Item 6: Update on the
impact of COVID-19 and Council's response
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Council
9 April 2020
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REPORT R16944
Update
on the impact of COVID-19 and Council's response
1. Purpose of Report
1.1 To
provide an update on the impact COVID-19 is having on the Nelson community and
ways that Council can respond.
2. Recommendation
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That the Council
1. Receives the report Update on the
impact of COVID-19 and Council's response (R16944); and
2. Notes that officers will remit
rates penalties on the 2019/20 fourth rates instalment under the Rates
Remission Policy using ‘compassionate grounds’ or where an agreed
repayment programme is in place.
Annual Plan
3. Notes that officers will report
back on 23 April 2020 on rating scenarios for 2020/21; and;
4. Agrees that the consultation period
for the 2020/21 Annual Plan be extended to 6 May 2020, to enable the public
to provide feedback on an appropriate rates rise.
Inner City Parking
5. Approves the suspension of charges
for parking in the Central Business District until the end of June 2020; and
6. Notes that steps may be required
under the new Parking and Vehicle Control Bylaw, that comes into effect on 1
July 2020, to address the likely delay in installation of the new parking
machines due to the COVID-19 shutdown
Lease and
Licence Income
7. Notes the decision by the Chief
Executive to grant a three month waiver starting 1 April 2020 of:
a. Rental
and outgoings for tourism and hospitality tenants/licensees holding Council
leases and licences; and
b. Rental
for community tenants holding leases and licences; and
8. Notes that the Chief Executive will
consider any requests from other tenants/licence holders including taking
into account financial hardship.
Events Funding
9. Agrees that officers will discuss
timing of the Fringe Festival with the organisers; and
10. Notes that the Light Nelson Festival will be
considered as part of the Annual Plan deliberations; and
11. Notes that the 2020 Nelson Arts Festival is
cancelled; and
12. Agrees to invite a proposal from the Arts
Festival Trust to replace the cancelled Arts Festival with local events
involving regional partners; and
13. Notes that the April 2020 Heritage Festival
has been cancelled; and
14. Notes that the Annual Plan deliberations
report will include recommendations for the Events Fund and Venue Hire Fund;
and
15. Notes that Council-delivered events will be
reviewed and adjusted as necessary during the COVID-19 recovery period.
Support
for community organisations
16. Approves an Emergency Fund of $200,000 to
support community organisations impacted by COVID-19; and
17. Delegates the setting of criteria and
distribution of funds to support community organisations from the Emergency
Fund to the Mayor, Deputy Mayor and the Chair of the Community Services
Committee; and
18. Notes that the criteria for granting funds
from the Emergency Fund will include that the organisation has applied for
any applicable Central Government support, for example wage subsidies.
Community Investment Fund
19. Agrees to remove the $5000 cap on Community
Investment Fund applications in 2021/22; and
20. Agrees to modify the criteria for Community
Investment Fund applications in 2021/22 to prioritise projects that reduce
the impact of the COVID-19 emergency on vulnerable communities; and
21. Notes that existing allocation processes
utilising the independent panel will be used to make Community Investment
Fund allocations.
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3. Background
3.1 COVID-19
was declared an official pandemic on 11 March 2020 by the World Health
Organisation.
3.2 In
response to the growing threat, the New Zealand Government declared a State of
National Emergency on 25 March 2020. The Prime Minister issued an epidemic notice
on 25 March 2020 under section 5(1) of the Epidemic Preparedness Act 2006. This
enabled the Director-General of Health to issue an order under section 70
(1)(m) Health Act which required, amongst other things, the closure of all
premises within New Zealand except for those listed in the appendix to the
Order (which includes premises necessary for the performance or delivery of
essential businesses). This was followed by a decision to initiate a four week
period of national lockdown. As a result Civic House, all Council libraries,
and its other facilities have closed and staff are working from home.
4. Discussion
4.1 The
Nelson community has risen to the challenge of social distancing and
self-isolation, but the impact of the lockdown will be long lasting. The
economic effects in particular will be profound. Many businesses will find it
difficult to survive the loss of revenue and consequential unemployment can be
expected to be high. High levels of stress are being reported by residents who
face an uncertain future. Community groups are also struggling and there is a
real risk of permanent loss of social capital.
4.2 We
are in the early phases of responding to the pandemic and it will take time to
understand and respond to the sweeping changes this emergency will bring.
However it is important that Council respond at this early stage to provide
relief for those who are struggling. This report outlines the package of
measures Council has taken so far and recommends a range of other assistance.
4.3 Specific
areas with known impacts are discussed below.
4.4 Given
the need for urgent action, the Chief Executive made the following decisions on
3 April 2020, under delegated authority, and now seeks support for these.
Discussion on these decisions is set out in the following paragraphs.
