Agenda of Council - Wednesday, 2 November 2022

Council

02 November 2022

6. Key Organisational Performance Results - September 2022
Reference / Te Tohutoro:	22/1385930
Report of / Te Pou Matua:	Peter Ryan, Head of Corporate Planning & Performance Peter.Ryan@ccc.govt.nz
General Manager / Pouwhakarae:	Lynn McClelland, Assistant Chief Executive Strategic Policy and Performance (lynn.mcclelland@ccc.govt.nz)

1. Nature of Information Update and Report Origin

1.1 The purpose of this report is to provide Council with an overview of service, project and budget performance, as adopted through the 2021-31 Long Term Plan (and Annual Plan 2022/23), against organisational performance targets.

Normally presented to the Finance and Performance Committee, the key organisational performance targets include:

1.1.1 Service delivery
1.1.2 Capital projects (both planning and delivery)
1.1.3 Finance

1.2 Management-initiated performance goals.

2. Officer Recommendations Ngā Tūtohu

That the Council:

1. Receive the information in the Key Performance Results September 2022 report.

3. Brief Summary

3.1 Organisational performance forecasts are as at the end of September 2022, for the second year of the LTP 2021-31 (financial year to June 2023).

3.2 Level of service delivery is forecast 87.9%, against a target of 85%.

3.3 Key project delivery is forecast 69.0% against a target of 85%, while Non-Key project delivery is forecast 70.7% (against the target of 85%). Ongoing supply chain delays are impacting Council’s capital programme delivery, and also capital financial performance (below), and will continue to be for some time. These effects are being felt nationwide, part of a wider global economic uncertainty.

3.4 Capital planning for future years’ programmes is underway. Allocation of funding budgets for 2024 is tracking at 14.9%, while drawing down of FY25 & 26 funding budgets is reported at 7.2%, both against a target of 90%. This is normal at this time of the year.

3.5 The organisation is forecasting a year-end operational surplus of $2.1m.

3.6 Forecast capital expenditure is presently at -16.6%, outside ELT’s target range. In line with the ELT target, this forecast includes core and externally funded work, but excludes Te Kaha and Parakiore.

4. Service delivery

ELT Goal: Deliver 85% Community Levels of Service to target

4.1 Community levels of service (LOS) is forecast 87.9% delivery against the performance target of 85%.

4.2 Exceptions (levels of service forecast to not meet target) continue to reflect impacts from COVID that affected results at last year-end, and continue to do so this year (Transport, Art Gallery).

4.3 Attendee volumes are still impacting Art Gallery while staffing and planning around recent rainfall volumes and excessive spring growth impact Parks level of service delivery.

4.4 Impacts are also noticeable in some regulatory services, such as increases in consent volumes leading to delays in consent processing. Extensive effort around recruitment and contracting and process improvement initiatives has been underway for some time to provide the additional capacity needed.

4.5 Water Supply is impacted by leakage rates with remedial action suggestions available to address increasing leakage rates.

4.6 Amongst the exceptions are a number of satisfaction LOS (10 LOS). Results from the Residents Survey 2021/22 were presented to Council at the meeting of 9 June 2022. In addition to the summary of results Council were presented with action plans prepared by Heads of Service for each satisfaction level of service. This included an interpretation of the results, a response to the results and an outline of action to be taken. Council resolved for staff to report back to the Finance and Performance Committee on the Heads of Service action plans every six months (October 2022 report).

4.7 The scatter diagram below is an overview of the performance of the top-ten activities.

· The vertical y-axis shows service delivery (LOS) performance.

· The horizontal x-axis shows budget over/underspend.

4.8 Currently, no budget variances are recorded for the first two months for those activities not achieving at least 85% service delivery.

4.9 Transport activity has a number of exceptions related to road and footpath condition, resurfacing, modes of transport and resident satisfaction.

4.10 Parks, Heritage and Coastal Environment exceptions all relate to resident satisfaction. Action plans have been prepared for each satisfaction level of service, including an interpretation of the results, a response to the results and an outline of action to be taken.

4.11 Recreation, Sports, Community Arts and Events service delivery requires adjustment of targets. The Activity owner is currently compiling documentation for the target adjustment request.

4.12 For further details regarding LOS exceptions, refer to managers’ comments in Attachment A.

5. Capital projects - delivery and planning

ELT Goal: Deliver 85% Key capital projects to ‘delivery complete’ milestones

ELT Goal: Deliver 85% non-Key capital projects to ‘delivery complete’ milestones

5.1 Key project delivery is forecast to 69.0% delivery against the target of 85%. 20 of the 29 projects are forecast to meet milestone baseline target date at year-end.

5.2 Non-Key project delivery is forecast to 70.7% delivery against the target of 85%.

5.3 Supply chain delays and construction price escalation remain a concern nationwide and remain risks to the delivery of the Council’s capital programme.

5.4 For further information and underlying detail, refer to the detailed Capital Project Performance Report for September 2022.

5.5 Below is a forward view of capital delivery performance (financial), an overview of capital delivery in recent years against plan, plus capital delivery planned for the first three years of the LTP 2021-31.

5.6

Figures are updated for 2022/23, per the adopted Annual Plan (21 June 2022).

5.7 There has been stability of delivery year-on-year for projects CCC is responsible for delivering (green line – total spend), ranging consistently in a narrow band between $371m to $409m spend per annum over the previous 3 years.

5.8 The ELT performance goal for capital delivery is based on all delivery CCC is accountable for, regardless of funding source.

5.9 For this year (year 2 of the LTP 2021) the total programme amount set for CCC to deliver is $468m. The September 2022 Financial Report result for capital delivery is $390m, which equates to 83% delivery. As noted above, this forecast includes both core and externally funded works, but excludes Parakiore and Te Kaha, in line with the ELT performance goal.

5.10 Under the Annual Plan 2022/23, the future year CCC delivery programme for 2023/24 is set at $565m (blue line - excluding Te Kaha). This programme is $97m higher than what is planned for 2022/23.

5.11 There remain very clear risks around capital deliverability, given the strong consistency of spend these last four years (under $400m pa, on average), plus the challenges of supply of materials and cost escalation that will continue to impact in 2022/23, and potentially the years beyond. These were flagged with Councillors clearly as part of the Annual Plan process.

5.12 For more detail refer to the Financial Performance and Capital Programme Performance reports for September 2022.

ELT Goal: Ensure capital planning for FY23 funding programme budgets allocated,
90% by 1 March 2022.

ELT Goal: Ensure capital planning for FY24 & FY25 funding programme budgets drawn down, 90% by 1 May 2022.

5.13 Capital planning targets are intended to monitor the draw-down of future capital funding programme budgets, in this case years 2, and 3 and 4 of 2021-31 LTP. This helps the business plan and prepare for future capital project delivery, in order to effectively implement the LTP.

5.14 Capital planning performance normally start the year with low values and improves as projects are allocated / drawn down during the year.

5.15 14.9% of FY2024 funding programme budgets have been allocated (projects initiated) by 1st March 2023 against a target of 90%.

5.16 7.2% of FY2025/FY2026 funding programme budgets drawn down by 1st May 2023 against a target of 90%.

6. Finance

6.1 The organisation is forecasting an operational surplus of $2.1m. For more information refer to the Financial Performance Report - September 2022.

6.2 Capital expenditure variance at year-end forecast is at -16.6%. More detail is available in the Capital Programme Performance Report for September 2022.

Attachments / Ngā Tāpirihanga

No.	Title	Reference	Page
a ⇩	LOS Exceptions Commentary September 2022	22/1412287	80

In addition to the attached documents, the following background information is available:

Document Name – Location / File Link

Not applicable

Confirmation of Statutory Compliance / Te Whakatūturutanga ā-Ture

Compliance with Statutory Decision-making Requirements (ss 76 - 81 Local Government Act 2002).

(a) This report contains:

(i) sufficient information about all reasonably practicable options identified and assessed in terms of their advantages and disadvantages; and

(ii) adequate consideration of the views and preferences of affected and interested persons bearing in mind any proposed or previous community engagement.

(b) The information reflects the level of significance of the matters covered by the report, as determined in accordance with the Council's significance and engagement policy.

Signatories / Ngā Kaiwaitohu

Authors

Johan Jacobs - Senior Business Analyst

Boyd Kedzlie - Senior Business Analyst

Approved By

Peter Ryan - Head of Performance Management

Lynn McClelland - Assistant Chief Executive Strategic Policy and Performance

Council

02 November 2022

8. Financial Performance Report - September 2022
Reference / Te Tohutoro:	22/1384464
Report of / Te Pou Matua:	Bruce Moher – Acting Head of Finance (Bruce.Moher@ccc.govt.nz)
General Manager / Pouwhakarae:	Leah Scales, General Manager Resources/Chief Financial Officer (Leah.Scales@ccc.govt.nz)

1. Nature of Information Update and Report Origin

1.1 The purpose of this report is for Council to be updated on the financial performance to 30 September 2022, including the current year forecast, and receive information relating to the Council's treasury and debt risks, and insurance notifications.

1.2 This is a regular report that will go to Council or applicable committee on a monthly basis to provide an update on financial performance.

