in recognition of the delays to opening that have left the Sanctuary Trust with less funding than expected. Council’s proposal is to reduce this funding from 2019/20 onwards as the Sanctuary should by then be receiving income from visitors.”

13.8 However, for various reasons, including the lack of visitor facilities, the Sanctuary is only open three days a week from 10.00am to 4.00pm, and seven days a week during school holidays.

13.9 The Trust lodged an application for a building consent for an education centre on the Brook Reserve in 2014. This application is on hold at the Trust’s request. The transition to a fully operating visitor attraction is likely to be dependent on a number of factors including raising capital funding to undertake developments.

13.10 The background on the process to develop the RMP was included in a Council report dated 8 August 2018 (report number R9522). A report on proposed special purpose status for the Reserve and the road closure and amalgamation of the road through the Brook Reserve is scheduled to come to Council for decision on 20 June 2019.

13.11 Following Council’s decision on these matters, officers will bring a report back to Council on next steps for the RMP and CDP. The final RMP and CDP, including working with the community to prepare a CDP, may take up to two years to complete. Given that the Sanctuary is operating with reduced hours Officers are not recommending an increase in funding at this juncture.

Recommendation

That the Council

Declines the request from the Brook Waimarama Sanctuary Trust for an increase in funding of $50,000 for 2019/20

Tahunanui Reserve Management Plan

13.12 The Tahunanui Business Association Incorporated supported a review of the Tahunanui Beach Reserve Management Plan (TBRMP) and requested that the Association be provided with an opportunity to have input into this review.

The review of the TBRMP is scheduled to commence later in 2019 with the first step to advertise the intention to prepare a Reserve Management Plan and invite interested parties to send written comments, ideas and suggestions for the Reserve.

Nelson Cricket Association

13.13 The Nelson Cricket Association (20268) requested support for broadcasting and media towers at Saxton Oval. Attached to the Association’s submission was a business case for its proposal. The proposal included information on the costs of providing these facilities on a temporary basis and the advantages of installing permanent towers.

As part of the work programme for 2018/19 a review of the requirements for holding international events at the Saxton Oval and Trafalgar Park has been commissioned. This review has been completed and the report is scheduled to go to the Saxton Field committee meeting of 7 August 2019 and the Sport and Recreation Committee on 20 August 2019. Officers propose that the request for broadcasting and media towers be considered as part as the wider review and accordingly no additional funding is proposed to be included in the final Annual Plan.

Nelson Mountain Bike Club

13.14 The Nelson Mountain Bike Club (19969) requested $150,000 for Council to underwrite the hosting of the Enduro World Series event in 2021. It is also requesting that any remaining funding from 2018/19 be carried over to 2019/20 and that $50,000 of funding allocated for 2020/21 (for the Enduro World Series) be brought forward to 2019/20. At the Annual Plan hearings the club confirmed that the requested funding was for underwriting the event, but they were requesting that funding be paid upfront. The club would work to raise sponsorship to repay the underwriting.

13.15 Officers recommend that the request be referred to the Events Fund Committee, but note that this fund was planned to return to a positive balance of $50,000 by 2020/21. If the Event Fund Committee recommends funding the event, and Council approves the funding, this may result in the event fund’s “overdraft” being up to $150,000 at the end of 2020/21, and fully repaid by 30/6/22. For consistency the request to bring forward funding from 2020/21 to 2019/20 is also proposed to be considered by the events committee and would be funded through the proposed events overdraft.

Recommendation:

That the Council

Refers the Nelson Mountain Bike Club funding requests to the Event Fund Committee for consideration; and

Approves unspent funding of up to $30,000 for the Enduro World Series in 2018/19 to be carried forward to 2019/20; and

Approves the Event Fund overdraft limit with Council to be up to $150,000 at 30/6/21 and repaid by 30/6/22 to allow underwriting of the support for the Enduro World Series if required.

Koata Limited

13.16 Koata Limited (20013) is a company owned by Ngati Koata. Koata Limited has proposed that Council provides $30,000 to assist with the development of a Recreation Management Plan for Hira Forest. The objective would be to provide for ongoing management of public access rights to Hira Forest.

13.17 Hira Forest was previously Crown land, but was included as part of the settlement assets received by the iwi under a Deed of Settlement in December 2012. The Forest has an extensive network of mountain biking tracks and is also used for other recreational activities including walking and hunting. The mix of working forest and recreation raises a number of issues, including health and safety concerns. The land also adjoins Council land and tracks and most users would be unlikely to be aware where land ownership changes

13.18 There are a number of Council strategies that might link with the proposed Plan including, the Out and About Strategy and Council Reserve Management Plans. There are also external agreements that should be considered in developing the proposed plan, for example between Koata Limited and the Nelson Mountain Bike Club.

13.19 Officers are supportive of the development of a Recreation Management Plan, but would like the plan to have a broader scope. Officers propose that Council work with Koata Limited in 2019/20 on the scope of the Plan and that the funding and development of the plan be considered as part of the 2020/21 annual plan process.

Recommendation:

That the Council

Approves that officers work with Koata Limited in 2019/20 on the scope of a Recreation Management Plan for Hira Forest and adjoining Council land, and that the proposal be brought back to Council, with any funding required as part of the 2020/21 Annual Plan process

Nelson Bays Football

13.20 Nelson Bays Football (20228) has requested $120,000 towards installation of lights at the Beach Road grounds. Nelson Bays Football cites the increasing number of games, the lack of a football field in Nelson with lights, and the overlap of football and rugby codes needing fields as the main reasons why they have requested the lights.

In an effort to better understand lighting requirements, Council recently carried out a condition assessment of all sports field lights. A wider investigation is needed to determine future investment needs for new lighting before funding is considered. It is planned that this work will be undertaken as part of the development of the Long Term Plan 2021-31.

Tasman Rugby Union and Nelson Bays Football

13.21 Tasman Rugby Union and Nelson Bays Football made a joint submission (20191) requesting that Council include $50,000 in the final Annual Plan for the investigation and preliminary work on an artificial turf.

13.22 $50,000 was included in the draft Annual Plan budgets for investigation of the need for an artificial turf. The involvement of Tasman Rugby and Nelson Bays Football will be sought in relation to that investigation. The investigation will consider a wide range of factors, including the benefits to the organisations of providing the requested facility, associated costs, and environmental considerations.

Disc golf course at Branford Park

13.23 One submitter (19709) requested that Council install a disc golf course at Branford Park.

Careful consideration is required before establishing a disc golf course at Branford Park. The park is a popular picnic area and for some time has been bollarded off to avoid damage by vehicles. By its nature disc golf uses a lot of space and given the speed of the discs would tend to dominate the reserve. The proposal would also require a safety assessment given its proximity to Maitai Valley Road. Officers will contact the submitter and other residents representing the sport in Nelson to discuss the level of need for a new course.

14. Economic

Uniquely Nelson funding

14.1 Uniquely Nelson (19878) has requested that Council provide an additional $45,000 funding to enable employment of a promotional assistant. Its submission outlines the work undertaken by the organisation and the outcomes that the new position would contribute to.

