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Notice of the Ordinary meeting of

Nelson City Council

Te Kaunihera o Whakatū

 

Date:                        Thursday 23 March 2023

Time:                       1.00p.m.

Location:                  Council Chamber
Floor 2A, Civic House
110 Trafalgar Street, Nelson

Agenda

Rārangi take

Chairperson                     His Worship the Mayor Nick Smith

Deputy Mayor                  Deputy Mayor Rohan O'Neill-Stevens

Members                         Cr Matty Anderson

        Cr Matthew Benge

        Cr Trudie Brand

        Cr Mel Courtney

        Cr James Hodgson

        Cr Kahu Paki Paki

        Cr Pete Rainey

        Cr Campbell Rollo

        Cr Rachel Sanson

        Cr Tim Skinner

        Cr Aaron Stallard

Quorum   7                                                                      Lindsay McKenzie

Interim Chief Executive

Nelson City Council Disclaimer

Please note that the contents of these Council and Committee agendas have yet to be considered by Council and officer recommendations may be altered or changed by the Council in the process of making the formal Council decision. For enquiries call (03) 5460436.


 

 


Nelson City Council

23 March 2023

 

 

Page No.

 

Karakia and Mihi 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.      Adoption of the Annual Plan 2023/24 Consultation Document and Supporting Information                                               7 - 76

Document number R27501

Recommendation

That the Council

1.     Receives the report Adoption of the Annual Plan 2023/24 Consultation Document and Supporting Information (R27501) and its attachments (839498445-13646 and 839498445-14090); and

2.     Adopts the Supporting Information for the Annual Plan 2023/24 Consultation Document (839498445-13958) that is relied on for the Annual Plan 2023/24 Consultation Document, as required by section 95A(4) of the Local Government Act 2002; and

3.     Agrees that the Annual Plan 2023/24 Consultation Document (839498445-13646) provides the basis for effective public consultation and clearly identifies and explains the significant or material differences between the proposed Annual Plan 2023/24 and year three of the Long Term Plan 2021–31; and

4.     Notes under section 80 of the Local Government Act 2022, that the proposed work programme, rates increases and debt projections in the Annual Plan 2023/24 Consultation Document and supporting information:

a.  Are significantly inconsistent with the Long Term Plan 202131 and the Financial Strategy; and

b.  That the reasons for this inconsistency are principally the costs of recovery from the August 2022 severe weather event, inflationary pressures, rising interest costs, bringing forward funding for projects to take advantage of available Government financial support, and decisions to respond to the changing needs of the Nelson community; and

c.  That Council does not intend to amend the Long Term Plan 202131 or the Financial Strategy to accommodate the proposed decisions; and

5.     Agrees to maintain the commercial differential to collect 22.6% of total rates (excluding water annual charge and water volumetric rate) for 2023/24 consistent with the level collected in 2022/23; and

6.     Notes that, having had regard to the matters in section 100(2) of the Local Government Act 2002 and as approved in the Long Term Plan 2021-31,  the setting of an unbalanced budget in the Annual Plan 2023/24 remains prudent given the ongoing effects of the COVID-19 pandemic on the local economy and ratepayers and further notes that, more recently, Council budgets have been impacted by the unforeseen additional costs associated with the August 2022 severe weather event and the sharp rise in inflation and interest costs; and

7.     Adopts the Annual Plan 2023/24 Consultation Document (839498445-13646) for public consultation, as required by section 95A of the Local Government Act 2002; and

8.     Agrees that His Worship Mayor and Chief Executive be delegated authority to approve any minor amendments required to the Annual Plan 2023/24 Consultation Document and the supporting information prior to them being published and made available for public consultation; and

9.     Approves the consultation approach (set out in paragraphs 5.12 to 5.14 of this report (R27501) and agrees that the approach:

a.  includes sufficient steps to ensure the Annual Plan 2023/24 Consultation Document and supporting information will be reasonably accessible to the public and will be publicised in a manner appropriate to its purpose and significance; and

b.  will result in the Annual Plan 2023/24 Consultation Document and supporting information being as widely publicised as is reasonably practicable as a basis for consultation; and

c.  meets the requirements of section 82 of the Local Government Act 2002; and

10.  Notes that the statement of proposal for changes to Council’s schedule of fees and charges for 2023/24 will be consulted on alongside consultation on the Annual Plan 2023/24 Consultation Document.

