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I hereby give notice that an ordinary meeting of the Strategy and Finance Committee will be held on:

Date: Time: Meeting Room: Venue:

Thursday, 7 February 2013 10.00am Reception Lounge Level 2 Auckland Town Hall 301-305 Queen Street Auckland

Strategy and Finance Committee OPEN AGENDA


MEMBERSHIP Chairperson Deputy Chairperson Councillors Cr Penny Webster Cr Des Morrison Cr Anae Arthur Anae Cr Cameron Brewer Mayor Len Brown, JP Cr Dr Cathy Casey Cr Sandra Coney, QSO Cr Alf Filipaina Cr Hon Chris Fletcher, QSO Cr Michael Goudie Cr Ann Hartley, JP Deputy Mayor Penny Hulse Cr Mike Lee

Cr Richard Northey, ONZM Cr Calum Penrose Cr Dick Quax Cr Noelene Raffills, JP Cr Sharon Stewart, QSM Member David Taipari Member John Tamihere Cr Sir John Walker, KNZM, CBE Cr Wayne Walker Cr George Wood, CNZM

(Quorum 12 members) Tam White Democracy Advisor 1 February 2013 Contact Telephone: (09) 307 7253 Email: tam.white@aucklandcouncil.govt.nz Website: www.aucklandcouncil.govt.nz

Note:

The reports contained within this agenda are for consideration and should not be construed as Council policy unless and until adopted. Should Members require further information relating to any reports, please contact the relevant manager, Chairperson or Deputy Chairperson.

TERMS OF REFERENCE

The Strategy and Finance Committee will have responsibility for: x x x x x x x x Planning and Financial Management, exercising the Councils responsibilities and making recommendations to the Governing Body where required under Part 6 (except subpart 2) of the Local Government Act 2002; Discussing Independent Maori Statutory Board agreements with the Independent Maori Statutory Board and making recommendations to the Governing Body; Discussing local board agreements with the local boards and making recommendations to the Governing Body on the adoption of the agreements as part of the annual plan; Delegation of powers to subcommittee(s); Dealing with Councils Governing Body responsibilities for rates collection; Ensuring local board input to the Long Term Plan and financial policies; Approving the write off of outstanding accounts (excluding rates) and wholly or partly remit fees and charges up to $500,000; and Acquisition and disposal of property assets.

For the avoidance of doubt, these delegations confirm the existing delegation (contained in the Chief Executives Delegation Register) to staff relating to the above terms of reference under the enactments mentioned below but limits those delegations by requiring them to be exercised as directed by the committee.

Relevant legislation includes but is not limited to: Local Government Act 2002; Local Government (Rating) Act 2002; and Local Government (Auckland Council) Act 2009.

Strategy and Finance Committee 07 February 2013 ITEM TABLE OF CONTENTS 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Apologies Declaration of Interest Confirmation of Minutes Petitions Public Input Local Board Input Extraordinary Business Notices of Motion Auckland Regional Amenities draft Funding Plan 2013-14 proposed submission Ken Maunder Park Community Trust - Request to Renew and Extend Loan Guarantee Selection of members to the local board funding policy review political working party Council Response to Law Commission Issues Paper - Joint and Several Liability Monthly budget update Consideration of Extraordinary Items PAGE 5 5 5 5 5 5 5 6 7 75 81 85 99

PUBLIC EXCLUDED
15 C1 C2 C3 C4 Procedural Motion to Exclude the Public Open space land acquisition budget Recommendation from the Regional Development and Operations Committee - Acquisition of Land for Local Purpose Reserve, Umupuia Recommendation from the Regional Development and Operations Committee - Acquisition of Land for Local Purpose Reserve, Otahuhu 90 Pavilion Drive, Mangere 111 111 111 112 112

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Strategy and Finance Committee 07 February 2013 1 Apologies At the close of the agenda no apologies had been received. 2 Declaration of Interest Members are reminded of the need to be vigilant to stand aside from decision making when a conflict arises between their role as a member and any private or other external interest they might have. 3 Confirmation of Minutes That the minutes of the Strategy and Finance Committee held on Wednesday, 19 December 2012, be confirmed as a true and correct record. 4 Petitions At the close of the agenda no requests for petitions had been received. 5 Public Input Standing Order 3.21 provides for Public Input. Applications to speak must be made to the Committee Secretary, in writing, no later than two (2) working days prior to the meeting and must include the subject matter. The meeting Chairperson has the discretion to decline any application that does not meet the requirements of Standing Orders. A maximum of thirty (30) minutes is allocated to the period for public input with five (5) minutes speaking time for each speaker. At the close of the agenda no requests for public input had been received. 6 Local Board Input Standing Order 3.22 provides for Local Board Input. The Chairperson (or nominee of that Chairperson) is entitled to speak for up to five (5) minutes during this time. The Chairperson of the Local Board (or nominee of that Chairperson) shall wherever practical, give two (2) days notice of their wish to speak. The meeting Chairperson has the discretion to decline any application that does not meet the requirements of Standing Orders. This right is in addition to the right under Standing Order 3.9.14 to speak to matters on the agenda. At the close of the agenda no requests for local board input had been received. 7 Extraordinary Business Section 46A(7) of the Local Government Official Information and Meetings Act 1987 (as amended) states: An item that is not on the agenda for a meeting may be dealt with at that meeting if(a) (b) The local authority by resolution so decides; and The presiding member explains at the meeting, at a time when it is open to the public,-

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Strategy and Finance Committee 07 February 2013 (i) (ii) The reason why the item is not on the agenda; and The reason why the discussion of the item cannot be delayed until a subsequent meeting.

Section 46A(7A) of the Local Government Official Information and Meetings Act 1987 (as amended) states: Where an item is not on the agenda for a meeting,(a) That item may be discussed at that meeting if(i) That item is a minor matter relating to the general business of the local authority; and the presiding member explains at the beginning of the meeting, at a time when it is open to the public, that the item will be discussed at the meeting; but

(ii)

(b)

no resolution, decision or recommendation may be made in respect of that item except to refer that item to a subsequent meeting of the local authority for further discussion.

Notices of Motion At the close of the agenda no requests for notices of motion had been received.

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File No.: CP2013/00425

Purpose
1. To approve a submission on behalf of Auckland Council to the Auckland Regional Amenities Funding Board (Funding Board) draft Funding Plan 2013-14, as per the Auckland Regional Amenities Funding Act 2008 (the Act).

Executive Summary
2. The Funding Board is required to prepare an annual draft funding-plan for the Auckland Regional Amenities (Amenities). The draft funding-plan details the provisional allocations of funding as determined by the Funding Board. The draft funding-plan must be circulated publicly, calling for submissions. Auckland Council is permitted to provide a submission to the draft funding-plan. Councils role is confined to the provision of the funds, not in the decision making of how the funds are allocated. Council do not have the ability to direct the Funding Board on the funding allocations, as the Funding Board has been established to act independently of Council. The intent of the Act is to enable the Amenities to achieve financial sustainability, as they are deemed an essential part of the fabric of Auckland. It is envisaged that Amenities will move from financial dependence on this funding mechanism, to eventual financial independence where they are able to rely on their own fund raising activities The Funding Board have proposed to reduce the funding request by the Auckland Regional Helicopter trust by 25% to $900,000 (application amount $1,230,000). The Funding Board have looked at all entities across the Helicopter Trust family e.g. Auckland Regional Rescue Helicopter Trust and Rescue Helicopter (Auckland) Trust, and has concluded that the combined trading results of the two entities was a surplus of $2.257 million as at 30 June 2012. This demonstrates that the ARRHT are becoming more financially independent. The Funding Board have advised that levels of service would not be affected by the proposed reduction of funding. The key points of the proposed submission are that: x x x Acknowledging the Amenities for operating prudently in a financially constrained environment, by submitting considered funding applications, Acknowledging the Funding Board for taking into consideration the two new funding principles, by proposing a 2.5% increase in funding for the Amenities, Requesting that the Funding board confirm that the Auckland Regional Rescue Helicopter Trusts (ARRHT) ability to deliver current levels of service will not be adversely affected by the proposed reduction in funding. When doing so, the Funding Board should have regard to other trusts related to ARRHT. Requesting Councils pohutukawa logo be included on the Amenities websites Requiring clarification that educational courses provided by Watersafe are not a duplication of those provided by the Coastguard, and Requiring clarification of funding mechanisms in respect of the proposal to annualise the Auckland Arts Festival.

3.

4.

5.

6. 7.

x x x

Auckland Regional Amenities draft Funding Plan 2013-14 proposed submission

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Auckland Regional Amenities draft Funding Plan 2013-14 proposed submission

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Recommendation/s
That the Strategy and Finance Committee: a) b) Agrees that the report be received Approves the draft submission to the Auckland Regional Amenities Funding Board draft Funding Plan 2013-14

Discussion
8. The Funding Board is an independent body, which is responsible for allocation of the annual funding provided by the Auckland Council for the Auckland Regional Amenities. The Amenities comprises of ten independently governed organisations: x x x x x x x x x x 9. Auckland Observatory and Planetarium Trust Board Auckland Philharmonia Auckland Regional Rescue Helicopter Trust Auckland Theatre Company Ltd Coast Guard Northern Region Incorporated New Zealand Maritime Museum Trust Board New Zealand Opera Limited Surf Life Saving Northern Region Incorporated The Auckland Festival Trust Watersafe Auckland Incorporated

The Funding Board was established under the Auckland Regional Amenities Funding Act 2008. The Act was established to secure funding through Auckland Council for the Amenities that provide arts, educational and rescue services throughout the Auckland region. The intent of the Act is to enable the Amenities to achieve financial sustainability, as they are deemed an essential part of the fabric of Auckland and are necessary to make the region a vibrant and attractive place to live. It is envisaged that Amenities will move from financial dependence on this funding mechanism, to eventual financial independence where they are able to rely on their own fund raising activities. In theory this will free up rate payer funding for other Amenities. The role of the Funding Board is to assess the annual funding applications from the Amenities, against funding principles identified within the Act. The funding principles detail a range of requirements for the Funding Board to have regard to when determining the provisional grants for the Amenities. At the 1st November 2012, Strategy and Finance committee meeting council adopted two additional funding principles, which required the Funding Board to have regard of the councils proposed rates increase for the forthcoming year and requiring the Amenities to align their activities to the Auckland Plan, by adopting relevant performance measures. The funding principles primarily require the Funding Board to; x x x Grant funding to the Amenities for expenses incurred in providing the services; For the Funding Board to ensure funding is only available for activities within the Auckland region; and, For the funding not to be applied towards capital expenses.