This funding was included in the draft budgets for 2019/20 and no further action is required.

Te Matau Trust

14.2 The Trust (20197) did not include their cover letter to their submission, this is now attached (attachment 2).

14.3 In the covering letter the Trust requested that Council provide $75,000 towards development of a business case for a proposed Marine Centre of Excellence located in Kinzett Terrace.

14.4 Council is not recommending provision of funding for the business case and suggest that the cost of this be funded by the Trust partners or raised through non-Council sources. Notwithstanding this, Council has provided in principle support for the concept.

City development

14.5 Fifty submitters responded to Council’s priority of City Centre Development. The majority of submitters were supportive of Council’s work to develop the City Centre. Themes that attracted high levels of support from submitters included:

· a new inner city park, which catered for all ages and was family friendly;

· pedestrianisation of upper Trafalgar Street, with a number of submitters supporting this as a permanent, year round change;

· inner city living;

· maintaining the city character, including historic buildings;

· creative initiatives in the city centre;

· use of vacant buildings by arts and community groups under Meanwhile Spaces;

· continuation of the first free hour of parking programme; and

· reduction in car parking.

14.6 Notwithstanding this, some submitters proposed alternate views, including not developing a new park and maintaining or increasing the number of car parks in the inner city.

14.7 The Nelson City Centre Programme Plan aims to deliver a people-focussed, walkable, and liveable city centre with high quality development, clever business, and a balance between the urban and natural environment.

14.8 Council is also undertaking a review and update of the City Centre and City Centre Spatial Plan. This piece of work builds on the projects and planning initiated under Heart of Nelson.

14.9 The Spatial Plan Refresh will look at aspirations around potential City Centre development opportunities (residential, commercial/retail, civic), transport initiatives, open space and laneway/street activations (that extend the success of the upper Trafalgar Street summer road closure to other areas in the City Centre). This work will assist with the prioritisation of capital projects to minimise disruptions and maximise synergies.

14.10 Suggestions from submitters will be used as reference material for developing the City Centre Programme, and to inform implementation of specific projects.

15. Corporate

Council performance

15.1 A number of submitters commented on Council performance, with one submitter (20081) commenting on the increase in staff numbers and salary costs since 2006. Two submitters (20081 and 20176) asked for increased transparency on staff salaries, and proposed that salary budgets could be reduced. Two submitters (19956 and 20124) proposed that Council plan for the amalgamation of Richmond and Nelson, including in its recruitment policies.

15.2 In regards to transparency of salary information, the Chief Executive's remuneration is published each year in the Annual Report, along with the total/aggregated remuneration for senior Council staff. The total salary expense for all other employees is also published, but individuals' remuneration below Chief Executive is not identified to ensure that the Council remains compliant with the Privacy Act 1993.

Nelson City Council and Tasman District Council work closely together, on a wide number of projects and programmes including, Saxton Field, emergency management, pest control and the regional sewerage and landfill business units. Officers will continue to consider further opportunities for the two Councils to work together, but the assumption in the LTP does not include amalgamation.

Civic House

15.3 The Thompson Property Group (20194) submitted against Council upgrading Civic House.

15.4 Council is working in an extremely competitive labour force market. To attract and retain staff, we need to provide a reasonable level of accommodation.

15.5 The submitter may be referring to funds and expenditure plans that were consulted on during the previous Long Term Plan consultation process, which was for refurbishment of one floor of Civic House. That project is still to be undertaken and the funds have been carried over to the coming financial year.

15.6 No substantial refurbishment of Civic House has been undertaken in the last 10 years, and operational expenditure in the 2018/19 year has been on basic interior maintenance (e.g. painting and replacement of worn carpet) and on updating ageing ventilation and heating systems.

15.7 However we do know through feedback from current and departing employees that satisfaction with the condition, comfort, and ventilation and lighting conditions of their workplace is low, and provision of an adequate workspace is one factor in attracting and retaining the right staff, especially in a tight labour market. There is also a need for Council to meet basic modern workplace standards and health and safety requirements relating to ventilation, temperature and lighting. This means that refurbishment remains a requirement.

16. Rates

Rates increases

16.1 Several submitters (19725, 19942, 20107, 20128 and 20081) raised concerns about the impact of rates increases, including for those on fixed incomes. One submitter (20130) requested Council investigate whether the reduction in the commercial differential has resulted in a reduction in costs to property lessees.

16.2 Budgets are carefully considered each year to balance the provision of services against keeping rates affordable.

16.3 The usual arrangements for commercial leases is for a rent payment plus outgoings. Outgoings would normally include rates and therefore it is a reasonable assumption that for most leases, the reduction in the commercial differential should benefit tenants.

Airbnb properties

16.4 Tasman Bay Backpackers (19825) submitted that Council should treat Airbnb properties as commercial users and rate accordingly. The submission refers to information on a third party website that tracks Airbnb and another holiday home websites. The website (which requires registration to access the data) is reported to state that there are now over 600 properties available in Nelson, including some owners that have multiple properties. It is not clear from the submission if the 600 properties are all “entire” house rentals, or if this figure includes rooms to rent.

16.5 Officers have considered the effects of Airbnb and similar accommodation on neighbourhoods and the issues that arise when residential properties are operated as commercial enterprises. There are some challenges with rating these properties on a commercial basis, particularly in Nelson.

16.6 Firstly, Council would need to identify the providers, and under the Rating Act they must be operating that business on a specific date (1 July) in order to be commercially rated. It is the nature of many of these accommodation providers, and especially in Nelson, that the properties are made available over the summer period. Other councils have found that identifying and keeping track of these providers is extremely resource intensive. A further consideration is that, in terms of pressure on Council infrastructure, there is little difference between a property that is occupied as a residence and one that is occupied under short term lease agreements.

16.7 Notwithstanding this, Council will continue to monitor how other councils address this issue to determine if changes to the Rating Policy are required and note that Whakamahere Whakatū any proposed changes will be subject to consultation. Officers will also review the definition of residential activity as part of the Nelson Plan and this will be consulted on in 2020.

17. Environment

Climate Change

17.1 The Annual Plan consultation document outlined workstreams and initiatives relating to climate change and proposed $42,000 of additional funding, alongside the $58,000 outlined in the Long Term Plan. Feedback was sought on the following three areas:

· Do you think that putting resources into helping our region deal with climate change is important?

· Do you support the additional level of investment ($42,000 to investigate how Council and the community can measure and reduce greenhouse gas emissions)?

· If you have other ideas about how Council can help our region respond to climate change please let us know.

17.2 Of the eighty submissions on climate change, nine submitters did not express support for the proposals. Only one explicitly opposed Council undertaking work on climate change, stating that current climate science is inaccurate. A small number of submitters did not agree with the proposed funding for carbon footprinting on the basis that the information may be available elsewhere. One submitter considered that protection for low lying areas should not be ratepayer funded.

