Agenda of Nelson Regional Sewerage Business Unit

Nelson Regional Sewerage Business Unit Minutes - 11 December 2020

Minutes of a meeting of the Nelson Regional Sewerage Business Unit

Held in the Rūma Waimārama, Level 2A, Civic House, 110 Trafalgar Street, Nelson

On Friday 11 December 2020, commencing at 1.33p.m.

Present: Tasman District Councillor K Maling (Chairperson), Nelson City Councillors B McGurk, T Skinner (Deputy Chairperson), Tasman District Councillor T Tuffnell, Independent Member B Silcock, and Industry Representative (non-voting) P Wilson

In Attendance: Group Manager Infrastructure (A Louverdis), General Manager Regional Sewerage and Landfill (N Clarke), Operations Manager Regional Services (B Nixon), Accountant (A Bishop) and Governance Adviser (J Brandt)

Apology: Frank Hippolite (Iwi Representative)

1. Confirmation of Order of Business

Changes to the order were made as follows: Agenda item 7 (Nelson Regional Sewerage Business Unit Quarterly Report) was considered prior to agenda item 6 (Nelson Regional Sewerage Business Unit 2021-2031 Activity Management Plan and 2021/22 Business Plan Feedback Report). Apologies were considered in between those two items.

2. Interests

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

3. Public Forum

There was no public forum.

4. Confirmation of Minutes

4.1 11 September 2020

Document number M14106, agenda pages 4 - 11 refer.

A correction was made to the spelling of Ms Forward’s surname in the minutes.

Resolved NRSBU/2020/020

That the Nelson Regional Sewerage Business Unit

1. Confirms the amended minutes of the meeting of the Nelson Regional Sewerage Business Unit, held on 11 September 2020, as a true and correct record.

Tuffnell/McGurk Carried

5. Chairperson's Report

There was no Chairperson’s report.

6. Nelson Regional Sewerage Business Unit Quarterly Report (agenda item 7)

Document number R22502, agenda pages 22 - 30 refer.

General Manager Regional Sewerage and Landfill, Nathan Clarke, presented the report. He noted that since the writing of the report, conditional support from iwi had been received for the Biosolids Application Resource Consent.

Attendance: Mr P Wilson joined the meeting at 1.45p.m.

Accountant, Andrew Bishop, answered questions about the Nelson Regional Sewerage Business Unit (NRSBU) financial report and position to 30 September 2020.

It was noted that funding would be required to cover part of the shortfall in profits at the end of the year. Mr Wilson was asked to communicate this to industry stakeholders.

The Board requested that the General Manager investigate options to reduce operational costs for the NRSBU, including electricity costs and to report back to the Board in early 2021.

Mr Clarke answered questions about discharge performance at Bell Island’s Waste Water Treatment Plant, its capacity to cater for future population growth, as well as decisions required regarding project management support.

Resolved NRSBU/2020/021

That the Nelson Regional Sewerage Business Unit

1. Receives the report Nelson Regional Sewerage Business Unit Quarterly Report (R22502).

Skinner/Tuffnell Carried

7 Apologies

It was noted that an apology from Mr Hippolite was received subsequent to the start of the meeting.
Resolved NRSBU/2020/022
	*That the Nelson Regional Sewerage Business Unit* 1. Receives and accepts an apology from Frank Hippolite for absence.
McGurk/Maling Carried

8. Nelson Regional Sewerage Business Unit 2021-2031 Activity Management Plan and 2021/22 Business Plan Feedback Report (agenda item 6)

Document number R22515, agenda pages 12 - 21 refer.

General Manager Regional Sewerage and Landfill, Nathan Clarke, presented the report.

Based on feedback received from Tasman District Council relating to the capital works programme, the Board requested that Mr Clarke prepare a modified programme of work as part of an options report for consideration at a NRSBU meeting in early 2021.

In a separate discussion, the Board queried the increasing operating costs. Accountant, Andrew Bishop, answered questions about depreciation and revaluation. Mr Clarke noted the renewal of two contracts as a contributing factor.

Based on feedback received from Nelson City Council, the Board requested an analysis of operating costs, including any potential cost reductions and increased efficiencies, to be reported back to the Board in early 2021.

An additional clause was added to the officer’s recommendation to reflect the Board’s requests.

The meeting was adjourned from 3.20p.m. until 3.29p.m.

Resolved NRSBU/2020/023

That the Nelson Regional Sewerage Business Unit

1. Receives the report Nelson Regional Sewerage Business Unit 2021-2031 Activity Management Plan and 2021/22 Business Plan Feedback Report (R22515); and

2. Requests the General Manager Regional Sewerage and Landfill to present a revised Capital/Renewal programme and business case (detailing several options) to reduce operational budgets to a future Nelson Regional Sewerage Business Unit meeting, taking into account Nelson City Council procedures, in time to inform the Long Term Plans of both Nelson City and Tasman District Councils.