2. Officer Recommendations Ngā Tūtohu

That the Council:

1. Receive the information in the Financial Performance Report for September 2022.

3. Brief Summary

3.1 Financial results to date and forecast are positive.

3.2 All treasury risk positions are within policy limits.

3.3 There was an increase in rates and general debt during the month.

3.1 There were no material insurance issues for the month.

4. Key Financial Statistics

5. Financial Overview

5.1 Financial information reported covers two key areas.

5.1.1 Operational (expenditure and revenue) covers the day to day spend on staffing, operations and maintenance, and revenues.

5.1.2 Capital covers the capital programme spend and funding relating to it.

5.2 There is a $2.1 million forecast operating surplus. Contributing to this are:

5.2.1 Higher rates revenues ($1.5 million) – rating growth was 0.25% higher in 2021/22 than the 1.12% planned. The budget is slightly conservative to allow for rating adjustments that arise during the year, some of which can be material,

5.2.2 Higher Transwaste dividends ($1.1 million) – their final Statement of Intent included higher dividends than their draft on which the budget was based,

5.2.3 Lower insurance premiums than budgeted ($0.3 million).

Partially offset by,

5.2.4 Higher net interest costs ($0.8 million) - full year projections have been revised up for both interest costs and revenues, because of additional borrowing for onlending, and because market interest rates are likely to rise further than projected in the Annual Plan. Extreme volatility in market interest rates is ongoing, and there is significant risk of further upward revision in net interest costs over the next few months.

6. Operational Position

6.1 Operational revenue exceeds expenditure as it includes rates revenue for capital renewals and debt repayment. This revenue is referred to below as ‘Funds not available for Opex’ and removed from the Operational result below.

	Year to Date Results			Forecast Year End Results			After Carry Forwards
$m	Actual	Budget	Var	Forecast	Budget	Var	Carry Fwd	Var
Revenues	(216.1)	(208.1)	8.0	(872.0)	(861.3)	10.7	-	10.7
Expenditure	184.1	182.6	(1.5)	665.2	656.6	(8.6)	-	(8.6)
Funds not available for Opex	51.4	50.7	(0.7)	204.7	204.7	-	-	-
Surplus	19.4	25.2	5.8	(2.1)	-	2.1	-	2.1

6.1 Operational results by activity are detailed in Attachment A.

6.2 Brief summaries of the surplus, revenues, and expenditure are highlighted below.

Surplus

The operational surplus is currently $5.8 million better than budget; forecast to be $2.1 million at year end.

Key forecast drivers

Higher rates revenues ($1.5 million), higher Transwaste dividends ($1.1 million), and lower insurance premiums than budgeted ($0.3 million); partially offset by higher net interest costs ($0.8 million).

Revenues

Revenues are $8 million higher than budget year to date - forecast to be $10.7 million higher at year end. Below are the key drivers of these variances:

YTD Forecast

WW Treatment Plant Insurance recoveries (offset by costs, offset budgets will be processed) $5.3m -

Water Reform Crown transition funding (to be offset by higher costs to be incurred) $0.8m -

*Higher Interest revenues (offset by higher debt servicing costs) $0.6m $9.6m

Rates Revenues (2021/22 rating growth higher than planned) $0.6m $1.5m

Higher Transwaste dividends $0.6m $1.1m

Higher Building Consent volumes (offset by higher resourcing costs) $0.5m $0.8m

Lower Housing revenues (offset by lower maintenance costs aligned to OCHT forecasts) $0.1m ($1.1m)

Lower Burwood Landfill revenues ($0.3m) ($1.2m)

Total $8.2m $10.7m

* there is an additional $206 million of unbudgeted forecast on-lending to Christchurch City Holdings Limited, impacting forecast interest revenues (offset by higher debt servicing costs).

Expenditure

Expenditure is $1.5 million higher than budget year to date and forecast to be $8.6 million higher at year end. Below are the key drivers of these variances.

Key variance drivers: YTD Forecast

WW Treatment Plant response costs (offsetting rev/exp budgets to be processed) ($5.3m) -

*Higher debt servicing costs (see note above) ($0.6m) ($10.5m)

Building Consenting additional resourcing (offset by higher revenues) ($0.3m) ($0.8m)

Lower Housing maintenance (offset by lower revenues aligned to OCHT calcs) $0.3m $1.1m

Lower Recycling Processing fees $0.3m $1.2m

Lower Insurance Premiums $0.3m $0.3m

Timing of Grants $0.5m -

Lower Personnel costs/additional capitalisation of staff time $3.1m $0.3m

Total ($1.7m) ($8.4m)

Funds not available for Opex

Year to date variance is driven by favourable operating results for Housing ($0.4 million) and Dogs ($0.3 million), both of which are non-rates funded.

7. Capital Position

	Year to Date Results			Forecast Year End Results			After Carry Forwards
$m	Actual	Budget	Var	Forecast	Budget	Var	Carry Fwd	Var
Core Programme	58.4	50.1	(8.3)	391.1	410.3	19.2	19.2	-
External Funded Programme	6.2	7.6	1.4	53.6	57.5	3.9	3.9	-
Less unidentified Carry Forwards	-	-	-	(54.7)	-	54.7	54.7	-
Core/External Funded Programme	64.6	57.7	(6.9)	390.0	467.8	77.8	77.8	-
Te Kaha/Parakiore	22.5	16.1	(6.4)	166.7	104.3	(62.4)	(62.4)	-
Total Capital Programme	87.1	73.8	(13.3)	556.7	572.1	15.4	15.4	-
Revenues and Funding	(88.4)	(81.4)	7.0	(478.7)	(409.6)	69.1	69.0	0.1
Borrowing required	(1.3)	(7.6)	(6.3)	78.0	162.5	84.5	84.4	0.1

Capital Expenditure

7.1 Gross capital expenditure of $87.1 million has been incurred year to date. A further $469.6 million is forecast to be spent by year end.

7.2 The $556.7 million forecast spend is based on a Core/External Funded spend of $390 million, plus forecast spend of $166.7 million on Te Kaha and Parakiore projects.

7.3 Project managers have identified $23.1 million relating to specific projects forecast to be carried forward in the Core/External Funded Programme. The forecast includes an additional $54.7 million of expected carry forwards yet to be specifically identified (based on actuals to date and historical trend analysis).

7.4 There is currently a forecast spend of $143 million for Te Kaha this financial year, compared to a budget of $78.5 million. This earlier cost will be covered by bringing forward Crown revenues budgeted in 2023/24.

7.5 Breakdown of Capital expenditure by Group of Activities is outlined in Attachment A.

7.6 For further information on capital, please refer to the Capital Programme Performance Report.

Capital Revenues and Funding

7.7 Year to date revenues are higher than budget driven by earlier Crown contributions for Te Kaha.

7.8 The earlier forecast of $69 million (with budgets to be brought back from 2023/24) is driven by earlier timing of Crown contributions for Te Kaha ($64.5 million), based on the current project forecast spend. Earlier Waka Kotahi NZ Transport Agency subsidies are also forecast ($5.9 million) due to an earlier forecast spend on eligible projects.

7.9 The lower current year borrowing requirement forecast of $84.5 million is due to the slower forecast core/external funded capital programme spend.

8. Special Funds

8.1 The current and forecast movements and balance of the Housing Account and Capital Endowment Fund are shown in Attachment A.

8.2 The forecast balance of 2022/23 funds available for allocation from the Capital Endowment Fund at 30 September 2022 was $609,548.

9. Treasury

Borrowing, Advances to Related Parties, and Bank Deposits

9.1 Council’s borrowing and treasury-related Advances are shown below:

9.2 The increase in Gross Debt has been driven by a mix of new Advances to Related Parties and pre-funding of future major maturities (to reduce liquidity risk).

Policy Compliance

9.3 All Treasury risks are within Policy limits:

Risk Area	Compliance	*Plain-language meaning*
Liquidity Risk	Yes	(cash availability)
Funding Risk	Yes	(spread of debt maturities)
Interest Rate Risk	Yes	(managing interest costs)
Counterparty Credit Risk	Yes	(not all eggs in one basket)

9.1 The temporary breach in the Funding Risk Policy, ratified in advance at the April 2022 F&P Committee, has been corrected as planned, as opportunities have arisen to establish new borrowing for maturities greater than seven years.

Funding & Interest Rates

9.2 Council’s projected funding needs per financial year are shown in the chart below, split between the maturity of existing gross borrowing (green) and expected new borrowing requirements (grey).

9.3 Council’s interest rate risk is managed to reduce the volatility of interest costs from year to year. Most existing debt has been fixed for at least the next three years, which will limit the impact of recent market interest rate increases on Council’s future borrowing costs.

10. Rates and General Debt

10.1 Rates debt increased $3.6 million this quarter and General debt increased $19.1 million as shown in the table below. General debt includes a Crown invoice for $19.9m relating to Te Kaha (CMUA), which was paid on 3 October.

$m	June	Current	Change	Comment
Rates Debt	21.0	24.6	3.6	Annual collection cycle for mortgagees restarting
Overdue rates for current year	19.0	14.7	(4.3)	Change in rating years. Debt moves to being “previous years”
Arrears from previous years	2.0	9.9	7.9	See above
General Debt	12.5	31.6	19.1	$19.9m Crown contribution for Te Kaha (CMUA) (Oct-Dec 2022) was fully paid in October $4m owed by DIA relating to multiple invoices has been paid in October
(less than 30 days)	11.0	27.9	16.9	As above
(between 30 – 90 days)	0.9	3.0	2.1	Two large debtors are sitting in 30-60 days owing totalling $2.16m Both fully paid in October
(greater than 90 days)	0.6	0.7	.1	-

10.2 General debts of $74k have been written-off year to date 30 September, and $12k in the 3 months to June 2022.

10.3 A summary report of debtors written-off in 2022/23 by month is provided as Attachment B.

10.4 The graph below shows 90+ days rates debt as a percentage of the annual rates strike that year, with a three month moving average to smooth the quarterly cycle, and indicates that rate arrears are well in hand.