 

 

Confidential Business

6.       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

Request for a Private Plan Change - Nelson Airport

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 48(1)(d)

     That the exclusion of the public from the whole or the relevant part of the proceedings of the meeting is necessary to enable the local authority to deliberate in private on its decision or recommendation in any proceedings to which this paragraph applies.

Section 48(2)

Paragraph (d) of subsection (1) applies to -

(a) Any proceedings before a local authority where -

(i) A right of appeal lies to any Court or tribunal against the final decision of  the local authority in those proceedings; or

(ii) The local authority is required, by any enactment, to make a recommendation in respect of the matter that is the subject of those proceedings; and

c) Any proceedings of a local authority in relation to any application or objection under the Marine Farming Act 1971.

 

 

Karakia Whakamutanga


 

Item 5: Adoption of the Annual Plan 2023/24 Consultation Document and Supporting Information

 

Council

23 March 2023

 

 

REPORT R27501

Adoption of the Annual Plan 2023/24 Consultation Document and Supporting Information

 

 

 

1.       Purpose of Report

1.1       To adopt the Annual Plan 2023/24 Consultation Document and its supporting information.

1.2       To approve the public consultation process for the Annual Plan 2023/24.

2.       Summary

2.1       Council is required to prepare and adopt an Annual Plan by 30 June each year. If there are significant or material changes proposed to the work programme set out in the Long Term Plan for the year, then Council must consult via a consultation document which outlines these changes. The consultation document is an exceptions document and focuses on the key proposed variances for that year from what was proposed in the Long Term Plan 202131.

2.2       The average rates increase proposed in the Annual Plan 2023/24 Consultation Document is 7.2%, and the proposed debt at the end of June 2024 is projected to be $199.6 million. Year three of the Long Term Plan projected an average rates increase of 5% and net debt of $191.93 million. It is important to note that in 2020/21 when the Long Term Plan was developed the forecast inflation for this current year was 2.5%, but is now in excess of 7% and this is the principal reason for the variation. Recovery from the August 2022 severe weather event, inflationary pressures, increasing operating costs and rising interest costs have all contributed to the proposed rates and debt increases.

3.       Recommendation

 

That the Council

1.     Receives the report Adoption of the Annual Plan 2023/24 Consultation Document and Supporting Information(R27501) and its attachments (839498445-13646 and 839498445-14090); and

2.     Adopts the Supporting Information for the Annual Plan 2023/24 Consultation Document (839498445-13958) that is relied on for the Annual Plan 2023/24 Consultation Document, as required by section 95A(4) of the Local Government Act 2002; and

3.     Agrees that the Annual Plan 2023/24 Consultation Document (839498445-13646) provides the basis for effective public consultation and clearly identifies and explains the significant or material differences between the proposed Annual Plan 2023/24 and year three of the Long Term Plan 2021–31; and

4.     Notes under section 80 of the Local Government Act 2022, that the proposed work programme, rates increases and debt projections in the Annual Plan 2023/24 Consultation Document and supporting information:

a.  Are significantly inconsistent with the Long Term Plan 202131 and the Financial Strategy; and

b.  That the reasons for this inconsistency are principally the costs of recovery from the August 2022 severe weather event, inflationary pressures, rising interest costs, bringing forward funding for projects to take advantage of available Government financial support, and decisions to respond to the changing needs of the Nelson community; and

c.  That Council does not intend to amend the Long Term Plan 202131 or the Financial Strategy to accommodate the proposed decisions; and

5.     Agrees to maintain the commercial differential to collect 22.6% of total rates (excluding water annual charge and water volumetric rate) for 2023/24 consistent with the level collected in 2022/23; and

6.     Notes that, having had regard to the matters in section 100(2) of the Local Government Act 2002 and as approved in the Long Term Plan 2021-31,  the setting of an unbalanced budget in the Annual Plan 2023/24 remains prudent given the ongoing effects of the COVID-19 pandemic on the local economy and ratepayers and further notes that, more recently, Council budgets have been impacted by the unforeseen additional costs associated with the August 2022 severe weather event and the sharp rise in inflation and interest costs; and

7.     Adopts the Annual Plan 2023/24 Consultation Document (839498445-13646) for public consultation, as required by section 95A of the Local Government Act 2002; and

8.     Agrees that His Worship Mayor and Chief Executive be delegated authority to approve any minor amendments required to the Annual Plan 2023/24 Consultation Document and the supporting information prior to them being published and made available for public consultation; and

9.     Approves the consultation approach (set out in paragraphs 5.12 to 5.14 of this report (R27501) and agrees that the approach:

a.  includes sufficient steps to ensure the Annual Plan 2023/24 Consultation Document and supporting information will be reasonably accessible to the public and will be publicised in a manner appropriate to its purpose and significance; and

b.  will result in the Annual Plan 2023/24 Consultation Document and supporting information being as widely publicised as is reasonably practicable as a basis for consultation; and

c.  meets the requirements of section 82 of the Local Government Act 2002; and

10.  Notes that the statement of proposal for changes to Council’s schedule of fees and charges for 2023/24 will be consulted on alongside consultation on the Annual Plan 2023/24 Consultation Document.