Tuffnell/Skinner Carried

There being no further business the meeting ended at 3.35p.m.

Confirmed as a correct record of proceedings:

Chairperson Date

Item 7: Nelson Regional Sewerage Business Unit Quarterly Report

Nelson Regional Sewerage Business Unit

12 March 2021

REPORT R22683

Nelson Regional Sewerage Business Unit Quarterly Report

1. Purpose of Report

1.1 This report is a three monthly update by the General Manager (GM) on activities undertaken over the last three months by the Nelson Regional Sewerage Business Unit (NRSBU).

2. Summary

2.1 Operations are generally running well.

2.2 Health and Safety (H&S) activities are continuing with additional issues resolved during this period.

2.3 A Registration of Interest for the lease of Best and Bell Island land process is ongoing.

2.4 Desludging has started on pond F2 at Bell Island. The work is progressing steadily. The desludging is expected to continue until the need to stop over the winter period.

2.5 The wastewater recycling system and high pressure screen cleaning system is now in operation.

2.6 The regional pipeline rehabilitation project design and procurement is well underway, with prices received from the two companies in New Zealand with the capability to complete the pipe relining works.

2.7 A review of the tenders is underway, but further clarification has been sought from the tenderers on their submissions and as such this is not ready for discussion at this time. This will be presented to the NRSBU at the April extraordinary meeting for review and approval.

2.8 The design and procurement process for the renewed pipe through the Turners and Growers site is progressing well. A number of land access considerations are being worked through with Turners and Growers and the new owners of 484 Nayland Rd, Willis Bond Ltd. NRSBU is anticipating that tenders for this section of the regional pipe duplication project will be released to the market within the next six weeks.

2.9 The concept design for the renewal of the sludge storage tanks and the biosolids storage tanks has been developed and we are currently awaiting quotes from external suppliers for the works.

2.10 The requests from Nelson City Council (NCC) and Tasman District Council (TDC) to spread out the capital programme in the AMP and Business Plan (with associated operational cost reduction due to the deferrals) has been undertaken by deferring $5M of capital projects from the first five years of the 10 year programme to the last five years. It is recommended that the NRSBU adopts the revised Business Plan and AMP that include changes to the capital works programme as detailed in Table 6.9, and any associated Opex adjustments

2.11 With respect to the request from NCC to reduce operational expenditure, feedback from both Council’s (following discussions between the respective Infrastructure and Finance officers and CEO’s) was to put on hold any plans to bring contractual staff in-house and to proceed with the re-tendering of the contract as a matter of urgency – this on the basis that the current Opex budgets are currently reflected in each Council’s LTP’s. The only change will be to reflect the reduced Opex associated with the capital deferrals.

2.12 Financial performance to 31 December 2020 is below budget, with a significant decrease in fixed contributions. This is compensated by an increase in variable contributions and other recoveries, and increases in depreciation and electricity costs. These cost increases have occurred due to changes outside NRSBU control.

3. Recommendation

That the Nelson Regional Sewerage Business Unit

1. Receives the report Nelson Regional Sewerage Business Unit Quarterly Report (A2588005) (R22683) and its attachments (A2588684 and A2588602); and

2. Approves the following two documents for presentation to Nelson City Council and Tasman District Council:

o the updated draft Nelson Regional Sewerage Business Unit 2021 – 2031 Activity Management Plan (A2588684); and

o the draft Nelson Regional Sewerage Business Unit 2021/2022 Business Plan (A2588602) which includes a revised capital works programme and associated operational cost reductions as requested by both Nelson City and Tasman District Councils.

Recommendation to Nelson City Council and Tasman District Council

That the Nelson City Council and Tasman District Councils

1. Approves the 2021/2022 Nelson Regional Sewerage Business Unit Business Plan (A2588602) for inclusion in their Long Term Plans; and

2. Approves the Nelson Regional Sewerage Business Unit Activity Management Plan 2021-2031 (A2588684) for inclusion in their Long Term Plans.

4. Background

4.1 This report is the GM update for three months to 31 December 2020. It outlines the activities, issues and opportunities that have occurred during this period.

5. Health and Safety (H&S)

5.1 H&S at the site is being managed well, and the programme of safety improvements is currently ongoing. Progress on these activities is being updated by the contractor in each monthly report.

5.2 It is recommended that the Board Chair and the NCC and TDC group managers visit the site to undertake a review of H&S issues.

