Agenda of Council - 18 March 2021

Council Values

Following are the values agreed during the 2019 - 2022 term:

A. Whakautetanga: respect

B. Kōrero Pono: integrity

C. Māiatanga: courage

D. Whakamanatanga: effectiveness

E. Whakamōwaitanga: humility

F. Kaitiakitanga: stewardship

G. Manaakitanga: generosity of spirit Karakia Timatanga

Nelson City Council

18 March 2021

Karakia Timatanga

1. Apologies

Nil

2. Confirmation of Order of Business

3. Interests

3.1 Updates to the Interests Register

3.2 Identify any conflicts of interest in the agenda

4. Public Forum

5. Confirmation of Minutes

5.1 18 February 2021 11 - 22

Document number M15422

Recommendation

That the Council

1. Confirms the minutes of the meeting of the Council, held on 18 February 2021, as a true and correct record.

6. Recommendations from Committees

6.1 Environment and Climate Committee 17 February 2021

6.1.1 Biosecurity Annual Review

Recommendation to Council

That the Council

1. Approves the Operational Plan 2020-21 for the Tasman-Nelson Regional Pest Management Plan (A2486628), specifically as it relates to Nelson City Council’s area.

6.2 Community and Recreation Committee - 4 March 2021

6.2.1 Community and Recreation Fees and Charges 2021/22 and removal of Rates Remission for Cemeteries

Recommendation to Council

That the Council

1. Agrees to consult on the removal of the Rates Remission Policy for cemeteries; and

2. Agrees the cemeteries remission changes to be consulted on within the Consultation Document to the Long Term Plan 2021-31.

7. Mayor's Report 30 - 35

Document number R22721

Recommendation

That the Council

1. Receives the report Mayor's Report (R22721) and its attachment (A2585869).

8. Council Status Report - 18 March 2021 36 - 38

Document number R22716

Recommendation

That the Council

1. Receives the report Council Status Report - 18 March 2021 (R22716).

9. Adoption of the Consultation Document for the Long Term Plan 2021-31 and Related Documents 39 - 455

Document number R22525

Recommendation

That the Council

1. Receives the report Adoption of the Consultation Document for the Long Term Plan 2021-31 and Related Documents (R22525) and its attachments (A2563695, A2573241, A2558353, A2562891, A2258406, A2508977, A2546062, A2364365, A2533099, A2554237, A2380354, A2587614, A2463444 and A2496998); and

2. Resolves that setting an unbalanced budget for years 2022/23 and 2023/24 of the Long Term Plan is prudent in terms of section 100 of the Local Government Act 2002 given the ongoing effects of the COVID-19 pandemic, on the local economy and its ratepayers, having had regard to the matters in section 100(2) of the Local Government Act 2002; and

3. Adopts the following documents as supporting information for Nelson’s Long Term Plan Consultation Document as required by section 93G of the Local Government Act 2002:

· Community Outcomes (A2573241)

· Financial Statements (Accounting Information) (A2558353)

· Funding Impact Statement (A2562891)

· Treasury Management Policy (A2258406)

· Forecasting Assumptions (A2508977)

· Activity Summaries (A2546062)

· Infrastructure Strategy (A2364365)

· Financial Strategy (A2533099)

· Statement on Fostering Māori Participation in Decision Making (A2554237)

· Population Growth and Demographics report (A2380354)

· Supporting information for a New Company Model for Nelson Airport and Port Nelson – (A2587614); and

4. Adopts the following for concurrent consultation under the provisions of s82 of the Local Government Act 2002 having considered all the reasonably practicable options:

· Rates Remission Policy (A2463444)

· Revenue and Financing Policy (A2496998); and

5. Agrees that having considered the Council’s Significance and Engagement Policy and the importance of other matters to the district and its communities, that the key issues and choices facing Council and the district are included in the Consultation Document (A2563695); and

6. Adopts the Long Term Plan 2021-31 Consultation Document (A2563695) for release as the basis for community consultation in accordance with the provisions of the Local Government Act 2002; and

7. Agrees that the consultation approach (in paragraphs 5.12 to 5.15) includes sufficient steps to ensure the consultation process will be sufficiently accessible to the public and will be as widely publicised as reasonably practicable and in a manner appropriate to its purpose and significance; and

8. Delegates the Mayor and Chief Executive to make any necessary minor editorial amendments prior to the documents being released for public consultation.

10. Review of the Development Contributions Policy 2018 456 - 558

Document number R22680

Recommendation

That the Council

1. Receives the report Review of the Development Contributions Policy 2018 (R22680) and its attachments (A2538607 and A2502141); and

2. Adopts the draft Development Contributions Policy 2021 and consultation document for consultation alongside the Long Term Plan 2021-2031 consultation process; and

3. Approves the consultation approach (set out in paragraph 8) and agrees:

(a) the plan includes sufficient steps to ensure the Consultation Document will be reasonably accessible to the public and will be publicised in a manner appropriate to its purpose and significance; and

(b) the plan will result in the Consultation Document being as widely publicised as is reasonably practicable as a basis for consultation.

11. Saltwater Creek Bridge - Gift to the Brook Waimārama Sanctuary Trust 559 - 564

Document number R22596

Recommendation

That the Council

1. Receives the report Saltwater Creek Bridge - Gift to the Brook Waimārama Sanctuary Trust (R22596) and its attachment (A2565116); and

2. Approves the gifting of the old Saltwater Creek Bridge to the Brook Waimārama Sanctuary Trust for installation at the Sanctuary at no charge, subject to the trust undertaking at its own expense the following matters:

a) Collection from the Marina;

b) Transportation to the Sanctuary;

c) Obtaining all consents and permits necessary;

d) Refurbishment;

e) Installation;

f) Ongoing maintenance; and

3. Agrees that the old Saltwater Creek Bridge is included as an asset of the Brook Waimārama Sanctuary Trust and appended to its lease agreement with the Council.

CONFIDENTIAL Business

12. Exclusion of the Public

Recommendation

That the Council

1. Excludes the public from the following parts of the proceedings of this meeting.

2. The general subject of each matter to be considered while the public is excluded, the reason for passing this resolution in relation to each matter and the specific grounds under section 48(1) of the Local Government Official Information and Meetings Act 1987 for the passing of this resolution are as follows:

Item	General subject of each matter to be considered	Reason for passing this resolution in relation to each matter	Particular interests protected (where applicable)
1	Council Meeting - Public Excluded Minutes - 18 February 2021	Section 48(1)(a) The public conduct of this matter would be likely to result in disclosure of information for which good reason exists under section 7.	The withholding of the information is necessary: · Section 7(2)(a) To protect the privacy of natural persons, including that of a deceased person · Section 7(2)(g) To maintain legal professional privilege · Section 7(2)(h) To enable the local authority to carry out, without prejudice or disadvantage, commercial activities
3	Economic development outcomes and strategic priorities for the Nelson Regional Development Agency Letter of Expectation	Section 48(1)(a) The public conduct of this matter would be likely to result in disclosure of information for which good reason exists under section 7	The withholding of the information is necessary: · Section 7(2)(i) To enable the local authority to carry on, without prejudice or disadvantage, negotiations (including commercial and industrial negotiations)
4	Council Confidential Status Report - 18 March 2021	Section 48(1)(a) The public conduct of this matter would be likely to result in disclosure of information for which good reason exists under section 7	The withholding of the information is necessary: · Section 7(2)(a) To protect the privacy of natural persons, including that of a deceased person · Section 7(2)(b)(ii) To protect information where the making available of the information would be likely unreasonably to prejudice the commercial position of the person who supplied or who is the subject of the information · Section 7(2)(g) To maintain legal professional privilege · Section 7(2)(i) To enable the local authority to carry on, without prejudice or disadvantage, negotiations (including commercial and industrial negotiations)

Nelson City Council Minutes - 18 February 2021

Minutes of a meeting of the Nelson City Council

Held in the Council Chamber, Civic House, 110 Trafalgar Street, Nelson

On Thursday 18 February 2021, commencing at 9.07a.m.

Present: Her Worship the Mayor R Reese (Chairperson), Councillors Y Bowater, T Brand, M Courtney, J Edgar (Deputy Mayor), K Fulton, M Lawrey, R O'Neill-Stevens, B McGurk, G Noonan, P Rainey, R Sanson and T Skinner

In Attendance: Chief Executive (P Dougherty), Group Manager Infrastructure (A Louverdis), Group Manager Environmental Management (C Barton), Group Manager Community Services (A White), Group Manager Corporate Services (N Harrison), Group Manager Strategy and Communications (N McDonald), and Governance Advisers (E-J Ruthven and K McLean)

Apologies : Nil

Karakia Timatanga

A karakia timatanga was given.

1. Apologies

There were no apologies

2. Confirmation of Order of Business

Her Worship the Mayor advised of one late item for the meeting, and that the following resolution needed to be passed for the item to be considered:

2.1 Adoption of the Draft Financial Strategy

Resolved CL/2021/001

That the Council

1. Considers the item regarding Adoption of the Draft Financial Strategy at this meeting as a major item not on the agenda, pursuant to Section 46A(7)(a) of the Local Government Official Information and Meetings Act 1987, to enable a timely decision to be made.