 

4.       Background

4.1       Section 95 of the Local Government Act 2002 (LGA2002) states that a local authority must prepare and adopt an annual plan for each financial year and that it must consult in a manner that gives effect to the requirements of section 82 before adopting an annual plan. However, consultation is not required if the proposed annual plan does not include significant or material differences from the content of the long term plan for the financial year to which the proposed annual plan relates.

4.2       Council’s Significance and Engagement Policy sets out the relationship between the degree of significance that a matter has, and the level and type of community engagement that is likely to take place. Under this policy, Council determines the appropriate level of engagement on a case by case basis and in proportion to the level of significance of the matter being considered.

4.3       Staff undertook an assessment of the significance of the proposed changes for the Annual Plan 2023/24 from year three of the Long Term Plan 202131 against Council’s Significance and Engagement Policy. The assessment indicated that the proposed key changes for the Annual Plan 2023/24 were of high significance. At its meeting on 9 February 2023, Council agreed that the proposed key changes were of high significance and that it needed to consult through an annual plan consultation process.

4.4       Elected member feedback from three days of annual planning workshops and three Annual Plan 2023/24 Taskforce meetings has informed the development of the Consultation Document and supporting information.

5.       Discussion

5.1       Section 95A of the LGA2002 sets out the purpose and content requirements for a consultation document. The proposed process, the draft Consultation Document and the supporting information outlined below, meet the requirements of this section.

Consultation Document

5.2       The Consultation Document (Attachment 1) outlines the proposed key changes to the work programme, and the other main changes from the Long Term Plan 20212031 by activity area.

5.3       The proposed key changes for the Annual Plan 2023/24 are:

·     The approach to rates – an average rates rise of 7.2%

·     Recovery from the August 2022 severe weather event

·     Reduction in spending on a new library

·     Infrastructure Acceleration Fund – infrastructure upgrade to unlock city centre living

·     Maitahi Bayview Development subdivision (Maitai Valley) utilities and transport connections. 

5.4       Detail on these proposed changes is outlined in the Consultation Document and supporting information, attached to this report.

5.5       The overall effect of the proposed work programme is to decrease slightly the capital works programme from the programme outlined in year three of the Long Term Plan, from $59.5 million to $59.2 million (excluding vested assets, staff costs, Nelson Regional Sewerage Business Unit and Nelson Tasman Regional Landfill Business Unit). Operational expenditure has increased. The overall effect of the proposed changes is an increase in rates revenue of 7.2% and debt at the end of June 2024 of $199.6 million. These figures are different to year three of the Long Term Plan, which projected a rates revenue increase of 5% and debt of $191.93 million, albeit in 2020 no one foresaw inflation exceeding 7% in this year.

Supporting information

5.6       Under section 95A(4) LGA2002, Council must adopt the supporting information that is relied on for the content of the consultation document, before it adopts the consultation document itself.  This information must also be made available to the public as part of the consultation process and includes detailed financial forecasts, changes to the capital expenditure programme, and the proposed Funding Impact Statement (Attachment 2).

Consequences of the rates approach

5.7       A key focus for Council in considering its approach to rates setting for the 2023/24 year has been affordability. Aware of the cost of living pressures households and businesses are facing, Council has tried to minimise the increase in rates. While rates are not a major factor driving the increasing costs the community is experiencing, Council did not wish to add to inflationary pressures with a rates rise above the rate of inflation.

5.8       Some of the impacts of this approach will be an increase in debt (from not fully funding depreciation) and a reduction in service in a range of areas. It is unlikely to be possible to restore all reduced services in year 1 of the Long Term Plan 2024–34 because of the significant rates increase that would generate, so a phased approach or some permanent changes are likely to be necessary. Likewise, phasing in funding of depreciation will have a cumulative impact over the first few years of the Long Term Plan. The overall impact is likely to require a rethinking of Council’s Financial Strategy as the Long Term Plan is developed.