10.

11.

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Strategy and Finance Committee 07 February 2013 x 12.

Once the Funding Board have conducted the analysis, they are required under the Act to prepare the draft-funding plan and circulate for public consultation, calling for public submissions. The Council is also permitted to make a submission on the draft-funding plan. Officers have reviewed the draft Funding-Plan 2013-14 with general feedback being that plan is well considered. Officers have noted that there could be an improvement on the performance measures detailed by the Amenities and their alignment to the Auckland Plan. Council officers are committed to continue working with the Funding Board and Amenities in the development of robust performance measures. However, some concerns have been raised, please refer to the attachment for full submission details: x x Commitment from Council officers to assist in the development of meaningful performance measures which demonstrate an alignment to the Auckland Plan Requesting Council acknowledgement as a major financial contributor to the Amenities, through the incorporation of the Councils logo on the Amenities websites/promotional material Requesting that the Funding board confirm that the ARRHT ability to deliver current levels of service will not be adversely affected by the proposed reduction in funding. When doing so, the Funding Board should have regard to other trusts related to ARRHT. Clarifications that the courses provided by Watersafe are not a duplication of those provided by the Coastguard Requesting an increase in the focus of water safety education in particular for the Pacifica community Clarification or further investigation required on the funding mechanisms in respect of the proposal to annualise the Auckland Arts Festival

13.

x x x 14.

Once submissions have been received (8th February 2013) a hearing will be held on 14th February 2013. The Funding Board will consider the submissions received and will then finalise the funding plan. Council will then consider the Funding Boards recommendations on the total levy, at the March 2013 Strategy and Finance committee. Under the Act, Councils role is confined to approving or rejecting the total levy amount, having regard to the funding principles. Under the Act, Council do not have the ability to direct the Funding Board on the funding allocations, as the Funding Board has been established to act independently of Council. Councils role is in the provision of the funds, not in the decision making of how the funds are allocated between the Amenities. At the March 2013 meeting, should Council decide to reject the proposed total levy from the Funding Board, the dispute must be referred to an independent arbitrator. Council can only reject the proposed total levy after having regard to the funding principles. The legislation does not allow for renegotiation. If Council do not accept the proposed levy, the matter must be referred to arbitration in the first instance. On a previous occasion, the matter was referred to arbitration. On this previous occasion costs of approximately $70,000 were incurred, in addition to the Funding Board costs, as the arbitrator found in favour of the Funding Board. This year the proposed funding allocations have experienced attention from the Funding Board decision to reduce the funding allocation to the ARRHT. The Act as previously described requires the Funding Board to operate independently of council and they are mandated to provide robust assessment of each Amenities funding application. The Funding Board have proposed to reduce the funding request of the ARRHT by 25% to $900,000 (application amount $1,230,000). The Funding Board have looked at all entities across the Helicopter Trust family e.g. Auckland Regional Rescue Helicopter Trust and
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15.

16.

17.

18.

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Funding Board must determine that the Amenities have made all reasonable endeavours to maximise their funding from other available funding sources.

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Rescue Helicopter (Auckland) Trust, and has concluded that the combined trading results of the two entities was a surplus of $2.257 million as at 30 June 2012. This demonstrates that the ARRHT are becoming more financially independent, which the Funding Board advises is due to their very successful fund raising activities. 19. The Funding Board have advised that levels of service would not be affected by this proposed reduction of funding.

Consideration
Local Board Views
20. Decision-making and oversight in respect of regional activities is the responsibility of the Governing Body. This report relates to the funding relationship between the Council, the Funding Board and Amenities. Local Board views have not been formally canvassed, however views have been sought from Great Barrier, Waiheke, Rodney and Franklin local boards, given these areas reliance on the regional rescue helicopter service. Waiheke local board have formally responded, stating that: That the Waiheke Local Board would view with concern, any proposal by the Auckland Regional Amenities Funding Board to reduce the annual funding to the Auckland Regional Rescue Helicopter Trust. Waiheke Island, and the other Gulf Islands, account for 45% of the trips of the Helicopter Trust. Waiheke Island, in particular, is dependent on their valuable services, as there are limited emergency health services available on the island. The age profile of the Waiheke residents is older than the rest of the Auckland region and is therefore more likely to be in greater need of these emergency services. The Waiheke Local Board also notes that the Waiheke Health Trust would view any reduction of the Helicopter service with concern. The proposed funding cut could mean rescue helicopters being available for fewer hours and with reduced capability, which would directly affect Waiheke Island, as a major user of the service. The Waiheke Local Board also notes that a reduction in funding could also jeopardize the purchase a replacement helicopter in 2015.

21.

22.

Maori Impact Statement


23. The Amenities have the ability to make positive contributions to Maori Wellbeing, and to deliver on Auckland Plan outcomes relating to effective communication and engagement with Maori and contribute to effective Maori capacity. Legislation requires that the membership of the Funding Board must have at least one member who represents the interests of Maori in the Auckland region.

General
24. This report does not trigger the significance policy.

Implementation Issues
25. There are no implementation issues associated with this report.

Attachments
No. A B Title Auckland Council proposed submission to draft funding plan Auckland Regional Amenities Funding Board draft Funding Plan 20132014 Page 13 15

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Signatories
Authors Authorisers Colette Farrer - Advisor Alastair Cameron - Acting CCO Governance and External Partnership Manager Andrew McKenzie - Chief Finance Officer

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31st January 2013

Public Submissions Advisory Officer Auckland Regional Amenities Funding Board PO Box 6969 Wellesley Street Auckland 1141

To the Chairperson, Auckland Regional Amenities Funding Board

Auckland Council are providing a submission to the Auckland Regional Amenities Funding Board draft Funding Plan 2013-14. 1. The specific matter within the draft 2013-14 Funding Plan that our submission relates to is: Auckland Council acknowledges that the Funding Board and Amenities have gone to considerable effort to be mindful of the Auckland Councils proposed rates increase; we commend the proposed 2.5% increase. Auckland Regional Rescue Helicopter Trust Requesting that the Funding board confirm that the Auckland Regional Rescue Helicopter Trusts (ARRHT) ability to deliver current levels of service will not be adversely affected by the proposed reduction in funding. When doing so, the Funding Board should have regard to other trusts related to ARRHT. Performance Measures: Council wish to advise the Funding Board that they need to encourage the Amenities to develop meaningful performance measures, which demonstrate an alignment to the Auckland Plan. Council acknowledges, this is a new funding principle and the development of meaningful measures requires time. Council is expressing a commitment to work closely with the Funding Board and Amenities forthcoming year in the development of performance measures. Auckland Council Branding: Council provides a significant financial contribution to the Amenities, Council would like the Amenities to include the councils logo on their websites to enable public awareness.

Auckland Festival Trust: x Council would like clarification from the Auckland Festival Trust (page 16) on the level of funding required to enable the increase in the frequency of the arts festival
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Auckland Regional Amenities draft Funding Plan 2013-14 proposed submission

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Re: Auckland Regional Amenities Funding Board Draft Funding Plan 2013-14 Submission

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Strategy and Finance Committee 07 February 2013 x Council would like to understand what the Trust has done to secure funding from external parties Has the Festival Trust considered the increase in frequency of the festival in relation to the ATEED major events strategy? When will the Festival Trust formally approach Council regarding this proposal?

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x x

Watersafe and Coastguard: x x Council would like clarification that the courses provided by Watersafe are not a duplication of those provided by the Coastguard Council are requesting an increase in the focus of water safety education, in particular for the Pacifica community

2. We seek the following amendment to the draft 2013-2014 Funding Plan: Council does not seek an amendment to the draft 2013-2014 Funding Plan, only clarifications to the above-mentioned points. 3. Our submission is that (state the nature of the submission, giving reasons for the amendment requested): Councils submission is detailed above under the specific matters section. 4. Please indicate the cost or savings impact of your proposal, if possible: Not applicable Yours Faithfully

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Cr P Webster Chair of the Strategy and Finance Committee Auckland Council

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File No.: CP2012/24323

Purpose
1. This report seeks approval from the Strategy and Finance Committee to a request from the Ken Maunder Park Community Trust for Auckland Council to renew a loan guarantee with the ASB Bank for an amount of $200,000 for an 8-year period.

Executive Summary
2. A request has been received from the Ken Maunder Park Community Trust (the Trust) for Auckland Council to renew a $200,000 loan guarantee arrangement with the ASB Bank Ltd. The original guarantee facility was initially approved by Waitakere City Council and subsequently entered into by Auckland Council in late 2010. The loan and guarantee arrangement expired on 31 October 2012, although it continues in place until formally released by the bank. The ASB Bank lent the Trust $200,000 in 2010 to enable the new facility being built by the Trust on council owned land to be completed after a series of cost increases resulted in the Trust having insufficient funds to cover the total cost of the development. As at 1 November 2012, the amount outstanding on the ASB Bank loan remained at $200,000. The Trust is negotiating the renewal of the loan arrangement for a further 8-year period and has requested that Auckland Council re-new its loan guarantee facility. As the Trust leases its site from Auckland Council, it is prevented from offering the ASB Bank first mortgage security over the land and buildings for the loan. The Chair, Mr Ross Hick, acts as a guarantor for the interest due on the loan only, not the principal. In early 2012 Auckland Council (Legal Services and Treasury) and ASB Bank negotiated and agreed the terms and conditions of the loan guarantee documentation and applicable interest rates that is acceptable to both parties. This form of documentation will be used in this instance if the request is approved by council. A further change to the previous loan guarantee arrangements is the requirement for the borrower (the Trust in this instance) to enter into a Guarantee Side Deed which is a agreement between the council and the Trust, setting out the terms and conditions under which Auckland Council will provide the loan guarantee to the ASB Bank on behalf of the Trust. This will include a condition, that should the Trust fail to meet its obligations under the loan facility, this will be deemed to be a default under the lease agreement.