17.3 Meanwhile, seventy-one submitters were strongly in favour of Council taking action on climate change. These submitters welcomed Council’s increased focus on climate change, however the majority felt that the proposals, and the associated funding levels, did not go far enough. In particular, submitters wanted to see concrete action from Council and a level of funding proportionate to the scale and urgency of the problem.

17.4 Submitters provided a range of practical suggestions about actions that Council could take, including additional investment in public and active transport options, phasing out coal boilers, incentivising uptake of solar photovoltaics, afforestation programmes, and limiting development in areas at risk from coastal inundation. Twenty-one submitters called on Council to establish a community “Climate Forum” to enable collaboration on climate change issues.

17.5 Several submitters considered climate change to be the key challenge facing humanity, and many regarded it as a “crisis” or “emergency” situation. This sentiment also came through strongly in oral submissions, many of which urged Council to declare a climate emergency. Council responded to this by declaring a climate emergency on 16 May 2019.

Next steps on climate change

17.6 Council already has a range of climate change work well-advanced or in progress, including organisational mitigation initiatives under the Certified Emissions Management and Reduction Scheme (CEMARS) and following the adaptive planning pathways approach to consult with the community on adaptation. A summary of current or already planned work that Council is undertaking in relation to climate change is Attachment 3.

17.7 As outlined in the Declaration of Climate Emergency report (R10219 refers), the declaration does not bring any formal duties to take action and does not have legal effect. It is open to Council to remain with the status quo (i.e. those actions outlined in Attachment 3), and look to the Annual Plan 2020/21 and Long Term Plan 2021-31 to take forward any additional actions.

17.8 Alternatively, Council could decide to implement additional actions in this Annual Plan. If Council wishes to do so, officers recommend consideration be given to carrying forward to 2019/20 a portion of the 2018/2019 Port Nelson Ltd special dividend to achieve the following:

17.8.1 Supporting the establishment of a Climate Forum to enable collaboration with central government, other councils and governing bodies, iwi, business, industry and scientific sectors on emissions reduction, adaptation and resilience. It is proposed that this be modelled on the highly successful Biodiversity Forum, which draws together a range of stakeholders to advance common objectives outlined in a guiding strategy. The Biodiversity Forum is assisted by an independent facilitator, which helps strike a balance between Council and community ownership of the Forum. An independent facilitator could assist delivery of Climate Forum outputs (for example, strategies and action plans). Creating specific outputs is also likely to require some technical and expert support (for example, measurement of potential mitigation gains from various initiatives outlined in an action plan). For the first year of operation, the estimated total cost is $30,000, to cover independent facilitation, expert/technical input, and the annual operating budget. A joint approach with Tasman District Council (TDC) could also be considered. TDC has confirmed that it would be interested in a joint forum given the benefits of a regional approach.

17.8.2 Appointing a Council “climate champion” to coordinate and oversee a climate change work programme, increase the visibility and robustness of climate change considerations in Council decision-making, and support the establishment of the Climate Forum. The new appointment would help to address the current absence of a coordinated Council-wide climate change work programme covering both mitigation and adaptation. It is proposed that the appointment be in the form of a new Team Leader position in the Environment Business Unit (the position would also have some non-climate change responsibilities, with approximately 0.5 FTE dedicated to climate change). The estimated cost of establishing the position is $124,500. This amount would need to be factored into subsequent planning cycles as an ongoing cost as the special dividend may not be available to fund this on an ongoing basis.

17.8.3 Establishing a Climate Taskforce, that could work with Council and senior management on the strategic dimensions of climate change. It could also provide input to the Climate Forum on a case-by-case basis. Expenses relating to the Taskforce, for example (if required) venue hire, catering and administrative assistance can be met from existing budgets.

17.9 For simplicity, officers propose that the $100,000 outlined in the Annual Plan consultation document is also funded from the special dividend, as opposed to being rates funded. This sum is to be applied to cover, respectively, CEMARS annual audit and certification ($22,000), investigation of community carbon footprint and collaboration with the community to reduce it ($20,000) and technical support for investigation of specific projects to reduce Council’s greenhouse gas emissions ($58,000, included in the Long Term Plan).

17.10 Council’s Investment Policy currently provides for the special dividend to be applied to reduce external borrowings. Therefore, Council will need to resolve to carry forward and apply $254,500 of the special dividend received in 2018/19 to 2019/20, as outlined above ($30,000 for the Climate Forum, $124,000 for the establishment of the new role, and Taskforce, and $100,000 as outlined in the Annual Plan Consultation Document).

17.11 Doing so will reduce the rates requirement for 2019/20 by between $80,000 and $95,000 (as a result of the $100,000 sum no longer being rates funded, but higher interest charges due to a portion of the special dividend no longer being applied to pay down debt). Any ongoing costs of these initiatives will become a direct extra charge to rates from 2020/21 onwards.

Future Council action on climate change

17.12 The options outlined above are initial steps that Council can take to accelerate work on climate change, if it so chooses. It is not feasible to outline all potential actions that Council could take at this juncture. This is particularly the case for specific mitigation and adaptation projects, which need to be investigated and brought forward with detailed business cases to ensure that Council is pursuing the most impactful and cost-effective actions. Furthermore, some of the actions needed, particularly in the adaptation area, may only become apparent in the future. In addition, potential options and priorities should be developed with input from the community (through the proposed Forum) and advice from the Climate Taskforce.

17.13 Therefore, Council action on climate change will be built over time and through a pattern of Council decision making and collaboration with the community under repeated planning and budgeting cycles. The additional actions outlined in this report will, however, enable delivery of a coordinated climate change work programme, meaningful engagement with the community on climate change issues, and position Council well to take forward additional actions in subsequent annual and long term plans.

Recommendation

That the Council

Approves a total of $254,500 for climate change initiatives, comprised of: establishment of a climate forum and climate taskforce ($30,000); appointment of a new “Climate Champion” ($124,500) and to fund the $100,000 specified in the Annual Plan 2019/20 consultation document;

Approves that this funding ($254,500) be carried forward from the 2018/19 Port Nelson Ltd special dividend, with the balance of the dividend to be applied to reducing external borrowing as per Council’s Investment Policy.

18. Information that has come available since the draft budgets for the Annual Plan 2019-20 were prepared.

18.1 Officers have reviewed the capital expenditure for 2018/19 and 2019/20 for possible changes since the draft budgets were prepared for the Consultation Document. A list of projects where changes are proposed for the forecasts for 2018/19 and 2019/20 are included in Attachment 4, with detailed information on key changes outlined in the following section. This list does not include all projects, only those where changes are proposed.

18.2 Activity managers will be available to answer questions on these changes at the meeting. The net effect is that the forecast capital expenditure budget for 2018/19 increases by $672,000 and the 2019/20 Annual Plan capital expenditure has reduced by $691,000.

Recommendation

That the Council

Approves the changes to the 2019/20 capital expenditure budget, as set out in Attachment 4.

Carparking charges

18.3 The parking charges were increased last year, from $1.50 to $2.00 an hour. However, this has not resulted in an increase in revenue.