Commercial differential

5.9       The commercial differential recognises the additional services that businesses receive, such as extra rubbish collection, street sweeping and events to attract visitors. The percentage collected has been decreased by 0.5% per annum for the last five years to reduce the burden on the commercial sector. The Long Term Plan outlined that Council would continue to reduce the proportion of rates collected from commercial properties by 0.5% per year for the first three years, reviewed annually during the annual plan process.

5.10     Council has assessed the relative rating contributions to find a suitable balance between commercial and residential properties in the context of the cost of living increases and impact on residential ratepayers.  Following this review, the commercial differential for 2023/24 is proposed to be retained at the same level as 2022/23.  This would result in 22.6% of total rates being collected from commercial rates.

5.11     Council can consider an appropriate level for the commercial differential again in future years through the Long Term Plan 2024–34. 

Consultation process

5.12     The proposed consultation process involves:

·    Preparation and adoption of a consultation document and supporting information.

·    A submission period of 29 March to 30 April for the public to make submissions.

·    Hearings to enable submitters to present their submissions to Council

·    Deliberations and decisions on the matters raised in submissions, followed by adopting the final Annual Plan 2023/24.

5.13     Adoption of the final Annual Plan and setting the rates is planned to occur on 22 June 2023.

5.14     The following are the key methods proposed to raise public awareness of the consultation process:

·     Promote the opportunity to submit on the Consultation Document in Our Nelson, which is delivered to households in Nelson.

·     Advertise in local media.

·     Make available hard copies of the Consultation Document at Council’s Customer Service Centre and libraries;

·     Make available the Consultation Document and supporting information on the Council website.

·     Provide opportunities for the public to discuss the Consultation Document with elected members, for example a stall at the Saturday Market.

·     Make available copies of the Consultation Document for elected members to take to any community meetings that they attend during the consultation period

·     Publicise the Consultation Document and opportunity to submit on social media, by media release and Antenno posts.

5.15     These methods may be amended as the consultation process progresses. Staff also expect there will be local media coverage on the key topics and changes outlined in the Consultation Document.

5.16     The consultation process above is proportionate to the significance of the matters raised and is in accordance with sections 95A, 82 and 82A of the LGA2002.

 

Inconsistencies with the Long Term Plan and Financial Strategy

5.17     If Council makes a decision which is significantly inconsistent with, or could have consequences that will be significantly inconsistent with, any Council policy or plan, section 80 of the LGA2002 requires that when making the decision Council clearly identifies:

a)    The inconsistency

b)    The reasons for the inconsistency

c)    Any intention of the local authority to amend the policy or plan to accommodate the decision.

5.18     The proposals in the Annual Plan 2023/24 Consultation Document are inconsistent with the work programme, rates increases and debt levels in the Long Term Plan and the Financial Strategy. The reasons for the Consultation Document proposals being inconsistent with those documents are principally the costs of recovery from the August 2022 severe weather event, inflationary pressures, rising interest costs, bringing forward funding for projects to take advantage of available Government financial support, and decisions to respond to the changing needs of the Nelson community. In February 2023, Council decided not to undertake an amendment to the Long Term Plan 2021–31 to accommodate these changes. A new Long Term Plan and Financial Strategy will be prepared and consulted on during the 2023/24 financial year.

5.19     The resolutions contained in this report meet the requirements of section 80 of the LGA2002.

Unbalanced budget

5.20     Section 100 of the LGA2002 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.

5.21     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).

5.22     In relation to 2023/24 Council confirmed an unbalanced budget was prudent at the adoption of the Long Term Plan 202131 on 24 June 2021:

Resolved CL/2021/115

3. Confirms that setting an unbalanced budget in 2021/22, 2022/23 and 2023/24 of the Long Term Plan 2021–2031 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 ratepayers, and having had regard to the matters in section 100(2) of the Local Government Act 2002;

5.23     Since that time Council has had to manage the additional impact upon budgets of the August 2022 severe weather event and the sharp rise in inflation and interest costs. These budgetary pressures have added to the reasons why Council considers it is prudent to set an unbalanced budget.

5.24     Council does not meet the balanced budget benchmark for 2023/24, with a planned level of 99%. This is consistent with year three of the Long Term Plan 202131 Financial Strategy, where it was acknowledged that COVID-19 has had a significant impact on Council’s finances. It was resolved to have an unbalanced budget (projected operating expenditure exceeding projected operating income) for years one, two and three of the Long Term Plan, to maintain services and integrity of assets. This shortfall will be funded using Council’s balance sheet (debt).