That
the Council
2. Notes
that officers will remit rates penalties on the 2019/20 fourth rates instalment
under the Rates Remission Policy using ‘compassionate grounds’ or
where an agreed repayment programme is in place.
Council
business continuing remotely
4.5 The
transition to staff working from home has proceeded as smoothly as could be
hoped for. This is a credit to staff and the systems that were developed in
anticipation of an emergency. There are now over 250 staff working remotely
across all of Council’s business units. Work which is continuing includes
the Nelson Plan, the Annual Plan and Long Term Plan, infrastructure services,
property services, community services, and communications. The objective is to
continue to provide as many key Council services during the lockdown as
possible, for example processing of building and resource consents and
answering customers’ enquires. Staff are also working on reviewing
business unit work programmes so that they fit with the new environment that
will apply for the medium term.
4.6 A
number of staff have been seconded to the Emergency Operations Centre (EOC) for
emergency response work, and others are supporting the Ministry for Social
Development in outreach work targeting older adults likely to need assistance.
4.7 2020/21
Annual Plan
4.8 The
2020/21 Annual Plan Consultation Document proposed an overall rates increase of
3.7%. In short, this level may no longer be considered prudent or to
promote the current or future interests of the community. Officers recommend
that Council considers a range of lower rating levels for the final Annual
Plan. The main options are set out in the table below, which shows the
reduction in rates requirement that would be necessary to achieve each rates
option, compared to the Annual Plan Consultation Document budget. The Balanced
Budget Benchmark ratio for each option is also shown.
|
Rates Increase
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Rate
Saving Required (compared to Draft Annual Plan)
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Balanced
Budget Benchmark
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3.7% per Draft Annual Plan
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-
|
97
|
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2.2% - Local Government Cost Index
(LGCI)
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1,160,000
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97
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1.9% - Consumer Price Index (CPI)
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1,392,000
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97
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0% - No Increase
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2,862,000
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96
|
|
|
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4.9 The
Chief Executive will outline at the meeting of 9 April 2020 key levers
available to reduce expenditure for 2020/21. These include:
4.9.1 Not
funding and/or drawing down against the Disaster Recovery Fund. The proposed
contribution to the Disaster Fund in 2020/21 was $1.150m. Drawing down
against the Fund would require borrowing, as the fund is overdrawn as a result
of Nelson experiencing several emergencies in recent years. The projected
balance of the Fund as at 30 June 2020 was $974,000 overdrawn.
4.9.2 Many
of the 2020/21 events will not be able to be held, (see the events section
below for information on the current situation for specific events) and Council
could negotiate with external event providers the minimum funding required to
enable some event infrastructure and staffing to be retained.
4.10 As
noted in the table above, Council was not planning on a balanced budget in
2020/21. The main contributing factors to this is Council’s
contribution to the Waimea Dam, and the decision to fund, through borrowing,
the costs of developing the Nelson Plan. A lower or nil rates increase is
likely to further increase the 2020/21 deficit. This in itself is not a
reason not to proceed with a lower rates increase, but Council should, in due
course, resolve that it has made that decision.
4.11 It
is proposed that officers report to the 23 April 2020 Council meeting on impact
of the two lower rating scenarios factors such as debt, the work programme and
future years’ rates. Officers propose that the public feedback period for
the Annual Plan be extended by up to 6 May to enable the public to provide
feedback on an appropriate rates rise. The information from this further
feedback process would be included in the Annual Plan deliberations
process.
4.12 Officers
consider that an extension to the current Annual Plan consultation period would
meet the consultation processes required by the Local Government Act 2002. It
would also be consistent with the process followed by Council when it decided
in 2018, to contribute to the Waimea Dam. In that situation new information
came to hand, and Council decided to extend the consultation process before
making a final decision.
4.13 A
summary of what is proposed is outlined below:
4.13.1 Two
rating scenarios will be prepared for Council to consider on 23 April. A 1.9%
overall rates increase, and a zero rates increase. The report will cover
the effects of each of these options on Council services and debt. These
would be overall rates levels, and individual rate changes for properties will
vary. An assumption is that Council would continue to support the commercial
differential adjustment for CBD and Stoke properties.
4.13.2 Any
decrease in rates in one year would typically increase the percentage in the
following year unless there was a permanent change to levels of service i.e. a
3.7% decrease in 2020/21 would increase the rates in 2021/22 by this amount
plus any other increases.
4.13.3 Public
feedback on an appropriate rates level will be sought for up to a further three
weeks. Officers will develop and implement an engagement plan that,
notwithstanding the COVID-19 shutdown, reaches as many members of the public
and businesses as possible. Very importantly for those members of the public
who do not have internet access, this will include community advocacy
groups.
4.14 It
is preferable to continue to work towards adopting the 2020/21 Annual Plan by
30 June 2020. However, officers will provide recommendations if timetable
changes are required as a result of this further feedback process.