Surveys of the car parking occupancy undertaken in November 2018 and February 2019 indicate the public car parks continue to be well used with citywide occupancy rates over 75% at 1.00pm. At peak times near Christmas these occupancy rates rise to over 90%, with a peak of 94% recorded in the Montgomery Square carpark at 1pm. However, this is not reflected in revenue. Surveys of the Buxton Square carpark in 2016 indicated that at least 15% of the total vehicles that occupy spaces were moved one or more times on the survey day. It appears that this behaviour has increased since 2016 and that patrons of the public car parks use the free hour parking to their advantage to avoid paying for significant periods of the day.

Revenue for 2019/20 is expected to be $100,000 below what was included in the draft Annual Plan. Officers are currently progressing a parking meter renewal project that will introduce technology which can address the loss of revenue due to multiple use of one hour free parking on any one day.

Recommendation:

That the Council

Notes that carparking income for 2019/20 is expected to be $100,000 lower than originally budgeted; and

Approves the budgets for the final Annual Plan 2019/20 being adjusted to reflect the lower income; and

Notes that officers will report to the Works and Infrastructure Committee on carparking policies in 2019/20 with further information and recommendations.

Wastewater

18.4 Awatea pump station

Re-phasing of this project is required to finalise design and consenting work. This is a complex multi-faceted project with significant community interfaces that require careful management and consideration. Following development of the concept the programme was revised to reflect the realities of implementation; the programme will be reviewed periodically through the project. The budget requirement for 2019/20 has been reduced by $903,000, and although the spending profile has been rephrased, the timeline for completion remains the same.

Recommendation

That the Council

Notes that the Awatea pump station project requires further work to finalise the design and obtain resource consents; and

Approves that the 2019/20 Annual Plan budget be reduced by $903,000 and that future years’ budgets will be increased to balance this.

Nelson Regional Sewerage Business Unit (NRSBU)

18.5 The NRSBU budgets have been updated, with investment income $90,000 lower than budget and expenses $140,000 higher. However, these two factors are offset by higher commercial trade waste income of $230,000.

Recommendation

That the Council

Notes that the Nelson Regional Sewerage Business Unit investment income is $90,000 lower and business unit charges to Council are $140,000 higher than budgeted for in the Annual Plan Consultation Document, and that these factors are offset by higher commercial trade waste income of $230,000.

Flood Protection

18.6 Saxton Creek Upgrade (Main Road culvert to sea)

Re-phasing of this project is required to finalise land owner and easement negotiations which are set to continue during 2019/20. This work needs to be concluded before detailed design and an application for resource consent can be finalised. The re-phasing will see a further reduction of funding required in 2019/20 of $850,000. Construction will now start in 2020/21 and be completed in 2022/23. Officers will investigate the possibility of splitting the works into stages to allow proposed works within Council property to be progressed ahead of the main work.

Of this $850,000, funding is requested to be allocated to the following two items:

18.6.1 Minor Flood Improvement ($300,000) and

18.6.2 Inventory of Urban Streams ($150,000).

The net saving in the Flood Protection activity is $400,000.

The additional allocation of $300,000 for Minor Flood Improvement, has been requested to accommodate unprogrammed projects within the stormwater network and to provide flexibility within the stormwater activity programme to bring potential projects forward.

The additional allocation of $150,000 to complete an Inventory of Urban Streams is to fund flood mapping updates to reflect recent changes to guidance on sea level rise and storm rainfall intensity. This includes the Ministry for the Environment 2017 guidance ‘Coastal Hazards and Climate Change’, and the NIWA updates to the High Intensity Rainfall Design System (HIRDS) database in 2018. The flood mapping updates will be used for the Nelson Plan. This budget provision of $150,000 will also enable other scheduled work such as Saxton Creek modelling to progress in 2019/20.

Recommendation

That the Council

Notes that the Saxton Creek Upgrade (Main Road culvert to sea) requires further work to finalise land owner and easement negotiations; and

Approves a reduction of $850,000 in the 2019/20 budget for the Saxton Creek Upgrade (Main Road culvert to sea);

Approves that $300,000 of the reduction in expenditure is allocated to the Minor Flood Improvement account, and a further $150,000 is allocated to the Inventory of Urban Streams.

Stormwater

Nayland/Galway Project

18.7 An increase in budget for the Nayland/Galway project of $416,000 (to a 2019/20 total budget value of $716,000) is required following the closing of tenders which reflects an increase in current market rates. This represents a $260,000 increase to the existing project budget of $506,000, and takes into consideration a forecast spend of $50,000 in 2018/19. Officers propose that this increase be offset by the projected underspend for Wastney Terrace, of $417,600 in 2019/20 which has occurred as a result of the prolonged negotiations and delay to programme. The net effect in 2019/20 is zero but physical works for Wastney Terrace will move out a year to 2020/21.

Recommendation

That the Council

Notes that the Wastney Terrace project requires further negotiations with property owners; and

Approves the Annual Plan 2019/20 budget for the Wastney Terrace project being moved from 2019/20 to 2020/21; and

Approves the reduction in budget for the Wastney Terrace project being applied to the 2019/20 Nayland/Galway stormwater budget which requires additional funding as a result of higher than expected tenders.

Transport

18.8 Champion Road

At its meeting of 13 December 2018 Council considered a recommendation from the Regional Transport Committee (RTC) to support the Tasman District Council Champion Road underpass project, including increasing Council’s contribution by $317,000 to $470,000.

Following discussion on the recommendation from the RTC, Council decided to let the matter lie on the table until it received further information on the project on Crime Prevention through Environmental Design (CPTED) and assurance that a Council staff member would be part of the project team. These matters were discussed at a following Annual Plan workshop.

The funding for the project has been included in forecasts, but not incorporated into budgets for 2019/20. Tasman District Council have advised that they are taking an updated report to Council on 20 June 2019 and if available an update will be provide at this deliberations meeting. Notwithstanding this, the resolution that was left to lie on the table is being brought back to Council for formal adoption, and funding allocation in the 2019/20 Annual Plan.

Recommendation

That the Council

Approves the allocation of a maximum of $470,000 as a grant payable to Tasman District Council for the Champion roundabout and underpass project as part of the 2019/20 Annual Plan.

18.9 Footpaths

The draft Annual Plan budgets included a proposed $200,000 carry forward from 2018/19 to 2019/20. In addition $154,000 of work previously expected to be undertaken in 2019/20 is now not required as the contractor achieved more work in 2018/19 than was previously expected. The total effect of these changes is that the new footpaths budget is recommended to decrease from $1.069M to $715,000.

Recommendation

That the Council

Notes that more new footpath work has been carried out in 2018/19 than previously forecast; and

Approves the new footpath budget for the Annual Plan 2019/20 reducing from $1.069 million to $715,000

18.10 Westbrook Convergence Bridge

The draft Annual Plan budget for this project included work that was originally expected to be undertaken in 2018/19, but carried forward into 2019/20. The work will now be undertaken as originally planned. Therefore, the revised budget for 2019/20 can be reduced from $398,000 to $143,000.