Noonan/McGurk Carried

3. Interests

There were no updates to the Interests Register, and no interests with items on the agenda were declared.

4. Public Forum

4.1 Steve Cross – Library Redevelopment Proposal

Mr Cross explained his concerns regarding the cost of the proposed Elma Turner Library redevelopment project and the potential for inundation in the area. He noted that the costs of library and art gallery development projects in other local authority areas was less per square metre, and suggested the proposed cost of the Elma Turner Library project could not be justified.

5. Confirmation of Minutes

5.1 10 December 2020

Document number M15348, agenda pages 8 – 11 refer
Resolved CL/2021/002
	*That the Council* 1. Confirms the minutes of the extraordinary meeting of the Council, held on 10 December 2020, as a true and correct record.
Edgar/Courtney Carried

5.2 17 December 2020

Document number M15357, agenda pages 12 - 38 refer

Resolved CL/2021/003

That the Council

1. Confirms the minutes of the meeting of the Council, held on 17 December 2020, as a true and correct record.

Her Worship the Mayor/Skinner Carried

6. Mayor's Report

Document number R22573, agenda pages 39 - 40 refer.

Her Worship the Mayor noted that current employment levels in the region were encouraging, however there was continuing pressure on housing. She noted the need for partnership between central and local government, and social support organisations to address this.
Resolved CL/2021/004
	*That the Council* 1. Receives the report Mayor's Report (R22573).
Her Worship the Mayor/Edgar Carried

7. Options for a Climatorium

Document number R20301, agenda pages 41 – 57 refer.

Iain Sheves, Wakatū Incorporation Group General Manager Property and Commercial (Strategy and Risk), joined the meeting via audio-visual link.

The meeting was adjourned from 9.30a.m. to 9.39a.m.

Consultant Chris Ward, of Policy Works Ltd, presented the report.

Mr Sheves gave a PowerPoint presentation (A2578224), and together with Mr Ward, he answered questions regarding:

· Wakatū Incorporation’s relationship with the Lemvig Climatorium;

· The importance of local authority participation as part of the quadruple-helix model for development of a climatorium;

· Council’s ability to assist with setting up a Steering Group and provide political leadership for the project,

· the development of a virtual climatorium prior to considering whether a physical climatorium was required,

· collaboration with potential local partners and information flow between Lemvig and Nelson, and

· whether financial support for the climatorium would be sought from Council in the future.

Her Worship the Mayor advised that the meeting would move to consider the following item, Elma Turner Library Redevelopment Options, before returning to consider this item further.

Attachments

1 A2578224 - PowerPoint Presentation - Wakatū Incorporation - Climatorium

8. Elma Turner Library Redevelopment Options

Document number R21341, agenda pages 58 - 110 refer.

Consultant Chris Ward, of Policy Works Ltd, presented the report. He tabled an updated Attachment 4 to the report (A2479330), and explained that paragraph 7.4 of the report should refer to Option 4, rather than Option 3.

Iain Sheves, Wakatū Incorporation Group General Manager Property and Commercial (Strategy and Risk), gave a further PowerPoint presentation regarding the Elma Turner Library Redevelopment Project as part of the Maitahi Precinct (A2578902).

Mr Sheves answered questions regarding:

· Wakatū Incorporation’s vision for the Riverside Precinct, including the proposed land swap, the future for current lessees in the area, how the vision might change if the library were situated elsewhere, and potential timeframes for development;

· Potential design controls to mitigate the risk of inundation; and

· Wakatū Incorporation’s focus on climate change and intergenerational outcomes.

Mr Sheves left the meeting, and Her Worship the Mayor advised the meeting would return to consider further item 8, Options for a Climatorium.

Attachments

1 A2479330 - updated attachment 4 to report R21341

2 A2578902 - PowerPoint Presentation - Wakatū Incorporation - Maitahi Precinct

9. Options for a Climatorium (Item 8, cont)

Document number R20301, agenda pages 41 - 57 refer.

Her Worship the Mayor, seconded by Councillor Fulton, moved: That the Council 1. Receives the report Options for a Climatorium (R20301) and its attachment (A2398703); and 2. Supports Wakatū Incorporation’s approach of developing a business case for the development of a Climatorium; and 3. Agrees that planning for any library redevelopment in the Mahitahi River Precinct should recognise the potential development of a Climatorium on Wakatū Incorporation land; and 4. Agrees to work with Wakatū Incorporation to convene a meeting with representatives from government, industry, research institutions, and the community to explore the opportunity for Nelson to become a centre for climate change mitigation, adaptation and resilience research and innovation. Chief Executive, Pat Dougherty, answered questions regarding the effect of the proposed motion on Council’s resources, workstreams and budgets. Mr Ward answered further questions regarding the risks and disadvantages noted in the report for options two and three, how progress would be reported back to Council should the motion proceed, the centrality of relationship-building in the quadruple-helix model, and the development of a virtual climatorium prior to considering a physical climatorium building. Following discussion, and with the agreement of the meeting, the mover and seconder of the motion added an additional clause 5: 5. Requests that progress on the development of the Climatorium is reported to Council on a regular basis via the Mayor’s Report. Elected members debated the motion. During debate, Councillor O’Neill-Stevens and Councillor Lawrey raised points of order against Councillor Skinner, that under Standing Order 24.2(b), disrespectful language had been used. The points of order were upheld.
Resolved CL/2021/005
	*That the Council* *1. Receives the report Options for a Climatorium (R20301) and its attachment (A2398703); and* *2. Supports Wakatū Incorporation’s approach of developing a business case for the development of a Climatorium; and* *3. Agrees that planning for any library redevelopment in the Mahitahi River Precinct should recognise the potential development of a Climatorium on Wakatū Incorporation land; and* 4. Agrees to work with Wakatū Incorporation to convene a meeting with representatives from government, industry, research institutions, and the community to explore the opportunity for Nelson to become a centre for climate change mitigation, adaptation and resilience research and innovation; and *5. Requests that progress on the development of the Climatorium is reported to Council on a regular basis via the Mayor’s Report.*
Her Worship the Mayor/Fulton Carried
The meeting was adjourned from 11.10a.m. to 11.25a.m.

10. Elma Turner Library Redevelopment Options (Item 9, cont)

Document number R21341, agenda pages 58 - 110 refer.

Consultant, Chris Ward, of Policy Works Ltd, spoke to the report.

Mr Ward, Group Manager Infrastructure, Alec Louverdis, and Chief Executive, Pat Dougherty, answered questions regarding:

· How proposed high-level costs for a five-star green-star building were developed, and how they compared with developments by other local authorities that did not meet these specifications;

· Inclusion in the costings of all foreseeable costs of the development, including contingencies, fitout costs, landscaping and hard and soft furnishings, and fulltime professional supervision of the development;

· The proposed land swap with Wakatū Incorporation, and Wakatū Incorporation’s expectations regarding the type of building to be developed on the corner site;

· Timeframes for and the scope of negotiations with Wakatū Incorporation, how these aligned with the Long Term Plan timeframes, and the potential timeframe for construction of a new library;

· Potential design elements to mitigate any risks regarding climate resiliency, including how to meet Coastal Policy Statement requirements, and how insurance for the site might be affected;

· The procurement model for the project, should it proceed, noting a specific approach may be required;

· The potential life span of a new library building;

· Community engagement undertaken to date, and further consultation to occur through the Long Term Plan;

· Consideration of any alternative uses for the corner site.

Activity Engineer, Toby Kay, and Tonkin and Taylor Water Resources Engineer, Damian Velluppillai, along with Mr Ward, answered further questions regarding:

· projected sea level rise and potential inundation and flooding impacts for the Riverside Precinct, based on Representative Concentration Pathways 8.5M and 8.5M+;

· Reasons for taking a conservative approach sea level rise and inundation risks in relation to this project; and

· Potential mitigation measures for sea level rise and inundation risks, such as raised floor levels, raised street levels and flood walls, and how these may affect a redeveloped library on the corner site.

The meeting was adjourned from 1.12p.m. to 1.52p.m.

Officers answered further questions regarding:

· The potential costs of the project, including the deconstruction of 23 Halifax Street as a part of this project;

· Additional timeframes should further consideration be given to redeveloping a library on a different site in the city;

· Inundation mitigation works to be undertaken along the Maitai River;

· Land swap negotiations with Wakatū Incorporation, including levels of car parking to be included for the redevelopment of the library, and further development of the Riverside Precinct over time; and

· Elements to be incorporated into a high-specification building, such as a specialised library fit-out and an archive facility.