4.15 Officers
will also consider further financial relief options as part of preparations for
Annual Plan deliberations.
That the
Council
3. Notes that officers will report back
on 23 April 2020 on rating scenarios for 2020/21; and
4. Agrees that the consultation period for
the 2020/21 Annual Plan be extended to 6 May 2020, to enable the public to
provide feedback on an appropriate rates rise.
Rates
Deferment
4.16 Background
information: Rates payment dates and remissions policies are set within the
Rates Resolution through the Annual Plan process. Any changes to the resolution
or policies requires consultation. Any future relief provided to ratepayers
would need to be in accordance with the Local Government (Rating) Act 2002.
4.17 Officers
are very aware of the financial pressures that many of our ratepayers will be
facing in the coming months that will impact on their ability to pay their
rates.
4.18 The
level of outstanding rates debt in Nelson is amongst the lowest in the country,
as a result of officers building strong relationships with our ratepayers and
using a consistent approach to debts outstanding.
4.19 Rates
Instalment Four will generate revenue of $19,800,000 including GST. With
approximately 54% of all rates paid quarterly by the due date, any decision to
alter the due date of payment will considerably impact on the cashflow of the
organisation.
4.20 Presently
rates payments are received in the following ways:
|
Direct Debit
|
Annual
– paid in full
|
2.4%
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|
Direct Debit
|
Quarterly – paid in full
|
16.6%
|
|
Direct Debit
|
Fixed Amounts - weekly, fortnightly,
monthly
|
32.2%
|
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Other Payment Methods
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Quarterly - paid in full
|
37.4%
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|
Other Payments Methods
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Variable amounts
|
11.4%
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4.21 Any
relief provided through new remission policies need to be fully considered for
the long term and not just for this event in isolation to ensure it is designed
and workable for its intended purpose.
4.22 In
order for Council to continue providing the community all essential services,
ratepayers simply ‘not’ paying their rates is not an option. The
Councils Standard & Poor’s long term credit rating of AA stable and
hence our low interest margins, is based on the ability to collect rates.
Current
Rates Payment Options
4.23 Various
options are currently available for those ratepayers that are struggling to
pay, with Council encouraging ratepayers to make contact to explore a range of
solutions. Officers work with individuals to tailor solutions to suit
their situation, and monitor these throughout the life of the arrangement.
4.23.1 Some
residential ratepayers may be eligible for a rates rebate (Department of
Internal Affairs) depending on their financial situation.
4.23.2 Creating
manageable payment arrangements include initiating new direct debit
arrangements and amending current direct debits with lower fixed periodic
amounts provide avenues to pay rates in smaller instalments.
4.23.3 Payment
arrangements will be flexible and can include providing a short term pause of
payments for 3 to 6 months depending on the ratepayers’ circumstances.
4.23.4 Payment
arrangements may also consider spreading current and future rates over an
extended period depending on the ratepayers’ circumstances.
4.23.5 Officers
are also reminding ratepayers of the available government assistance at this
time.
4.23.6 Rates
Instalment 4 will be levied on 1 May 2020, due on 20 May 2020. It
is expected officers will receive an unprecedented number of hardship queries
during this period.
4.23.7 Council’s
Rates Resolution requires penalties for non-payment to be charged on the 26 May
2020, unless a payment arrangement is in place.
4.23.8 The
Rates Remission policy allows council officers to remit penalties on
compassionate grounds or where a payment plan is in place.
4.23.9 On this
basis we will be following up with any ratepayer who has not contacted us,
prior to the 26 May with the view to make a suitable payment arrangement for
that individual.
4.23.10 Unfortunately
Council has no means of requiring commercial ratepayers to pass any benefits
from their rates payment arrangements onto their private tenants.
Rates
Relief Possibilities
4.24 Council
could agree a new remission for financial hardship
4.24.1 Using
similar hardship guidelines as Central Government, a new remission could be
established for ratepayers to apply for in the case of financial hardship.
4.24.2 Kapiti
District Council currently has a similar Remissions Policy. A fixed budget of
$200,000 per annum is available to ratepayers experiencing either short term or
long term hardship. An application is required, for a remission up to $300 for residential properties or $150 for licence
to occupy properties within a retirement village. Once the budget has
been expended, no further applications are approved.
4.24.3 Risks
will include clearly defining the remission to ensure the purpose meets future
needs and, creating an appropriate and definitive assessment criteria for the
management of the remission and there will be a cost in the additional staff
time to administer the remission.
4.24.4 If
Council supported a new remissions policy then officers would bring a report
outlining options, including financial implications for Council’s budget
and a proposed timeline for the special consultative
procedure.