3.

4.

5.

6.

Recommendation/s
That the Strategy and Finance Committee: i) ii) Approves the request from the Ken Maunder Park Community Trust for a loan guarantee facility in respect of a $200,000 loan from the ASB Bank. Requires that the loan guarantee be limited to a maximum period of 8 years and that the documentation be in the form agreed between Auckland Council and ASB Bank in respect of loan guarantees to community organisations, also requiring the Ken Maunder Park Community Trust to fully repay the loan within the 8 year period. Requires a Guarantee Side Deed be entered into between Auckland Council and the Ken Maunder Park Community Trust recording the terms and
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iii)

Ken Maunder Park Community Trust - Request to Renew and Extend Loan Guarantee

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Ken Maunder Park Community Trust - Request to Renew and Extend Loan Guarantee

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conditions under which Council will guarantee the loan facility, including a requirement to make annual reductions in the principal outstanding, and a cross-default clause with the lease agreement. iv) Delegates approval for the final term and conditions of the loan guarantee and Guarantee Side Deed to the Manger, Regional and Local Planning and/or Manger Finance.

Discussion
7. The Waitakere City Council (WCC) worked with the Trust to develop an indoor facility on Ken Maunder Park, New Lynn. This facility is also available for community use. During 2010, while the indoor facility was still under construction, significant cost variations had resulted in a funding shortfall of approximately $200,000. The WCC had already financially contributed to the facility in three ways: a grant of $250,000 was provided from the Leisure Facility Partnership Fund; new public toilets and changing rooms to the value of $330,000 were incorporated into the facility to help share costs; and an additional sum of $75,000 was contributed to cover the increased cost of a wastewater pump station. Project variations/cost increases created the additional funding shortfall of approximately $200,000. The Trust obtained a $200,000 loan from the ASB to over this shortfall. The bank requested that the borrowing be secured by a council guarantee because the facility is located on council owned land and the Trust could not provide mortgage security to the ASB. The request for a council guarantee is common practice amongst financial institutions for occupiers on council property. The request was considered and approved by the WCC, and subsequently the Auckland Transition Authority. The loan guarantee was documented by the newly formed Auckland Council. The Trusts business plan and associated documents provided to the WCC in 2010 demonstrated the ability of the Trust to repay the loan over the 10-year term from operating surpluses. It was the Trusts intention to repay the loan as early as possible through the marketing opportunities of the Facility. To date, no principal repayments have been made. This means that in order to fully repay the loan in the remaining 8 years of the ASB loan, annual payments of principal must increase from $20,000 to $25,000, plus interest. In addition to the ASB loan, as at 30 September 2012 the Trust also owed a further $134,000 to other unsecured lenders. This represents a reduction of $26,000 since 30 September 2011. The business plan and latest financial information has been reviewed by council staff who are of the opinion that the Trust is growing its business and has been able to trade profitably, and projections indicate that this situation will continue. Noted in paragraph 13 above, the Trust has also been able to make principal repayments on unsecured loans from private individuals. Should the request to renew loan guarantee not be approved the ASB may chose to call in the loan, meaning that as the Trust has insufficient funds to repay the loan, Auckland Council will be required to do so under the terms of the existing loan guarantee agreement.

8.

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14.

Consequences of not renewing 15.

Ken Maunder Park Community Trust - Request to Renew and Extend Loan Guarantee

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Strategy and Finance Committee 07 February 2013

16.

If Auckland Council is required to make payment under the loan guarantee, it will be subrogated into the role of lender and would need to determine how to manage the outstanding loan. A number of options exist, ranging from converting the debt into a community loan; taking recovery action against the Trust or seeking alternative security from the trustees. Options regarding renewal of the guarantee are limited. In an ideal situation the facility and trust would exist without any debt. Unfortunately this is not the case, and a loan guarantee facility is the most cost effective manner for council to continue supporting the Trust in the short to medium term. Options in respect of this loan are limited to: x Providing a grant sufficient to cover the loan amount to ASB x Converting the ASB loan into a council community loan x Renewing the loan guarantee and monitoring it for on-going compliance.

Options 17.

18.

Providing a grant is unviable as there are no budgets available to cover this option. A community loan would result in council directly assuming the risk of the loan, with associated responsibilities of monitoring and enforcing the loan, and the need to fund the repayment of the ASB loan in the first instance. A loan guarantee arrangement leaves the monitoring and enforcement obligations with the ASB, with council only needing to be involved if there is default under the loan agreement. This arrangement also provides that if the trust defaults under the loan agreement with the bank, then there is an automatic default under the lease, triggering a number of other remedies for council to consider. Of the options available to council for dealing with this request, a loan guarantee facility is the most cost effective manner for council to continue supporting the Trust in the short to medium term. This is the recommended course of action. The ASB Bank has a large presence in the area of loans to community and/or not for profit organisations. Auckland Council has acted as guarantor in circumstances where organisations have made their own funding arrangements; are located on council owned land; and require a loan guarantor.

19.

20.

21.

Consideration
Local Board Views
22. Details of the request from the Trust were reported to the Whau Local Board on 11 December 2012. The Whau Local Board resolved to support the request, Attachment A. The authority to approve a request for a loan guarantee resides with the Strategy and Finance Committee, although the resolutions of the Whau Local Board have incorrectly referred the matter to the Regional Development and Operations Committee.

Maori Impact Statement


23. There are no known matters relating to this request that require the input of Maori representatives.

Ken Maunder Park Community Trust - Request to Renew and Extend Loan Guarantee

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Item 10

Strategy and Finance Committee 07 February 2013

Item 10

General
24. As this is a request to renew an arrangement previously approved by the Waitakere City Council and the Auckland Transition Authority consultation is being limited to discussions with the Local Board, and with the officers in the Legal Services, Finance and Treasury units. Where necessary, officers have also liaised with the ASB Bank to ensure that the previously agreed terms and conditions of loan guarantee agreements will be applied to this loan guarantee arrangement. This proposal is not considered to be significant under the councils Significance Policy.

25.

Implementation Issues
26. If approved, it is necessary for formal loan guarantee documentation to be developed between Auckland Council and ASB Bank. As the result of other loan guarantee arrangements, council staff have previously negotiated and agreed with the ASB Bank the general form that these guarantees will take, although they are further customised for each situation to reflect the particular nature of the bank lending. In addition, an agreement will also be entered into between Auckland Council and the Trust setting out the terms and conditions that council will agree to enter the loan guarantee (a Guarantee Side Deed). The Guarantee Side Deed will contain a provision that any default under the loan arrangement with the bank, will trigger the default clauses in the lease agreement that the Trust has with council. There are no immediate cash funding implications for this loan guarantee arrangement if it is approved. However, in accordance with accounting standards and policies it will be necessary for Auckland Council to apply the appropriate tests to determine the extent of exposure of council under the guarantee arrangement. This is likely to have flow-on implications as to how the guarantee is treated in councils financial records. There are no legislative impediments to council entering into this arrangement.

27.

28.

28.

29.

Attachments
No. A Title Whau Local Board Resolutions 11 Dec 2012 Page 79

Signatories
Authors Authorisers Leigh Redshaw - Advisor Penny Pirrit - Regional & Local Planning Manager Andrew McKenzie - Chief Finance Officer

Ken Maunder Park Community Trust - Request to Renew and Extend Loan Guarantee

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Strategy and Finance Committee 07 February 2013

Whau Local Board OPEN MINUTES


Minutes of a meeting of the Whau Local Board held in the Whau Local Board Office, 31 Totara Avenue, New Lynn on Tuesday, 11 December 2012 at 6.37 pm.

PRESENT:
Chairman Deputy Chairman Members Derek Battersby QSM, JP Duncan MacDonald JP Kathryn Davie Catherine Farmer Lily Ho Sandy Taylor JP Jack Weir

APOLOGIES:
Cr Noelene Rafills

IN ATTENDANCE:
Haylee Magele, Youth Advisory Panel Representative Jock Jamieson, West Lynn Garden Margaret Jamieson, West Lynn Garden 20 Ken Maunder Park Community Trust - Request to Renew and Extend Loan Guarantee Resolution number WH/2012/178 MOVED by Member DQ Battersby, seconded Member D MacDonald: That the Whau Local Board: a) Recommends to the Regional Development and Operations Committee that: i) the request from the Ken Maunder Park Community Trust for a loan guarantee facility in respect of a $200,000 loan from the ASB Bank be approved. the loan guarantee be limited to a maximum period of 8 years and that the documentation be in the form agreed between Auckland Council and ASB Bank in respect of loan guarantees to community organisations, also requiring the Trust to fully repay the loan within the 8 year period. if a loan guarantee is approved, that a Guarantee Side Deed be entered into between Auckland Council and the Ken Maunder Park Community Trust recording the terms and conditions under which Council will guarantee the loan facility, including a requirement to make annual reductions in the principal outstanding and a cross-default clause with the lease agreement. CARRIED

ii)

iii)

Ken Maunder Park Community Trust - Request to Renew and Extend Loan Guarantee

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Attachment A

Item 10

Strategy and Finance Committee 07 February 2013

File No.: CP2013/00341

Purpose
1. This report recommends the Strategy and Finance Committee appoint members to the local board funding policy review political working party.

Executive Summary
2. The Strategy and Finance Committee approved the creation of a working party to provide guidance and direction with respect to the development of the local board funding policy at its meeting on 1 November 2012. The committee agreed that the working party will include: x the mayor as chair of the working party x seven councillors x seven local board members x one representative from the Independent Maori Statutory Board. The chairs of local boards agreed a formal process for selecting members to political working parties at their 19 November meeting. The chairs decided that each working party should include eight representatives from local boards in order to achieve a suitable geographic spread of their members. This will require the currently agreed membership of the local board funding policy review political working party to be increased by one local board member. The local boards have undertaken a process to select representatives for the local board funding policy review political working party. Nominations were not finalised for inclusion in this report, however local board services will distribute names to committee members prior to the meeting. It is proposed that the first meeting of the working party be scheduled for 15 March 14.30 17.00.