11. Insurance Claims

The table below outlines the number of events that have been notified by Council against its insurance policies as well as claims against Council from third parties for the July – September 20220 quarter.

	Policy	Claims / Notifications		Estimated Cost
	Policy	Above excess	Below excess	Estimated Cost
Claims by Council	Motor Vehicle	3	5	$28,000
	Material damage	0	0	$0
Claims against Council	PI / PL	0	0	$0

11.1 CWTP fire claim - damage assessment reports and cost estimates were received during this period. Once this work is reviewed and finalised the quantum of the claim will become clearer. Updates on this claim will be reported to the Insurance Subcommittee, in accordance with the updated Terms of Reference for this Subcommittee.

Attachments / Ngā Tāpirihanga

No.	Title	Reference	Page
a ⇩	Activities Financial Performance	22/1395762	147
b ⇩	Debtors Written Off Summary 30 September 2022	22/1420279	152

In addition to the attached documents, the following background information is available:

Document Name – Location / File Link

Not applicable

Confirmation of Statutory Compliance / Te Whakatūturutanga ā-Ture

Compliance with Statutory Decision-making Requirements (ss 76 - 81 Local Government Act 2002).

(a) This report contains:

(i) sufficient information about all reasonably practicable options identified and assessed in terms of their advantages and disadvantages; and

(ii) adequate consideration of the views and preferences of affected and interested persons bearing in mind any proposed or previous community engagement.

(b) The information reflects the level of significance of the matters covered by the report, as determined in accordance with the Council's significance and engagement policy.

Signatories / Ngā Kaiwaitohu

Authors

Ryan McLachlan - Reporting Accountant

Annie Yang - Reporting Accountant

Andrew Jefferies - Manager Rates Revenue

Brett Hales - Manager Transactions

Martin Zelas - Team Leader Rates

Steve Ballard - Group Treasurer

Approved By

Bruce Moher - Acting Head of Finance

Leah Scales - General Manager Resources/Chief Financial Officer

Council

02 November 2022

9. Overdue General and Rates Debtors at 30 September 2022 (Greater than $20,000 and 90 days)
Reference / Te Tohutoro:	22/1418872
Report of / Te Pou Matua:	Bruce Moher – Acting Head of Finance, (Bruce.Moher@ccc.govt.nz)
General Manager / Pouwhakarae:	Leah Scales, General Manager Resources/Chief Financial Officer (Leah.Scales@ccc.govt.nz)

1. Nature of Information Update and Report Origin

1.1 The purpose of this report is to update the Council on overdue general and rates debtors with balances in excess of $20,000, as at 30 September 2022.

1.2 This is a regular report that will go to Council or applicable committee on a quarterly basis to provide an update on financial performance.

2. Officer Recommendations Ngā Tūtohu

That the Council:

1. Receives the Overdue General and Rates Debtors (Greater than $20,000 and 90 days) report.

2. Notes the action being taken to recover the overdue amounts.

3. Resolves that a redacted copy of the report can be released after the Council has received the report, but the names of the individuals and organisations will remain confidential.

3. Overdue general (non-rates) debtors

3.1 There were two traffic related damage debtors, and one resource consent debtor with balances greater than $20,000 and older than 90 days as at 30 September 2022, totalling $130,105 (See Attachment A).

4. Overdue rates debtors

4.1 As at 30 September 2022, there are 30 individual properties with arrears greater than $20,000 (and where at least some of those arrears are older than 90 days). Total arrears on those properties is $1.01 million. Attachment B provides information on each of those properties including comments on the management of each debt. This is contained in the first table in that attachment.

4.2 In terms of the number of properties that have entered or exited this list since the last report as at 30 June 2022 (considered at the 25 August 2022 Council meeting):

4.2.1 Ten new debtors have been added to the first table in Attachment B. This is indicated by a yellow highlight in the first column labelled “Date came on report”.

4.2.2 There are three debtors from the previous quarterly report that no longer appear in the first table of Attachment B. The arrears owed by these debtors reduced by $0.08 million. The second table of Attachment B provides information on each of those properties.

5. Referred to Debt Collection Agency or Council Legal Team

5.1 Debt collection agency: The following table shows the number and value of files (accounts) that have been submitted to our contracted debt collection agency in the 3 months to 30 September 2022. It also shows the amount collected, the amount closed (sent back to Council) and the total debt still outstanding for files held by our debt collection agency. This includes all debt (not just debts over $20,000).

Amount submitted

Amount collected

Amount closed

Total debt still outstanding for collection and number of files

General debtors

$39,119

86 files

$24,127

19 files are under arrangement plans totalling $61,010

$16,188

$116,367

70 files

Rates debtors (inclusive of water rates)

0 files

$28,540

22 files are under arrangement plans totalling $32,665

$33,084

$48,000

28 files

5.2 Council’s legal team: The following table shows the number and value of files currently being managed by Council’s legal team. This includes all debt (not just debts over $20,000).

	Total number of files submitted and active	Total amount submitted and active
General debtors	2	$3,150
Rates debtors (inclusive of water rates)	30	$662,687

Attachments / Ngā Tāpirihanga

No.	Title	Reference	Page
a	General Debtors at 30 September 2022 (Under Separate Cover) - Confidential	22/1423057
b	Rates Debtors at 30 September 2022 (Under Separate Cover) - Confidential	22/1425167

In addition to the attached documents, the following background information is available:

Document Name – Location / File Link

Not applicable

Confirmation of Statutory Compliance / Te Whakatūturutanga ā-Ture

Compliance with Statutory Decision-making Requirements (ss 76 - 81 Local Government Act 2002).

(a) This report contains:

(i) sufficient information about all reasonably practicable options identified and assessed in terms of their advantages and disadvantages; and

(ii) adequate consideration of the views and preferences of affected and interested persons bearing in mind any proposed or previous community engagement.

(b) The information reflects the level of significance of the matters covered by the report, as determined in accordance with the Council's significance and engagement policy.

Signatories / Ngā Kaiwaitohu

Authors

Andrew Jefferies - Manager Rates Revenue

Brett Hales - Manager Transactions

Martin Zelas - Team Leader Rates

Approved By

Bruce Moher - Acting Head of Finance

Leah Scales - General Manager Resources/Chief Financial Officer

Council

02 November 2022

10. Local Government Funding Agency - Annual Report 2021/22 and Annual General Meeting Proxy and Voting Instructions
Reference / Te Tohutoro:	22/1368770
Report of / Te Pou Matua:	Linda Gibb, Performance Advisor Resources (linda.gibb@ccc.govt.nz)
General Manager / Pouwhakarae:	Leah Scales, General Manager Resources/Chief Financial Officer (Leah.Scales@ccc.govt.nz)

1. Nature of Decision or Issue and Report Origin

1.1 To note the Local Government Funding Agency's (LGFA's) Annual Report for the year ending 30 June 2022 and to approve a proxy and voting instructions for the Annual General Meeting (AGM) to be held on 23 November 2022.

1.2 The report has been written as a result of receiving the Annual Report and AGM documentation on 22 September 2022 in accordance with the timing requirements in section 67 of the Local Government Act 2002 (LGA).

1.3 There are no controversial items on the LGFA’s AGM agenda.

1.4 The shareholders council has advised it will not be making recommendations to shareholders with respect to voting decisions at the AGM. This is unusual, but probably reflects the fact that none of the items for shareholder voting are controversial.

1.5 The decisions in this report are of low significance in relation to the Christchurch City Council’s Significance and Engagement Policy. The level of significance was determined by considering the extent to which the decisions will impact the community.

1.6 The LGFA’s Annual Report is at Attachment A and its AGM documentation is at Attachment B.

2. Officer Recommendations / Ngā Tūtohu

That the Council:

1. Appoints Leah Scales, General Manager, Resources as the Council’s proxy for the purposes of voting at the Local Government Funding Agency’s Annual General Meeting on 23 November 2022, and the Chair of the meeting as alternate; and

2. Agrees to vote in favour of the following agenda items:

a. Re-election of Mr Anthony Quirk to the Local Government Funding Agency board for a third term;

b. Election of Ms Helen Robinson to the Local Government Funding Agency board for a first term; and

c. Re-election of the Bay of Plenty Regional Council and Hamilton City Council to the Local Government Funding Agency Shareholders’ Council.

3. Reason for Report Recommendations Ngā Take mō te Whakatau

3.1 To enable the Council, as a shareholder of LGFA to vote at the company’s 2022 AGM.

4. Alternative Options Considered Ētahi atu Kōwhiringa

4.1 The only other option is to not vote at the AGM which is not consistent with good practice governance.

5. Detail Te Whakamahuki

Background

5.1 The Council has an 8.3% ownership stake in the LGFA. It is also a borrower of $2.04 billion (up from $1.97 billion in the prior year), representing 14.5% of total LGFA lending to the local government sector (down from 16.5% in the prior year).