4.25 Council
could agree to revise the Rates Resolution in the 2020/21 Annual Plan with any
of the following suggestions:
4.25.1 Remove
the penalty which is to be applied at 5 July for any balance outstanding from
the previous rating year, and/or
4.25.2 Reduce
the penalty charge of 10% to a lower rate for unpaid rates and water, and/or
4.25.3 Remove
the rates and water penalties in entirety for 20/21, which would reduce
budgeted revenue by $241,000, and create difficulty in encouraging payment
arrangements, and/or
4.25.4 Increase
the penalty date for each instalment to more than three days past due date
4.26 This
can be considered during the Annual Plan deliberations.
Environmental
Management activities and fees
4.27 A
letter has been written to the Minister of Justice requesting the suspension of
fees for alcohol licensing. Council does not control these fees.
4.28 A
letter has also been written to the Ministry of Primary Industries requesting
the ability for businesses to voluntarily suspend food control and national
programme operations for the duration of the lockdown period rather than the
fixed three months required by the Food Act. Officers are proposing to
waive the $74 fee for applications to voluntarily suspend food operations for
the duration of the lockdown.
4.29 Further
work is being undertaken with Uniquely Nelson to provide sound advice to
retailers and hospitality services across a range of services e.g. E-commerce
and public relations. Engagement with the Chamber of Commerce and others is
occurring through the Office of the Mayor and the Nelson Tasman Civil Defence
structure, to consider what options are available for support to
business.
4.30 City
centre programme work will be focused on getting activity to support the
functioning of the city centre. This includes expanding the efforts around
place making trials such as Upper Trafalgar Street and the temporary Riverside
Youth Pop-Up Park adjacent to the Elma Turner Library.
Inner City Parking
4.31 At
some point, the COVID-19 lockdown will be lifted and revitalisation of the
inner city will be critical to promote economic growth for our retailers and
our City. Council needs to support activities that will encourage people back
into the CBD.
4.32 A
three month rent holiday has already been put in place for Council tenants in
the hospitality and tourism sector and community groups. One additional way
Council could assist in the economic recovery would be to make parking within
the CBD free. This initiative would see a reduction in income of approximately
$50,000 to the end of June 2020. Officers have stopped enforcement
patrols; the last patrols occurred in the last week of March and are unlikely
to recommence until July. However, the need for patrols to manage parking such
as unsafe parking, blocking driveways and in mobility car parks would continue.
4.33 In
addition, officers note that the installation of the new parking meters in the
CBD is likely to be delayed as a result of the COVID-19 shutdown. Steps
may need to be taken under the new Parking and Vehicle Control Bylaw that
commences on 1 July 2020 to address this delay. This will be the subject
of a future report to Council if required.
Recommendations
That
the Council
5. Approves the suspension of charges
for parking in the Central Business District until the end of June 2020; and
6. Notes that steps may be required
under the new Parking and Vehicle Control Bylaw that comes into effect on 1
July 2020 to address the likely delay in installation of the new parking
machines due to the COVID-19 shutdown
5. Contract savings
5.1 There
is also a subsequent confidential report on contracts on the meeting agenda.
The overall savings from contracts which cannot be fulfilled in the short term
is approximately $500,000 per month. These savings offset the cost of
providing a waiver of rent and outgoings to some lease and license holders.
Lease/Licence income
5.2 The
Chief Executive has approved a three month waiver of rent and outgoings ending
30 June 2020, for the tourism and hospitality sector and community
groups. This is to cover the current lockdown period, any extensions of
the Order and a period of time to give those tenants an opportunity to
re-establish themselves. The potential cost of a three month rental and
outgoings holiday is approximately $230,000 plus outgoings of approximately
$5,000.
5.3 If
some of the tenants/licence holders in the balance of the portfolio sought
rental relief, either on the basis of their lease terms or financial hardship,
then additional costs might be $240,000 for a three month term.
Analysis of Leases and Licences
5.4 Council
has 502 leases and licences that provide just over $2.4 million in annual
rental and are classified as:
|
Lease
or License Type
|
Number
|
Rental
Per Annum (rounded to the nearest $1,000)
|
Rental
Per Month (rounded to the nearest $1,000)
|
|
Commercial
|
104
|
$1,932,000
|
$161,000
|
|
Community
|
76
|
$80,000
|
$7,000
|
|
Carpark
& Foot Path Dining
|
59
|
$162,000
|
$13,000
|
|
Concessions
|
17
|
$32,000
|
$3,000
|
|
Other
|
15
|
$35,000
|
$3,000
|
|
Parking
Permits
|
39
|
$45,000
|
$4,000
|
|
Road
Reserve
|
160
|
$62,000
|
$5,000
|
|
Street Stalls
|
12
|
$40,000
|
$3,000
|
|
No
Classification
|
20
|
$15,000
|
$1,000
|
|
Total
|
502
|
$2,401,000
|
$200,000
|
5.5 Many
of the tenants of these leases and holders of these licences are non-essential
businesses or activities, albeit some are not affected by the Order; such as
the Road Reserve Licences. There are some tenants/licence holders who are
essential businesses such as telecommunications.