3.

4.

5.

Recommendation/s
That the Strategy and Finance Committee agrees that for the political working party for the review of the local board funding policy: a) b) the local board representation is increased to eight members the following representatives are appointed: i) ii) c) seven councillors as representatives of the Governing Body in addition to the mayor as chair of the working party. one representative for the Independent Maori Statutory Board.

the first meeting of the political working party will be held on 15 March 14.30 - 17.00.

Discussion
6. Local boards requested that a political working party be established to ensure there is effective communication between the boards, governing body and officers over the course of the review of the local board funding policy. The purpose of the working party will be to provide direction and guidance on the policy review work programme.

Selection of members to the local board funding policy review political working party

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Item 11

Selection of members to the local board funding policy review political working party

Strategy and Finance Committee 07 February 2013 7. At its 1 November 2012 meeting the Strategy and Finance Committee agreed the establishment of a political working party to provide guidance and direction with respect to the development of the local board funding policy. The committee agreed that the working party should consist of seven councillors, seven representatives from the local boards, and one representative for the Independent Maori Statutory Board. The committee also agreed that the working party be chaired by the mayor in addition to the seven councillors. The Strategy and Finance Committee agreed to defer the selection of councillors for the working party until after the local boards had nominated their representatives. This provides the committee with the opportunity to consider the geographic spread of the working party members when nominating their representatives. The process for selecting members to working parties was discussed at the meeting 19 November meeting of local board chairs. The board chairs agreed a formal selection process that requires eight board representatives to be chosen as follows: two members from the central boards, one member from each of the northern, western, eastern, southern, rural and island board areas. Membership of the local board funding policy working party will need to be increased from seven local board members to eight if the local boards requirements for representation are to be met. This will bring total membership of the working party to seventeen, with eight local board members, seven councillors, the mayor and one representative from the IMSB. The first meeting of the working party is proposed for 15 March 14.30 - 17.00.

Item 11
8. 9. 10. 11. 12.

Consideration
Local Board Views
Regional briefings on the policies officers were proposing be considered alongside development of the draft Annual Plan 2013/2014 were provided to local boards on 10, 11, 12 and 13 September. Included in the briefing were details of the project to review the local board funding policy. A request for a political working party to be established to review and guide the project was made by representatives of several boards. Engagement with the local boards will be a critical factor in the development of the local board funding policy. The political working party is one facet in a successful engagement process. The other key steps will be: x opportunity for each local board to workshop issues with officers prior to the decision making phases of the review x local board views and resolutions to be reported to the Strategy and Finance Committee before each decision making phase of the review x workshops for local board chairs and the governing body at each phase of the review. Local boards will have equal representation on the working party with councillors. Local boards have undertaken their own selection process to agree their representatives for the working party.

13.

14.

Maori Impact Statement


15. The impact on M ori is determined by the decisions of the governing body and local boards regarding the activities that will be undertaken by the council. The local board funding policy constrains the environment in which local boards make their decisions, but does not determine the outcomes of the decision making process. As such, the review of the local board funding policy only has an incidental impact on M ori. The issue of what constitutes equity in the funding of local boards is a key consideration for the review. The differences between boards in terms of M ori population will be one of the matters considered in developing a view of what dimensions of equity are significant in the funding of local boards.
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16.

Selection of members to the local board funding policy review political working party

Strategy and Finance Committee 07 February 2013 17.

Significance
18. Agreeing members for a political working party is not a significant decision.

Implementation Issues
19. There are no implementation issues associated with the recommendations in this report.

Attachments
There are no attachments for this report.

Signatories
Authors Authorisers Beth Sullivan - Principal Advisor Policy Andrew McKenzie - Chief Finance Officer

Selection of members to the local board funding policy review political working party

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Item 11

The Independent M ori Statutory Board will have oversight of the local board funding policy review process through their membership of the Strategy and Finance Committee, and its representative on the political working party.

Strategy and Finance Committee 07 February 2013

File No.: CP2013/00673

Purpose
1. To obtain the committees authority to provide a response to the Law Commissions issues paper on joint and several liability and to allow for the finalisation of the councils response to be delegated to the Chair of the committee.

Executive Summary
2. The Law Commission has issued an issues paper on the legal rule, called joint and several liability, that applies in negligence cases. The Law Commission is interested in the councils response to the issues it has posed in its paper. This rule as it currently operates has a direct impact on the councils budget, including a $470 million provision for claims over the course of the LTP. If the rule was to be changed as a result of the Commissions inquiry, then this potentially has a significant impact by reducing the amount of such provision. The deadline for providing a response to the Law Commission has been extended for the council until 15 February 2013.

Recommendation/s
The Strategy and Finance Committee agrees that: a) b) c) d) The council endorses a recommendation that proportional liability is the most cost effective rule for the council in cases of negligence. The council provides an Auckland focused submission on the Law Commissions issues paper on joint and several liability. The council supports the SOLGM submission on the Law Commission's issues paper. The finalisation of the councils submission on the Law Commissions issues paper be delegated to the Chair of the Strategy and Finance Committee.

Discussion
3. The Law Commission has produced an Issues Paper entitled Review of Joint and Several Liability. Joint and several liability is the legal rule that currently applies when two or more defendants in court proceedings are held liable for the same loss. Under this rule, each defendant is liable for the whole loss regardless of how many others are also at fault. That is, all defendants are sued for the whole amount of the loss and effectively the last defendant standing or the defendants with the deepest pockets pay. Joint and several liability has evolved under hundreds of years of common law. The underlying principle is that the plaintiff, the person who has suffered the loss, should not be out of pocket. The plaintiff does not need to locate all those who are at fault. In cases of negligence, the other defendants are often untraceable or insolvent and the council then bears a disproportionate share of the cost of the loss. The current system encourages some sectors to structure their affairs to operate in ways that limit their exposure, such as by setting up a special purpose company. This results in occasions that

4.

5.

Council Response to Law Commission Issues Paper - Joint and Several Liability

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Item 12

Council Response to Law Commission Issues Paper - Joint and Several Liability

Strategy and Finance Committee 07 February 2013

Item 12

the council pays for all of the wrongdoing even where the councils part is only a small reason why the loss was suffered. 6. This means that the council must arrange for suitable insurance cover for the entirety of such losses and create sizeable provisions in its budget to cover the cases where insurance is not available. The Law Commission is now asking whether joint and several responsibility remains the most appropriate way of dealing with liability in negligence cases. This is set against the backdrop of the leaky buildings crisis, the global financial crisis and the cost and availability of indemnity insurance. This presents an opportunity to consider whether it remains fair that the council should continue to bear the disproportionate share of the costs in negligence cases. If the position were to change, then who, if anyone, would pick up the costs in the event the other parties are insolvent or unable to be found? The area that this has the biggest impact for the council is its potential liability for leaky homes. The council has allowed about $470 million over the life of the current LTP and this area is no longer available to be covered by insurance. An example of one of the options suggested is that a plaintiff who owns a defective home, would not recover the full amount of the damage to their house and may not be able to afford the full costs to repair the damage. There is a balancing exercise here in relation to the costs to the ratepayer against the costs to an individual or business that has suffered loss for which they are generally blameless. The current system actively encourages parties responsible for negligent construction to arrange their affairs so as to avoid liability. The council is not in a position to do this and are often becomes the deep pocket left resolving the claim. The current system also encourages plaintiffs to only bring proceedings against the council late in the limitation period and there may be insufficient time for the council to locate other solvent defendants. The council can then be responsible for the whole of the amount as it is the only defendant. To highlight the amount of money involved, the previous total of five years of settlements for weathertight claims across the legacy councils and Auckland Council above and beyond the legacy insurance recovery was $247 million. The Law Commission paper summarises the current position and looks at options for change. The options are summarised from paragraph 16 below. The full paper is available to view on the Law Commissions website at www.lawcommission.govt.nz The Law Commission has asked questions about the matters in their report and seeks views, experiences and preferences from respondents. The Law Commission seeks responses to focus on the areas of concern to the council. A copy of the draft SOLGM submission is attached as attachment A. This is a thorough response and may be endorsed by the council. It is understood that the LGNZ response will be very similar in substance. An officer draft response focusing on the impact to the council is attachment B to this report. A delegation is sought to enable finalisation of the response which is due by 15 February 2013, taking into account the views of the committee.

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Law Commission Options


17. The Law Commission has identified the follow options to the status quo.

Council Response to Law Commission Issues Paper - Joint and Several Liability

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Strategy and Finance Committee 07 February 2013

19.

The council estimates that had it, and the predecessor councils, been responsible for a proportionate share of liability and it would have resulted in a significantly reduced payment with a possible savings as high as $140 million as compared to the actual amount paid of $247 million. This rule has been adopted in other jurisdictions, including most Australian states. Other jurisdictions have adopted the rule for a particular industry or class of defendants, such as building and securities. Some jurisdictions have allowed the proportionate rule to include capping of liability or other forms of limited liability. On the face of the figures alone, proportionate liability will have a positive impact on the costs paid by the council. The Law Commission considers that if there is to be a shift to proportionate liability it should be applied to all sectors universally. Such a shift would better harmonise the NZ system with Australian jurisdictions and would be consistent with NZs obligations under Closer Economic Relations.

20.

21. 22.

Alternatives to joint and several liability: Hybrids 23. Other jurisdictions have used various hybrids of the current NZ system and proportionate liability. 24. Hybrid one those predominantly at fault remain jointly and severally liable and minor players only pay a proportionate share. The council is often a minor player in negligence claims and estimates that in relation to the leaky homes cases, its liability is at a range at a range of 15-20% level of the total cost of the loss. Hybrid two where the plaintiff is also at fault, in other words is contributory negligent to the loss. If the plaintiff is not at fault, then the defendants remain jointly and severally liable. This supports the underlying principle of the current rule that a plaintiff should not have to bear costs. Where the plaintiff is also at fault, then proportionate liability would apply to all defendants. Hybrid three where the plaintiff is also at fault, the contributory negligence would be shared proportionately across all parties, not just the defendants. Hybrid four is a variant of hybrid three, but reallocates the share of an absent or insolvent defendant so that the plaintiff receives all of the defendants contribution. The council would still be worse off then a pure proportional system, but not liable for 100%.