Councillor Fulton, seconded by Councillor McGurk, moved:

That the Council

1. Receives the report Elma Turner Library Redevelopment Options (R21341) and its attachments (A2411462, A2478433, A2572096 and A2479330); and

2. Confirms that Council’s preferred option is to build a new library building on the corner of Halifax Street and Trafalgar Street, within the Riverside Precinct, subject to agreement with Wakatū Incorporation on a land exchange involving that site and the current library site; and

3. Directs officers to enter into preliminary negotiations with Wakatū Incorporation to develop a land exchange proposal and report back; and

4. Notes that a business case will be brought to Council for final approval of the project; and

5. Notes that any agreements negotiated with Wakatū Incorporation will be subject to approval of the business case and confirmation of the location and the budget for the Elma Turner Library through the Long Term Plan 2021-2031.

Elected members debated the motion.

During debate, Her Worship the Mayor raised a point of order against Councillor Skinner, that under Standing Order 24.2(d) a misleading statement had been made. The point of order was upheld, and the statement was withdrawn.

Resolved CL/2021/006

That the Council

1. Receives the report Elma Turner Library Redevelopment Options (R21341) and its attachments (A2411462, A2478433, A2572096 and A2479330); and

3. Directs officers to enter into preliminary negotiations with Wakatū Incorporation to develop a land exchange proposal and report back; and

4. Notes that a business case will be brought to Council for final approval of the project; and

Fulton/McGurk Carried

A division was called:

For

Her Worship the Mayor (Chairperson)

Cr Bowater

Cr Brand

Cr Courtney

Cr Edgar

Cr Fulton

Cr Lawrey

Cr O'Neill-Stevens

Cr McGurk

Cr Noonan

Cr Skinner

Against

Cr Rainey

Cr Sanson

Abstained/Interest

The motion was carried 11 - 2.

Extension of Meeting Time
Resolved CL/2021/007
	*That the Council* *1. Extends the meeting time beyond six hours, pursuant to Standing Order 4.2.*
Edgar/Bowater Carried
The meeting was adjourned from 2.58p.m. to 3.08p.m.

11. Adoption of the Draft Financial Strategy

Document number R22545, late items agenda pages 3 - 21 refer.

Group Manager Corporate Services, Nikki Harrison, and Manager Finance, Clare Knox, presented the report. Ms Harrison and Ms Knox answered questions regarding the operation and capital expenditure amounts between 2032 and 2051, the proposal to review the target return of taxable profits from Nelmac Limited, and the use of rates collected over the next 10 years.
Resolved CL/2021/008
	*That the Council* *1. Receives the report Adoption of the Draft Financial Strategy (R22545) and its attachment (A2533099); and* 2. Adopts the Draft Financial Strategy (A2533099).
Edgar/Bowater Carried

12. Exclusion of the Public

Resolved CL/2021/009

That the Council

1. Excludes the public from the following parts of the proceedings of this meeting.

Her Worship the Mayor/Skinner Carried

Item	General subject of each matter to be considered	Reason for passing this resolution in relation to each matter	Particular interests protected (where applicable)
1	Extraordinary Council Meeting - Confidential Minutes - 10 December 2020	Section 48(1)(a) The public conduct of this matter would be likely to result in disclosure of information for which good reason exists under section 7.	The withholding of the information is necessary: · Section 7(2)(b)(ii) To protect information where the making available of the information would be likely unreasonably to prejudice the commercial position of the person who supplied or who is the subject of the information · Section 7(2)(i) To enable the local authority to carry on, without prejudice or disadvantage, negotiations (including commercial and industrial negotiations)
2	Council Meeting – Confidential Minutes – 17 December 2020	Section 48(1)(a) The public conduct of this matter would be likely to result in disclosure of information for which good reason exists under section 7.	The withholding of the information is necessary: · Section 7(2)(a) To protect the privacy of natural persons, including that of a deceased person · Section 7(2)(g) To maintain legal professional privilege · Section 7(2)(h) To enable the local authority to carry out, without prejudice or disadvantage, commercial activities
3	Recommendations from Committees Strategic Development and Property Subcommittee – 11 February 2021 Strawbridge Square Improvements Brook Valley Holiday Park Long Term Occupancy Compliance	Section 48(1)(a) The public conduct of this matter would be likely to result in disclosure of information for which good reason exists under section 7.	The withholding of the information is necessary: · Section 7(2)(a) To protect the privacy of natural persons, including that of a deceased person · Section 7(2)(g) To maintain legal professional privilege · Section 7(2)(h) To enable the local authority to carry out, without prejudice or disadvantage, commercial activities

The meeting went into confidential session at 3.15p.m. and resumed in public session at 3.40p.m.

Restatements

It was resolved while the public was excluded:

CONFIDENTIAL: Recommendation from Strategic Development and Property Subcommittee – Strawbridge Square Improvements

That the Council

2. Agrees that Report (R13655), Attachments (A2372815 and A2416789) and the decision remain confidential at this time.

CONFIDENTIAL: Recommendation from Strategic Development and Property Subcommittee – Brook Valley Holiday Park Long Term Occupancy Compliance

That the Council

9. Agrees that Report R21432, attachments (A2505899 and A2568730) and the decision remain confidential at this time.

Karakia Whakamutunga

A karakia whakamutunga was given.

There being no further business the meeting ended at 3.42p.m.

Confirmed as a correct record of proceedings:

Chairperson Date

Item 9: Adoption of the Consultation Document for the Long Term Plan 2021-31 and Related Documents

Council

18 March 2021

REPORT R22525

Adoption of the Consultation Document for the Long Term Plan 2021-31 and Related Documents

1. Purpose of Report

1.1 To adopt the Consultation Document and supporting information for the Long Term Plan 2021–31 and related documents for public consultation.

2. Summary

2.1 Council is required to consult with the community on its 10 year plan, the Long Term Plan, through a Consultation Document. The Consultation Document has been reviewed by Audit NZ as part of the required auditing process and is attached (Attachment 1). Council is also required to make available to the public supporting information that was used to develop the Consultation Document and this is also attached (Attachments 2 - 14).

3. Recommendation

That the Council

3. Adopts the following documents as supporting information for Nelson’s Long Term Plan Consultation Document as required by section 93G of the Local Government Act 2002:

· Community Outcomes (A2573241)

· Financial Statements (Accounting Information) (A2558353)

· Funding Impact Statement (A2562891)

· Treasury Management Policy (A2258406)

· Forecasting Assumptions (A2508977)

· Activity Summaries (A2546062)

· Infrastructure Strategy (A2364365)

· Financial Strategy (A2533099)

· Statement on Fostering Māori Participation in Decision Making (A2554237)

· Population Growth and Demographics report (A2380354)

· Supporting information for a New Company Model for Nelson Airport and Port Nelson – (A2587614); and

4. Adopts the following for concurrent consultation under the provisions of s82 of the Local Government Act 2002 having considered all the reasonably practicable options:

· Rates Remission Policy (A2463444)

· Revenue and Financing Policy (A2496998); and

6. Adopts the Long Term Plan 2021-31 Consultation Document (A2563695) for release as the basis for community consultation in accordance with the provisions of the Local Government Act 2002; and

8. Delegates the Mayor and Chief Executive to make any necessary minor editorial amendments prior to the documents being released for public consultation.

4. Background

4.1 Every three years Council is required, under the Local Government Act 2002, to prepare and adopt a Long Term Plan containing Council’s 10 year work programme including all the services and activities it plans to deliver and the estimated costs of those. Council is required to consult with the community on its Long Term Plan through a Consultation Document.

4.2 The Consultation Document must “provide an effective basis for public participation in local authority decision-making processes” relating to the Long Term Plan. It needs to explain key issues, provide options for consideration and give information on how Council proposals will impact on rates and debt. It must also include a summary of Council’s Financial Strategy and Infrastructure Strategy, changes to funding arrangements, changes to levels of service and changes to rates and debt levels.

4.3 In developing the Long Term Plan 2021-31, Council has held over 70 workshops to discuss key issues and approaches. This includes committee workshops to provide feedback on activity management plans.

4.4 Iwi have been included in engagement processes with eight hui held to discuss activity management plans. Council has also held 21 pre-engagement meetings to further understand the community’s needs and expectations.

4.5 Most recently, Council held workshops in December 2020, January 2021 and February 2021 to review the overall work programme and provide guidance for the Consultation Document. Officers have worked with the Mayor and elected members to develop the Consultation Document, which outlines key questions for community feedback.

4.6 The Consultation Document is now ready for adoption. A design version of the Consultation Document will be circulated separately.

4.7 The Consultation Document and supporting documents were audited by Audit NZ. The Consultation Document, when published, will include a report from the Auditor General confirming that it meets its purpose and discussing the quality of the underlying information and assumptions.

5. Discussion

Requirements for financial considerations

5.1 Council needs to consider the financial prudency requirements of sections 100 and 101 of the Act when developing the Financial Strategy. Council must make adequate and effective provisions in the Long Term Plan to meet the expenditure needs identified in the Plan. Council considered this when adopting the Draft Financial Strategy on 18 February 2021.

Unbalanced Budget

5.2 Following COVID-19, Council is proposing through the Consultation Document to have an unbalanced budget for years 2022/23 and 2023/24.