5.2 The strategic approach agreed by all shareholders at the LGFA’s inception is for the focus to be on lowering on-lending margins for council borrowers rather than generating dividends for equity holders.

5.3 The LGFA maintained its credit rating at AAA (S&P Global Ratings) / AA+ (Fitch Ratings), both on stable outlook and both of which are equal to the Government’s credit ratings. At these levels, the LGFA is able to offer rates to its borrowers that are lower than those offered in the market.

5.4 The following table shows the LGFA’s borrowing and lending activity in the current year compared with its SOI target and last year’s activity. Also for comparison purposes, the position in 2018/19 is shown, being the last full financial year without COVID-19 impacts:

Actual

2021/22

SOI target

2021/22

Last year

2020/21

Pre-COVID-19

2018/19

Total lending to participating councils

14.0

13.3

12.1

9.3

Total bonds and bills issued

16.1

N/A

12.2

9.3

5.5 Lending - increased by $1.9 billion in 2021/22 over 2020/21 and by $0.7 billion against the SOI target to $14 billion, largely due to higher demand from councils for infrastructure projects.

5.6 Borrowing – borrowing to support its lending programme increased by $3.9 billion in 2021/22 against the prior year to $16 billion, with a variety of maturity dates through to 2037. The increase is greater than the increase in lending in large part to enable the LGFA to maintain a portfolio of investment assets to comply with liquidity and capital adequacy regulations.

5.7 Headroom - the Council’s borrowing headroom is around $1.4 billion in 2022/23, falling to $0.6 billion in 2024/25, and just over $0.4 billion in each of the years following through to 2027/28. The large drop in headroom reflects the capital requirements for Te Kaha but excludes potential three waters’ financial impacts.

Risk

5.8 Along with 67 other member councils, the Council is a guarantor of the debt obligations held by all local authority LGFA borrowers after the LGFA has called on its other available sources of funding (e.g. retained earnings, the Crown’s committed funding facility which is currently $1.3 billion and conversion of $283 million of borrower notes to equity). There has never been a default.

5.9 Of its total lending to local authorities, around 84% is issued to AA- rated councils and CCOs or better.

Governance

5.10 The LGFA board is being refreshed over several years. The current directors are:

Director	First appointed	Years on board
Craig Stobo, Chair	December 2011	11
Alan Adcock	November 2021	1
Philip Cory-Wright	December 2011	11
Anthony Quirk	November 2017	5
Linda Robertson	November 2015	7

5.11 LGFA shareholders have established a Shareholders’ Council, membership of which is represented by the ten largest council shareholders including this Council. The purpose of the Shareholders’ Council is to advise the LGFA’s 31 shareholders on the LGFA’s performance, governance and any other matters requiring shareholders’ approval.

Financial Performance

5.12 The following table sets out the LGFA’s operating performance against its SOI targets and last year’s performance:

	Actual 2021/22 $m	SOI target 2021/22 $m	Last year 2020/21 $m
Revenue	18.6	19.1	19.7
Expenses	7.9	7.8	7.7
Net operating profit	10.7	11.3	12.0

Net operating profit variances

-5.3%

-10.8%

5.13 The lower net operating profit against both SOI target and last year’s result is driven by the steepening of market interest rates over the year – in particular, the gap between the interest that LGFA pays on its borrowings and what it earns on its posted collateral and liquid investments (which must be held for liquidity management purposes).

5.14 Non-financial performance targets have all been met.

5.15 The LGFA’s board has declared a dividend of $1.2 million for the year, of which the Council’s share is $99,600.

Annual General Meeting 2022

5.16 The LGFA has advised that its AGM will be held on 23 November 2022 in Wellington at 2pm. The Council is asked to approve voting instructions and a proxy and alternate to vote at the AGM. It is proposed that the Council approves Leah Scales, Chief Financial Officer as proxy, and the Chair of the AGM as the alternate. AGM documentation is at Attachment B.

5.17 Items that shareholders are asked to vote on, and for which the Council’s voting instructions are sought are as follows:

· Item 2 Election/Re-election of directors to the LGFA board

Each year, the two independent directors who were appointed or re-appointed to the LGFA board the earliest must retire from the board, and may stand for re-election. This year, Mr Anthony Quirk is the independent director who is retiring and is standing for re-election. Mr Quirk was first appointed to the LGFA board in 2017.

A long-standing director, Mr John Avery has retired from the board this year, and accordingly a replacement was sought. The only candidate is Ms Helen Robinson. She has a strong background in technology which will fill an important skills’ gap on the board. The biographies for both candidates are appended to the Notice of Meeting at Attachment B.

Council staff support both the re-election of Mr Quirk and the election of Ms Robinson.

· Item 3 Election/Re-election of nominating local authorities to the shareholders’ council

Each year the two nominating local authority members of the Shareholders’ Council that were elected or re-elected the earliest must retire and seek re-election if so inclined. This year the retiring councils are Bay of Plenty Regional Council and Hamilton City Council and both are seeking re-election.

There are no competing nominations for these positions on the Shareholders’ Council. Both councils are among the top 10 shareholders. On this basis, Council staff support their re-election.

Strategic Alignment /Te Rautaki Tīaroaro

5.18 This report is consistent with the Council’s commitment to good governance of its Council-controlled organisations (CCOs). This is aligned to the efficient delivery of the outcomes sought by the Council's Long Term Plan (2021 - 2031).

Policy Consistency Te Whai Kaupapa here

5.19 There is no specific Council policy relating to voting at AGMs, appointing directors to LGFA, or appointing shareholders to the Shareholder’s Council.

Impact on Mana Whenua Ngā Whai Take Mana Whenua

5.20 The decision does not involve a significant decision in relation to ancestral land or a body of water or other elements of intrinsic value, therefore this decision does not specifically impact Mana Whenua, their culture and traditions.

Climate Change Impact Considerations Ngā Whai Whakaaro mā te Āhuarangi

5.21 Not relevant.

Accessibility Considerations Ngā Whai Whakaaro mā te Hunga Hauā

5.22 Not relevant.

6. Resource Implications Ngā Hīraunga Rauemi

Capex/Opex / Ngā Utu Whakahaere

6.1 There are no incremental costs associated with the recommendations in this report.

7. Legal Implications Ngā Hīraunga ā-Ture

Statutory power to undertake proposals in the report / Te Manatū Whakahaere Kaupapa

7.1 LGA.

Other Legal Implications / Ētahi atu Hīraunga-ā-Ture

7.2 There is no legal context, issue or implication relevant to this decision.

8. Risk Management Implications Ngā Hīraunga Tūraru

8.1 Not relevant.

Attachments / Ngā Tāpirihanga

No.	Title	Reference	Page
a ⇩	Local Government Funding Agency Annual Report 2021/22	22/1320071	162
b ⇩	Local Government Funding Agency AGM 2022 Agenda	22/1320239	211

In addition to the attached documents, the following background information is available:

Document Name – Location / File Link

Not applicable

Confirmation of Statutory Compliance / Te Whakatūturutanga ā-Ture

Compliance with Statutory Decision-making Requirements (ss 76 - 81 Local Government Act 2002).

(a) This report contains:

(i) sufficient information about all reasonably practicable options identified and assessed in terms of their advantages and disadvantages; and

(ii) adequate consideration of the views and preferences of affected and interested persons bearing in mind any proposed or previous community engagement.

(b) The information reflects the level of significance of the matters covered by the report, as determined in accordance with the Council's significance and engagement policy.

Signatories / Ngā Kaiwaitohu

Author

Linda Gibb - Performance Monitoring Advisor CCO

Approved By

Bruce Moher - Acting Head of Finance

Leah Scales - General Manager Resources/Chief Financial Officer

Council

02 November 2022

11. Heathcote Low Stopbanks Feasibility
Reference / Te Tohutoro:	22/1386051
Report of / Te Pou Matua:	Kevin McDonnell, Team Leader Stormwater & Waterways Asset Planning WWW (Kevin.McDonnell@ccc.govt.nz)
General Manager / Pouwhakarae:	Jane Davis, General Manager Infrastructure, Planning & Regulatory Services (jane.davis@ccc.govt.nz)

1. Nature of Decision or Issue and Report Origin

1.1 The purpose of this report is to report back on technical feasibility of low stopbanks along the Ōpāwaho Heathcote River and to make a recommendation on the next steps for the project.

1.2 This report has been written in response to Council resolution CNCL/2017/00326, item 1(d) dated 8 November 2017; “Approving that staff continue to investigate the technical feasibility of low stopbanks to reduce frequent underfloor flooding, consult with affected communities should technical feasibility be confirmed and report back to the Committee.”

1.3 The decision in this report is of medium significance in relation to the Christchurch City Council’s Significance and Engagement Policy. The level of significance was determined by considering the impacts on the community, cultural values, the environment, and the ability of Council to meet levels of service.

1.4 The technical feasibility of low stopbanks has been confirmed for four different frequent flooding scenarios. However, the low stopbanks project has a low priority, with funding allocation not beginning until 2041. There is no line item for low stopbanks in the 2021-2031 Long Term Plan.