25.

26. 27.

Alternatives to joint and several liability: Capping 28. This is where the maximum liability can be applied for certain types of defendants or types of cases. This has been used overseas primarily in relation to professional liability for accountants, lawyers, architects etc. This option supports the theory that there is a need for suitably qualified persons to remain in such professions and prevent wholesale collapse of a particular sector. Alternatives to joint and several liability: Contracting Out 29. It is usual in commercial arrangements for limitation or exclusion to be agreed for liability in negligence. However, for the most part, the council does not have the option of entering into a commercial arrangement as it is performing a statutory duty. The council has to perform these duties as a matter of law and is required to do so with reasonable care. 30. The council cannot contract out of its statutory duties.

Council Response to Law Commission Issues Paper - Joint and Several Liability

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Item 12

Alternatives to joint and several liability: Proportionate Liability 18. Each defendant would be liable for a proportion of the overall loss, based on their level of fault. This alternative is fairer to defendants. However, if one or more defendants cannot be found or are insolvent, then the plaintiff would be out of pocket. The plaintiff would need to join all the defendants to the case if they wish to collect the full amount of the loss.

Strategy and Finance Committee 07 February 2013 Alternatives to joint and several liability: Warranty system 31. NZ has a long established statutory warranty system for negligence causing personal injury, ACC. This means that court cases alleging negligence causing physical harm are not allowed in NZ. One option that could meet the costs for building defects is through a similar scheme. Such a scheme is unlikely to be successful without very strong governmental support. Overseas experience has shown that industry only supported schemes are not satisfactory. Analysis of options 32. There is no perfect legal rule that will be fair to all persons in a dispute at all times. 33. Changes to the rule may lead to reduce levels of liability of new claims in the future, but it is unlikely that these would have retrospective effect on current legal proceedings. The number and size of building related cases are expected to reduce over time, however, the council will always be a locatable and solvent defendant in negligence proceedings. On balance, it is recommended that a form of proportional liability be considered for further analysis by the Law Commission. Moving to a purely proportionate system or a capped system means that the councils share is related to its share of fault, but does not help a plaintiff where there is an absent or insolvent defendant. These alternatives are not necessarily fairer to everyone, but will be more cost effective to the ratepayer.

Item 12

34. 35.

36.

Consideration
37. 38. Building Control and Risk and Assurance have had input into this report. There may be a community impact depending on whether the government agrees to introduce a bill that changes the rule on joint and several liability.

Local Board Views


39. The costs of meeting the councils obligations in negligence matters is a governing body responsibility. In the event that there is a bill before Parliament on this matter, local board views will be sought at this stage.

Maori Impact Statement


40. This report does not appear to have significant benefits or adverse affects on Maori.

Implementation Issues
41. 42. The Law Commission deadline for the councils response is 15 February 2013. The Law Commission anticipates providing a final report in April/May 2013.

Attachments
No. A B Title Draft Response by SOLGM Draft Response by Auckland Council Page 89 95

Signatories
Authors Authorisers Helen White - Manager Public Law Wendy Brandon - General Counsel Andrew McKenzie - Chief Finance Officer

Council Response to Law Commission Issues Paper - Joint and Several Liability

Page 88

Strategy and Finance Committee 07 February 2013 Submission of the Society of Local Government Managers on the Law Commission Discussion Document Review of Joint and Several Liability

Introduction The Society of Local Government Managers (SOLGM) thanks the Commission for the opportunity to make a submission on Review of Joint and Several Liability (the paper). SOLGM is a professional society with approximately 550 members drawn from all 78 of New Zealands local authorities. Full membership is available to all Chief Executives and others with significant policy, operational or strategic responsibilities. Our vision is professional local government management, leading staff and enabling communities to shape their future

In preparing the submission we have discussed these issues with Local Government New Zealand and Riskpool, and we are broadly in agreement with the comments they have made around proportionate liability. Our submission briefly comments in support of this proposal, but also adds support for some of the other options canvassed in the paper whether in addition to, or in place of proportionate liability. If the Commission would like to discuss these issues further it should contact Raymond Horan Principal Advisor, Sector Leadership Email: RHoran@solgm.org.nz ; Phone: 04-978-1283 There may be merit in joint discussions between the Commission, SOLGM, Local Government New Zealand and Riskpool.

Proportionate Liability The circumstances where local authorities are the primarily responsible for loss will (thankfully) be rare, and most likely limited to a small self-contained group of plaintiffs. For example, in the Thompson case, the local authority may have been primarily liable but there was a single plaintiff.

Council Response to Law Commission Issues Paper - Joint and Several Liability

Page 89

Attachment A

The reason for our submission should be obvious. Local authorities conduct a wide range of activities that expose them to risk from building infrastructure to a variety of regulatory activities. Under New Zealand law a local authority cannot be declared bankrupt so they are one of the best examples of deep pocketed defendants (only central government would be a better example). Under New Zealand law local authorities cannot become bankrupt, and even on amalgamation the debts of existing local authorities are assumed by the new ones.

Item 12

Strategy and Finance Committee 07 February 2013 In cases such as the leaky homes issue, local authorities negligence is fruit of poisoned tree in that it is the choice of the builder to use substandard materials or construct in a substandard way that is the root cause. It is that negligence, that makes possible the consequence of any negligent action of a local authority i.e. in the absence of negligent construction, the consequences of negligent inspection will generally be limited. The paper correctly notes that legal principles around restitution are designed broadly to place the plaintiff in as near a position as possible to that which they would have been in had the damage not occurred. We agree that this is fundamental tenet of consumer protection. Equally consumer protection should be about more than righting wrongs, it must also focus on ensuring that wrongs are kept to the absolute minimum. In other words, the law should be designed in such a way as to incentivise due care. In effect, joint and several liability deep pockets operating together create the situation where local authorities have to pay, when local authorities pay in restitution of a claim they do so using public money. In effect then joint and several liability in cases such as leaky homes means the entire ratepaying public are directly acting as backstop for the action of others. In addition to the financial cost of the reimbursement there is an opportunity cost. Local authorities and their communities cannot undertake other projects or services including the provision of infrastructure that promotes and sustains economic growth. If rates are increased to meet settlements than the ratepayer misses out on whatever they would have done with the funds. While preserving the ratepayers position and therefore their economic welfare, society as a whole suffers a loss of economic welfare as a result. Facing these realities, the paper is correct when it says that the economically rational thing for deep pocketed defendants to do is to take all steps they can to minimise the risk to themselves (or what page 63 of the paper cites as the gatekeeper effect). The leaky homes example serves as a textbook illustration of this. The 2012 Report of the Housing Inquiry1 noted the following: x x inspection processes have become more rigorous, with the average number of house inspections rising from seven in 2000/1 to eleven in 2006/7 the Registered Master Builders Federation have suggested that there is a need fro more drawing details (from an average 10 pages in 2002 to 30 pages in 2007), more office and on-site staff to facilitate the consenting process, and additional inspections, and a higher risk margin to allow for building consent time delays have increased total construction costs by approximately 10 percent.

Attachment A

Item 12

Prudent local authorities historically insured themselves against losses of this nature (again an economically rational and efficient result). But the leaky homes issue has resulted in increased risk profile for local authorities, which has impacted on the cost of insurance. As Riskpools submission has noted has reached the point where insurance for some types of claim are no longer available. Where insurance costs increase the choices facing local authorities are stark increasing rates, reducing expenditure in other areas (with the effect on the nations economic welfare as a whole) or accepting greater levels of risk.

New Zealand Productivity Commission (2012), Housing Affordability, pp 160-161


Page 90

Council Response to Law Commission Issues Paper - Joint and Several Liability

Strategy and Finance Committee 07 February 2013 SOLGM therefore concurs with the papers comment (at page 62) that There is a reasonable consensus in New Zealand that the combination of joint and several liability and a deep pocket is one situation that may lead to inefficiency. It seems that the Law Commission has previously considered, and not been convinced by these arguments. In particular, we note the extract from the Law Commissions 1998 report (quoted on page 61 of the paper) which asks Can it really be suggested that a result of proportionate liability would be a second-guessing of auditors by creditors or shareholders of a company? Based on 14 years experience since that time, our answer to this is an unequivocal yes. The collapse of Enron, Worldcom and Arthur Anderson resulted in action against auditors in oversees jurisdictions (it was one of the causes of the collapse of Arthur Anderson) and has been threatened in New Zealand (though we are not aware of any case that has come before the courts as yet). We also find the arguments the paper advances around cross-Tasman harmonisation persuasive. Australia is New Zealands largest trading partner, although CER was historically about trade in goods, there is increasing trade in professional and trade services (including the building trades). We submit that there is value in companies that operate in both jurisdictions operating under as consistent a legal framework as possible. Multiple frameworks create a risk of plaintiffs jurisdiction shopping i.e. looking for the jurisdiction where the law is most plaint-friendly. The Riskpool submission notes that at least one multinational provider has ceased operation in New Zealand as a result of the risks joint and several liability creates. The inefficiencies of operating under two different frameworks (having to retain counsel to interpret different statutes and sets of case law and the like) give additional weight (if any were needed) to the economic arguments of Chapter Eight of the paper. In preparing our submission, SOLGM has tried to approach the issue from a base of principle. While some may argue otherwise, we find it difficult to accept an argument that proportionate liability should be selective. While we accept that some industries or sectors may pose particular risks or be particularly prone to these claims, we should be incentivising all industries or sectors to exercise a duty of care. The Law Commission should apply principle to its analysis and recommend a consistent application of whichever regime it recommends, that is to say proportionate liability should apply everywhere or nowhere. The second part of the paragraph on page 62 (quoted earlier) noted that economic inefficiencies arising from joint and several liability are not inevitable and can be controlled in other ways. While SOLGM supports Riskpool in seeking to move to proportionate liability, we also note that such a change will be seen as a loss of plaintiffs rights2. We therefore turn to some of the other alternatives to proportionate liability.