5.1 The Local Government Act 2002 (section 100) requires that local authorities must ensure that each year’s projected operating revenues are set at a level sufficient to meet that year’s projected operating expenses. However, the Act also provides that a local authority may set revenues at a different level if it resolves that it is financially prudent to do so, having regard to:

(a) the estimated expenses of achieving and maintaining the predicted levels of service provision set out in the long-term plan, including the estimated expenses associated with maintaining the service capacity and integrity of assets throughout their useful life; and

(b) the projected revenue available to fund the estimated expenses associated with maintaining the service capacity and integrity of assets throughout their useful life; and

(c) the equitable allocation of responsibility for funding the provision and maintenance of assets and facilities throughout their useful life; and

(d) the funding and financial policies adopted under LGA (2002) section 102 .

5.2 The following discusses the consideration of points a-d above.

5.3 The balanced budget benchmark is normally at least 100%, i.e. that revenue for the year (excluding development contributions, financial contributions, vested assets, gains on derivative financial instruments, and revaluations of property, plant, or equipment) exceeds operating expenses (excluding losses on derivative financial instruments and revaluations of property, plant, or equipment).

5.4 Through the adoption of this Long Term Plan, Council plans to meet the financial benchmarks included in the Long Term Plan disclosure statement, apart from the balanced budget benchmark for years 2022/23 and 2023/24.

5.5 In 2022/23 and 2023/24 this benchmark is planned to be 98% and 99% respectively. This reflects the ongoing effects of the COVID-19 pandemic, on the local economy and its ratepayers.

5.6 In terms of the requirements of section 100(2) of the LGA, the Long Term Plan provides for continuation of levels of service and maintaining assets and facilities. Furthermore, Council has relatively low debt and a strong balance sheet and the additional funding will not impact on its ability to meet current and future level of service objectives.

5.7 Given Council’s continued funding of depreciation and operating expenditure (with the exception of the phasing in of the depreciation on the 2020 revaluation of Three Waters assets), the unbalanced budget for years 2022/23 and 2023/24 of the Long Term Plan does not affect Council’s ability to maintain the service capacity and integrity of its assets throughout their useful life.

Commercial Differential

5.8 Council proposes to continue to reduce the proportion of rates collected from commercial rates by 0.5% per year for the first three years of the Long Term Plan (reviewed annually). This would be expanded from central city and Stoke businesses to apply to all commercial ratepayers. This will mean residential properties will see rates increases of at least 0.4% more than otherwise.

5.9 Reducing the commercial differential reduces the rates collected from the commercial sector and allows a re-balancing of the relative rating contributions from commercial and residential properties. It also keeps businesses competitive relative to other centres that do not have such a charge.

Funding Impact Statement

5.10 Council approved a number of changes to the Funding Impact Statement and Rates Remissions Policy at its meeting of 17 December 2020. Subsequent to that meeting Council has discussed at a workshop a proposal to amend the Uniform Annual General Charge (UAGC).

Uniform Annual General Charge (UAGC)

5.10.1 Council sets a flat charge per rating unit - the UAGC - which is currently 14% of rates collected. It is a fixed charge for services that every property receives, irrespective of its land value. It also serves to reduce the extremes of rates paid by the highest valued properties. Increased infrastructure work, particularly in wastewater, stormwater and flood protection are funded through a fixed targeted rate per property, and the effect of the increased work programme and expenditure for these puts an increased rating burden on lower valued properties.

5.10.2 Therefore it is proposed to reduce the proportion of rates collected from the UAGC from 14% of total rates (excluding water charges, Clean Heat Warm Homes, and the Solar Saver rates) to 13%.

5.10.3 With the adjustment to the commercial differential it was expected that the rates increases for residential would be at least 0.4% higher than the overall increase in rates required of 5.7%, and by adjusting the UAGC to 13%, the lowest value properties would see rates increases of 6.1% compared to the highest value properties which would go up 7.99%.

5.10.4 Without this adjustment the lowest value residential properties would see rates increases of 6.7% compared to the highest value properties which would go up 6.92%.

5.11 The amendments from 17 December and proposed change to the UAGC have been included in the Consultation Document.

Consultation

5.12 Council is required to undertake a special consultative procedure to seek feedback to inform the Long Term Plan 2021-31 as required by section 93(2) of the Local Government Act 2002.

5.13 The aim of the consultation process is to:

5.13.1 improve public awareness and understanding on Council’s Long Term Plan

5.13.2 seek public views on the key issues, proposals and options for the Long Term Plan

5.13.3 meet statutory requirements for consultation on the Long Term Plan and related decisions.

5.14 The public will be made aware of the consultation (which will run for four and a half weeks, 22 March to 21 April 2021) through a range of means, including: an eight page summary of the Consultation Document sent to every household, a letter delivered to every household, press releases, articles in Our Nelson, meetings, radio segments, Council’s social media channels and Council’s website.

5.15 Council is also consulting on a number of other matters at the same time as the Consultation Document. These other consultations will either be combined in the Consultation Document or be concurrent. To simplify the process for the community, a single submission form will be used for all feedback on the Consultation Document and related consultations.

Combined consultation

5.16 The following consultations are combined with the Consultation Document:

Establishment of a Holding Company

5.16.1 Council is proposing to establish a holding company with Tasman District Council for Nelson Airport and Port Nelson. Council must, under section 56 of the Act, consult in accordance with section 82 of the LGA. However, inclusion of the proposal within the Consultation Document, which uses the Special Consultative Procedure is considered appropriate.

5.16.2 Attachment 11 (A2587614) contains additional information on the Holding Company proposal and is included for adoption by Council as supplementary information for the Consultation Document.

York Valley Landfill Fees and Charges

5.16.3 The fees and charges for the York Valley landfill are set by the Nelson Tasman Regional Landfill Business Unit but are consulted on separately by each Council. The proposed fees are included in the Consultation Document.

Concurrent consultation

5.17 Consultation on the following will be undertaken concurrently with the Consultation Document:

Development Contributions Policy

5.17.1 This policy is being considered in a separate report at this meeting.

Revenue and Financing Policy

5.17.2 At its meeting of 17 December 2020 Council approved the Revenue and Financing Policy for concurrent consultation through the Long Term Plan process. References to community housing have been removed from the policy as it will be released after the settlement date when Council is no longer the owner.

Rates Remission Policy

5.17.3 A number of proposed changes to the Rates Remission Policy were agreed at Council’s meeting of 17 December 2020. These changes are aimed at reducing administrative burdens, providing consistency, and better meeting the needs of ratepayers.

5.17.4 There has been consideration, at the Community and Recreation Committee meeting of 4 March 2021, of a proposal to remove the Remission of Rates for cemeteries. Schedule 1 of the Local Government (Rating) Act 2002 allows for cemetery land, if under two hectares, to be non-rateable. In addition, the remission policy provides remission of rates for Nelson City Council cemeteries that are larger than two hectares. The removal of the remission will increase the overall operating costs for the two properties (Marsden Valley Cemetery and Wakapuaka Cemetery) that receive the remission and will lead to an increase in cemetery fees. This was approved at the 4 March meeting and is therefore included as an additional change to the Rates Remission Policy.

Treasury Management Policy

5.18 Currently the Treasury Management Policy (approved by Council 19 September 2019) does not allow for the possibility of direct lending from the Local Government Funding Agency to any Council Controlled Trading Organisations. If the Holding company proposal proceeds then the Treasury Management Policy would need to be updated to allow for this lending to occur.

5.19 The Consultation Document also contains a proposal to increase the debt to revenue cap to 175% and the Treasury Management Policy would need to be amended to reflect that.

5.20 Necessary changes will be made following deliberations on the Long Term Plan and an updated Treasury Management Policy will be brought to Council for adoption before the Long Term Plan adoption.

Activity Management Plans

5.21 Activity management plans will be available as linked documents on the website with a covering page explaining they are not a current reflection of the LTP and will be updated and adopted in Sept/Oct 2021. There is a separate covering page for the Property and Facilities Activity Management Plan explaining that it is not yet approved by Council.

Assumptions

5.22 Council adopted a set of Forecasting Assumptions as supporting information for the Consultation Document at its meeting on 12 November 2020. A small number of changes have been made at the request of Audit NZ as well as some updates from staff. These are highlighted in the revised version in Attachment (A2508977). The main changes are to the “delivery of the capital programme” assumption and moving the impact of a change to the Three Waters assumption to “high”. There was also some additional information requested by Audit NZ on revaluation of assets.

Options

5.23 Development of a Consultation Document is a legal obligation under sections 93B and 93C of the Act. Council can choose to amend the Consultation Document or delay its release to the community but that would put at risk completion of the Long Term Plan within statutory timeframes.

