Ordinary meeting of the
Nelson City Council
Wednesday 8 December 2021
Commencing at 1.00p.m.
110 Trafalgar Street, Nelson
ATTACHMENTS UNDER SEPARATE COVER
12 Deliberations on public feedback to Te Ara ō Whakatū - Nelson City Centre Spatial Plan
1 A2786233 - Final Te Ara ō Whakatū Main Document - Nov2021 3
2 A2783462 – Final Te Ara ō Whakatū Public Feedback Summary - Oct2021 52
11 Property and Facilities Activity Management Plan 2021-31
1 A2443568 Executive Summary to Property and Facilities Activity Management Plan 2021-31 (A2443568) 69
15 Three Waters Reform Update and submission on Three Waters Economic Regulator discussion document
1 A2788174 - National Transition Unit Overview - Provided by DIA 123
2 A2786106 - Three Waters Reform Timeline - Provided by DIA 127
3 A2786027 - Draft submission on economic regulation and consumer protection for three water services in New Zealand 128
13 Annual Report 2020/21
R26237 Annual Report 2021 138
Please note this report was prepared and included in these Attachments at an earlier date. The final document has been included in the Council Agenda - 8 December 2021
1 A2791731 - Annual Report 2020/21 150
18 Residents' Survey 2020/21
1 A2724461 - Nelson City Council Residents' Survey 2020/21 results 375
20 Schedule of meetings 2022
1 A2760389 - Draft 2022 Meeting Schedule 413
9 December 2021
Annual Report 2020/21
Note : This report has been included for your reference and has been finalised in the Council Agenda 8 December
1. Purpose of Report
1.1 To adopt the Annual Report for the year ending 30 June 2021 in accordance with section 98 of the Local Government Act 2002.
2.1 The Local Government Act usually requires Council to adopt the final Annual Report within four months of the end of the financial year (31 October). Due to the impacts of COVID-19, the Government has extended the adoption deadline to 31 December for the 2020/21 and 2021/22 annual reports.
2.2 Audit has completed its review of the non-financial sections of the draft Annual Report 2020/21, and the financial sections are still being audited, with no major issues identified at this stage. An unmodified audit report is expected. Further minor editorial adjustments may be required as part of the final proofing process. A designed version of the Annual Report for publication will be tabled at the meeting.
2.3 Audit New Zealand commenced auditing of the draft Annual Report 2020/21 in September 2021, and audit work is still underway. Although the Council audit is almost completed, audit on the Nelson City Council group has not been finalised, due to delays in finalising Nelson Airport Limited’s financial statements. No significant issues were found during the audit and Audit New Zealand is expecting to issue an unmodified audit report. Audit has indicated that audit work will be completed in time to adopt the Annual Report at the Council meeting on 9 December 2021.
2.4 The Annual Report 2020/21 presents a positive picture of the financial performance of the Council over the previous year. Council recorded an accounting surplus before revaluations for the year ended 30 June 2021 of $9.0 million which was $2.1 million more than budget. Borrowings net of cash and deposits were $87.7 million, compared to a budget of $115.7 million.
2.5 Progress was made across a range of projects in line with Council’s priorities of infrastructure, environment, central city development, and lifting Council performance. Council achieved 53 out of 80 performance measures in a year that was again impacted by COVID-19.
2.6 Changes made to the document during the audit process are highlighted for your reference (Attachment 1).
2.7 The draft Audit opinion is not yet available and will be attached to this report prior to the adoption date (9 December 2021).
1. Receives the report Annual Report 2020/21) and its attachments (A2791731 and Axxxxxx); and
2. Adopts the Annual Report for the year ended 30 June 2021 (A2593052) in accordance with s98 of the Local Government Act 2002; and
3. Receives the draft Audit New Zealand Opinion (Axxxxxx); and
4. Delegates the Mayor and Chief Executive authority to approve minor editorial changes to the Annual Report 2020/21 (A2791731), as necessary.
4.1 The purpose of the Annual Report is to compare the actual activities and performance of the local authority with those set out in the applicable Long Term Plan or Annual Plan (the Annual Report 2019/20 compares performance against the 2019/20 Annual Plan). It also aims to promote the local authority’s accountability to the community for the decisions made throughout the year. An Annual Report is required under section 98 of the Local Government Act 2002.