1.5 Furthermore, the flood management basins upstream, along with works along the river and purchase of the worst affected properties, has reduced the fluvial flood risk along the river. While the tidal risk remains in the lower reaches, there are other Council workstreams (such as the Coastal Hazards Adaptation Planning Programme) identifying options to address flooding in areas affected by sea level rise. As such it is considered appropriate to cancel the current project, and for it to be included in future floodplain management projects if it is considered an appropriate response.

2. Officer Recommendations / Ngā Tūtohu

That the Council:

1. Receive the staff investigation concluding that low stopbanks are technically feasible.

2. Approve that staff do not consult on low stopbank options.

3. Approve that the project is cancelled and removed from the Infrastructure Strategy contained within the 2021-2031 Long Term Plan, and for the project to be included in future floodplain management projects if it is considered an appropriate response.

3. Reason for Report Recommendations / Ngā Take mō te Whakatau

3.1 Following the July 2017 flooding along the Ōpāwaho Heathcote River a range of floodplain management options were identified.

3.2 Over $80 million has been allocated to floodplain management in the Ōpāwaho Heathcote River catchment. This has included purchase of the most frequently flooded houses, dredging, bank widening and strengthening, as well as beginning construction on four major flood basins. Combined, these works have reduced the risk of flooding along the river, although these works have had less impact in areas subject to tidal flooding.

3.3 Low stopbanks were identified as a possible means to restore the extent of underfloor, property and road flooding to pre-earthquake levels and would work in conjunction with the remainder of the floodplain management strategy (such as storage basins and dredging). The types of low stopbanks considered range from the addition of a kerb to the river side of the road to low walls.

3.4 Since that time technical feasibility has been proven. However, low stopbanks only address low priority flooding compared to other flood management needs in the city, and also do not address a specific level of service.

3.5 The original intention was to consult on low stopbanks if feasibility was proven. Given the low priority, and the deferral of funding (to 2041) in the recent 2021-2031 LTP, it is not considered appropriate to consult on the option at this stage. The deferral was subject to the LTP consultation process.

3.6 Low stopbanks are not required for implementation of the floodplain management scheme described above and which is currently being implemented. Low stopbanks were instead considered for management of the residual lower priority risks that remain when the full scheme for flood management across the whole of the Ōpāwaho Heathcote River catchment is implemented. In addition, to help manage lower priority residual risks the stopbanks may assist in partly mitigating potential effects arising from large storms which are outside the design events. Such risks will be considered when planning the implementation of any future floodplain management measures, along with other factors which will form part of that future consideration such as other Council flood management workstreams, new technology and process advancements.

3.7 While in future stopbanks may be identified as forming part of an appropriate response to flooding, it is recommended that they are considered in the context of a range of possible future floodplain management measures, including policy and planning approaches. The understanding of the impacts of climate change on both tidal and fluvial flooding will also have changed by 2041. The Coastal Hazards Adaptation Planning Programme is also looking at the impacts of climate change in tidally affected areas. Overall it is considered better to cancel the current project and to review it as a possible option in the future.

3.8 The disadvantage of this option is the risk that some in the community already have an expectation that consultation will take place. However, given that matters have essentially moved on following the 2021-2031 LTP, this risk is considered to have been mitigated through communicating with local communities via a webinar about the current measures to mitigate flooding and the reasons behind the recommendation to cancel the low stopbanks project.

4. Alternative Options Considered / Ētahi atu Kōwhiringa

4.1 An alternative option would be to consult with affected communities as originally planned. A range of different options could be presented to the community, such as:

· Implementing low stopbanks with an approximately 5-year average recurrence interval (ARI) level of service (without climate change or sea level rise) as other projects occur in the area on an ad-hoc basis (e.g. when roadworks occur, major cycle routes are implemented or masterplan landscaping is undertaken). Opportunities to achieve some of the outcomes through transport projects will continue to be considered by staff.

· Implementing low stopbanks with an approximately 5-year ARI level of service (without climate change or sea level rise) with the funding and programme as currently budgeted (implementation FY41-48).

4.2 The primary advantage of this option is that it meets the expectation set in 2017 that the project would be consulted on. It also allows a debate on whether low stopbanks are an appropriate means of flood management to take place outside of an emergency response situation.

4.3 There are a number of disadvantages of this option, including:

· Consultation would raise expectations within the community that low stopbanks may proceed when this has already been deferred in the LTP.

· Low stopbanks along the Heathcote are of lower priority than other flood management needs in the City.

· There is no clear policy support to implement.

· There is the potential to set a precedent if low stopbanks proceed, and the risk of inconsistency of approach across the city to addressing similar issues.

5. Detail / Te Whakamahuki

Ōpāwaho Heathcote River floodplain management works

5.1 Flooding has been a significant issue along the Ōpāwaho Heathcote River since human settlement along the river corridor intensified, particularly when the lower river terraces were settled in the early 20^th century.

5.2 The Canterbury Earthquake Sequence (‘earthquakes’) resulted in significant changes to land drainage throughout the city. The key effects for the Ōpāwaho Heathcote River were:

· Loss of channel capacity due to bank slumping, lateral spread, and increased sedimentation due to liquefaction.

· Tectonic uplift at the mouth of the river resulting in a reduced capability to drain upstream.

· Land settlement in places resulting in a drop of land levels adjacent to the river.

5.3 In response to this, in November 2017, Council approved a package of physical works (storage, dredging and bank stabilisation) across the catchment and property purchases (Flood Intervention Policy) to mitigate the earthquake effects on flooding. Details of the options presented to Council at the time can be found in the agenda of the 23 November 2017 meeting.

5.4 The combined flood mitigation benefits of these approved works is significant, with benefits provided in both frequent and extreme events. Figures 1 and 2 illustrate the benefit as estimated in November 2017, showing how the numbers of dwellings modelled to be at risk of flooding above the floor level has changed as a result of the earthquakes, and then the improvement through the storage scheme and then with the additional options. This results in a substantial improvement over the pre-earthquake situation.

Figure 1 Frequent flood risk along the Ōpāwaho / Heathcote River (10 year ARI, as estimated in November 2017)

Figure 2 Extreme flood risk along the Ōpāwaho / Heathcote River (50 year ARI, as estimated in November 2017)

5.5 The approved works are either complete or in progress. It is currently estimated that the full benefits of the scheme will be realised by 2024.

5.6 In addition to the approved works the Council has introduced the planning controls through the District Plan. Most of the Ōpāwaho Heathcote River corridor being considered for low stopbanks is in the Flood Management Area and the High Flood Hazard Management Area.

5.7 In the Flood Management Areas minimum floor levels are 400 millimetres above the modelled 200-year average recurrence interval (ARI) event with climate change and 1 metre sea level rise. The High Flood Hazard Management Areas are those with high risk to life in extreme flooding, and planning rules restrict intensification in these areas.

Stopbanks for flooding as presented in November 2017

5.8 High stopbanks and/or floodwalls could be used to protect buildings at risk of over floor flooding in a more extreme 50 year ARI event. However, the heights of stopbanks or walls required – and the large width of stopbanks if constructed – are unlikely to be technically viable or acceptable to the community without major changes to the riverside environment. In some places the stopbanks would be over 1.8 m in height. In addition, the cost of stopbanks or walls to provide this level of protection has been previously estimated at several hundred million dollars – well in excess of the value of the property protected.

5.9 This is in contrast to the stopbanks along the Ōtākaro Avon River, which has an extensive floodplain allowing stopbanks to be easily installed. The Ōtākaro Avon River stopbanks currently provide protection against a 100 year ARI event. It is not feasible to provide this level of protection along the Ōpāwaho Heathcote River.

5.10 As an alternative to high stopbanks to protect against extreme flooding, low stopbanks to address frequent underfloor, property and road flooding were considered. Low stopbanks would address issues which cause significant distress and disruption to the community, including:

· Detrimental psycho-social effect on residents (underfloor flooding can be as distressing as over-floor flooding for some).

· Emergency Operations Centre activation and the impacts on staff and resources

· Wastewater overflows to river (road flooding results in the sewer system being overloaded)

· Wastewater under houses, on property, in playgrounds and on streets

· Closure of roads, loss of access, and damage to roads

· Danger to life if the flood waters are entered in many locations

· Contents damaged in garages, under homes and cars written off

· Reputational damage to Council.

5.11 At the time it was proposed that low stopbanks could be considered between Hansen Park and Colombo Street to restore pre-earthquake levels of flood risk in the most impacted locations, focusing on those areas with:

· Frequent underfloor flooding

· Deep road flooding (>300 mm) and limited alternative access for large numbers of houses.

5.12 This section was proposed for low stopbanks in the context of restoring pre-earthquake levels of flooding. Downstream of Hansen Park the dredging works were estimated to restore pre-earthquake levels of flooding (which, based on the modelling at the time, meant there would still be 47 houses at risk of frequent underfloor flooding, and 2.8 km of road with flooding >300 mm depth). However, upstream of Hansen Park, even with the dredging, storage and house purchases, the numbers of houses at risk of frequent underfloor flooding and length of road inundated were higher than pre-earthquake. Low stopbanks were considered to be the only option available to mitigate this increase in impact in this area.

5.13 In the November 2017 report to Council it was recommended that further work on technical feasibility of low stopbanks be undertaken.

5.14 The original extent for low stopbanks was from Hansen Park to Colombo Street. In order to provide an equal level of service along the Ōpāwaho Heathcote River, the feasibility assessment of low stopbanks was extended to Radley Street (Figure 3).