Option 1: Adopts Consultation Document for public consultation
Advantages	· Fulfils requirements of the Local Government Act 2002 · Provides sufficient time for public consultation, hearings and deliberations, and adoption of the Long Term Plan 2021-31
Risks and Disadvantages	· None
Option 2: Delay adoption of Consultation Document for public consultation
Advantages	· Allows more time for elected members to discuss LTP issues
Risks and Disadvantages	· Unlikely to meet the statutory timeframes

6. Conclusion

6.1 Council has a statutory obligation to develop a Consultation Document to support the public to engage in the planning of the Long Term Plan 2021-31. It is recommended Council adopts the Consultation Document for public consultation.

7. Next Steps

7.1 A range of engagement and communications activities are proposed to make the community aware of the consultation and encourage submissions. In May Council will consider the submissions received, hold hearings and deliberations. Contingency plans will be activated should Nelson be at COVID-19 Alert Level 2 or higher during the period.

Author: Nicky McDonald, Group Manager Strategy and Communications

Attachments

Attachment 1: A2563695 Consultation Document (Circulated separately) ⇨

Attachment 2: A2573241 Community Outcomes ⇩

Attachment 3: A2558353 Financial Statements ⇩

Attachment 4: A2562891 Funding Impact Statement ⇩

Attachment 5: A2258406 Treasury Managment Policy (LIability Management Policy, Investment Policy) ⇩

Attachment 6: A2508977 Forecasting Assumptions ⇩

Attachment 7: A2546062 Council Activity Summaries ⇩

Attachment 8: A2364365 Infrastructure Strategy ⇩

Attachment 9: A2533099 Financial Strategy ⇩

Attachment 10: A2554237 Statement on Fostering Māori Participation in Council Decision-making ⇩

Attachment 11: A2380354 Population Growth and Demographics ⇩

Attachment 12: A2587614 New Company Model for Nelson Airport and Port Nelson ⇩

Attachment 13: A2463444 Draft Rates Remission Policy ⇩

Attachment 14: A2496998 Revenue and Financing Policy ⇩

Important considerations for decision making

1. Fit with Purpose of Local Government

Adoption of the Consultation Document and related documents is required under section 93 of the Local Government Act 2002.

It supports the purpose of Local Government by enabling our community to have input to decisions that will impact wellbeing.

2. Consistency with Community Outcomes and Council Policy

Consultation on the Consultation Document and related documents supports all community outcomes.

3. Risk

Consultation reduces the risk that Council will fund services or projects that are not supported by part or all of the community. A broad programme of engagement over the consultation period reduces the risk that feedback is at a low level or not representative.

4. Financial impact

Consultation will be undertaken within existing budgets. The financial impact of the Long Term Plan itself is as set out in the attached documents.

5. Degree of significance and level of engagement

The Consultation Document and supporting documents are of high significance because they set out Council’s 10 year work programme. Public consultation will use a special consultative procedure.

The following key issues have been included in the Consultation Document:

- Climate Change

- COVID-19

- Debt vs Rates

- Nelson City Centre

- Community Facilities and Partnerships

- Housing Affordability and Intensification

- Environment

- Infrastructure

6. Climate Impact

The impact of climate change has been considered as part of development of the Long Term Plan and in the supporting documents. Climate change is one of the key issues in the Consultation Document.

7. Inclusion of Māori in the decision making process

A number of iwi hui have been held to provide early feedback on the Activity Management Plans which have then fed into the Long Term Plan process.

8. Delegations

The Council has responsibility for considering the development of the Long Term Plan and its related processes.

Item 9: Adoption of the Consultation Document for the Long Term Plan 2021-31 and Related Documents: Attachment 8

PDF Creator

Item 10: Review of the Development Contributions Policy 2018

Council

18 March 2021

REPORT R22680

Review of the Development Contributions Policy 2018

1. Purpose of Report

1.1 To approve for public consultation, concurrently with the Long Term Plan 2021-2031 (LTP), the attached draft Development Contributions Policy 2021 and consultation document.

2. Summary

2.1 This report:

2.1.1 Outlines Council’s statutory obligations in respect of development contributions; and

2.1.2 Summarises the review process which has been undertaken in respect of the Council’s current policy – the Policy on Development Contributions 2018 (the 2018 Policy); and

2.1.3 Outlines the options for changes to the 2018 Policy; and

2.1.4 Recommends to Council that it adopts a draft policy for development contributions (the draft 2021 Policy) for public consultation alongside the Long Term Plan 2021-31 (LTP) consultation process.

2.2 A summary of the proposed development contributions (DCs), along with the current DCs, for an example greenfield and intensification/brownfield site is shown below:

	2021 draft Policy (excl. GST)		2018 Policy (excl. GST)
	Intensification	Greenfield	Intensification	Greenfield
Category	Any intensification per HUD	600sqm site @ $350,000	100sqm site @ $350,000	600sqm site @ $350,000
Stormwater	$5,520	$5,520	$3,460	$3,460
Wastewater	$6,570	$6,570	$5,360	$5,360
Water supply	$3,620	$3,620	$2,200	$2,200
Transportation	$1,720	$1,720	$1,470	$1,470
Community Infrastructure	$2,430	$2,430	$300	$300
Infrastructure total	$19,860	$19,860	$12,790	$12,790
Neighbourhood reserves (greenfield)	$ -	$10,725	$70,000	$23,333
Neighbourhood reserves improvement (intensification)	$130	$ -	$300	$ -
General reserves	$730	$730	$1,240	$1,240
Reserves total	$860	$11,455	$71,540	$24,573
Total	$20,720	$31,315	$84,330	$37,363

3. Recommendation

That the Council

1. Receives the report Review of the Development Contributions Policy 2018 (R22680) and its attachments (A2538607 and A2502141); and

2. Adopts the draft Development Contributions Policy 2021 and consultation document for consultation alongside the Long Term Plan 2021-2031 consultation process; and

3. Approves the consultation approach (set out in paragraph 8) and agrees:

(b) the plan will result in the Consultation Document being as widely publicised as is reasonably practicable as a basis for consultation.

4. Background

4.1 Under Section 102(2)(d) of the Local Government Act 2002 (LGA), every local authority must adopt a policy on development contributions or financial contributions. The current 2018 Policy was adopted by Council on 15 May 2018 as part of the Long Term Plan 2018-28. Section 1.3 of the 2018 Policy provides:

“It is anticipated that this policy will be reviewed, and if necessary amended, at least every three years as part of the LTP process.”

4.2 A review of the 2018 Policy has been carried out by Council officers with the assistance of a consultant for financial analysis. As part of the review process, there has been a workshop with development stakeholders to discuss current issues and receive their preliminary feedback on policies which should be retained or changed and also three Council workshops. In addition, a Shape Nelson feedback process occurred, including targeting specific parties such as state integrated schools, housing providers, valuers, developers and other development professionals. A verbal update, of feedback received to date, will be provided at the meeting.

5. Discussion

5.1 The review of the 2018 Policy has considered several issues and these are addressed in the following sections:

Continuation of levying contributions from developments

5.2 Local authorities are not required to levy development contributions. Some councils choose not to levy development contributions either because they have very limited growth-related capital expenditure, or to create an additional incentive for development. However, the majority of councils (45 of 67 territorial authorities) use development contributions.

5.3 The LGA provides that the purpose of development contributions is to:

“…enable territorial authorities to recover from those persons undertaking development a fair, equitable, and proportionate portion of the total cost of capital expenditure necessary to service growth over the long term.” (s.197AA)

5.4 Contributions may be required if:

“…the effect of the developments is to require new or additional assets or assets of increased capacity and, as a consequence, the territorial authority incurs capital expenditure to provide appropriately for (a) reserves; (b) network infrastructure; (c) community infrastructure.” (s.199)

5.5 Development and financial contributions are only a small source (approximately 2%) of Nelson’s total revenue. If development contributions were to be removed altogether there would be an additional financial burden on rates or some other means to meet this funding gap. This is not considered to be fair or equitable for the purposes of the LGA as outlined in section 5.3 above, and accordingly the rationale behind the draft Policy is that those who cause the need for new infrastructure and services pay their share of that cost.

Options

Recommendation - Retain development contributions
Advantages	· Ensures a fair and equitable apportionment of capital costs to those who create growth.
Risks and Disadvantages	· May be seen by some developers as a disincentive to develop
Remove development contributions
Advantages	· Decreases costs for developers.
Risks and Disadvantages	· Creates a revenue shortfall that would need to be met from rates. · Placing the costs of growth on existing ratepayers lacks fairness and equity. · May not result in cheaper sections.

Infrastructure contributions

5.6 Under the draft 2021 Policy the development contribution charge is $19,860 (excl. GST) plus reserves per HUD or an increase of $7,070 (55%). This increase is offset by significantly lower reserves development contributions as detailed in the following sections of this report.