5.6 Of
the affected tenants/licence holders, many have a provision in their lease or
licence that addresses the “no-access” issue, with the balance
silent on such a situation. Adopting usual property management procedures, the
interpretation of the impact on the tenants would require careful lease
analysis and then separate negotiation with each tenant to arrive at a
result. While this would ordinarily be regarded as the preferred
approach, it could take significant time and resource to implement.
5.7 This
time delay and management expense needs to be balanced against the quantum of
rental reduction being contemplated, together with the intent to achieve
business support initiatives as quickly as possible.
5.8 An
alternative is to offer an immediate rental relief package to those tenants and
licence holders that are perceived to bear the biggest impact from the
Order.
5.9 Based
on observation over the last month and certainly taking into account the
immediate effect Level 4 lockdown has had, the highest risk tenants and licence
holders appear to be the tourism, hospitality and the community tenants.
5.10 The
tourism and hospitality tenants make up 15% of the number and 65% of the rental
per annum of leases and licenses in this group as shown below:
|
Lease
or Licence Type
|
Number
|
Rental
Per Annum
(rounded
to the nearest $1,000)
|
Rental
Per Month
(rounded
to the nearest $1,000)
|
|
Tourism
& Hospitality
|
24
|
$613,000
|
$51,000
|
|
Community
|
76
|
$80,000
|
$7,000
|
|
Carpark
& Foot Path Dining
|
59
|
$162,000
|
$13,000
|
|
Concessions
|
17
|
$32,000
|
$3,000
|
|
Street
Stalls
|
12
|
$40,000
|
$3,000
|
|
Total
|
186
|
$918,000
|
$77,000
|
5.11 The
balance of the portfolio is made up as shown below:
|
Lease
or Licence Type
|
Number
|
Rental
Per Annum
(rounded
to the nearest $1,000)
|
Rental
Per Month
(rounded
to the nearest $1,000)
|
|
Commercial
|
50
|
$1,320,000
|
$110,000
|
|
Other
|
15
|
$35,000
|
$3,000
|
|
Parking
Permits
|
39
|
$45,000
|
$4,000
|
|
Road Reserve
|
160
|
$62,000
|
$5,000
|
|
No
Classification
|
20
|
$15,000
|
$1,000
|
|
Total
|
314
|
$1,476,000
|
$123,000
|
5.12 Of
these other tenants/licence holders, there are likely to be some that have been
financial constrained by the Order and may seek rent relief and they can be
assessed on a case by case basis, applying a consistent set of criteria.
Recommendations
That
the Council
7. Notes the decision by the
Chief Executive to grant a
three month waiver starting 1 April 2020 of:
a) Rental and outgoings for tourism and hospitality
tenants/licensees holding council leases and licences; and
b) Rental for community tenants/licensees
holding leases and licences; and
8. Notes that the Chief Executive will consider
any requests from other tenants/licence holders including taking into account
financial hardship; and
Events
funding
5.13 Council
supports events through several channels that will be impacted by COVID-19,
including festivals through outside providers, events administered by the
Events Development Committee (EDC) and small scale Council delivered events
delivered by the Events Team. As noted in the Annual Plan section of this
report, one option for reducing the rates rise in 2020/21 is to reduce the
various events budgets. Work on reducing these budgets has already
commenced, and the current information on different events is set out below.
Large
Scale Events
5.14 Festivals
and events administered by outside providers and the EDC include a number of
larger events. Decisions for these larger scale events over the next six
to twelve months may be largely out of Council’s hands. This
reflects the long planning time required, a reliance on international acts,
restrictions on large gatherings and the likely impact of the economic downturn
on ticket sales.
5.15 Some
events organisers are suggesting their events are downscaled and reconfigured
for a smaller local audience and requesting Council support.
5.16 The
table below lists large scale events scheduled for the next twelve months and
their current status.
|
Event
|
Planned Date(s)
|
Council Investment
|
Current Status
|
Alternatives
|
|
Heritage Festival
|
April 2020
|
$50,000 less $35,000 already spent
|
Cancelled
|
|
|
Fringe Festival
|
May 2020
|
$16,000 (events fund)
$7,500 (venue)
$13,500 requested to be carried forward to 2020/21
|
Postponed
|
Postponed until October
|
|
Light Nelson
|
3 July 2020
|
$162,000 over two years
|
Unconfirmed
|
|
|
Nelson Arts Festival
|
16-26 Oct 2020
|
$560,000
|
Cancelled
|
Possibly some smaller community events at a lower budget
amount
|
|
Black Ferns
|
21 Nov 2020
|
$70,000
|
Unconfirmed
|
|
|
Bay Dreams
|
4 Jan 2021
|
None
|
Unconfirmed
|
Smaller localised event
|
|
Enduro World Series
|
April 2021
|
$200,000 0ver two years
|
Unconfirmed
|
Smaller localised event or prepare for EWS in a future
year
|
|
Adam Festival
|
February 2021
|
$37,500 p.a.
|
Postponed
|
Event proposed to be held February 2022
|
Additional information and
options
Fringe Festival – May
2020 - postpone
5.17 The
Fringe Festival was to receive $16,000 from the Events Fund and $7500 to assist
with venue costs following the Refinery closure, and the organisers have
proposed rescheduling of the festival at NCMA in October 2020. This date may
need to be shifted out again depending on status of the COVID-19 shutdown.