Figure 3 Current proposed extent of low stopbanks in green (background colours show Community Board boundaries)

Assessment of Technical Feasibility

5.15 Beca Ltd were engaged to assess the technical feasibility of low stopbanks. The key areas of interest for assessing technical feasibility were:

· Impact on road layout, transport, parking and accessibility

· Ecological impact – trees, aquatic ecology

· Effects and mitigation of stormwater and wastewater issues during and after flood events – gravity and/or pumped drainage of floodplain behind the stopbanks after overtopping, providing a range of options to mitigate these.

· Impact on services

· Landscape impacts, including options for integration to deliver the Mid-Heathcote River/ Ōpāwaho Linear Park Masterplan works

· Constructability

· Resilience, particularly to lateral spread or subsidence along the river edge.

5.16 Beca Ltd have concluded that low stopbanks are technically feasible for the three level of service scenarios presented in this report.

5.17 Worley Parsons were engaged to assess the potential for low stopbanks to increase drowning risks, as aspects of the design (e.g. footpaths) may encourage the public to interact closer to the river hazard. The conclusion was that the risk is not increased above current conditions.

Levels of Service and Extent Considered

5.18 Low stopbanks are an option to mitigate the effects of ‘frequent’ flooding; interpreted as an event with approximately a 10-year ARI. Two options were developed with a 10-year ARI level of service, one without climate change and one including climate change (2ºC) and 0.5 m sea level rise. Both of these options, for the area between Colombo Street and Hansen Park, exceeded the allocated budget.

5.19 In order to develop a feasible option within the budget, a 5-year ARI option was developed. While this provides a lower level of service, it still mitigates the impact of the type of flood events that occur most winters. For example, in the 2019 Queens Birthday weekend event (1 June), low stopbanks may have prevented inundation of roads and properties along the Ōpāwaho Heathcote River.

5.20 The original area covered by the low stopbank proposal was from Colombo Street to Hansen Park. However, this could be seen as providing a lower level of service to properties downstream of Hansen Park. Feasibility assessment was extended down to Radley Street to provide a consistent level of service along the river. It is considered that the 5-year ARI option could be value engineered to fit within the current budget.

Forecast Cost for Stopbanks from Colombo Street to Radley Street

5.21 The estimated total outturn cost to complete stopbanks designed for a 10-year ARI level of service, including climate change (2ºC) and 0.5 m sea level rise, is expected to be $58 million. This is approximately $31 million over the budget of $27 million.

5.22 The estimated total outturn cost to complete stopbanks designed for a 10-year ARI level of service without climate change is expected to be $40 million. This is approximately $13 million over the budget.

5.23 The estimated total outturn cost to complete stopbanks designed for a 5-year ARI level of service without climate change is expected to be $22 million. This is within the budget.

5.24 The actual total outturn cost estimates in the section above could range from -25% to +35%. A principal’s contingency of 25% has been used in the estimated total outturn cost calculations.

Low stopbank types

5.25 A number of different types of stopbanks were incorporated into the concept design, ranging from adding a kerb on the riverside and re-grading the road to low walls to earthen embankments. Different levels of service result in a different mix of low stopbank types. The mix of stopbank types for each level of service is shown in Table 1.

Level of service	Low wall	Earth Embankment	Hybrid embankment/wall	Kerb and/or road regrade
5-year ARI	17%	22%	31%	30%
10-year ARI	14%	33%	36%	17%
10-year ARI with climate change/SLR	22%	17%	61%	Not assessed

Table 1 Distribution of stopbank type by level of service

5.26 The stopbanks also range in height (and therefore impact) depending on the stopbank location and level of service provided.

Level of service	Average height	Height range
5-year ARI	0.25 m	0.1-0.8 m
10-year ARI	0.45 m	0.1-1.0 m
10-year ARI with climate change/SLR	0.75 m	0.3-1.2 m

Table 2 Average stopbank heights and predominant range by level of service

Low stopbank additional benefits

5.27 The benefits of low stopbanks are primarily the reduction of frequent underfloor, property and road flooding.

5.28 Of the construction costs associated with the low stopbanks, approximately 60% of the cost is for bank stabilisation, replacing services under the low stopbank location, adding kerb and channel and resurfacing the road and landscaping. This brings other benefits to the areas affected by the low stopbanks.

5.29 In addition, in the areas where the low stopbanks are installed, many of the aims of the Mid-Heathcote River/ Ōpāwaho Linear Park Masterplan will be implemented, such as narrowing roads to reduce speed, increased riverbank planting, prevention of parking on the river berm and footpaths along the river.

Low stopbank impacts and risks

5.30 The low stopbanks would result in impacts along the river corridor, and introduce some risks. These include:

· Immediate loss of tree canopy where mature trees need to be removed to make way for the low stopbanks

· Loss of on-street parking in most areas where low stopbanks are installed

· Setting a precedent for a level of service to be applied citywide

· Being inconsistent with the approach being taken by Council for other areas

· Residents may consider flooding to be ‘fixed’, and therefore be less prepared when a larger flood, which overtops the stopbanks, occurs (and it will); this would lead to a less resilient outcome through community complacency

· If flooding is considered by residents to be ‘fixed’, then they may be encouraged to increase their investment in the area; this in turn could lead to Council being held responsible by residents to provide higher protection in the future

· It could be seen as predetermining a long term approach of ‘defending’ against flooding, rather than changing land use and adapting to living with water

· When an overtopping flood occurs, residents may be caught unaware as the early signs of road flooding would not be present

· Wastewater overflows may accumulate on the road-side of the stopbanks and could result in worse outcomes than if discharged into the river and diluted

· The community may expect Council to make the stopbanks higher over time rather than accepting the level of service provided.

5.31 These impacts will vary depending on stopbank height and type. For instance, where only a kerb or road regrade is needed most of the impacts disappear. However, where a higher earthen embankment is proposed then the impacts would be the most severe, and all of the impacts listed above are likely to occur.

Community Views and Preferences

5.32 Community views and preferences were tested by the project with the public engagement that took place following the July 2017 flooding, and in particular the public meetings held in October 2017. In the November 2017 report to Council, staff summarised public reaction to low stopbanks as follows, “Initial response from the community at past public meetings have provided a mixed response, with some supporting them due to the impacts of the flooding, and others considering that the character of the river banks will be compromised.” This summary is still considered appropriate.

5.33 Updates have been provided during joint briefings with the Waikura Linwood-Central-Heathcote and Waihoro Spreydon-Cashmere Community Boards on 23 November 2018, 22 July 2019 and 20 June 2022. The Boards reaction to low stopbanks at earlier presentations was mixed, with some in favour and others concerned about the impacts on the nature of the riverbanks. However, at the 20 June 2022 meeting there was no identifiable opposition to the recommendations of this report, but further engagement with the community was requested which was agreed by the Boards as able to be achieved through a webinar.

5.34 Given that the funding for this project has been significantly deferred, and the level of service offered by low stopbanks is not currently supported by policy (and therefore has the potential to set a precedent), a consultation process is not recommended. To be meaningful and useful, consultation should ideally happen within an 18 month – two year window of the start of project funding.

5.35 However, given the significance of the matter it was considered appropriate to undertake some further communication with local communities about the current suite of works that the Council has undertaken, i.e. the Ōpāwaho Heathcote River floodplain management works, and the recommended cancellation of the low stopbanks project.

5.36 A webinar was held on 14 July 2022 to update the community on the floodplain management projects and an update on the low stopbanks. A letter was sent to approximately 860 properties who live along the river between Colombo Street and Radley Street inviting them to the webinar. 35 people registered with 22 people attending. Participants could ask questions before and during the webinar, and these were answered by staff at the end during a question time. A Q&A document was sent to all people that registered along with the webinar recording and copy of the PowerPoint presentation slides. This information was also uploaded to the Heathcote River website for those residents that were unable to attend the webinar.

5.37 We did not receive any questions about why it was recommended that the project be removed from the Long Term Plan, with the most relevant questions being about what was being planned to manage sea level rise effects in the lower reaches of the river, and what other flood mitigation measures were being planned. These were answered by stating that while in the future stopbanks may be identified as forming part of an appropriate response to flooding, it is recommended that they are considered in the context of a range of possible future floodplain management responses. Where there were questions about ongoing flooding in the roads, it was emphasised that the priority was on addressing floor level flooding (as per the wider programme) and that there would still be occasional road and property flooding in this area as it is within a river corridor.

5.38 The community will be informed of the Council decision on the recommendations via communication back to the Community Boards, direct communications with those who attended the webinar and the Ōpāwaho / Heathcote River newsletter.

5.39 The decision affects the following wards/Community Board area:

5.39.1 Waihoro Spreydon-Cashmere-Heathcote.

6. Policy Framework Implications Ngā Hīraunga ā- Kaupapa here

Strategic Alignment /Te Rautaki Tīaroaro

6.1 This report supports the Council's Long Term Plan (2021 - 2031):

6.1.1 Activity: Flood Protection and Control Works

· Level of Service: 14.1.6.1 Manage the risk of flooding to property and dwellings during extreme rain events: Annual reduction in the modelled number of properties predicted to be at risk of habitable floor level flooding of the primary dwelling in a 2% AEP Design Rainfall Event of duration 2 hours or greater excluding flooding that arises solely from private drainage - >=0 properties per annum on a rolling three-year average

Policy Consistency / Te Whai Kaupapa here

6.2 The decision to cancel the project is consistent with Council’s Plans and Policies.

6.3 The decision is consistent as there is currently no policy which addresses frequent underfloor, property and road flooding and so implementing low stopbanks would be an exception to Council’s Plans and Policies.