5.3 There were three safety events this period, with two events associated with sludge and wastewater pumping where operational staff came into contact with wastewater/ sludge. There was one event where it was observed that an operator was not wearing Personal protective equipment (PPE) correctly.

5.4 The revised covers on the inlet screen with a revised mechanical guarding system have now been installed. The risk associated with this has now been minimised.

5.5 Table 1 below summarises the H&S improvements being undertaken on site.

H&S Projects

Work completed in the last three months:

· Inlet Screen guarding

Notable works currently under way:

· DAF saturator tank replacement

· Inlet odour upgrade

6. NRSBU Activities

6.1 NRSBU staff have been busy during the period with numerous activities. Project delivery support has been engaged from NCC Capital Project staff for a number of smaller projects.

6.2 Regional Service staff capacity remains an issues particularly at the project development and initiation stage.

6.3 A major pump failure of one of the storm pumps at Beach Road Pump Station occurred in early December. Options for repair or replacement of this pump have been undertaken, and it has been decided to this pump will be replaced. The indicative cost for the new pump is $65,000. In the interim the pump station will have no back up storm pump. The delivery time for the new pump has not been confirmed yet.

6.4 Resident’s meeting- A residents meeting was held at the Greenacres Golf Course in November 2020. A small number of residents turned up for a discussion and for refreshments. Residents were generally complimentary regarding management of the facility, but still hold concerns about odour issues from our facilities. Discussion was held regarding odour management including reference to a weather station to be located Best Island to assist to identify the source of odour issues when they happen.

6.5 A new independent odour assessor was engaged. Training and odour reporting templates were developed, and he started his odour monitoring visits.

6.6 The Annual NRSBU Hui was held at the end of November. A site visit to Bell Island was undertaken, and discussion was held regarding Bell Island, wastewater application to land, the aberrational discharge consent, and future planning. A key output from the discussion was Iwis interest to assist NRSBU in the development of the 50 year Master Plan.

6.7 Biosolids Application Consent – The Cultural Impact Assessment has been received from Iwi in regard to the Rabbit Island Biosolids Application resource Consent. Iwi have indicated that they would give conditional support for 15 years for the activity.

6.8 Activity Management Plan (AMP) – Further work has been undertaken regarding the requests from TDC and NCC to spread out the capital programme in the AMP and Business Plan. This has been undertaken by deferring $5M of capital projects from the first five years of the 10 year programme to the last five years. The will also be some Opex saving associated with the deferred activities which will be included in the updated plan.

6.9 Table 6.9 - Revised Capital Works Programme

The following table is a revised capital works programme that takes into account the deferred Capex.

6.10 Business Plan - The NRSBU Business Plan was also reviewed, and agreement was reach regarding both Opex and Capex requirements. With respect to the request from NCC to reduce operational expenditure, feedback from both Council’s (following discussions between the respective Infrastructure and Finance officers and CEO’s) was to put on hold any plans to bring contractual staff in-house and to proceed with the re-tendering of the contract as a matter of urgency – this on the basis that the current Opex budgets are currently reflected in each Council’s LTP’s. The only change will be to reflect the reduced Opex associated with the capital deferrals.

6.11 Registration for Information for water reform from the Department of Internal Affairs– A considerable amount of time and effort was expended in preparing the request for information required as part of the three waters reform. The GM NRSBU would like to thank NCC and TDC officers and NRSBU’s Iain Satterthwaite for the diligence and effort taken to deliver this in the timely fashion.

6.12 Asset inspections - a concerted effort has been made to inspect the rising mains and valve chambers over the last few months. NRSBU has focussed on these areas initially because they have the highest consequence if they fail.

6.13 The lease for the Best and Bell Island land is in preparation.

6.14 Rabbit Island Biosolids Application Consent CIA has been completed, with 5 Iwi being involved in this collaborative approach.

6.15 Following increased electricity charges, Staff have completed a review of the Power Factor (PF) correction performance at the Treatment Plant. The investigation revealed issues with PF correction at the aeration basin and ATADs. Remedial work has been instructed, and is expected to be completed in April 2021.

7. Contract 3458 – Nelson Regional Sewerage System Operations Update

7.1 Operations are generally running well, there have been a number of issues with sampling and billing that are being worked on.

7.2 There are ongoing issues with flow metering, with issues occurring with the Richmond inflow meter owned by TDC, the Mapua Flowmeter at Bell Island, and the Stoke catchment inflow meter owned by NCC. Similarly there are issues with the samplers for a number of the sites. New samplers have been supplied by TDC, and NCC is awaiting delivery of new samplers for their discharge points.