Recommendation

That the Council

Approves that Westbrook Convergence Bridge budget for the Annual Plan 2019/20 decreasing from $398,000 to $143,000

18.11 Bus services

A number of factors have resulted in cost escalation requiring a budget correction for bus services. The requirement to move to a gross public transport contract, some uncertainty of income due to changes to fares and zones, plus additional costs due to new legislation around bus drivers rest breaks has introduced some risk that may require additional budget. An amount of $40,000 local share is requested as part of the Annual Plan 2019/20. Additional income is being sought from NZTA and TDC but as yet is not confirmed.

Recommendation

That the Council

Approves, subject to the New Zealand Transport Agency and Tasman District Council contributions, an additional $40,000 in the public transport budget for 2019/20 to provide for uncertainty of income due to changes to fares and zones and changes to legislation effecting bus drivers rest breaks

Community Services

18.12 Greenmeadows Access Ramp

A correction to the text in the Annual Plan Consultation Document is required for the Annual Plan 2019/20. In the Parks and Active Recreation section of the Consultation document, under the heading ‘Trafalgar Park – Lights and Accessible Ramp’, it was noted that Council was proposing to spend an additional $15,000 in 2019/20 for an accessible ramp from Trafalgar Pavilion to the Trafalgar Park main field. This statement is incorrect and will be updated in the final Annual Plan to read ‘we will be spending an additional $15,000 in 2019/20 for an accessible ramp from the Greenmeadows Pavilion to the Greenmeadows main field’.

18.13 Great Taste Trail link - Tahunanui beach to airport

The 2019/20 draft budgets for the Tahunanui beach to airport link for the Great Taste Trail was reduced in error by $289,000. This amount needs to be reinstated into the budgets.

That the Council

Approves the final Annual Plan 2019/20 budgets for the Great Taste Trail link - Tahunanui beach to airport, be reinstated from $320,000 to $610,000

18.14 Condition Assessments

As part of focus for development of robust activity management plans an updated plan of condition assessments for community services assets has been developed. The work undertaken in 2018/19 is less than what was originally proposed in the LTP for this year. However, the work is still required to be completed for the next LTP and officers are recommending that the $40,000 expected underspend this year be carried forward to 2019/20.

Recommendation

That the Council

Approves the carry forward of $40,000 for Parks and Recreation condition assessments from 2018/19 to 2019/20

18.15 Marina Hardstand

Work on the marina hardstand commenced in 2018/19 however, there were delays in obtaining permits (to release wastewater into the Council tradewaste network) and resource and building consents. Physical works are now scheduled to commence after September 2019. Accordingly, officers are recommending that $65,000 of anticipated unspent budget for 2018/29 be carried forward to 2019/20.

Recommendation

That the Council

Approves the carry forward of $65,000 for the Marina hardstand project from 2018/19 to 2019/20.

18.16 Council Facilities Event Fund

Council is approached each year by event organisers for support or sponsorship of events through provision of a discount on hire charges for Council facilities. Event organisers cite that the cost of hiring facilities can be a barrier to bringing or holding events in Nelson. Additionally, when discounts are granted this negatively affects revenue. Officers propose that any support should use an easily identifiable and transparent mechanism in providing discounts or sponsorship. Given that use of Council facilities supports social and economic outcomes for Nelson, officers are recommending, as a trial, that a fund of $30,000 for 2019/20 be established to offset hire charges for the use of Council facilities. This would be in line with Council’s approach when it approved support for Giants Nelson’s use of the Trafalgar Centre.

Applications to the fund would be considered by the Events Development Committee.

Recommendation

That the Council

Approves the establishment of a Council facilities event hire fund of $30,000; and

Delegates the responsibility for considering applications to this fund to the Events Development Committee; and

Notes that a report on the outcomes for the programme will be reported back to Council as part of the development of the 2020/21 budgets.

Forestry

18.17 The 2019/20 budgets for forestry have been updated, but there is no effect on rates from these changes.

Nelson Regional Development Agency funding

18.18 Council funding to the Nelson Regional Development Agency (NRDA) for 2019 and 2020 is approximately $920,000 per year, including $72,000 for management of the Nelson Events Fund and assessment of economic benefits. The NRDA also holds various separate service contracts with Council. The NRDA has requested additional funding of $31,000 for work relating to events including marketing, development, coordination, venue selection and Council venue marketing

18.19 Officers recommend that before any additional funding is provided a review be undertaken to clarify the NRDA services funded or purchased by Council and identify any areas of overlap where savings and greater efficiency might be achieved. Additionally, to simplify administration and improve transparency, the various separate contracts should be brought into the Statement of Intent. The review is proposed to be undertaken by an external consultant and is expected to be completed prior to the next Statement of Expectation being issued. The findings of the review will be presented to Council. No additional funding is being sought for this work.

Recommendation

That the Council

Approves that a review of the Nelson Regional Development Agency services funded or purchased by Council will be undertaken prior to the next Statement of Expectation being issued and that the findings of the review to be reported to the Governance Committee.

19. Spreadsheet of staff comments and proposed responses to submitters

19.1 All submitters will either be e-mailed or posted a response to their submission. This will follow deliberations and the adoption of the Annual Plan 2019/20 by Council.

19.2 Submission requests or comments will be responded to on the basis of the material in this report, discussion at the meeting, and resolutions made by Council. Those submissions or submitter requests that are not discussed in this report will be responded to based on the suggested responses in the attached spreadsheet.

19.3 The spreadsheet contains those responses that are less substantive, specific to the submitter or where the submitter is asking for additional information about a decision or project.

20. Options

20.1 Council is required to adopt an Annual Plan for 2019/20 by 30 June 2019. It has options for each decision it makes in relation to submissions, however it needs to determine the 12 month work programme in time for adoption at the end of the current financial year.

21. Conclusion

21.1 The submission period for the Annual Plan 2019/20 was 29 March to 2 May. Council heard from submitters on the 14, 15 and 16 May. At this meeting, Council will deliberate on the changes to be included in preparing the final Annual Plan for 2019/20. The Annual Plan 2019/20 will be updated accordingly before going to a Council meeting on 27 June 2019 for adoption.

Author: Mark Tregurtha, Manager Strategy

Attachments

Attachment 1: A2199462 - Annual Plan 2019/20 Draft Submission Responses ⇩

Attachment 2: A2198507 - Cover Letter for Submission 20197 - Te Matau Trust ⇩

Attachment 3: A2195528 - Climate change actions - current and prospective - Appendix for Climate Change Next Steps Report ⇩

Attachment 4: A2198769 - Annual Plan 2019/20 Capex update for deliberations ⇩

Important considerations for decision making

1. Fit with Purpose of Local Government

The adoption of the Annual Plan is required under the Local Government Act 2002 and deliberating on submissions assists Council to determine the changes to make to the Plan following consultation.

2. Consistency with Community Outcomes and Council Policy

Making decisions to respond to feedback from submissions supports all the community outcomes outlined in Council’s strategic documents.