Impact on Mana Whenua Ngā Whai Take Mana Whenua

6.4 The decision to cancel the project does not involve a significant decision in relation to ancestral land or a body of water or other elements of intrinsic value, therefore this decision does not specifically impact Mana Whenua, their culture and traditions.

6.5 The decision to cancel the project does not involve a matter of interest to Mana Whenua and will not impact on our agreed partnership priorities with Ngā Papatipu Rūnanga.

6.6 Previous advice was sought at a programme level from Mahaanui Kurataiao Ltd. The advice was that construction of the low stopbanks would impact of areas of value to Mana Whenua. Therefore, if the decision is made for the project to proceed, then it would involve a significant decision in relation to ancestral land or a body of water or other elements of intrinsic value and would specifically impact Mana Whenua, their culture and traditions and further engagement would be required.

Climate Change Impact Considerations / Ngā Whai Whakaaro mā te Āhuarangi

6.7 The decision in this report relates to consultation and closure of a project and so has minimal climate change impacts. However, if the low stopbanks were to proceed they would provide an opportunity to mitigate some of the climate change impacts from rising sea levels, and therefore rising river levels in the area under consideration for low stopbanks.

6.8 The procurement of materials for the low stopbanks, if these were to proceed, would need to consider the use of local materials as far as possible to reduce the carbon footprint of the construction.

Accessibility Considerations / Ngā Whai Whakaaro mā te Hunga Hauā

6.9 The design of the low stopbanks, if the project were to proceed, would need to take into account accessibility along the river and seek opportunities to improve accessibility where possible.

7. Resource Implications Ngā Hīraunga Rauemi

Capex/Opex / Ngā Utu Whakahaere

7.1 Cost to Implement – It is estimated that there will be a cost of approximately $15,000 to close out the project.

7.2 Maintenance/Ongoing costs – Cancelling the project will reduce future stopbank maintenance costs, but there may be higher road maintenance and flood clean-up costs instead. This has not been quantified.

7.3 Funding Source - Existing project CPMS ID 46688, with a remaining budget of approximately $47 million available between 2041 and 2048.

8. Legal Implications Ngā Hīraunga ā-Ture

Statutory power to undertake proposals in the report / Te Manatū Whakahaere Kaupapa

8.1 In accordance with the Local Government Act 2002, the Council has broad powers to make decisions about when to progress a project, when to pause a project and when to stop or close a project.

8.2 When the Council adopted the 2021-2031 Long Term Plan, it did not include a line item for this project in its 2021-2031 budgets.

Other Legal Implications / Ētahi atu Hīraunga-ā-Ture

8.3 In 2017, the Council resolved as part of a package of measures that it would “approve that staff continue to investigate the technical feasibility of low stopbanks to reduce frequent underfloor flooding, consult with affected communities should technical feasibility be confirmed and report back to the Committee.”

8.4 Whilst technical feasibility has been confirmed, the Council determined through the LTP process that it would not progress these measures in the next 10 years (and indeed in the next 20 years).

8.5 It is appropriate from a legal perspective to close off the project in light of this long time frame. Even though the Council indicated that it would consult once technical feasibility has been confirmed it would not be appropriate to consult the public in relation to a project that may not begin for another twenty years.

8.6 When making decisions, the Council is required to comply with its decision-making obligations in Part 6 of the Local Government Act 2002. Section 79 provides that it is for each Council to determine how it will achieve compliance with sections 77 and 78, although as a general rule compliance should be largely proportional to the significance of the matter. Essentially, the more significant the matter, the higher the standard of compliance is expected from the Council.

8.7 Section 78 does not require the Council to undertake a consultation process of itself but the Council must have some way of identifying the views and preferences of interested and affected persons.

8.8 In this case, the Council has an understanding of current views and preferences in relation to the low stopbanks. Over the last few years, there has been a mixed response in relation to low stopbanks with some supporting them due to the impacts of the flooding, and others considering that the character of the river banks will be compromised. However, at the most recent engagement with the community in July 2022 through the interactive process no particular concerns were raised with staff about not proceeding further with low stop banks.

8.9 On this basis, given the significance of the matter, it would be appropriate to round out the engagement process with some further communication with local communities via the Community Board on where the Council has landed in relation to the low stopbanks. However, Legal Services does not consider that Council is required to undertake further ‘consultation’ as such to close out this project.

8.10 This report has been reviewed and approved by the Legal Services Unit.

9. Risk Management Implications Ngā Hīraunga Tūraru

9.1 The risks considered in this section relate to not consulting on and closing the low stopbanks project, and not to the implementation of low stopbanks.

9.2 There is a risk with not undertaking further consultation on the low stopbanks because the Council indicated in 2017 that it would do so. However, given that matters have essentially moved on following the 2021-2031 LTP, this risk is considered to have been mitigated through communicating with local communities via a webinar about the current measures to mitigate flooding and the reasons behind the recommendation to cancel the low stopbanks project.

9.3 Closure of the project maintains the current risk of frequent underfloor and road flooding, which will increase with time due to climate change impacts. This risk is partially mitigated by the flood management measures already in place, although these have less impact in tidal areas. However, this is an existing risk, and there are higher priority areas in the city where the risk is currently greater and these areas are being prioritised.

Attachments / Ngā Tāpirihanga

There are no attachments to this report.

In addition to the attached documents, the following background information is available:

Document Name – Location / File Link

Not applicable

Confirmation of Statutory Compliance / Te Whakatūturutanga ā-Ture

Compliance with Statutory Decision-making Requirements (ss 76 - 81 Local Government Act 2002).

(a) This report contains:

(i) sufficient information about all reasonably practicable options identified and assessed in terms of their advantages and disadvantages; and

(ii) adequate consideration of the views and preferences of affected and interested persons bearing in mind any proposed or previous community engagement.

(b) The information reflects the level of significance of the matters covered by the report, as determined in accordance with the Council's significance and engagement policy.

Signatories / Ngā Kaiwaitohu

Authors

Peter Christensen - Surface Water Engineer

Katy McRae - Head of Communications & Engagement

Vivienne Wilson - Senior Legal Counsel

Martin Densham - Project Manager

Approved By

Kevin McDonnell - Team Leader Asset Planning

Helen Beaumont - Head of Three Waters

Jane Davis - General Manager Infrastructure, Planning & Regulatory Services

Council

02 November 2022

12. Botanic Gardens - Licence to Occupy for Seismographic Equipment
Reference / Te Tohutoro:	22/1409796
Report of / Te Pou Matua:	Wolfgang Bopp, Director Botanic Gardens and Garden Parks (wolfgang.bopp@ccc.govt.nz)
General Manager / Pouwhakarae:	Mary Richardson, General Manager Citizens & Community (Mary.Richardson@ccc.govt.nz)

1. Nature of Decision or Issue and Report Origin

1.1 The purpose of the report is to seek Council approval to place seismic equipment at the Botanic Gardens to study liquifaction linked to earthquakes. The decision is required to meet obligations of the Reserves Act 1977.

1.2 Geological and Nuclear Sciences Ltd (GNS) have approached the Council for permission to install a second seismograph and borehole to house a sensor at the Botanic Gardens.

1.3 Installation of the equipment will enable GNS to capture data to support the study of liquefaction linked to earthquakes.

1.4 Mahaanui Kurataiao Ltd have been consulted for their views and are supportive of the installation of the equipment. Further detail may be found in paragraph 6.4-6.7 of this report.

1.5 The decision in this report is of low significance in relation to the Christchurch City Council’s Significance and Engagement Policy. The level of significance was determined by the minimal impact of it in the Botanic Gardens, to its visitors and the benefit to the City and the country of the installation of the equipment.

2. Officer Recommendations / Ngā Tūtohu

That the Council:

1. Approve the granting of a Licence to Occupy to the Institute of Geological and Nuclear Sciences Ltd. to install a second seismograph and borehole to contain a sensor at the Christchurch Botanic Gardens located at 5-7 Rolleston Avenue described as Part Reserve 25, gazetted as a local purpose (botanic garden) reserve, certificate of title identifier 668229. The term of the licence is 10 years with two rights of renewal of 10 years for a total licence term of 30 years at a peppercorn rental, in accordance with the Reserves Act 1977.

2. Recommend that the Chief Executive, in her capacity of holding the Minister of Conservation’s Delegation, give consent to the licence in accordance with section 48A of the Reserves Act 1977.

3. Authorise the Property Consultancy Manager to manage and finalise licence documentation for the above matter.

3. Reason for Report Recommendations / Ngā Take mō te Whakatau

3.1 A Licence is required to permit GNS to install the seismograph and borehole.

3.2 The Botanic Gardens already hosts a seismograph as part of the Magnetic Observatory, which has been supporting earth sciences since 1901.

3.3 The availability of long-term data together with the long-term protection of the Botanic Gardens as a reserve make it an ideal location.

3.4 The objective of the second seismograph is to enable GNS together with the University of Canterbury to learn more about liquefaction. The resulting data will be of interest to the City, New Zealand and the wider world. We understand this would be the first such installation in the country.