7.3 There was one odour notification during this period. The complaint was investigated but no clear cause was identified.

7.4 In consultation with TDC Engineering Services Manager and NCC Group Manager Infrastructure it has been agreed that the Bell Island O&M contract be extended for four months to allow NRSBU to tender the contracts.

7.5 Tender preparation is now underway on a revised the form of tender in parallel with the business case review. This options involves the development of a Target Outturn Cost contract model similar to the TDC Three Waters contract. This model is a more collaborative model than the current NZS3910:2003 model.

8. Contract 3619 – Biosolids Application Operations Update

8.1 Application of biosolids on Moturoa Rabbit Island has been working well during the December 2020 quarter, however some odour complaints have been experienced during the February 2021.

8.2 Operations were more difficult due to access issues resulting from TDC installing the new Mapua water main through Rabbit Island.

8.3 The renewal of the Biosolids Application Contract is due at the end of June 2021.

8.4 The NRSBU Operations Manager has been working on the renewal of the Operations and Maintenance contract and considered whether this contract should be renewed now, or whether it would be prudent to extend the contract till after we have received the new resource consent for the facility.

8.5 While contractually it would be best to extend the contract for sufficient time to ensure that the new consent is completed so that any new requirements for the consent can be included in the new contract rather than having variations for these, the contract has been renewed for an additional year once, and therefore NRSBU is reluctant to extend for a further 12 months.

8.6 NRSBU has drafted a volunteered set of consent conditions which are unlikely to change significantly, and it is therefore considered unlikely that significant contractual change will be required from the resource consent if the contract is tendered now.

8.7 Approval is sought to extend the contract by four months to 31 October, with a new contract to commence on 1 November 2021, to give time for the tender and establishment. There is a risk that the Rabbit Island resource consent may not have been granted by this date, and some minor variations will be required to the contract starts.

9. Capital Projects Update

9.1 A number of renewals and capital works project are in progress, including:

· The containment area for pond desludging is completed on the western side and nearly complete on the eastern side. Pond desludging has started, with the first two dewatering bags filled. No odour issues have occurred as a result of the work.

· The sludge storage tank and biosolids storage tank renewal concept design has been undertaken. The new tanks will be installed in an alternative location so that they can be built while the existing tanks are kept in service. The proposed procurement method is a design and construct contract. The technical specification is being completed at present.

· The reuse water and high pressure pumping system was commissioned during December, the recycle water system and high pressure wash water system is now operational. This has reduced the screen cleaning issues and reduced the health and safety risks.

· Odour control upgrades at the inlet area are in progress, a second biofilter is installed and operational, the bio-scrubbers are onsite awaiting installation.

· An ammonia removal system pilot test has been completed onsite to demonstrate ammonia removal from the ATAD off-gasses. Ammonia is a potential source of odour from the ATAD system discharge gas. NRSBU is waiting for a quote for the supply of an Ammonia Scrubber.

· An overflow screening facility has been installed at Airport Pump Station, and the design of the Songer Street and Whakatu screens is nearly complete.

· Prices have been received from the two NZ contractors with appropriate technology to undertake the lining contract for the pipeline between Turners and Growers site and Martin Point. Further questions have been asked of the tenderers as clarifications. Due to these additional questions a recommendation is expected to the NRSBU board for approval during the April Extraordinary Meeting. Due to these additional delays we now do not expect to complete this work prior to the start of the new financial year.

· Discussions have been held with Turners and Growers (T&G) regarding the relining of the pipeline through the T&G site. This discussion has led to a preferred option being a new pipe to the west of the T&G site. This project has also been delayed due to these discussion taking longer than the expected.

· The preliminary design of the Beach Rd to Saxton Rd Pipeline is underway. Potholing and CCTV inspections are being planned over the next two months for the sections of pipe that we are proposing to sleeve.

· The section of rising main across Saxton Creek alongside Whakatu Drive has been discussed with NCC as part of the Saxton Creek Stage 4 Upgrade, and NRSBU has sent details of the requirements to the NCC Project Manager for inclusion in the Saxton Creek project. No clear costs are available for this yet, and will be agreed in advance of proceeding with this work.

· The design for the Saxton Rd pump station has identified that maintenance of the pump station would remain a significant constraint if we were to leave the system with only the single pump well. The concept design has identified that a secondary pump well would significantly improve the resilience, maintainability, and may also allow NRSBU to reuse the existing pumps rather than buy much bigger pumps for the existing pump well. An engineer’s estimate has been undertaken on the preliminary design which confirms that the preliminary budget allowance made in the AMP is appropriate for the works.

· Sea level rise defence bund design options are being reviewed for both Songer St Pump Station and Beach Rd Pump Station, and construction is to be completed on both these projects prior to the end of the financial year.