In the event that a local authority is held liable for a leaky home claim, the settlement will be either be paid from rates income (including rates levied on the owner of the leaky building) or from insurance (or both). If paid for by insurance, a local authority will probably pay higher premiums which will be recouped by rates.
Page 91

Council Response to Law Commission Issues Paper - Joint and Several Liability

Attachment A

Item 12

Strategy and Finance Committee 07 February 2013

Item 12

Recommendation 1. That New Zealand move to proportionate liability as the basis for restitution of claims made in tort and contract.

Liability, Corporate Law and Insolvency Law It is difficult to consider these issues in isolation from corporate law. The paper notes that the use of single development companies by developers and builders is becoming common place these have a limited life and/or purpose and disappear soon after the development is complete. Another aspect of the leaky homes issue is that once the issue became known a number of smaller companies were wound up and new ones formed, under the same beneficial ownership.

Attachment A

In short, it is all too easy for those involved in businesses such as these to use the protection of corporate law to walk away and start afresh this effectively is why local authorities have paid 45 percent of the total cost of claims settled to date. While the corporate form was intended to separate personal and professional obligations, we cannot conceive that the corporate veil was ever intended to provide disincentives to taking due care. We understand that there are limited circumstances where the corporate veil can be pierced (generally around fraud or suspected fraud), there is a prima facie case for piercing the corporate veil in cases of negligence.

Recommendation 2. That future development of the proposals should consider the interface of the law of restitution with corporate law, and the law of insolvency. This recommendation would apply under either of joint and several or proportionate liability.

Compulsory Warranties The paper discusses compulsory warranty schemes and correctly notes that there is such a scheme in place with the Building Act. There is merit in these schemes though we note overseas experience with these schemes generally suggests that in the long term government intervention by underwriting is necessary.

Council Response to Law Commission Issues Paper - Joint and Several Liability

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Strategy and Finance Committee 07 February 2013

3.

That the Commission gives further consideration to the circumstances in which compulsory warranty schemes should apply. This recommendation would apply under either of joint and several liability and proportionate liability.

Collectivisation of Risk Another approach to the issues raised in the paper is to encourage or require some degree of industry collectivisation of risk. The principles underpinning this approach are simple and are in practice in some areas already. For example, historically members of the Law Society paid a compulsory levy to a so-called fidelity fund each year, with the fund used to reimburse clients in cases of misappropriation. The local government sector has a form of collectivisation of risk in place through Riskpool though membership of Riskpool is voluntary. SOLGM suggests that the Commission identify the existing schemes that exist for collectivisation of risk across the economy and assess how they operate. The Commission might then consider whether there are industries or sectors that are high risk that do not have such schemes in place, and whether encouragement or mandation should be required. The schemes tend to be more common in industries or professional groupings where reputation and trust are fundamental to the ability to conduct business, or where the use of public money is involved. These schemes offer only a partial solution. Collectivisation of industry risk is generally designed to provide a backstop for small-moderate claims affecting a single plaintiff, or small groups. Collectivisation of industry risk begins to break down when faced with challenges of the size of the leaky homes problem. For example, Riskpools submission notes that the scheme has now declined to provide cover for future leaky homes claims due to an inability to secure insurance cover for these claims.

Recommendation 4. That the Commission develop proposals for schemes that collectivise industry risk, possibly starting with high risk industries that do not have existing schemes. This would apply under either joint and several or proportionate liability and could operate in conjunction with compulsory warranty schemes.

Plaintiff Management of Risk/Personal Responsibility Chapter Eight of the paper discussed the economic rationale for each of joint and several and proportional liability. Using this framework it is evident that the most economically efficient

Council Response to Law Commission Issues Paper - Joint and Several Liability

Page 93

Attachment A

Item 12

Recommendation

Strategy and Finance Committee 07 February 2013 outcomes will occur if all parties to a transaction (that is to say both potential plaintiffs and defendants) are taking due care. This translates into potential plaintiffs taking steps such as: x x x using registered or reputable practitioners making judgements about potential providers based on factors other than price alone doing their homework for example closely reading company reports in total or checking Land Information Memoranda and the like.

Item 12

With this in mind we submit that: 1. one of the benefits of proportionate liability is that a potential plaintiff will be given economic incentives to take due care simply because they will be left with an uncollectable share in the event of damage. For this to work effectively the plaintiff has to be aware of the risk when contracting for the supply of goods and service. Mechanisms such as mandatory disclosure of this fact in contracts may be necessary recognition of contributory negligence both would have a similar result. We note that some American jurisdictions have moved to bar claimants where any contributory negligence can be demonstrated. While there is some merit to such a position we submit that it should be left to the Courts to determine whether and to what extent contributory negligence should apply allowing partial or complete contracting out of liability would also promote a greater duty of care though we agree that it will not (and should not) be possible to contract out of liability in some cases (for example, building failure carries risks to wider public safety not just that of the contractor, and of course buildings are sold thus transferring risk to a party who was not party to the original contract).

2.

Attachment A

3.

Council Response to Law Commission Issues Paper - Joint and Several Liability

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Strategy and Finance Committee 07 February 2013

Law Commission Issues Paper: Review of Joint and Several Liability


Introduction
1. 2. This submission is from Auckland Council, Private Bag 92300, Auckland 1142. Auckland Council would welcome the opportunity to discuss the submission with the Commission. It can be contacted through Helen White, Manager Public Law, Legal Services, ph 09 367 3111, helen.white@aucklandcouncil.govt.nz. In preparing its submission, the council has had the benefit of viewing a draft submission of the Society of Local Government Managers (SOLGM) and liaised with Local Government New Zealand (LGNZ). The council is broadly in agreement with the detail contained within the draft prepared by SOLGM and understands that the submission prepared by LGNZ is also supportive of a change to proportional liability. It does not intend to repeat the detail that is contained in the SOLGM submission.

3.

The current position


4. The current system works well to ensure that the person who has suffered loss is not out of pocket when there is a solvent defendant who can be located. When the case alleges that the council has played a part in the loss, then it will on occasion be liable to meet the full amount of the loss regardless of the number of other parties involved. This means that provision must be made in the councils budget to meet such losses or insurance cover must be arranged where available. The leaky homes cases are now not able to be covered by insurance and the provision made by the council is significant. The provision over the life of the LTP is $470 million. The leaky homes claims have exposed the council to a high level of financial liability. A number of the other defendants in these cases, including the builders and other trades persons, are usually more at fault then the council, but often they are unable to be found or are insolvent. This is an area where insurance is not always available and there is incentive for a tradesperson or builder to protect against potential liability by setting up a special purpose company that can be liquidated at will. The owners of these companies are then able to move on to new ventures with the protection of a different corporate entity. The councils role in these cases is a relatively minor part in the fault compared to the builder/tradespersons. However, the council is a convenient and permanently available, solvent defendant.

5.

6.

7.

Proportionate Liability
8. Joint and several liability has evolved to protect the plaintiff. However, the council, and consequently, the ratepayers, bears a cost that is disproportionate to the part it has played in the loss. It would be more cost effective for the council if its liability was limited to represent its contribution to the loss.

Council Response to Law Commission Issues Paper - Joint and Several Liability

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Attachment B

Item 12

Auckland Council Draft Submission

Strategy and Finance Committee 07 February 2013 9. It estimates that, on average, its direct contribution to the leaky homes cases is at best 20%. However, depending on the solvency and/or inclusion of the other construction parties in the claim, it can carry a high proportion of the amount of the settlement, but the contribution is significantly lower. Proportionate liability is fairer to the ratepayers of Auckland as the council will not have to bear the cost of the uncollectable shares. The council considers that a plaintiff who is also to blame for the loss, should bear the cost of their contribution. Proportionate liability maybe unfair to the plaintiff as it shifts the cost of a defendants insolvency from the council to the plaintiff. A warranty or insurance scheme could fill the gap caused by absent defendants, however, the council acknowledges that overseas experience of such schemes are not positive. Such a scheme would require significant government underwriting. Alternatively, a model that allowed any uncollected shares to be apportioned amongst the other defendants could be fairer to the council. Although, this option would not be the most cost effective for the council, but it would be better off than under joint and several liability. If there is to be changes to joint and several liability, the council would urge further consideration of the following points:

Item 12 Attachment B

10. 11. 12.

13.

14.

The timing of joinder of defendants


15. Presently, there is no obligation on the plaintiff to do join other defendants to the proceedings, which leaves the council sometimes the only party to the claim or the first party joined to the claim. The council then has to locate and join the other parties which leaves the council bearing the true cost of the litigation, not the plaintiff. There should be a requirement to join all defendants within a set timescale within the proceedings.

16.

The inability to lift the corporate veil


17. The council cannot become insolvent and has perpetual succession. This means that if the council is a defendant and is found to have contributed to the loss, it will always be liable for the full amount of the loss under joint and several liability. Developers and building professionals are able to set up special purpose companies that can be liquidated after the project. If a negligence claim is subsequently lodged, then the beneficial owners of the liquidated company have no residual legal liability, unless they took a hands on role in the construction. However, the beneficial owners of defunct companies may go on to set up new companies and commence new projects. The owners may have substantial assets. There is no incentive for the industry to organise itself differently.

Summary
18. The council strongly recommends that joint and several liability be replaced by proportionate liability. In order to obtain the maximum impact on the outstanding leaky homes cases, the council recommends that legislation is introduced urgently.

Council Response to Law Commission Issues Paper - Joint and Several Liability

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Strategy and Finance Committee 07 February 2013

Council Response to Law Commission Issues Paper - Joint and Several Liability

Page 97

Attachment B

Item 12

Strategy and Finance Committee 07 February 2013

Monthly budget update


File No.: CP2013/00108

Purpose
1. The Strategy and Finance Committee has delegated authority to approve changes to budgets during a financial year. This report will be provided each month as required. It collates decisions required of the Strategy and Finance Committee on changes to the budget for 2012/2013 and provides a financial context within which the decisions can be made.