4.2 An initial draft of the Annual Report 2020/21 was presented to the Audit, Risk and Finance Subcommittee on 14 September 2021. Feedback from the Subcommittee was used to inform the content of the final Annual Report 2020/21 (Attachment One).
4.3 Audit New Zealand commenced auditing of the draft Annual Report 2020/21 in September 2021 and concluded its work in December 2021. Audit is expected to issue a final unmodified audit report. A draft audit report has been prepared and is attached (Attachment Two). The final audit report will be issued once Council has adopted the Annual Report.
4.4 The Annual Report includes both the parent (Nelson City Council) and the Nelson City Council Group – which consists of Nelson City Council, its subsidiaries (Nelmac Limited, Nelson Civic Trust, Bishop Suter Trust, Nelson Regional Development Agency) and its associates and joint ventures.
4.5 As Council does not have a controlling interest in its associates (Nelson Airport Limited, Tasman Bays Heritage Trust and Port Nelson Limited) these are equity accounted. Nelson Regional Sewerage Business Unit, Nelson Tasman Regional Landfill Business Unit, and Nelson Tasman Combined Civil Defence Organisation are proportionately consolidated as these are not separate legal entities. Further detail of the accounting treatment is included in Note 1 to the accounts.
Highlights for 2020/21
5.1 Council set emissions reduction targets for the organisation, committing to achieving net zero emissions of all greenhouse gases (excluding biogenic methane) by 2050, and reducing biogenic methane emissions by 24-47% by 2050. Emissions were measured and Council’s carbon footprint was successfully audited. Council also began conducting energy audits of its key buildings.
5.2 Council’s 142 community housing units were sold to Kāinga Ora in 2021 for $19.8 million, creating a $12 million Housing Reserve to support affordable and social housing projects in Nelson. From the balance, $5.1 million was held in a reserve for retrofitting, renewal and consents for redevelopment of the units, $1.5 million was paid back to Kāinga Ora for required maintenance and healthy homes work and the balance was used to repay the Local Government Housing Fund Loan ($1.2 million) with Housing New Zealand Corporation.
5.3 A review and restructure of Council’s committee and subcommittee arrangements was completed, and Council voted to establish a Māori ward for the 2022 local elections.
5.4 The Long Term Plan 2021-31 was consulted on and adopted, setting Council’s vision and work programme for ‘Nelson – A Smart Little City’ for the next ten years. Over 660 submissions were received and 136 people spoke at the hearings. The Infrastructure Strategy for 2021-2051 was also adopted, and activity management plans prepared.
5.5 Implementation of Project Kōkiri (the Nelson Tasman region’s post-COVID-19 economic recovery plan) continued, and the project moved from the ‘survival and response’ phase into ‘restart and recovery’. Work by the NRDA included: supporting local businesses, delivering the ‘We’ve Got This – Kei a Tātou’ campaign, launching the Pick Nelson Tasman campaign, promoting events to support the economy, and launching new action-oriented workstreams such as ‘Skills & Workforce Development’. Council invested $250,000 in this project in 2020/21, and Tasman District Council contributed an additional $200,000.
5.6 Council approved funding of $5.72 million to support the development of a Science and Technology Precinct by Port Nelson in collaboration with the Cawthron Institute.
5.7 $700,000 of funding was also approved by Council to support the Nelson marine slipway redevelopment and services expansion in 2021/22.
5.8 Council was awarded $1.23 million from the Provincial Growth Fund, for infrastructure projects to help our region recover from the COVID-19 pandemic by providing local jobs. Projects undertaken using this funding included the Beach Road raised table and Maitai riverside path widening.
5.9 Council agreed to participate in the initial stage of the Three Waters Reform Programme and signed a Memorandum of Understanding with the Department of Internal Affairs. As part of this agreement Council received initial grant funding of $5.72 million, to support Three Waters service delivery and aid economic recovery from COVID-19 through job creation. This was allocated towards a variety of projects and programmes, including Awatea Wastewater Pump Station Upgrade and Beach Road Pump Station and Wastewater Storage Tanks upgrade.
5.10 A grant of $7.5 million was received from central government’s COVID-19 Response and Recovery Fund, for Saxton Creek Upgrade Stage 4 ($1 million of which was used in 2020/21).