10. Finance

10.1 The NRSBU finances for the first half of the 2020/2021 financial year have been improved since the first quarter, but are still tracking for a loss for the year.

10.2 There are four changes that have influenced the finances over the last quarter.

10.2.1 The first significant factor is the lower interest rate, which reduces the Return on Investment, and therefore the revenue that NRSBU collects from the Fixed Contributions. The effect of this change is a continued reduction in revenue which now equates to an under recovery against budget of $445,000 for the year to date. This indicates that we should expect a deficit in this item of around $900,000 for the full 2020/21 year.

10.2.2 The second issue is an improvement in electricity charges. NRSBU has used less electricity over the last quarter and as a result the under recovery has not increased for the year compared to the first quarter.

10.2.3 The third factor for the increase costs is the change to the Operations and Maintenance contract. The cost of the Operations and Maintenance has increased as a result of increased monitoring required by the resource consent. The unit costs also increased when the Nelmac contract was extended. The year to date increase in these costs is ~$110,000.

10.2.4 The fourth cost ($69,000) is the annual excess biosolids cost for the 2019/20 year that NRSBU pays for the biosolids discharge in excess of 26,000m³ per year.

10.3 The additional costs are partly compensated by the reduced interest charges on the term liabilities, and by an increase in revenue from the Best Island sand royalty payments and an increase in septage disposal charges for the year to 31 December 2020.

10.4 The NRSBU has a deficit for the period to 31 December 2020 of -$175,000, which is down from the deficit of -$213,000 for the first quarter.

10.5 Table 2 below shows the NRSBU Financial Report to 31 December 2020.

10.6 The NRSBU financial Position as at 31 December 2020 is shown in Table 3 Below

11. Discharge performance

11.1 The discharge performance from Bell Island WWTP has meet all the consent criteria for the period.

11.2 There was one unconfirmed odour complaint recorded.

12. NRSBU Resourcing

12.1 There are ongoing resource capacity issues for regional services staff, with the Request for Information (RFI) for the water reform work further constraining capacity for the quarter. As a result some capital and operational works have been delayed.

12.2 Staffing capacity issues have meant that the request for a Regional Service Capital Works Project Manager has not been completed yet.

Author: Nathan Clarke, General Manager Regional Sewerage and Landfill

Attachments

Attachment 1: A2588602 - NRSBU Business Plan 2021/22 ⇩

Attachment 2: A2588684 - NRSBU Activity Management Plan 2021 - 2031 ⇩

Important considerations for decision making

1. Fit with Purpose of Local Government

The NRSBU is a joint committee constituted pursuant to the provisions of Schedule 7 to the Local Government Act 2002 and contributes to the four Local Government well-beings of social, economic, environmental and cultural.

2. Consistency with Community Outcomes and Council Policy

This report supports the delivery of the following Council Community Outcomes:

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

3. Risk

This report allows the NRSBU board to monitor and review the ongoing operations of the NRSBU. The report considers risks from health and safety and compliance, and with resource consents.

4. Financial impact

This report has no financial impacts. It summarises financial performance against budgets.

5. Degree of significance and level of engagement

The NRSBU is a Joint Committee of the two Councils and its activities are included in the Long-term Plans and Annual Plans of each Council. Consultation is undertaken by both Councils in the preparation and adoption of these plans.

6. Climate Impact

A key feature of the Business Plans for NRSBU is the inclusion of a long–term objective of greenhouse gas emissions with the commitment to measure and reduce greenhouse gas emissions from the facility and consideration about site location and retreat for vulnerable sites.

7. Inclusion of Māori in the decision making process

No engagement with Māori has been undertaken in preparing this report but iwi have representation on the Board.

8. Delegations

Powers to Decide:

· The Councils are agreed that the responsibility for all management and administrative matters associated with the NRSBU operation shall be with the Board, and in particular the Board shall without the need to seek any further authority from the Councils:

o Enter into all contract necessary for the operations and management of the Business Unit in accordance with approved Budgets and the intent of the Business Plan.

o Authorise all payments necessary for the operations and management of the business unit within the approve budgets and the intent of the Business Plan

o Do all other things, other than those things explicitly prohibited by this MOU or relevant statutes, that are necessary to achieve the objectives as stated in the strategic Plan, Asset Management Plan or Business Plan approved by the councils.

Powers to Recommend to Councils:

· Any other matters under the areas of responsibility of the Business Unit and detailed in the Memorandum of Understanding

· All recommendations to Council will be subject to adoption of an equivalent resolution by the other Council, unless it is a matter specific to one Council only.