Executive Summary
Background 2. Rates for 2012/2013 have been set with no provision made for accommodating new unbudgeted expenditure items. Any new expenditure committed to will either require reprioritisation of existing budgets or increased borrowings. Following adoption of the Draft Annual Plan 2013/2014 the proposed average rates increase is 2.9 per cent. None of the budget changes proposed in this report will have a material impact on the councils rates requirement, current year operating surplus or projected debt levels.

3. 4.

Opex grant deferral requests National Ocean Water Sports Centre 5. Auckland Council has previously approved a $3 million budget for grants for the National Ocean Water Sports Centre. This will now be delayed by one year so that the timing will become $500,000 in 2013/2014 and $2.5 million in 2014/2015. Auckland Council has previously approved a $10 million budget for grants to the Auckland Theatre Company for their proposed Waterfront Theatre. Progress on this project was the subject of a report to the November meeting of the Regional Development and Operations Committee. The Strategy and Finance Committee resolution of May 2011 (and the draft funding agreement) provides for the $10 million contribution to be returned to ratepayers if total funding for the project has not been raised by 30 June 2014. The first payment of $1 million will now be delayed by one year into 2013/2014, giving a total budget of $6 million in 2013/2014 and an unchanged budget of $4 million in 2014/2015.

Waterfront Theatre Project 6.

7.

8.

Budget change requests Takapuna/Devonport Local Board Communities Grants increase 9. The Devonport-Takapuna Local Board contracts a number of local community groups to provide services on its behalf by way of annual grants. Commitments have been made to increase these grants by $17,291 for 2012/2013 which is not yet reflected in the local board's budget. These grants are typically paid out in blocks (for example $5,000 or $10,000) and due to their discretionary nature, are not automatically inflated by the council's cost of inflation. The other Local Boards in the legacy North Shore City Council region have funded these increases from within their existing discretionary budgets.

10.

Monthly budget update

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Item 13

Strategy and Finance Committee 07 February 2013 11.

Item 13

The Devonport-Takapuna Local Board has sufficient underspends within their 2012/2013 budget to fund this increase, but have requested that the increase be funded regionally on the basis that an automatic inflation adjustment should have been applied to these budgets, which would have increased the local boards funding by this amount. Officers consider that the increases in these grants are discretionary in nature and that it is appropriate for these increases to be funded from discretionary local funds rather than being funded regionally as part of the application of councils cost of inflation. In March 2012 the Regional Development and Operations Committee endorsed the Auckland Graffiti Vandalism Prevention Plan and a new regional graffiti removal contract was established from 1 July 2012 to provide an end-to-end solution to graffiti across Auckland in a cohesive manner. The new regional graffiti contract was not finalised in time for adjustments to be included in the long-term plan. As a result, budget adjustments are now required to align budgets with decision-making responsibilities and the new contract. These adjustments require moving approximately $295,000 per annum from local activities and $75,000 per annum from other regional activities to the regional budget for graffiti eradication. While this will reduce the overall budget allocated to each local board, the changes will not impact service levels for local boards. Auckland Transport is requesting approval to reprioritise $2.6 million in the current year 2012/2013 and $1 million in 2013/2014 for construction of a double track connection between the northbound Manukau Rail Link and the main line at Wiri junction. Construction of the existing northbound Manukau Rail Link (double track) was completed in 2012 with a single track connection to the double track main line. Passenger rail services currently operate at 2030 minute intervals. This work would allow the line to deliver 10 minute service frequencies in support of the Auckland Plan objective of doubling public transport trips to 140 million by 2022. Auckland Transport's budgets for 2012/2013 include approximately $7 million of commercial lease revenue relating to a planned acquisition for the City Rail Link. This acquisition will now not proceed in 2012/2013 and the commercial revenue will not be received. The revenue and funding requirements for the City Rail Link are effectively ring-fenced (with the lost revenue largely offset by lower borrowing costs from not proceeding with the acquisition) and therefore removing this revenue line will not affect the underlying rates funding requirement for Auckland Transport.

12.

Centralisation of graffiti removal budgets 13.

14.

15.

Manukau Rail Link Double Track Connection 16.

17. 18.

City Rail Link - Commercial lease revenue 19.

20.

Recommendation/s
That the Strategy and Finance Committee: a) b) Receives the report. Approves the one year deferral of grants for the National Ocean Water Sports Centre of $500,000 from 2012/2013 to 2013/2014 and $2,500,000 from 2013/2014 to 2014/2015. Approves the one year deferral of grants for the Auckland Theatre Company of $1,000,000 from 2012/2013 to 2013/2014. Agrees that any unbudgeted increase in community grants for the DevonportTakapuna Local Board be funded from within the local boards existing budgets.
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c) d)

Monthly budget update

Strategy and Finance Committee 07 February 2013 e)

f)

Approves the Manukau Rail Link Double Track Connection project funded by reprioritisation of Auckland Transport capital budgets of $2.6 million in 2012/2013 and $1 million in 2013/2014. Agree that $7 million of commercial lease revenue relating to the City Rail Link be removed from Auckland Transport's 2012/2013 operating budget, noting that this does not affect Auckland Transport's underlying rates funding requirement. Agrees that the councils budgets be updated to reflect the financial implications of the above decisions and decisions made in respect of other items on this agenda.

g)

h)

Discussion
Background 21. 22. Rates for 2012/2013 have been set through the adoption of the Long-term Plan 2012-2022, with no provision made for accommodating new unbudgeted expenditure items. The scale and scope of councils business means that from time to time council will need to consider unbudgeted expenditure requests in response to unforeseen events. These requests should always be considered with an understanding of the councils current financial situation, including the financial impact of decisions made since rates were set. Any new expenditure committed to will either require reprioritisation of existing budgets or increased borrowings. The forecast rates increase for 2013/2014 in the long-term plan is 4.8 per cent, set against a limit of 4.9 per cent. Following adoption of the Draft Annual Plan 2013/2014 the proposed average rates increase is 2.9 per cent.

23. 24.

Opex grant deferral requests National Ocean Water Sports Centre 25. Auckland Council has previously approved a $3 million budget for grants for the National Ocean Water Sports Centre with $500,000 budgeted in 2012/2013 and $2.5 million in 2013/2014. This will be delayed by one year to $500,000 in 2013/2014 and $2.5 million in 2014/2015. In May 2011 the Strategy and Finance Committee approved a $10 million budget for grants to the Auckland Theatre Company for their proposed Waterfront Theatre Project. The timing of this budget is currently $1 million in 2012/2013, $5 million in 2013/2014 and $4 million in 2014/2015. The Strategy and Finance Committee resolution of May 2011 (and the draft funding agreement) provides for the $10 million contribution to be returned to ratepayers if total funding for the project has not been raised by 30 June 2014. Progress on this project was the subject of a report to the November Regional Development and Operations Committee. The first payment of $1 million will now be delayed by one year into 2013/2014 giving a total budget of $6 million in 2013/2014 and $4 million in 2014/2015. Whilst these budgets are opex, they are debt funded as the funding is used to create an asset. The interest payments saved amounts to approximately $87,150 in 2012/2013.
Page 101

Waterfront Theatre Project 26. 27. 28.

29. 30. 31.

Monthly budget update

Item 13

Agrees that operating budgets for graffiti removal of approximately $295,000 per annum from local activities and $75,000 per annum from other regional activities are transferred to the regional budget for graffiti eradication.

Strategy and Finance Committee 07 February 2013

Item 13

Budget change requests Devonport-Takapuna Local Board Communities Grants increase 32. The Devonport-Takapuna Local Board contracts a number of local community groups to provide services on its behalf by way of annual grants. Commitments have been made to increase these grants by $17,291 for 2012/2013 which is not yet reflected in the local board's budget. These grants are typically paid out in blocks (for example $5,000 or $10,000) and due to their discretionary nature, are not automatically inflated by the council's cost of inflation. These specific community contracts have been traditionally increased each year to allow the community groups to maintain service level provision in the face of rising costs and increasing demand. While these services are delivered under contract, these are not multiyear commercial contracts with in-built price escalation clauses. The other Local Boards in the legacy North Shore City Council region have funded these increases from within their existing discretionary budgets. The Devonport-Takapuna Local Board has sufficient underspends within their 2012/2013 budget to fund this increase, but have requested that the increase be funded regionally on the basis that an automatic inflation adjustment should have been applied to these budgets, which would have increased the local boards funding by this amount. The Community, Development, Arts and Culture Department have advised there is scope to fund this amount for Devonport-Takapuna from existing regional budgets, if this was deemed appropriate. Officers consider that the increases in these grants are discretionary in nature and that it is appropriate for these increases to be funded from discretionary local funds rather than being funded regionally as part of the application of councils cost of inflation. In March 2012 the Regional Development and Operations Committee endorsed the Auckland Graffiti Vandalism Prevention Plan (GVPP) and a new regional graffiti removal contract was established from 1 July 2012 to provide an end-to-end solution to graffiti across Auckland in a cohesive manner. The new contract includes managing graffiti on council-owned buildings and park assets. Up until June 2012, graffiti removal from council owned buildings and parks was covered by a number of separate contracts and the associated budgets were attached to a number of different activities with some tagged to local boards via local activities such as libraries, arts, recreation and parks. The new regional graffiti contract was not finalised in time for adjustments to be included in the long-term plan. As a result, budget adjustments are now required to align budgets with decision-making responsibilities and the new contract. These adjustments will also simplify the budgets for financial management purposes. The adjustments require moving between $293,062 and $297,194 per annum (varies each year) from local activities and $75,582 per annum from other regional activities to the regional budget for graffiti eradication. While this will reduce the overall budget allocated to each local board, the changes will not impact service levels for local boards. The GVPP and the new contract do not provide for local tailoring of these services. However, if a local board elects to increase standards above regional service levels, then that element will be treated as a local discretionary activity.

33. 34.

35. 36.

37.

38.

Centralisation of graffiti removal budgets 39.

40.

41.

42.

43.