5.7 The infrastructure DCs are calculated using the capital programme of the draft LTP 2021/31. A summary of the proposed infrastructure DCs, along with the current DCs for an example greenfield and intensification/brownfield site is shown below:

	2021 draft Policy (excl. GST)		2018 Policy (excl. GST)
	Intensification	Greenfield	Intensification	Greenfield
Category	Any intensification per HUD	600sqm site @ $350,000	100sqm site @ $350,000	600sqm site @ $350,000
Stormwater	$5,520	$5,520	$3,460	$3,460
Wastewater	$6,570	$6,570	$5,360	$5,360
Water supply	$3,620	$3,620	$2,200	$2,200
Transportation	$1,720	$1,720	$1,470	$1,470
Community Infrastructure	$2,430	$2,430	$300	$300
Total	$19,860	$19,860	$12,790	$12,790

5.8 By way of comparison, the Council’s existing and proposed charge is significantly lower than comparable charges levied in Tasman District which were $27,013 for the Richmond area in the 2018 TDC Policy.

Reserves contributions

5.9 The reserves contribution method of calculation in the 2018 Policy has been identified as a financial barrier to intensive development of small, high value lots or unit titles. Under the current policy, all residential development pays a neighbourhood reserves DC based on the per square metre value of the land post development (currently for the equivalent of 40sqm per HUD). For apartments, townhouses and comprehensive developments located close to centres where the underlying land is valuable the neighbourhood reserves DC is currently high. In comparison, for greenfield areas, typically with larger sites further away from services and lower per square metre land values, the current neighbourhood reserves DC is much lower. Currently, the neighbourhood reserves DC is collected for the purchase of new reserves in greenfield areas.

5.10 The Nelson Tasman Future Development Strategy (FDS) identified a significant level of intensification as being necessary for accommodating growth in the region. There is now a need to programme redevelopment of existing reserves, in addition to new reserves in new subdivisions to support intensification.

5.11 In response to this issue, the draft 2021 Policy introduces a Neighbourhood Reserves (Intensification) DC for areas within the existing built urban area to replace the standard Neighbourhood Reserves DC in the 2018 Policy. Developments outside the existing built urban area will continue to pay the standard Neighbourhood Reserves DC for purchase of new reserve land in greenfield areas.

5.12 The new Neighbourhood Reserves (Intensification) DC is calculated based on a programme of works focussed on improving existing reserves in the intensification areas identified in the FDS. In the term of the 2021-2031 LTP, works to improve reserves in the City Centre, Victory and Washington intensification areas are included.

5.13 The proposed method for calculating reserves DCs for intensification recognises that Council does not generally plan to provide further reserve land in the existing built urban area but instead, improve the level of service in existing reserves so that the existing reserves will be able to serve a greater number of residents as the City intensifies.

5.14 In addition, Council Asset Managers have identified that the level of service for neighbourhood reserve land in greenfield areas is very high compared to the level of service adopted by most other councils. Therefore it is proposed to reduce the current level of service for the provision of neighbourhood reserve land from 1.7Ha per 1000 (or 40sqm per HUD) residents to 1.1Ha per 100 residents (or 26sqm per HUD).

5.15 The reduction in the level of service brings Nelson City Council in line with other councils throughout New Zealand and will reduce the cost of the neighbourhood reserves land DC for greenfield developments.

Options

Recommendation - Introduce an Intensification specific reserves DC
Advantages	· Reflects the programme of works in the Parks and Reserves Activity Management Plan · Ensures a fair and equitable apportionment of capital costs to those who create growth. · Reflects the provision of improvements planned to be made to existing reserves rather than additional land and supports Council’s intensification programme. · Consistent with the requirements of the LGA with additional land unlikely to be provided in intensification areas. · Consistent with the proposed changes to the levels of service for neighbourhood reserves.
Risks and Disadvantages	· Less consistent with the single catchment approach that the DC Policy is based on. · Adds more complexity to the Policy.
Continue to charge a DC for neighbourhood reserves land in intensification areas
Advantages	· More consistent with the one catchment approach.
Risks and Disadvantages	· Not consistent with the locations that additional land is needed to be provided to meet the proposed levels of service.

Valuations for greenfield neighbourhood reserves contributions

5.16 To simplify the calculation of the greenfield neighbourhood reserves DC, it is proposed in the draft Policy to calculate a standard fixed amount. This will be defined by using the sales of bare land in the previous year. This will remove the need for individual valuations to be provided and therefore reduce the cost to developers.

5.17 The method proposed involves collecting sales data for bare section sales over the last calendar year, calculating the per square metre land sales price for each site and then using the median value to calculate the DC based on 26sqm per lot.

5.18 The set fee will need to be updated annually. The LGA allows for DCs to be increased by PPI each year along with the requirement for Council to advertise the change. Land prices typically increase at a rate much higher than PPI so if the DC is to increase at a rate that reflects the increase in land prices, a greater level of consultation will be required.

5.19 It is therefore recommended that the neighbourhood reserves land DC is recalculated every year based on the bare land sale prices of the previous calendar year and the new DC for reserves be consulted on alongside the Annual Plan. If the Annual Plan is not consulted on, then a separate consultation process will be needed.

5.20 A summary of the proposed reserves DCs, along with the current DCs for an example greenfield and intensification/brownfield site is shown below:

	2021 draft Policy (excl. GST)		2018 Policy (excl. GST)
	Intensification	Greenfield	Intensification	Greenfield
Category	Any intensification per HUD	600sqm site @ $350,000	100sqm site @ $350,000	600sqm site @ $350,000
Neighbourhood reserves (greenfield)	$ -	$10,725	$70,000	$23,333
Neighbourhood reserves improvement (intensification)	$130	$ -	$300	$ -
General reserves	$730	$730	$1,240	$1,240
Total	$860	$11,455	$71,540	$24,573

5.21 As shown in the table above, the reserves DCs proposed in the draft Policy are significantly lower than those in the current Policy and more than offset any increase in the infrastructure DCs.

Options

Recommendation - Have a fixed Neighbourhood reserves land DC that is recalculated every year based on updated land sales data and consulted on as required by the LGA.
Advantages	· Reflects more closely the actual cost of Council purchasing land. · Reduces complication and costs for developers. · Reduces Council officer administration. · Provides certainty on costs for developers.
Risks and Disadvantages	· Additional annual consultation will be needed. This can be made more efficient when combined with the Annual Plan.
Continue to require individual valuations from developers for the purposes of calculating the Neighbourhood reserves land DC.
Advantages	· Would ensure that the amount collected by Council would most closely reflect the cost of land purchase for reserves. · Lowest cost to Council as no time needed to calculate land costs.
Risks and Disadvantages	· Continued cost and complication for developers. · More difficult for Council to administer. · Lacks certainty as to costs for developers.
Have a fixed Neighbourhood reserves land DC that is recalculated every year based on PPI.
Advantages	· Only requires recalculation of land values every three years with a DC policy update. · Lowest cost to developers.
Risks and Disadvantages	· Would result in Council not collecting enough to purchase the land required due to land prices increasing faster than PPI.

Exemptions to development contributions obligations

5.22 In addition to developments which the LGA does not permit contributions to be levied, the 2018 Policy contains the following (full or partial) exceptions to paying development contributions:

a) Residential HUDs developed within the Inner City;

b) Brownfield Intensification – Reserve Contribution 25% discount;

c) Developments which have low impact stormwater infrastructure;

d) Developments which are unable to connect to water or wastewater networks;

e) Developments which have water supplied by Tasman District Council;

f) Boundary adjustments, and subdivisions undertaken to place existing building development onto separate titles, either unit titles or freehold titles, i.e. those subdivisions that do not create additional titles and/or do not involve the erection of additional household units of demand;

g) Additions and alterations to buildings where no additional HUD is created;

h) Accessory buildings that do not create an additional unit of demand e.g. hay sheds, unserviced utility buildings;

i) Developments undertaken by entities of the Crown;

j) Social housing developments undertaken by the following organisations: Abbeyfield, Habitat for Humanity, Nelson Tasman Housing Trust and any other partnership where Council has entered into an agreement to provide social housing;

k) Development undertaken at Whakatu Marae; and

l) Utility titles (e.g. for power transformers), access ways or legal roads.

5.23 The changes in the draft 2021 Policy look to simplify the list of exemptions by removing the items in the 2018 Policy that are essentially self-evident. Examples of this are boundary adjustments and accessory buildings which clearly do not create an additional HUD.

5.24 The exemptions that remain in the 2021 Policy are:

a) Social housing developments

b) Developments undertaken by entities of the Crown

c) Development undertaken at Whakatu Marae

d) City Centre residential developments (unlimited in number)

e) Developments which have low impact stormwater infrastructure

f) Developments which have water supplied by Tasman District Council

g) Developments which are unable to connect to water or wastewater networks

5.25 An additional exemption is included in the draft 2021 Policy for State Integrated Schools.

5.26 Explanation of each of the exemptions, where they are new or have been modified, are included in the following sections.

City Centre residential waiver

5.27 The 2015 and 2018 Policies waived development contributions for up to 30 Housing Units of Demand (HUDs) per year in the City Centre and City Fringe areas. This waiver was included in response to Council’s goal of increasing the number of residents living in, or close to, the City Centre and in doing so supporting the vibrancy of the City Centre.