3. Risk

Consultation has been carried out to determine the community’s views of the services, projects, funding and policies contained within the Annual Plan.

There is a risk that Council will make decisions as part of the deliberations that are not supported by some stakeholders, however the thorough consultation mitigates this risk.

4. Financial impact

Decisions on submissions will determine the financial impact of the Annual Plan, including potential rates increase.

5. Degree of significance and level of engagement

The Annual Plan is of high significance and a Special Consultative Procedure

6. Inclusion of Māori in the decision making process

The following submissions were made by iwi or iwi owned organisations, Ngāti Tama ki Te Waipounamu Trust, Te Matua Trust and Koata Ltd.

7. Delegations

The Council has the responsibility for considering and adopting the Annual Plan.

Item 7: Community Housing Deliberations Report

Council

4 June 2019

REPORT R10151

Community Housing Deliberations Report

1. Purpose of Report

1.1 To consider submissions on Council’s proposal on the future of its community housing.

1.2 To approve the divestment of Council’s community housing assets, conditional on a range of requirements to be contained within a negotiating brief.

2. Recommendation

That the Council

1. Receives the report Community Housing Deliberations Report (R10151) and its attachment (A2198830); and

2. Approves the divestment of Council’s community housing assets, conditional on a sale and purchase agreement (or agreements) which achieves, in Council’s assessment, an appropriate level of protection for both tenant wellbeing and ratepayer interests; and

3. Directs the Chief Executive to develop a negotiating brief for approval by Council before discussions with interested parties commence; and

4. Notes that the key elements of the sale and purchase agreement will be approved by Council, taking into account all of the input and issues raised by submitters, before any divestment occurs; and

5. Requests officers to ensure tenants are kept appropriately informed of the process throughout; and

6. Approves the preparation of a subsequent amendment to the Long Term Plan 2018-28 for Audit New Zealand approval; and

7. Notes that the amended Long Term Plan 2018-28 will be brought to Council on 27 June 2019 for adoption.

3. Background

3.1 At its meeting on 27 March 2019, Council agreed to consult the community on a proposal to divest some or all of its 142 community housing units. The proposal would require an amendment to the Long Term Plan 2018-28 (LTP). As a change to an LTP requires use of the special consultative procedure, Council had previously directed that be combined with the Annual Plan 2019/20 consultation process.

3.2 The objective of the proposal outlined in the Consultation Document was to:

· divest the stock to a provider who would be able to access government and other funding that Council is not eligible for;

· leverage Council’s community housing asset to grow social housing in Nelson allowing access for more vulnerable people;

· address the equity and affordability issues that the current situation presents.

3.3 The Consultation Document set out Council’s preferred approach, as well as a number of other options that Council considered were practicably available to it. The advantages and disadvantages of the various options were explained and feedback invited from the public on all the possibilities presented.

3.4 Because community housing is a strategic asset under Council’s Significance and Engagement Policy, the proposal to divest triggered an LTP amendment, including a full audit by Audit New Zealand. If Council decides to proceed with divestment, Audit New Zealand will need to review the final LTP changes.

3.5 Council now has to decide whether to divest some or all of its community housing portfolio. If it decides to divest, a further report will be brought to Council to establish a negotiating brief for discussions with interested parties. Final approval of the key elements of any sale and purchase agreement would be by Council.

4. Discussion

4.1 Public consultation on the proposal was undertaken from 29 March 2019 to 2 May 2019, using a special consultative procedure. Seventy-nine submissions were received on the proposal and 14 submitters spoke at the Council hearings held over 14 - 16 May. This report takes into consideration both written and oral submissions.

Summary of submissions

4.2 Of the 79 submissions received on community housing, two submissions were co-signed by a number of current tenants in Council’s community housing. The submissions also included ten from organisations and one from someone living outside of the district.

4.3 Of the 79 submitters, 40 opposed the sale of the community housing, including 17 of the 24 tenant submitters. There were 33 submitters supporting the sale of the community housing. The position of the other submitters was unclear. There were a number of submissions with a preference for Council ownership, but which also contemplated divestment to an appropriate organisation if that was deemed necessary.

4.4 There was a range of views voiced by submitters on Council’s proposal, however the majority noted that the wellbeing of tenants and the importance of their ongoing care, should be front of mind. Another central message was that Council needed to achieve an appropriate balance that protected tenant welfare, while ensuring an equitable situation for ratepayers.

4.5 Officer responses to submitters are attached (Attachment 1:A2198830).

Main feedback themes of those opposed to the proposed divestment

4.6 Current tenants of Council’s community housing had mixed views on the proposed divestment, however the majority of those who submitted preferred ownership to remain with Council. Generally tenants were uncomfortable with the potential for change and preferred things to stay as they were and for tenancy conditions to remain unchanged.

4.7 Other submitters who opposed divestment were concerned that a different provider might not have affordable rents or continue to provide the same amount of community housing. There was a preference for Council continuing ownership because of the certainty that provided around future service levels for the community housing activity.

4.8 A number of submitters were worried that divestment might enable others to profit from, or exploit, vulnerable tenants.

Main feedback themes of those supporting the proposed divestment

4.9 Submitters who supported Council’s proposal generally had confidence in other providers of social housing in Nelson, and felt they would be better placed to provide community housing. A number noted that social housing providers had access to funding to invest in the housing as well as rental subsidies not available to councils. Others considered that Council should not be involved in activities that were outside core business and saw it as central government’s role to provide social housing for those in need. Some submitters commented that the scale of the portfolio is small and of relatively poor quality which makes it difficult to manage efficiently.

4.10 The Nelson Youth Council submission expressed concern about the $20 million upgrade cost and the impact that would have on other important Council work programmes. It questioned the value of this investment when other providers were in a position to deliver social housing.

4.11 A number of current tenants of the housing also supported Council’s proposal to divest the housing. Many still wished their current tenancy conditions to continue under the new provider e.g. rent levels, provision of garden maintenance, free rubbish collection and no separate water charges.

Key issues from submissions

Rent levels

4.12 Some submitters, including some of the current tenants, suggested that rent increases should be made to offset the $160,000 annual cost to rates. Others noted that a condition of sale should be that rents stay the same for a set period of time, or for existing tenants.

4.13 Other submitters suggested that to avoid or minimise a rent increase, tenants might cover the cost of water and rates.

4.14 Rent increases have been considered by Council in the past but were not pursued due to strong opposition from tenants at the time. Without access to government rent subsidies council would have a more difficult job balancing costs and rent affordability. This approach would also not allow the asset to be expanded to respond to increasing demand.

4.15 Rents are currently set at 25% of superannuation, and a rise to 30% of superannuation would lead to an increase of approximately $20 per week for a single person (from $100 to $120) or $31 per week for a couple (from $154 to $185). The increase in rental income would be $167,000 per annum and would offset the annual cost to rates for the management contract.

4.16 Equivalent market rentals are available for a one bedroom unit only. A rise to 80% of market rates for a one bedroom unit would result in an increase of approximately $86 per week (from $100 to $186) for a single person and $32 for a couple (from $154 to $186). The increase in rental income would be $499,000 per annum. Note: The difference for a single person is greater, due to the lack of a bedsit comparison.