Arts Festival – October
2020 - restructure
5.18 The
Nelson Arts Festival Trust has advised that planning for the 2020 festival has
ceased. There are options for the Trust to co-ordinate a suite of events
utilising current funding levels, or work collaboratively with community
partners to deliver local events at a reduced funding level. Consideration
should be given to ensuring that the Trust retains capacity and staffing to
deliver future Arts Festivals. Creative NZ funding is also available which
should be utilised by the Trust in preference to Council funding. Officers
suggest that when Council has decided on the priorities for the Trust, it is
invited to submit a proposal for consideration. There will be some
fixed costs in maintaining the Arts Festival but any proposal would be on a
smaller scale.
Black Ferns game - November
2020 - TBC
5.19 Officers
have contacted the Tasman Rugby Union regarding the planned Black Ferns game in
November but do not have an update at the time of this report. However,
it is unlikely that an international match will be able to be held this year.
Bay Dreams - January 2021 -
TBC
5.20 Staff
have not ascertained whether the organisers of Bay Dreams plan to proceed,
however if the event was able to proceed, then it is likely that the event
would be smaller and use local rather than international acts.
Light Nelson – July
2020 – TBC
5.21 The
organisers of the Light Nelson festival have been contacted for an update on
the 2020/21 festival.
Enduro World Series –
April 2021 – TBC
5.22 This
event is funded through the Events Fund. Discussions are being held on
the options for the Enduro World Series and whether a local or national event
might be possible in 2021, and/or whether planning should continue to enable a
full event to be held in a future year.
Adam Chamber Music Festival
– February 2021 - postpone
5.23 The
Trust has decided to postpone the event until beginning of February 2022. The
festival is currently one year into a four year contract and the Trust is
expected to apply for a one year extension in due course.
Council
Delivered Events
5.24 The
Council events team delivers 17 local events, predominately over the summer
period, such as the Teddy Bears Picnic, New Year’s Eve, Lantern Festival,
and Santa Parade. The budget for these Council delivered events is $298,000.
This budget will be reviewed as part of finalising the Annual Plan.
5.25 A
decision to cancel this year’s Heritage Festival, which was scheduled to
run in April, was made 20 March 2020. The budget for this event is
$50,000, of which $35,000 was spent.
5.26 As
community events are lower cost and attract high local participation, staff
will review the schedule with a view to retaining those that can be
successfully delivered during the recovery phase and consolidating other events
in collaboration with regional community partners including the Arts Festival
Trust.
Events Fund
5.27 The
Economic Development Committee manages the Events Fund (with an economic and
community component) and a Venue Hire Fund
· Economic events $317,000
2019/20, $406,000 2020/21
· Community events $76,000
2019/20, $76,000 2020/21
· Venue Hire Fund $30,000
2019/20, $30,000 2020/21.
5.28 A
review is being undertaken of all events that have had funding paid or
committed for future events. As noted above, large scale events are not
expected to be resumed for some time and therefore the immediate objective is
to review the events for the rest of 2019/20, to have any unspent funds
returned and to reduce the budget for 2020/21, in order to assist with
community support and economic stimulus elsewhere in Council activities.
5.29 Savings
for 2019/20 would assist with funding the proposed emergency fund of $200,000
for supporting community organisations. The 2020/21 budget will be set as
part of the Annual Plan process but at this stage the recommendation is likely
to be to reduce the budget by a half to two thirds.
Recommendations
That the Council
9. Agrees that
officers will discuss timing of the Fringe Festival with the organisers; and
10. Notes that the Light Nelson festival will be
considered as part of the Annual Plan deliberations; and
11. Notes that the 2020 Nelson Arts Festival is
cancelled; and
12. Agrees to invite a proposal from the Arts
Festival Trust to replace the cancelled Arts Festival with local events
involving regional partners; and
13. Notes that the April 2020 Heritage Festival has been
cancelled; and
14. Notes that the Annual Plan deliberations report
will include recommendations for the Events Fund and Venue Hire Fund; and
15. Notes that Council delivered events will be
reviewed and adjusted as necessary during the COVID-19 recovery period.