5.11 A total of 2.8 km of new shared or separated paths were built, including the Anzac Park to Maitai Shared Path. Stage 2 of the Tāhunanui Pathways project was completed, which has improved cycle safety for residents, commuters, and students of the local school. Council also invested in an underpass on the Railway Reserve.
5.12 The Bee Card was launched in August 2020. Users have embraced this new technology, with 88% of bus journeys now paid for using the card.
5.13 Council’s Innovative Streets for People trial project in Nelson South began. Traffic speeds were monitored before and after the trial changes were made, and there have been significant reductions in speed. The project received the 3M Traffic Safety Innovation Award.
Three Waters and Flood Protection
5.14 6,000 new residential water meters were installed and watermains were upgraded and renewed in several locations around the city, including Hardy Street and Melrose Terrace, to maintain a reliable water supply and allow for future residential and business growth, and intensification.
5.15 Council continued to invest in improved wastewater infrastructure to improve resilience and capacity, and minimise the risk of overflows to the environment. Several major works were completed, including the Gracefield Sewer Diversion, planning for the new Awatea Pump Station, and installation of the Beach Road Storage Tank.
5.16 Stormwater upgrades were made to reduce the risk of flooding and to improve capacity for future development. Council’s flood protection investment in upgrading Saxton Creek continued, with Stage 3 near completion at the close of 2020/21. Flood protection works at Whakatū Drive also approached completion.
5.17 Council launched the Rethink Waste programme. Many community-based activities are part of this initiative to empower the community to rethink waste, including new monthly composting workshops, Secondhand Sunday, and repair cafes. A waste minimisation grant trial began, and waste minimisation was incorporated into Council event delivery.
5.18 Council began its 12 month trial for kerbside collection of residential kitchen waste. By July 2021 (after 19 weeks of the trial) 8,950kg of kitchen waste had been diverted from landfill. Council also introduced a new construction and demolition waste reduction programme through support for the deconstruction of 23 Halifax Street.
City Centre and Planning
5.19 Work on the City Centre Spatial Plan (Te Ara ō Whakatū - The Pathway of Nelson) continued in 2020/21. Targeted community pre-engagement was undertaken, with 81 meetings held with more than 40 community sectors, and over 250 attendees participating. Engagement was also undertaken on the draft Whakamahere Whakatū Nelson Plan.
5.20 A ‘Pop-up Park’ opened on the banks of the Maitai/Mahitahi River in September 2020, and is now a popular space for young people to play in the City Centre. Council also approved a location and completed the design for a Youth Park, to be developed in the Marsden Recreation Reserve next to the Stoke Memorial Hall.
5.21 Project Mahitahi is a government-funded ecological restoration project, with $3.7 million funding granted over 5 years. It is a Kotahitanga mō te Taiao Alliance project, co-designed and co-governed by Council, Iwi partners (Ngāti Koata, Ngāti Rārua, and Te Ātiawa) and the Department of Conservation. The project was launched in October 2020, and since its inception has employed 33 people across a range of projects, planted 15,000 trees, held five community planting events, and removed pest animals and plants from the Maitai catchment.
5.22 Direction on the Central Library Development was determined through the Long Term Plan 2021-31 process. The current Elma Turner Library is located in a converted space, and is too small to deliver the range of services expected from a modern library. There are insufficient bookable spaces for groups and events, and the building itself would require substantial investment over time to maintain the status quo. The construction of a new library will bring it into the 21st century, allowing broadening of the scope of services and opportunities within a larger, purpose-built building and surrounding precinct.
5.23 Council measures its non-financial success against performance measures that are set through the Long Term Plan. The Long Term Plan 2018-28 established 80 performance measures across Council’s 11 activity areas. The measures are recorded as ‘achieved’, ‘not achieved’, or ‘not measured’ (where insufficient data is available to determine a result) at the end of the year.
5.24 Council achieved 53 of its non-financial performance measures (66.25%) in 2020/21, which is equal to its performance in 2019/20. Commentary on all measures is provided in the activity sections of Attachment 1.
5.25 As was the case in the previous year, Council’s ability to achieve many of its performance measures was impacted by COVID-19. In 2020/21 Nelson was fortunate to stay at Alert Level 1 for the majority of the year, with some relatively short periods at Level 2. However, the uncertainty and socioeconomic impacts of COVID-19, particularly the lack of international visitors and cancellation/scaling down of events, have affected the achievement of some targets. This is particularly notable in the social activity, which has many events-based measures, but also across other areas too, such as bus patronage.