4.17 Additionally, if rentals increased to 80% of market, the increased rentals would be able to fund the $160,000 rate funded part of the management contract and approximately 65% of funding costs (depreciation and interest) of the upgrade. Rates requirement for the balance of the funding of the upgrade would be approximately $338,000 per annum.

Gifting

4.18 The suggestion of gifting the community housing to another provider was made in relation to both the Nelson Tasman Housing Trust and Housing New Zealand. At the hearings one submitter said Council should not see this as giving the asset away, but as giving it back to the community under different stewardship.

4.19 Gifting an asset held by Council is not straightforward from a legal and audit perspective. Council is obliged to undertake commercial transactions in accordance with sound business practice and it would be hard to account to ratepayers for any decision to gift away a valuable asset.

4.20 From a financial perspective, gifting the assets would have a substantial effect. The loss on retirement of the assets of approximately $8.4 million would generate a deficit in the P&L, reducing retained earnings and the total value of fixed assets. Also of relevance is that the draft Annual Plan 2019/20 has assumed a debt reduction based on receipt of $8.4 million proceeds for the sale of Community Housing. If these proceeds are not received, interest expense and therefore rates will increase, by $177,000 in the draft Annual Plan 2019/20 and $361,000 in 2020/21 onwards.

Divesting some housing

4.21 In relation to Council’s proposal to divest ‘some or all’ of the housing portfolio, only a few submitters commented. In general they noted a preference for Council to either retain full ownership of the portfolio or for all nine sites to be divested.

4.22 There were some submitters who suggested the Karaka St/Orchard flats should be in a different category due to the outstanding Housing New Zealand (HNZ) loan. The loan would need to be discussed with HNZ should divestment be pursued, but it is considered unlikely that repayment would be required if the new provider is committed to continuing delivery of community housing at that location.

Age criteria

4.23 The criteria for entry to community housing was also raised as a concern by some submitters, particularly current tenants. The current criteria only accepts tenants 55 years and older. There was some support for raising this age to 65 but consistent opposition to younger tenants having access to the housing. The main concern was that older and younger people do not mix well and that noise and disruption might accompany a widening of the age range. The current clusters of tenants often act as a support network to each other, particularly in the absence of regular family contact.

4.24 The importance of tenant compatibility within clusters, particularly around age groups, was raised by both of the main parties interested in purchasing the portfolio, during early discussions with Council. It is clearly an issue they have already given thought to. There is a suggestion that the issue is more around managing clusters and selecting tenants carefully than necessarily a matter of age.

4.25 Council would be able to consider how it wishes to respond to this issue in its negotiating brief for the next stage of discussions with interested parties. The range of options would include legally binding requirements to limit tenancy by age or seeking assurances from interested parties about how they would manage tenant compatibility.

Use of Proceeds

4.26 Few submitters commented on the use of divestment proceeds, but those who did were generally in favour of Council’s proposal to use net proceeds from any divestment (up to the book value of approximately $8.4 million) to fund future work on housing in Nelson with the remainder being used to pay down debt. However one submitter considered that all proceeds should go to repay Council debt.

Tenant selection

4.27 The Nelson Tasman Housing Trust questioned that NCC tenants had not been selected on the basis of housing need. What the statement of proposal said on this point was “The past practice has been to take applicants from a waiting list on a first come, first served basis rather than prioritising according to need.” This means that the needs of all applicants waiting for accommodation were not assessed and prioritised according to greatest need.

Spreadsheet of responses

4.28 There were a number of other points raised by submitters, but some of these were outside of the scope of the consultation or technical matters that would not materially affect Council’s decision on divestment and therefore they are not covered in this report. These matters will be responded to as part of the letters back to submitters, following this deliberations meeting, and are contained in the attached spreadsheet.

5. Submitter views on options

5.1 Of submitters preferring for Council to retain the housing (option a) a number also noted their support for Council to spend rates to renovate (option b) and/or expand the housing portfolio (option c). The advantage of continued ownership is that it provides more certainty to tenants and the community about the housing’s future. However, while increasing supply would go some way to meeting a growing need for subsidised housing in Nelson it would also attract significant debt and rate increases and displace other projects in the work programme.

5.2 Several submitters supported Council leasing to another provider (option d) in order to retain ownership of valuable land that would be hard to replace, and/or to maintain a measure of control over the housing activity. One benefit of this option is that any maintenance or management funding would be met through the lease and no longer be a cost to ratepayers. However, ratepayers would still be required to fund the upgrade costs, estimated at approximately $20 million plus interest, over the next 20-25 years as well as any building of new units to increase the stock.

5.3 Another factor with leasing is that while a Community Housing Provider (CHP) would be able to receive government rental subsidies under such an arrangement, it would not own an asset to borrow against, so conventional mortgage funding would not be available to fund upgrades or expansion.

5.4 There was some support for increasing rents to cover costs. Option e) suggested raising rents to the standard 80% of market but a number of submitters preferred any increase to be set at 30% of superannuation (a lesser amount). At 80% of market the rent increase would generate sufficient income to cover the $160,000 subsidy of rates but additional funding would still be needed for upgrades and expansion.

5.5 Mixed ownership (option f) did not attract much support from submitters, however those that selected this as their preferred option noted that it offers Council the ability to exercise some control over community housing standards.

5.6 Only a few submitters had a preference for Council to divest its housing on the open market by private sale (option g). Those that did saw this as delivering the best financial outcome for ratepayers. Although this option is likely to maximise ratepayer returns, it is also likely to result in a reduction of subsided housing in a time of growing demand, and displace vulnerable tenants into an already stretched private rental market. There would also likely to be legal complications around the two properties which were acquired from the previous owners with an expectation that they would be used for community housing.

Consideration of community views

5.7 Current tenants will be directly affected by the decision ultimately made by Council, so due regard must be given to their views on the proposal. The idea of change to their current living arrangements can be deeply unsettling for many tenants and this has been expressed in submissions.

5.8 The decision for Council must, however, consider what is best for future tenants and the whole community, as well as the current residents of the community housing. Demand for subsidised housing continues to increase with the Ministry of Social Development’s Public Housing Register showing close to a tripling in demand in Nelson over the last two years and Council’s community housing waitlist reaching all-time highs over the last year.

5.9 Council’s proposal provides an opportunity for this community asset to be upgraded and expanded so that larger numbers of vulnerable people in the community can access subsidised housing. This is a significant and growing need in the community and it is appropriate that Council respond by allowing better and more effective use of this asset. If Council continues ownership it is likely to continue to underperform against its potential.

5.10 It is also relevant that its role as a landlord is not a core activity of Council and, given the relatively small size of its portfolio, not one that Council is likely to develop specialist in-house skills to manage. The transfer of the management contract to the Nelson Tasman Housing Trust has delivered wellbeing improvements for tenants that Council had previously been unable to deliver but it has come at a substantial cost. A more effective approach would be to transfer responsibility for these matters to an organisation for whom housing vulnerable residents is a core activity, rather than creating layers of administration and cost by continuing the current arrangement.