5.28 Since the 2015 Policy came into effect on 1 July 2015, there have been waivers of DCs for an average of around 18 HUDs per year up until the end of June 2020. Waivers for 11 HUDs have been granted to date in the 2020/21 financial year. The waiver was oversubscribed in 2016/17 and 2019/20 with developers typically delaying the timing of development to qualify for the waiver outside the oversubscribed years.

5.29 The current 30 HUDs/year limit has resulted in developers delaying the beginning of projects to ensure that they qualify for the waiver. This behaviour does not fully support the goal of a large increase in the number of residents living in the City Centre as it constrains the supply to a maximum of 30 HUDs per financial year regardless of demand or contractor availability.

5.30 Officers have discussed the issue of limiting the number of waivers in the city centre with Council Asset Managers who are supportive of removing the limit and no longer consider infrastructure capacity as a reason to justify the limit of 30 HUDs.

5.31 The draft 2021 Policy proposes the following:

a) The 30 HUD per year limit be removed so that all residential development in the City Centre qualifies for a waiver; and

b) The timing of the allocation of the exemption be changed to when resource consent or building consent is granted rather than when applied for as in the 2018 Policy; and

c) The waiver continue to be conditional on construction beginning within 12 months of the waiver being granted or 24 months if the developer can demonstrate that substantial progress has been made.

Options

Recommendation - Retain the City Centre DC waiver and remove the 30 HUD annual limit
Advantages	· Encourages City Centre residential development at a faster rate. · Removes the need for developers to artificially adjust development timing. · Requires less Council officer administration time.
Risks and Disadvantages	· A proportion of the planned infrastructure upgrades in the City Centre will continue to need to be funded by developers in other areas of the city or ratepayers.
Recommendation - Retain the City Centre DC waiver and retain the 30 HUD annual limit
Advantages	· Encourages City Centre residential development.
Risks and Disadvantages	· Developers will continue to artificially adjust development timing which will constrain supply. · A greater proportion of the planned infrastructure upgrades in the City Centre will need to be funded by developers in other areas of the city or ratepayers.
Remove the City Centre DC waiver
Advantages	· Reduces cost to ratepayers or developers in other areas of the City for growth related infrastructure.
Risks and Disadvantages	· Does not provide an incentive to develop residential dwellings in the City Centre.

Brownfield discount

5.32 The 2018 Policy has a 25% reserves contribution discount for residential development on brownfield sites. Brownfield sites eligible for the discount are defined in the policy as:

(i) Has an underlying title of 2000m2 or less; and

(ii) Creates lots of 300m2 or less; and

(iii) Is located in the Residential Zone; and

(iv) Is not located in the Services Overlay.

5.33 With the proposed changes to how the reserves DC is calculated for sites in the existing built urban area, including brownfield sites, the Neighbourhood Reserves (Intensification) reflects the need for additional investment in the existing reserves to bring them up to the standard required for intensification. The draft Long Term Plan 2021-31 currently contains approximately $27M for upgrading infrastructure for intensification of which around $8M is proposed to be funded by DCs. If this contribution is not collected in full then, over time there is likely to be a significant shortfall in growth funding that will need to be covered by rates.

5.34 It is important to note that later in this report is the recommendation that the discount for one and two bedroom dwellings that share the same title is retained from the 2018 policy. Rationale for this is detailed later in the report but relates primarily to increasing supply while also improving affordability. Other means of increasing the level of intensification will be put in place through the Intensification Action Plan and the Nelson Plan.

5.35 It is therefore recommended that the 25% reserves contribution discount be discontinued. The discount is not included in the draft 2021 Policy.

5.36 To offset the removal of the brownfield discount, the proposed changes to the Neighbourhood Reserves contribution will reduce the costs to developers in intensification areas. Additionally, second dwellings sharing a title will continue to receive a discount.

Options

Recommendation - Remove the 25% reserves contribution discount for brownfield sites
Advantages	· Ensures a fair and equitable apportionment of capital costs to those who create growth. · Ensures there is adequate funding for capacity upgrades to serve intensification.
Risks and Disadvantages	· May be seen by some developers as a disincentive to develop.
Retain the 25% reserves contribution discount for brownfield sites
Advantages	· Decreases costs for developers.
Risks and Disadvantages	· Creates a revenue shortfall that would need to be met from rates. · Placing the costs of growth on existing ratepayers and developers in other areas lacks fairness and equity.

State Integrated Schools

5.37 State Integrated Schools are identical to state schools in how they undertake education but with an identified special character and the land being privately owned. There are three State integrated schools in Nelson; Nelson Christian Academy, Garin College and St Joseph’s School.

5.38 The 2015 DCs Policy exempted State Integrated Schools but the exemption was removed in the 2018 Policy. State schools are exempt from paying DCs as they are identified as an entity of the crown.

5.39 Over the term of the 2018 DC Policy, a single request for an exemption to paying DCs was received from Nelson Christian Academy. In that case, Council approved the exemption.

5.40 The argument used against an exemption is that, because the land and buildings are not owned by the Crown, it could be sold at a profit after developing the land and not paying DCs. The risk of this happening is unlikely with all three of the Nelson state integrated schools being well established in the community.

5.41 Based on the direction provided by Council at the 23 April 2020 Council meeting, the draft 2021 DC Policy lists State Integrated Schools as exempt from DC costs.

Options

Recommendation - Exempt State Integrated Schools from DC costs
Advantages	· Provides consistency with services provided by the state schools which are exempt. · Is consistent with the Council decision during the 2018 Policy term.
Risks and Disadvantages	· Risk that sites could be sold at a profit after DC free development. · Places the costs of growth on existing ratepayers.
Continue to charge State Integrated Schools DCs
Advantages	· Growth costs borne by those that create the demand which is consistent with the purpose of DCs.
Risks and Disadvantages	· Not consistent with the Council decision during 2018 Policy term. · Inconsistent with approach to State Schools.

Extension of 1 and 2 bedroom discount

5.42 During early engagement, developers and their representatives queried why the DC discount for 1 and 2 bedroom dwellings only applied when they are located on the same title as another primary dwelling. It was suggested that this discount should be applied to sites where smaller dwellings are on their own title as the effect on the need for additional infrastructure is the same whether subdivided or not.

5.43 The original rationale for limiting the discount to dwellings sharing a title was twofold:

a) To incentivise backyard infill within the existing built urban area and thereby increase the density of residential dwellings in this area; and

b) To make developing smaller secondary dwellings more feasible for a wider range of property owners and therefore increasing the likelihood of more affordable homes being developed.

5.44 Backyard infill has been identified as an opportunity for increasing the supply of more affordable housing in Nelson. In times when housing is unaffordable for young people in particular, it is more common for parents, for example, to want to develop a secondary dwelling on their section for their children or even for themselves and for their children to occupy the primary dwelling. This type of development is typically more affordable as a result of the land owner not valuing the land under the new dwelling at full market value. This is the behaviour that Council was looking to incentivise when it adopted the discount. The discount remains consistent with the goals of the Future Development Strategy (FDS) and the draft Nelson Plan provisions.

5.45 Currently, when Council officers assess new lots created through subdivision consent for DCs there is one step as a full HUD per lot is charged. Typically, the lots are grouped in development stages that can be assessed together which limits the administrative load on Council officers. A change to allow the discount to apply for all 1 and 2 bedroom dwellings would increase the complexity of the process significantly. At issue of title following subdivision (s224), the developer would need to identify sites that would only have a 1 or 2 bedroom dwelling and the discounted DC would be applied. Then, at building consent stage, the new owner would be subject to a further DC assessment to confirm the number of bedrooms and that the DC discount still applies.

5.46 This second stage in the process has potential to require additional staff resource as the applications will likely arrive one lot at a time rather than by subdivision stage containing multiple lot. The level of processing for a single lot is similar to that for a larger subdivision stage resulting in significant officer time being required. It is likely that lot owners will be surprised by the additional DC if they plan to build a dwelling with more than two bedrooms.

Options

Recommendation - Retain discount for 1 and 2 bedroom dwellings that share a title with a primary dwelling
Advantages	· Encourages more backyard infill that is likely to be more affordable.
Risks and Disadvantages	· No financial incentive for secondary dwellings smaller than 3 bedrooms on their own title.
Extend the discount to all new 1 and 2 bedroom dwellings
Advantages	· Decreases costs for developers.
Risks and Disadvantages	· Is administratively more complex and time consuming. · No longer targets more affordable backyard infill. · Loss of income to pay for increased infrastructure needs.
Remove the discount for new 1 and 2 bedroom dwellings that share a title with a primary dwelling
Advantages	· Collects DCs necessary to pay for infrastructure upgrades. · Administratively simple.
Risks and Disadvantages	· Likely to discourage owners of smaller properties from backyard infill. · Reduces opportunities for more affordable housing.

Timing of payment - subdivision

5.47 During early engagement with developers, the issue of when DCs are paid for a subdivision was a common topic. Some developers commented that the demand on the Council infrastructure does not occur until soon after building consents are granted for each section and therefore DCs should not be required to be paid until building consent is issued.