Monthly budget update

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Strategy and Finance Committee 07 February 2013 44.

Manukau Rail Link Double Track Connection 45. Auckland Transport is requesting approval to reprioritise $2.6 million in the current year 2012/2013 and $1 million in 2013/2014 for construction of a double track connection between the northbound Manukau Rail Link and the main line at Wiri junction. Construction of the existing northbound Manukau Rail Link (double track) was completed in 2012 with a single track connection to the double track main line. Passenger rail services currently operate at 2030 minute intervals. This work would allow the line to deliver 10 minute service frequencies in support of the Auckland Plan objective of doubling public transport trips to 140 million by 2022. This project was not included in the long-term plan or in Auckland Transports Regional Land Transport Programme. Subsequent to the finalisation of these plans, discussions with Kiwirail have identified an opportunity to undertake this work in conjunction with the electrification project. Auckland Transport has advised that there is currently no funding available from the New Zealand Transport Agency for this kind of work. Auckland Transport will pay Kiwirail to build the connection which will be owned by Kiwirail. This means the payment would be accounted for as a debt funded opex grant and not capital expenditure. However, because this grant will result in an asset being created with ongoing benefits for Auckland Transport and the wider community, the councils debt policy still allows this investment to be funded from borrowings. Auckland Transport will reprioritise their 2012/13 and 2013/2014 capital programmes to fund this work. Technically this will mean reducing their capital expenditure budget and increasing their operating budget, but the debt funding of this project will mean that there is no change in the funding provided to Auckland Transport from Auckland Council. An investment proposal is attached as Attachment A. Auckland Transport's budgets for 2012/2013 include approximately $7 million of commercial lease revenue relating to a planned acquisition for the City Rail Link. This acquisition will now not proceed in 2012/2013 and the commercial revenue will not be received. The revenue and funding requirements for the City Rail Link are effectively ring-fenced (with the lost revenue largely offset by lower borrowing costs from not proceeding with the acquisition) and therefore removing this revenue line will not affect the underlying rates funding requirement for Auckland Transport. The implication of not amending Auckland Transport's budgets at this point would be to require Auckland Transport to further cut its operating expenditure by approximately $7 million for 2012/2013. The operating surplus for the Auckland Council parent for 2012/2013 would then improve by a similar amount. Auckland Transport have advised that they cannot achieve these kind of savings without making some immediate and material cuts to service levels. The confidential items on this agenda may, if agreed, also have an impact on the overall budget. In particular, if unbudgeted expenditure is approved for land acquisition (or land acquisitions budgets are bought forward without offsetting deferrals) then this may push the average rates increase above the 2.9 per cent proposed in the draft annual plan.
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46. 47.

48.

49. 50.

51.

52. 53.

City Rail Link - Commercial lease revenue

54.

55.

Other items on this agenda 56.

Monthly budget update

Item 13

Following completion of the procurement process, it is intended that procurement savings from the new contract will be used to make additional funding available to local boards for graffiti education/prevention.

Strategy and Finance Committee 07 February 2013

Item 13

Overall budget impact 57.


$000

The total potential impact of these changes are set out in the below table.
General Rates Operating Cumulative Surplus/(Deficit) % rates 2012/2013 2013/2014 2012/2013 2013/2014 % increase increase 5,707,729 563 6,700,020 1,339,424 2.9% Group Borrowing

Long-term Plan 2012-2022 Draft Annual Plan 2013/2014 Decisions already made Changes approved prior to adoption Subsequent changes Liquor Licencing Current Position February proposals

7,255

-6,562

411 5,715,395 -1587 6,700,020 -1000

-411 -6,410 87

316 1,339,740 -63

0.02%

2.9% 2.9%

0.00%

2.9%

Potential Position

5,713,808

6,699,020

-6,323

1,339,677

2.9%

58.

The potential impacts of the proposals detailed above relative to the draft annual plan include: x reduced net borrowings for 2012/2013 by $1,176,000 x reduced operating deficit for 2012/2013 by $324,000. The revised budgeted operating deficit would be $6.3 million x increased rates requirement for 2013/2014 of $253,000. The projected average general rates increase would remain at 2.9 per cent.

Consideration
Local Board Views
National Ocean Water Sports Centre 59. 60. The Devonport-Takapuna Local Board is highly supportive of this project. The Waitemata Local Board Plan recognises the importance of performing arts to its communities and wishes to foster and encourage arts through world class facilities, projects and programmes. The Board supports the construction of a new theatre in the Wynyard Quarter. The Devonport-Takapuna Local Board are supportive of the increase in funding for their community groups but have specifically requested this is funded by the governing body from regional budgets. The Regional Development and Operations Committee in March 2012 resolved that their resolutions on the Auckland Graffiti Vandalism Prevention Plan be forwarded to the local boards for their information. Waterfront Theatre Project

Devonport-Takapuna Local Board Community Grants increase 61.

Centralisation of graffiti removal budgets 62.

Monthly budget update

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Strategy and Finance Committee 07 February 2013 63.

Manukau Rail Link Double Track Connection 64. Auckland Transport has not yet sought local board views.

Maori Impact Statement


65. 66. These decisions have no adverse or favourable impact on Maori outcomes. Maori and Tangata Whenua are a key stakeholder in the National Ocean Water Sports Centre through the Takapuna Beach Reserve Management Plan process. However, this timing change does not materially impact on Maori outcomes. With regards to the Waterfront Theatre Project, the Independent Maori Statutory Board has expressed an interest in the project and a wish to ensure Maori involvement in the planning, governance and operational aspects of the theatre. ATC is liaising with local iwi and providing ongoing opportunities for involvement. Auckland Transport have not identified any specific adverse or favourable impacts on Maori outcomes in relation to the Manukau Rail Link Double Track Connection.

67.

68.

General
69. Officers do not consider that the decisions or budget adjustments set out in this report are significant for the purposes of the Auckland Council Significance Policy.

Implementation Issues
70. Budgets will be amended in core financial systems and used for internal management reporting, regular reporting to councillors and financial control for the 2012/2013 financial year. Any budget adjustments relevant to the 2013/2014 year will be adjusted for the final annual plan.

71.

Attachments
No. A Title Manukau Rail Link Double Track Investment Proposal Page 107

Signatories
Authors Authorisers Michael Griffiths - Principal Advisor Ross Tucker - Team Leader Capital Planning Andrew McKenzie - Chief Finance Officer

Monthly budget update

Page 105

Item 13

The Local Board Services Department have been involved in developing the proposed budget adjustments and support the change on the basis the changes are nondiscretionary and align budgets to decision-making responsibilities.

Strategy and Finance Committee 07 February 2013

Monthly budget update

Page 107

Attachment A

Item 13

Strategy and Finance Committee 07 February 2013

Attachment A
Monthly budget update

Item 13

Page 108

Strategy and Finance Committee 07 February 2013

Monthly budget update

Page 109

Attachment A

Item 13

Strategy and Finance Committee 07 February 2013

Attachment A
Monthly budget update

Item 13

Page 110

Strategy and Finance Committee 07 February 2013

Exclusion of the Public: Local Government Official Information and Meetings Act 1987
The following motion is submitted for consideration: That the public be excluded from the following part(s) of the proceedings of this meeting. 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 follows. This resolution is made in reliance on section 48(1)(a) of the Local Government Official Information and Meetings Act 1987 and the particular interest or interests protected by section 6 or section 7 of that Act which would be prejudiced by the holding of the whole or relevant part of the proceedings of the meeting in public, as follows:

C1

Open space land acquisition budget


Particular interest(s) protected (where applicable) s7(2)(b)(ii) - The withholding of the information is necessary 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. In particular the public conduct of this part of the meeting would be likely to result in the disclosure of information for which good reason for witholding exists under section 7. Ground(s) under section 48(1) for the passing of this resolution s48(1)(a) The public conduct of the part of the meeting would be likely to result in the disclosure of information for which good reason for withholding exists under section 7.

Reason for passing this resolution in relation to each matter The public conduct of the part of the meeting would be likely to result in the disclosure of information for which good reason for withholding exists under section 7.

C2

Recommendation from the Regional Development and Operations Committee Acquisition of Land for Local Purpose Reserve, Umupuia
Particular interest(s) protected (where applicable) s7(2)(i) - The withholding of the information is necessary to enable the local authority to carry on, without prejudice or disadvantage, negotiations (including commercial and industrial negotiations). In particular, the report contains information on property values. Ground(s) under section 48(1) for the passing of this resolution s48(1)(a) The public conduct of the part of the meeting would be likely to result in the disclosure of information for which good reason for withholding exists under section 7.

Reason for passing this resolution in relation to each matter The public conduct of the part of the meeting would be likely to result in the disclosure of information for which good reason for withholding exists under section 7.

Public Excluded

Page 111

Strategy and Finance Committee 07 February 2013 C3 Recommendation from the Regional Development and Operations Committee Acquisition of Land for Local Purpose Reserve, Otahuhu
Particular interest(s) protected (where applicable) s7(2)(i) - The withholding of the information is necessary to enable the local authority to carry on, without prejudice or disadvantage, negotiations (including commercial and industrial negotiations). In particular, the report contains information on property values. Ground(s) under section 48(1) for the passing of this resolution s48(1)(a) The public conduct of the part of the meeting would be likely to result in the disclosure of information for which good reason for withholding exists under section 7.

Reason for passing this resolution in relation to each matter The public conduct of the part of the meeting would be likely to result in the disclosure of information for which good reason for withholding exists under section 7.

C4

90 Pavilion Drive, Mangere


Particular interest(s) protected (where applicable) s7(2)(i) - The withholding of the information is necessary to enable the local authority to carry on, without prejudice or disadvantage, negotiations (including commercial and industrial negotiations). In particular, information contained within the report is subject to negotiations. Ground(s) under section 48(1) for the passing of this resolution s48(1)(a) The public conduct of the part of the meeting would be likely to result in the disclosure of information for which good reason for withholding exists under section 7.

Reason for passing this resolution in relation to each matter The public conduct of the part of the meeting would be likely to result in the disclosure of information for which good reason for withholding exists under section 7.

Public Excluded

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