5.11 A number of submitters have expressed a preference for Council to retain the housing because this provides greater certainty about its future. This is a point for consideration, as although future councils may seek to sell the housing on the private market or use the land for other purposes, they are more likely to continue community housing provision. It is true that if Council sells the community housing it will lose control of it and it would be very difficult to lock in detailed instructions about its future use. However the risk that comes with Council divestment could be seen to be adequately mitigated by its proposal to sell only to a government agency or a registered community housing provider as proposed. It does not seem that an organisation that is committed to providing subsidised housing for vulnerable residents will be any more likely to reduce community housing provision than a future council.

5.12 Retaining the housing will create a significant financial burden for ratepayers with upgrade costs and increasing maintenance as the asset ages. Submitters have suggested increasing rents to raise the funding for this, however the size of the increase that would be required would disadvantage tenants given that Council is not eligible for government rent subsidies. So a likely outcome of retention is that other projects that could benefit the community will be traded off against the need for funding to tackle maintenance and upgrading of community housing.

5.13 Realistically it would be difficult for Council to justify expansion of this non-core activity as a rates charge, so retention may well mean maintaining the current numbers of units and losing the opportunity to increase community access to subsidised housing.

5.14 Assessing all the issues raised in submissions, on balance it seems the best outcome for the Nelson community is for Council to divest the housing as proposed.

6. Communication with tenants

6.1 In the interim, while Council works through its decision making process, a letter has been sent to all tenants updating them on the hearings and explaining next steps. They have contact details for staff should they have any concerns they wish to discuss about the process.

6.2 A further letter will be sent to all tenants following this meeting advising tenants of Council’s decision. For those who submitted, this letter will include responses to the particular points they raised.

6.3 As this process progresses it is intended that communication with tenants will be ongoing. It will include visits by staff, letters, briefings for NTHT tenancy managers and involvement of relevant support people, including taking up the offer by Grey Power to provide an interface.

7. Options

7.1 Council has three options to consider: divest some or all of the community housing as set out in the proposal consulted on with the community; continue with the status quo (option a in the Consultation Document); choose to pursue one of the other options (b to g) as set out in the Consultation Document.

7.2 Option 1, to divest some or all of the community housing, is recommended. Should Council choose Option 3, officers would bring back a further report giving more detail on the consequences of the chosen option.

Option 1: Agree to divest some or all of Council’s community housing as proposed through the Annual Plan 2019/20 Consultation Document (conditional on a range of requirements to be agreed).
Advantages	· Supported by those submitters who recognise that others, with a focus in this area, are better placed to provide this activity, or that believe Council should concentrate on its core services · Provides an opportunity to expand an important community asset so that more vulnerable residents can access subsidised housing · Ratepayers would no longer subsidise community housing, and funding currently allocated for community housing in the Long Term Plan 2018-28 could be used elsewhere · The proceeds would enable future work on housing solutions to be progressed, and/or debt (and its associated interest) costs to reduce
Risks and Disadvantages	· Was not supported by those submitters concerned that divestment would lead to a loss of services over time and/or insecurity of tenancy arrangements for vulnerable members of the community · Council will not control future service levels for community housing, beyond any requirements contained in legal agreements
Option 2: Continue with the status quo where Council continues to own community housing, option a) as included in the Annual Plan 2019/20 Consultation Document
Advantages	· Provides more certainty for Council and the community about the future of community housing · Continues to provide subsidised housing for residents 55 and over in small communities with peers of a similar age · Supported by submitters seeking Council’s involvement in an activity that supports Nelson’s low income older adults
Risks and Disadvantages	· Would increase the rates requirement by approximately $521,000 (approximately 0.7% rates increase) made up of $160,000 rates subsidy to the activity and $361,000 interest savings foregone · Borrowings and fixed assets balances would be approximately $8.4m greater and there would be no reserve for further work on community housing · Inequity for other ratepayers, in effect, subsidising tenants in community housing through rates · Quality of the housing may decline without additional rates funding required to undertake upgrades · Expansion of the asset would be difficult to achieve
Option 3: Pursue one of the other options (b to g) included in the Annual Plan 2019/20 Consultation Document
Advantages	· If Council prefers one of these other options this will allow it to be further explored. · Each of these options had some submitters in favour who would support such a decision
Risks and Disadvantages	· Most of the alternative options come with real disadvantages either for tenants (e.g. increased rents) or ratepayers (e.g. increased costs) · None of the alternative options deliver the range of benefits that Council’s proposal does in terms of the potential to upgrade and grow social housing without significant cost to ratepayers

8. Next Steps

8.1 Should Council decide to divest its housing, officers are proposing to bring a public excluded report to a future Council meeting, to seek guidance on and approval for a negotiating brief. This brief would inform discussions with interested parties and cover the matters contained in the statement of proposal and relevant items from submissions (as per discussion above). Officers would work with the Councillor Working Party as any brief is developed.

Author: Nicky McDonald, Group Manager Strategy and Communications

Attachments

Attachment 1: A2198830 - Draft Submitter Responses ⇩

Important considerations for decision making

1. Fit with Purpose of Local Government

Divesting community housing to appropriate providers allows this asset to deliver services to the community in a more efficient and cost-effective way through a provider(s) with specialist skills in this area.

2. Consistency with Community Outcomes and Council Policy

The recommendations in this report fit with the community outcomes:

· Our urban and rural environments are people friendly, well planned and sustainable managed

· Our communities are healthy, safe, inclusive and resilient

3. Risk

Consultation has been carried out to determine the community’s views on Council’s proposal to divest some or all of its community housing.

There is a risk that some stakeholders will not support Council’s decision. This risk has, in part, been mitigated by Council undertaking a special consultative procedure. Appropriate messaging to the community and support for tenants through the process will also help mitigate this risk.

4. Financial impact

The financial impact of Council’s proposal is reflected in the resulting proposed rates change, debt levels and intended use of proceeds as set out in the Consultation Document. If Council decides to retain its housing portfolio this would increase the rates requirement by approximately $521,000 (approximately 0.7% rates increase) made up of $160,000 rates subsidy to the activity and $361,000 interest savings foregone. Borrowings and fixed assets balances would be approximately $8.4m greater and there would be no reserve for further work on community housing.

5. Degree of significance and level of engagement

This decision has been assessed as being one of high significance. In addition, community housing is a strategic asset in Council’s Significance and Engagement Policy and therefore an amendment is required to the LTP before Council can divest. In light of this, Council adopted the Special Consultative Procedure to engage with the community.

6. Inclusion of Māori in the decision making process

Local iwi were informed of the Council’s proposal, including the consultation period, at the Iwi Leaders Forum on 1 March 2019.

7. Delegations

The Community Services Committee delegated its mandate for decisions relating to the future of Council’s community housing to Council at its meeting on 27 November 2018.

The Council has responsibility to deliberate on its proposals as set out in the Consultation Document and make decisions in relation to these.