5.26 As annual reporting was undertaken over the period of the Long Term Plan 2018-28, several of the measures set in 2018 no longer align with changing data collection methods and legislated performance requirements (e.g. required inspection of licenced premises). Those measures are listed as ‘not achieved’ against the targets set in 2018, which does not accurately reflect Council’s actual achievements in these areas.
5.27 Similarly, numerous measures selected in 2018 relate to the performance of other organisations (such as the Theatre Royal and Suter Art Gallery), which Council has little control over. It also has limited influence on overarching measures such as Nelson’s GDP. To address this, Council’s performance measures were revised in the Long Term Plan 2021-31, to give a more accurate, relevant picture of Council’s non-financial performance over the next three years.
5.28 The Annual Report shows that Council recorded a net surplus before revaluations for the year ended 30 June 2021 of $9.0 million which was $2.1 million more than budget. The surplus was $7.2 million for the 2019/20 financial year. More detail for the variance is explained in the Annual Report Note 40, however the reasons for this variance are mainly due to:
5.28.1 Fees and charges are $2.5 million greater than budget, this is mainly due to the Building Consent activity income being $927,000 over budget. The driver behind higher income is increased levels of activity in the building sector during the recovery from COVID-19 compared with budgeted estimates which were conservative. Also, the Nelson Tasman Regional Landfill Busines Unit (NTRLBU) fees and charges income is $931,000 greater than budget due to a higher tonnage of waste received compared with budget.
Subsidies and grants are $2.7 million greater than budget mainly due to
unbudgeted grants received from Central Government largely to offset the
economic effects in the community caused by COVID-19 which are offset by
additional expenditure. Some examples of this include:
· Waka Kotahi provided $565,000 for the Public Transport COVID-19 response;
· Ministry for the Environment and Department of Conservation provided $671,000 for the Ecological Restoration Programme;
· Waka Kotahi provided $852,000 in operating and capital grants for Kawai Street Innovative Streets.
5.28.3 Other revenue is $2.5 million under budget mainly due to vested assets being $3.5 million under budget. The timing of vested asset receipts is dependent on the development cycle of individual developers.
5.28.4 Other gains/losses are greater than budget by $6.1 million due to below reasons:
· Gain on derivatives are $5.7 million greater than budget due to movement in interest rates;
· Gain on sale of Community Housing of $2.6 million;
· Loss on Disposal on Infrastructure assets of $1.8 million with some assets removed from the network earlier than anticipated in conjunction with our work programme.
5.28.5 Depreciation is greater than budget by $3.1 million mainly due to depreciation on Three Waters assets being $2.3 million greater than budget due to an increase in replacement values at 30 June 2020. Water supply assets increased by an average of 13%, wastewater assets increased by an average of 25%, and stormwater assets increased by an average of 29% when compared with values at 1 July 2019.
5.28.6 Other Expenses are $3.1 million greater than budget mainly due to the unbudgeted expenditure incurred due to the additional income received, including:
· Expenditure for the Champion Road connection to Saxton Field was $774,000 greater than budget. This was recovered from Tasman District Council for their half share of the project costs.
· Operating expenditure for the unbudgeted Kawai Innovative Streets project of $657,000 has partially been offset by operating grant income received.
· Community Housing expenditure is greater than budget by $610,000 due to the settlement happening later than assumed, and includes the repayment of previously recognised income from the suspensory loan.
· The NTRLBU expenditure is greater than budget due to the increased provision for post closure costs of $149,000, impairment of landfill infrastructure of $133,000, Emissions Trading Scheme expenditure of $105,000, management expenditure of $104,000, and consultancy expenditure of $86,000. This is offset by additional revenue.
5.28.7 Land and Infrastructure Revaluations were $48.7 million over budget;
· Infrastructure assets are revalued every year to smooth out the large fluctuations and accounted for $23.9 million of the overall revaluation. This was against a budget of $20.2 million.
· Land is revalued every five years or when its fair value diverges materially from the carrying value. There were material movements in the 2020/21 year and the revaluation at 30 June 2021 resulted in a total increase in land value of $45.0 million. As this was not budgeted to be a land revaluation year, this movement was against a nil budget.