5.48 For there to be adequate servicing of a site, Council has almost always had to provide infrastructure in advance of the development of the site. Therefore, while the actual load on the infrastructure does not occur until after building consents are issued, the loan for the capital expenditure has already been raised and therefore the financial effect of the development begins well in advance of building consents being issued.

5.49 It is therefore recommended that, for subdivision, payment of DCs is still required at the time of applying for a certificate under s.224(c) of the RMA. This provision is carried over to the 2021 Policy.

Options

Recommendation - Continue to require payment of DCs for subdivisions at the time of applying for a certificate under s.224(c) of the RMA
Advantages	· Matches the timing of collection of DCs more closely to when the financial impact is felt by Council.
Risks and Disadvantages	· Requires developers to carry the financial load for longer before they see income from section sales.
Require payment of DCs later at building consent stage
Advantages	· Reduces the financial load on developers.
Risks and Disadvantages	· Council required to carry the loan from infrastructure investment for longer before developers contribute. · Risk of section buyers being surprised by additional cost at building consent stage. · Increases costs to new home owners. · Additional administration load on Council Officers

Complexity and readability

5.50 The 2018 Policy has been criticised by users of the Policy for being overly complex. In particular the calculation assessments, waivers, discounts and statutory limits are all in different parts of the Policy.

5.51 In response to this issue, the draft 2021 Policy is split into three distinct parts; Summary of Policy, Policy Details and Assessment of Development Contributions.

5.52 The first part (Summary of Policy) contains everything a prospective developer or consultant needs to determine what the development contribution will be for a particular site and development type with the remaining two sections providing details required by the LGA. This grouping of the main information that is of interest to users is expected to make the Policy simpler to use and reduce the number of requests for assistance received by Council officers.

5.53 The format and layout of the draft 2021 Policy aligns with that in the Tasman District Council Policy.

Development agreements

5.54 The section of the draft 2021 Policy on development agreements has simplified the content of the 2018 Policy. The process remains the same (as it is detailed in the LGA), but any unnecessary detail has been removed to make the document more straightforward to implement and read.

6. Options

6.1 The Council’s options for consideration are summarised below. Officers recommend option 1, that the draft policy is approved for public consultation to be run concurrently with consultation on the draft Long Term Plan 2021-31.

Option 1: Recommend to Council that it approves the draft Development Contributions Policy for public consultation to be run concurrently with the draft Long Term Plan 2021-31.
Advantages	· The recommended Policy would allow the Council to continue to ensure a fair and equitable apportionment of capital costs across the community to service growth. · Proposed changes to the reserves development contributions reflects the changes in levels of service relating to the provision of neighbourhood preserves.
Risks and Disadvantages	· The resulting increase in the infrastructure related charge compared to the 2018 Policy may be viewed by developers as a disincentive to develop.
Option 2: Make amendments to the draft Development Contributions Policy
Advantages	· No advantages as it’s a statutory requirement to review the policy every 3 years.
Risks and Disadvantages	Amendment of the recommended Policy could mean that: · Community infrastructure needed for growth would be funded principally by rates. · The Council would face a funding shortfall for growth related infrastructure. · New capital projects required to support growth would not be funded by development contributions. · The Policy would not be completed in time to meet statutory timeframes.

7. Conclusion

7.1 The review of the 2018 Policy has concluded that:

7.2 Continuation of levying contributions from developments: Consistent with the approach taken in 45 of the 67 local authorities in New Zealand. Development contributions remain a fair and equitable source of revenue to fund the growth-related share of capital expenditure on infrastructure and community facilities.

7.3 Reserves contributions: There has been an additional Neighbourhood Reserves (Intensification) contribution added that residential developments in the existing built urban area will pay instead of the 2018 Policy Neighbourhood Reserves Land contribution. This is intended to more accurately reflect Council response in providing reserve infrastructure to areas with increased density. Additionally, the level of service for greenfield is proposed to be reduced to 1.1Ha per 1000 residents which has the effect of reducing the DC cost associated with neighbourhood reserves.

7.4 Exemptions to development contributions obligations: The draft 2021 Policy removes redundant and self-evident exemptions. The 30 HUD annual limit on DC waivers for City Centre residential development is removed. The Brownfield reserves discount of 25% has been removed. A DC wavier for State Integrated Schools is added.

7.5 1 and 2 bedroom discount: At the request of developers, extension of the 1 and 2 bedroom discount to all titles was considered during the review of the 2018 Policy. This discount intends to incentivise affordable backyard infill where the land owner sought to create an additional dwelling on their land, Council officers recommend that an extension of the discount not be adopted.

7.6 Timing of payment: At the request of developers, the delay of payment until building consent stage for subdivisions was considered during the review of the 2018 Policy. Council officers recommend that payment is still required at the time of applying for a certificate under s.224(c) of the RMA as in the 2018 Policy. This approach brings the timing of Council spend of Infrastructure to service an area closer to the receiving income from development.

7.7 Complexity and readability: The draft 2021 Policy improves the readability of the 2018 Policy by simplifying the content and grouping the information needed for users together in a more intuitive order.

7.8 Development agreements: The section on development agreements in the draft 2021 Policy is less complex in its description even though the process remains the same. This allows for easier reading of the Policy, less chance of misinterpretation and simplifying the process for updating the policy as infrastructure roll-out occurs.

8. Next Steps

8.1 If approved, consultation will be undertaken, including face to face meetings, in accordance with section 82 of the LGA alongside the LTP 2021-31 consultation process with a closing date for submissions at midnight on 21 April 2021.

8.2 Submissions will be heard during one of the LTP hearings between 4 May and 6 May 2021.

Author: Chris Pawson, Senior Analyst Environmental Management

Attachments

Attachment 1: A2502141 Draft Development Contributions Policy 2021 ⇩

Attachment 2: A2538607 Development Contributions Policy Review 2021 - Consultation Document ⇩

Important considerations for decision making

1. Fit with Purpose of Local Government

The adoption of a Development Contributions Policy is required under the LGA 2002 s102.

2. Consistency with Community Outcomes and Council Policy

The recommended Development Contributions Policy aligns with the following Community Outcome:

Our Region is supported by an innovative and sustainable economy.

3. Risk

It is expected that the draft Development Contributions Policy 2021 will continue to achieve Council’s objectives. It has been selected as the best mechanism to ensure the cost of growth is apportioned to those who have created the need for that cost. The outcome of this policy is to avoid the risk of funding deficit to meet the cost of growth network infrastructure and community facilities. Without this policy the cost of growth would have to be covered by general rates or by some other charge.

4. Financial impact

Development and financial contributions are only a small source (approximately 2%) of Nelson’s total revenue. If development contributions were to be removed altogether there would be an additional financial burden on rates or some other means to meet this funding gap. This is not considered to be fair or equitable for the purposes of the LGA as outlined in section 5.3 above, and accordingly the rationale behind the draft Policy is that those who cause the need for new infrastructure and services pay their share of that cost.

5. Degree of significance and level of engagement

Adopting this new policy has been assessed as having a medium-high degree of significance due to the level of impact of Council’s revenue and costs decisions on the community. Council is required to consult on the draft policy in accordance with section 82 of the LGA, and this will run alongside the Special Consultative Procedure that will be followed for the draft Long Term Plan 2021-31 process.

6. Climate Impact

The draft Policy supports the provision of intensification within the existing urban built environment in response to the community’s concerns regarding the effects of greenfield development on climate change.

7. Inclusion of Māori in the decision making process

No engagement with Māori has been undertaken in preparing this report.

8. Delegations

The delegation for the Urban Development Subcommittee includes the following:

Areas of Responsibility

• Development Contributions and Financial Contributions

Powers to Decide

• Developing, monitoring and reviewing strategies, policies and plans, with final versions to be recommended to Council for approval

Powers to Recommend to Council

• Approval of final versions of strategies, policies and plans

On the recommendation of the Chief Executive, and with the agreement of the Chair of the relevant committee, subcommittee or subordinate decision-making body and Mayor, matters within the area of responsibility of a particular committee, subcommittee or subordinate decision-making body may be considered directly by Council instead. If this occurs, the Chair of the relevant committee, subcommittee or subordinate decision-making body will report to the following meeting of the committee, subcommittee or subordinate decision-making body regarding the reason for doing so, and the outcome of the matter at the Council meeting.

Therefore the delegations for this report sit with the Urban Development Subcommittee. The Chair of the Urban Development Committee has agreed that, in order to meet statuary timeframes due to the delays in finalising the LTP programme, this report shall be considered by Full Council directly.

Option 1: Gift the ex-Saltwater Creek Bridge to the BWST (this is the preferred option)
Advantages	· The community will continue to benefit from the bridge
Risks and Disadvantages	· The bridge will not return a possible financial return from sale
Option 2: Decline the request from the BWST and investigate an alternative sale
Advantages	· A financial return may be achieved
Risks and Disadvantages	· Sale of the bridge may not be achieved · The BWST and visitors will not benefit from the bridge · The BWST would eventually construct bridges on these three locations at a significant expense to the Trust