Community Organisations Funding
5.30 Council
works in partnership with a range of community organisations to deliver social
and cultural outcomes and, has already received requests to provide support to
some key partners. Without Council support it is likely that a number of
these organisations, and facilities they manage, will not be in a position to
continue when the emergency level is lowered.
5.31 While
central government support packages provide some assistance, in some cases this
will be insufficient to prevent collapse. Some other councils across New
Zealand have also identified this risk and introduced community organisation
support packages.
5.32 An
unbudgeted funding allocation of $200,000 is proposed as an emergency fund to
assist key community organisations.
5.33 Selection
criteria would require organisations to be key partners in delivering community
outcomes, at a high risk of being unable to deliver services during recovery,
and have exhausted other funding mechanisms such as the central government
funding for COVID-19 businesses and the Creative NZ COVID-19 response
fund.
Recommendations
That the Council
16. Approves an emergency fund of $200,000 to
support community organisations; and
17. Delegates the setting of criteria and
distribution of funds to support community organisations to the Mayor, Deputy
Mayor, and the Chair of the Community Services Committee; and
18. Notes that the criteria for granting funds to
support community organisations will include that the organisation has applied
for any applicable Central Government support, for example wage subsidies.
Community
Investment Fund
5.34 The
Community Investment Fund (CIF) provides support to community groups to achieve
improved social outcomes. The fund currently has $124,000 available for
distribution via small grants of up to $5000 in the 2020/21 year. The current
process involves applications opening in April/May with funding decisions made
by an independent panel in July.
5.35 Given
the pressures on community groups post COVID-19, it seems inappropriate to
offer a small grant funding round capped at $5,000 per application. Council
could narrow the fund criteria, increase the funding allocation or distribute
the fund differently. Community groups should not be invited to apply to a fund
when they are unlikely to be successful. It is preferable for Council to
resource a few targeted projects to the level that they can succeed, rather
than a greater number of projects with limited impact or likely to fail.
5.36 Central
Government has a responsibility to help support community groups impacted by
COVID-19 and groups should be encouraged to seek support from government funds to
ensure their ongoing operations. At a local level the criteria for CIF funding
could be targeted to assist community groups to deliver projects to reduce the
impact of COVID-19 to vulnerable communities rather than business as usual
projects. The existing panel and process can be utilised for approvals.
Options
5.37 Removing
the Funding Cap:
|
Option 1: Remove the $5,000
funding cap (recommended)
|
|
Advantages
|
· Groups
can apply for meaningful funding to address vulnerable community need.
|
|
Risks and Disadvantages
|
· A risk
that the fund will be oversubscribed.
|
|
Option 2: Do not remove the
$5,000 funding cap
|
|
Advantages
|
· More
groups can be successful.
|
|
Risks and Disadvantages
|
· Groups
may see the fund as irrelevant to current needs.
· $5,000
is insufficient to deliver an effective project.
|
5.38 Modifying
CIF Criteria
|
Option 1: Narrow CIF criteria
to only consider projects that reduce the impact of COVID-19 on vulnerable
communities (recommended)
|
|
Advantages
|
· Funds will be targeted
to support vulnerable community recovery.
· Reduced
risk of oversubscription.
|
|
Risks and Disadvantages
|
· Other
worthwhile social development projects are no longer eligible.
|
|
Option 2: Retain existing
criteria
|
|
Advantages
|
· Panel
can consider a wide range of projects for approval.
|
|
Risks and Disadvantages
|
· Groups
will waste time applying to an oversubscribed fund with little chance of
success.
|
Recommendations
That the Council
19. Agrees to remove the $5000 cap on Community
Investment Fund applications in 2021/22; and
20. Agrees to modify the criteria for Community
Investment Fund applications in 2021/22 to prioritise projects that reduce the
impact of the COVID-19 emergency on vulnerable communities; and
21. Notes that existing allocation processes
utilising the independent panel will be used to make Community Investment Fund
allocations.
Capex forecast for 30 June 2020
5.39 The
lockdown has temporarily slowed Council’s capital delivery program. That
aside, staff and consultants are still working from home on the delivery of the
capital works programme.
5.40 Notwithstanding
this adjustment, the anticipated forecast expected to the end of June will not
be achieved. Again, assuming that physical works will only commence again on
site at the end of May, the forecast spend is as below:
|
Activity
|
Approved Budget 2019/20
|
Original Forecast 2019/20
|
Revised COVID-19 Forecast 2019/20
|
|
|
‘000s
|
‘000s
|
‘000s
|
|
Corporate
|
3,502
|
3,109
|
2,373
|
|
Parks & Active Recreation
|
9,364
|
7,587
|
6,502
|
|
Social
|
2,824
|
1,891
|
1,807
|
|
Economic
|
590
|
590
|
290
|
|
Transport
|
11,809
|
10,424
|
6,554
|
|
Environmental Management
|
575
|
565
|
635
|
|
Wastewater
|
3,617
|
3,065
|
2,720
|
|
Stormwater
|
2,247
|
2,226
|
1,888
|
|
Water Supply
|
4,415
|
3,985
|
3,646
|
|
Flood Protection
|
4,606
|
3,369
|
2,943
|
|
Solid waste
|
31
|
31
|
31
|
|
Total
|
43,579
|
36,842
|
29,389
|
|
COVID-19 scenario assumes an eight week shut down period
with capital works resuming 1 June. Figures exclude capital staff time and
vested assets.