Schedule of fees and charges

5.25     On 9 February 2023 Council resolved to consult on a statement of proposal for a proposed schedule of fees and charges for 2023/24 (report R27414). 

5.26     For ease of public participation, it is proposed to carry out this consultation alongside the consultation on the Annual Plan 2023/24 Consultation Document.

 

6.       Options

 

Option 1: Adopt the Annual Plan 2023/24 Consultation Document and its supporting information (Recommended option)

Advantages

·   Meets the requirements of the LGA2002.

·   Provides the community with the opportunity to provide feedback to Council on what is proposed.

·   Allows Council to consider feedback and make changes to work programmes and budgets before the final Annual Plan is adopted by Council.

·   The statutory deadline of adopting the final Annual Plan prior to 30 June 2023 should be met.

Risks and Disadvantages

·   Council would not have an opportunity to make major changes to the documents, if it considers they are needed prior to public consultation.

Option 2: Amend the Annual Plan 2023/24 Consultation Document and its supporting information

Advantages

·    If Council considers that the Consultation Document does not meet its needs or the needs of the community, Council can request staff to make further changes before releasing it for public consultation.

Risks and Disadvantages

·    Financial changes are likely to have an impact on the rates increase and level of debt.

·    A revised consultation document and supporting information would need to be developed and adopted by Council, which would delay the consultation process.

·    Increased risk that the final Annual Plan is not adopted by 30 June 2023, as required under the LGA2002. This would mean that Council would not be able to strike its rates for the 2023/24 financial year by 30 June 2023.

 

7.       Conclusion

7.1       The Consultation Document sets out the key changes Council is proposing for the 2023/24 financial year and provides a good basis for public consultation. Staff recommend that the Consultation Document and supporting information be adopted and approved for public consultation.

8.       Next Steps

8.1       Council will undertake the consultation process as outlined in paragraphs 5.12 to 5.14. Staff will then prepare a final Annual Plan 2023/24 for Council’s adoption before 30 June 2023.

 

 

Authors: Nicky McDonald, Group Manager Strategy and Communications           Nikki Harrison, Group Manager Corporate Services

Attachments

Attachment 1:    839498445-13646 Annual Plan 2023/24 Consultation Document (Circulated separately)  

Attachment 2:    839498445-14090 Supporting information  

 

Important considerations for decision making

Fit with Purpose of Local Government

Adopting a consultation document that covers proposed changes to the work programme for 2023/24, compared to year three of the Long Term Plan 202131, enables democratic local decision-making.

Consistency with Community Outcomes and Council Policy

The proposed changes to Council’s work programme as set out in the Consultation Document are considered to more appropriately align resources to achieve its community outcomes.

Risk

Adopting the Consultation Document and its supporting information is considered low risk, as Council will consider the views of the public before making its final decisions. The proposed process is in line with the requirements of the LGA2002. There is a risk that some members of the public might object to the final decisions that Council makes or challenge the process. Ensuring a robust consultation process and explaining the reasons for decisions will help mitigate this risk.

There is a risk that some in the community will not be supportive of the effect on services that will be experienced as a result of the reductions necessary to keep the average rates rise to inflation. The impact of reduced maintenance budgets will not always be obvious to the public but there may be increased complaints where repairs are slower and services not as responsive. There may also be concern from community groups, given their funding is being held to 2022/23 levels. It will be important to have clear messaging around the cost of living crisis and the need for Council and those it funds to play their part in not creating inflationary pressures.

Financial impact

The financial impact of the proposals in the Consultation Document are reflected in the resulting proposed rates change and debt levels.

Degree of significance and level of engagement

The proposals in the Consultation Document have been assessed against Council’s Significance and Engagement Policy as having a high level of significance (refer to report R27501 to 9 February Council meeting). The proposed process which includes providing for online and written submissions, hearings, deliberations meeting and responses to submitters is in accordance with the consultation principles set out in section 82 of the LGA 2002 and the assessment of the changes having a high level of significance.

Climate Impact

The decisions in this report will have no impact on the ability of Council to proactively respond to the impacts of climate change now or in the future.

Inclusion of Māori in the decision making process

No engagement with Māori has been undertaken in preparing this report, however the Iwi-Council Partnership Group is being briefed on the consultation process.

·   Delegations

This is a matter for Council.

 


Item 5: Adoption of the Annual Plan 2023/24 Consultation Document and Supporting Information: Attachment 2