5.29 At 30 June 2021 Council’s borrowings, net of deposits, cash and LGFA borrower notes were $86.1 million compared to a budget of $114.6 million. This variance from the budget is mainly due to following reasons;
· Borrowings were lower due to Capital Expenditure not reaching the full programme and ending less than forecasted by $10.0 million against the Annual Plan budget. This is due to a combination of reasons including savings, timing and carry forwards to future years. Detail relating to variances in the Capital Programme can be seen in the section of “Summary of Capital Expenditure over $100,000”.
5.30 The rates deficit is $2.55 million against an Annual Plan budget of $2.57 million.
Variances to budget
5.31 Please see Note 40 “Explanation of major variances against budget” to the financial statements for major variances.
5.32 Council is required to include information on financial performance in relation to various benchmarks in the Annual Report.
5.33 The balanced budget benchmark has not been achieved. The Council meets this benchmark if its revenue equals or is greater than its operating expenses and Council planned to not meet this benchmark in 2020/21. This is due to having a 0% rates increase and the debt funded $5 million contribution paid to Tasman District Council for the Waimea Dam, which has been designated as an operating expense rather than capital expenditure for Council.
5.34 A summary of this information in the Annual Report is included in the following table:
Material differences from the draft Annual Report presented to the Audit and Risk Subcommittee
5.35 The draft Annual Report went to the Audit and Risk Subcommittee on 14 September. Since that time, the audit has been completed.
5.36 There have been no material changes to the draft Annual Report presented. There have been some minor changes to the results in the statement of comprehensive revenue and expense for the valuation and in the balance sheet (and associated notes).
5.37 Option 1 is the recommended option.
Option 1: Adopt the Annual Report 2020/21 and accept the supporting recommendations
· Meets statutory timeframes.
· Allows timely production and distribution of the Annual Report.
Risks and Disadvantages
· There will be no further opportunity for Council to review any minor amendments prior to publishing.
Option 2: Not accept the recommendations
Risks and Disadvantages
· Adoption of the Annual Report will not meet statutory timeframes.
· The Annual Report will not be available to the public in a timely manner.
· Not meeting statutory timeframes may be a consideration by Standard and Poor’s for the Council credit rating.
6.1 It is recommended that Council adopt the Annual Report for the 2020/21 year.
7. Next Steps
7.1 Following adoption by Council the Annual Report 2020/21 will be made available online, and printed copies provided for reference at Council’s public libraries and the Customer Service Centre. A designed version will be completed and replace these copies in the week after adoption. An article on the Annual Report will be included in an upcoming edition of Our Nelson.
7.2 Council is required to make publicly available a summary of the information contained in the Annual Report within one month of its adoption. An audited Summary Annual Report 2020/21 will be designed and made available online, as well as at Council’s public libraries and the Customer Service Centre.
Authors: Nikki Harrison, Group Manager Corporate Services
Important considerations for decision making
1. Fit with Purpose of Local Government
The Annual Report 2020/21 is a requirement of the Local Government Act 2002 and fits the purpose of local government by providing information about Council’s performance during 2020/21 – this contributes to democratic local decision-making.
2. Consistency with Community Outcomes and Council Policy
The decision to adopt the Annual Report aligns with the following community outcome: Our Council provides leadership and fosters partnerships, a regional perspective and community engagement.
The content of the Annual Report is prescribed by statute so there is a very low risk that it will not achieve the required outcome.
The Local Government Act 2002 normally requires Council to adopt the final Annual Report within four months of the end of the financial year (31 October). Under the Annual Reporting and Audit Time Frames Extensions Legislation Bill 2021, the new date for councils to meet reporting timeframes is 31 December 2021. There is low risk that the Annual Report will not be adopted by this date.
4. Financial impact
There is no immediate financial impact from this decision - preparation and publication of the Annual Report can be achieved within existing budgets. If Council does not adopt the Annual Report before the statutory deadline of 31 December 2021, it may be a consideration for Standard and Poor’s in its annual credit rating assessment. The Annual Report itself outlines the financial position of Council at the end of the 2020/21 financial year.
5. Degree of significance and level of engagement
This decision is of low significance and does not require engagement.
6. Climate Impact
The Annual Report (Attachment 1) contains a summary of Council’s climate change actions in 2020/21, promoting awareness of Council’s work in this area.
7. Inclusion of Māori in the decision making process
No engagement with Māori has been undertaken in preparing this report.
The adoption of the Annual Report is a decision of Council.