|
Other income
5.41 There
will be impacts on other sources of Council income in the current year and
potentially into 2020/21. The quantum of the impact is not known at this stage
and it is difficult to accurately forecast a yearend outturn.
5.42 Dividends
are received from Council Controlled Trading Organisations (CCTOs) and used to
offset rates, with current year budgeted income from Port Nelson Limited of
$2.75 million, Nelson Airport Limited $400,000, and Nelmac $449,000. It is too
early to forecast the potential impact on these dividends. Port Nelson
Limited paid a special dividend in September 2019 of $400,000 per council.
5.43 Commercial
water sales ($410,000) and trade waste income ($260,000) for the quarter will
also be impacted.
5.44 Resource
consent ($348,000) and building consent fees ($609,000) budgeted for the last
quarter are also at risk depending on the length of the lockdown and the
ongoing financial impact on households and businesses.
5.45 Parking
fees ($154,000) and infringement fees ($168,000) budgeted income has been
impacted by the lockdown, but has the potential to be adversely affected for a
longer period of time due to the ongoing economic impact on the retail and
hospitality sectors.
5.46 There
will be impacts for venue hire, particularly Trafalgar Centre, Trafalgar Park
and Saxton facilities, but these will be partially offset by expenditure
savings.
Business
support
5.47 The
COVID-19 emergency is not just a health emergency, but will be the most severe
economic event since the Great Depression. Immediate business support and
advice is being provided by the Nelson Regional Development Agency, as well as
the Nelson Tasman Chamber of Commerce, the Ministry of Business, Innovation and
Employment and other organisations.
5.48 One
of the main ways Council can assist is to maximise the capital programme that
can be delivered to help stimulate the economy and create jobs. Officers are
looking at what can be achieved through resuming projects stalled by COVID 19
and bringing forward other capital projects. Officers are also working with
regional partners to assemble a list of projects suitable for government
support through its economic rescue package.
5.49 Council
is making early payments to suppliers in order to assist businesses with their
cash flow.
5.50 The
usual recovery process following an emergency will, in this case, be heavily
focused on the economy. An economic stimulus package will be a key task of the
recovery phase.
6. Conclusion
6.1 Although
the situation arising from COVID-19 is continuing to change daily, it is clear
that there will be changes to our communities and Council which will continue
for several years. This report provides an initial Council response to
the emergency, but further changes will be need to be considered, including
through the Annual Plan and Long Term Plan.
Author: Pat
Dougherty, Chief Executive
Attachments
Nil
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Important considerations for decision making
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1. Fit
with Purpose of Local Government
The recommendations in this report support the
social, economic, environmental and cultural well-being of communities in the
present and for the future including through responding to the COVID-19
emergency, supporting businesses effected by the shutdown and proposing
actions to support community organisations that contribute to the wellbeing
of Nelson residents.
|
|
2. Consistency
with Community Outcomes and Council Policy
The recommendations in this report align with the
following community outcomes:
· Our
communities are healthy, safe, inclusive and resilient
· Our infrastructure is efficient, cost effective and meets
current and future needs
· Our
Council provides leadership and fosters partnerships, a regional perspective
and community engagement
· Our region
is supported by an innovative and sustainable economy.
|
|
3. Risk
There are financial and legal risks arising from
responding quickly to the COVID-19 emergency. These are being managed through
review of reports and recommendations and obtaining advice as required.
The financial risks include that what is likely to unfold over the next 18
months may be significantly different to what is included in the Annual Plan.
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|
4. Financial
impact
Estimates of impacts on income and expenditure have
been provided where this information is available, however it is too soon to
quantify all effects of the COVID-19 shutdown on Council budgets and
activities.
|
|
5. Degree
of significance and level of engagement
The matters covered by this report will be
significant to many members of the Nelson community. However, this
emergency is unprecedented and in order to provide timely financial relief
and some certainty to businesses, community groups and residents, no
consultation is proposed.
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|
6. Climate
Impact
Climate impact has not been considered in the
preparation of this report.
|
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7. Inclusion
of Māori in the decision making process
No engagement with Māori has been undertaken in
the preparation of this report.
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8. Delegations
The matters in this report are across Committee and
Council delegations, therefore this report is being brought to Council.
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Nelson City Council