4. Alternative Options Considered / Ētahi atu Kōwhiringa

4.1 The Botanic Gardens has been identified as the best location for liquefaction study in Christchurch. The availability of long-term data together with the long-term protection of the Botanic Gardens as a reserve make it an ideal location.

4.2 Other sites have not been considered.

5. Detail / Te Whakamahuki

The Land

5.1 The Botanic Gardens are located at 5-7 Rolleston Avenue and held as a local purpose (botanic garden) in accordance with the Reserves Act 1977.

5.2 The legal description is Part Reserve 25, gazetted as a local purpose (botanic garden) reserve, certificate of title identifier 668229

The Equipment and Location

5.3 The existing seismograph and proposed second installation are located within/ next to the Magnetic Observatory near the Kiosk in the Botanic Gardens.

The proposed second seismograph is to be located between the Magnetic Observatory and the Weather Station, see red circle. The yellow arrow locates the existing borehole, close up below:

5.4 The proposed borehole would be 300 mm diameter and 20 to 30 metres deep.

5.5 The existing 200 mm diameter borehole shows what the proposed lid may look like. The proposed lid would also be flush with the surface to avoid being a trip hazard.

5.6 Installation would be carried out by the same contractor that has drilled various boreholes for the Museum investigation work in the Botanic Gardens. They have an archaeological protocol.

5.7 The drilling work is anticipated to take one to two days with limited noise disruption.

5.8 The Friends of the Botanic Gardens are supportive of the proposal and find the location appropriate.

5.9 The second installation and the resulting scientific endeavour will be interpreted alongside the other functions of the Observatory complex.

Minister of Conservation Delegation

5.10 On 12 June 2013, the Minster of Conservation delegated to all territorial authorities powers, functions and duties where the territorial authority is the administering body of the relevant reserve. The Council has sub-delegated that power to the Chief Executive.

5.11 In exercising the Minister’s delegation, the administering body (i.e. the Council) must give consideration to those matters previously applied by the Minister, for example ensuring that:

5.11.1 The land has been correctly identified.

5.11.2 The necessary statutory processes have been followed.

5.11.3 The functions and purposes of the Reserves Act have been taken into account in respect to the classification and purpose of the reserve as required under section 40 of the Act.

5.11.4 The administering body has considered submissions and objections from affected parties and that, on the basis of the evidence, the decision is a reasonable one.

5.11.5 Pursuant to the requirements of section 4 of the Conservation Act 1987, the administering body has consulted with and considered the views of tangata whenua or has in some other way been able to make an informed decision.

5.12 Public notification of the Council’s intentions to consider granting GNS a Licence to Occupy is not required under section 48A (5) as the reserve is not likely to be materially altered or permanently damaged and the rights of public in respect of the reserve are not likely to be permanently affected by the granting and lawful exercise of the rights and powers contained in the licence.

5.13 Council officers are satisfied that the proposed licence will comply with the Minister’s requirements.

5.14 The community’s views have not been obtained. The Magnetic Station and Observatory are existing structures and installation of the equipment does not affect the public. Public notification is not required in accordance with clause 48A (5) of the Reserves Act 1977 as the rights of the public in respect of the reserve are not likely to be permanently affected.

5.15 The decision affects the following wards/Community Board areas:

5.15.1 All wards/Community Boards as this is a metropolitan asset.

6. Policy Framework Implications Ngā Hīraunga ā- Kaupapa here

Strategic Alignment /Te Rautaki Tīaroaro

6.1 Installation of a second seismograph and borehole provides the necessary equipment to analyse earthquake data.

6.2 This report supports the Council's Long Term Plan (2021 - 2031):

6.2.1 Activity: Civil Defence Emergency Management

· Level of Service: 2.5.2.1 Council maintains an effective response capability and capacity to manage civil defence emergencies in its area (Designated facilities, equipment and infrastructure for use in an Emergency) - One primary and one secondary Emergency Operations Centre (EOC) facility available to be activated within 60 minutes

Policy Consistency / Te Whai Kaupapa here

6.3 The decision is consistent with Council’s Plans and Policies.

Impact on Mana Whenua Ngā Whai Take Mana Whenua

6.4 The decision does involve a significant decision in relation to ancestral land or a body of water or other elements of intrinsic value, therefore this decision does specifically impact Mana Whenua, their culture and traditions.

6.5 The decision to enter into a Licence with GNS is not a significant decision, however it does have a significant beneficial impact on Mana Whenua. The impact is that Mana Whenua will benefit from the data collected as it relates to earthquake monitoring and planning for future generations.

6.6 Council officers have engaged with the Environmental Advisor at Mahaanui Kurataiao (MKT) regarding the proposed licence. The information has been considered and they cannot see any issue with the installation of the proposed seismograph at the Botanical Gardens.

6.7 The contractor will be required to follow an accidental discovery protocol to cover the risk of encountering Māori archaeology. It is acknowledged by MKT that the contractor has experience in this area.

Climate Change Impact Considerations / Ngā Whai Whakaaro mā te Āhuarangi

6.8 The granting will allow the City to support research into understanding the effect of earthquakes which in due course may form part of our climate change response.

Accessibility Considerations / Ngā Whai Whakaaro mā te Hunga Hauā

6.9 The borehole lid will be flush with the surrounding grass with no trip hazard to members of the public.

7. Resource Implications Ngā Hīraunga Rauemi

Capex/Opex / Ngā Utu Whakahaere

7.1 Cost to Implement - this is funded by the Licensee, GNS; no cost to Council.

7.2 Maintenance/Ongoing costs – funded by GNS; GNS will advise if the equipment will operate through electrical power or be battery operated. The cost of electricity would be minimal and covered through operational budgets.

7.3 Funding Source - this is funded by the Licensee, GNS.

Other / He mea anō

7.4 Electricity – to run the monitoring equipment will be a very minor increase in electricity consumption will not affect operating budgets when compared to the value in obtaining the data collected.

8. Legal Implications Ngā Hīraunga ā-Ture

Statutory power to undertake proposals in the report / Te Manatū Whakahaere Kaupapa

8.1 Reserves Act 1977 - section 48A:

8.2 Minister of Conservation Powers delegated to Christchurch City Council.

8.3 The Botanic Gardens are a metropolitan asset, therefore the decision to grant a licence to occupy is with the Council.

Other Legal Implications / Ētahi atu Hīraunga-ā-Ture

8.4 The legal consideration is the granting of the Licence to Occupy ensuring that it meets legislative requirements. Preparation of the Licence is a routine matter on which the legal situation is well known and settled.

8.5 This report has not been reviewed and approved by the Legal Services Unit.

9. Risk Management Implications Ngā Hīraunga Tūraru

9.1 There is reputational risk if the Council does not agree, or discontinues partnerships or support with GNS in supporting scientific work that provides benefits to the city and the country.

Attachments / Ngā Tāpirihanga

There are no attachments to this report.

In addition to the attached documents, the following background information is available:

Document Name – Location / File Link

Not applicable

Confirmation of Statutory Compliance / Te Whakatūturutanga ā-Ture

Compliance with Statutory Decision-making Requirements (ss 76 - 81 Local Government Act 2002).

(a) This report contains:

(i) sufficient information about all reasonably practicable options identified and assessed in terms of their advantages and disadvantages; and

(ii) adequate consideration of the views and preferences of affected and interested persons bearing in mind any proposed or previous community engagement.

(b) The information reflects the level of significance of the matters covered by the report, as determined in accordance with the Council's significance and engagement policy.

Signatories / Ngā Kaiwaitohu

Authors

Wolfgang Bopp - Director Botanic Gardens & Garden Parks

Kathy Jarden - Team Leader Leasing Consultancy

Approved By

Angus Smith - Manager Property Consultancy

Andrew Rutledge - Head of Parks

Mary Richardson - General Manager Citizens & Community

ITEM NO.	GENERAL SUBJECT OF EACH MATTER TO BE CONSIDERED	SECTION	SUBCLAUSE AND REASON UNDER THE ACT	PLAIN ENGLISH REASON	WHEN REPORTS CAN BE RELEASED
9.	Overdue General and Rates Debtors at 30 September 2022 (Greater than $20,000 and 90 days)
	Attachment a - General Debtors at 30 September 2022	s7(2)(a)	Protection of Privacy of Natural Persons	To protect personal privacy of Debtors concerned	A REDACTED COPY OF THIS REPORT CAN BE RELEASED AFTER THE Council HAS RECEIVED THE REPORT BUT THE NAMES OF THE INDIVIDUALS AND ORGANISATIONS WILL REMAIN CONFIDENTIAL.
	Attachment b - Rates Debtors at 30 September 2022	s7(2)(a)	Protection of Privacy of Natural Persons	To protect personal privacy of ratepayers concerned	A REDACTED COPY OF THIS REPORT CAN BE RELEASED AFTER THE council HAS RECEIVED THE REPORT BUT THE NAMES OF THE INDIVIDUALS AND ORGANISATIONS WILL REMAIN CONFIDENTIAL.
14.	District Licensing Committee Member Appointments	s7(2)(a)	Protection of Privacy of Natural Persons	To protect the personal details and privacy of all applicants.	The outcome of the recruitment process will be made public with the sucessful applicants' names being posted on the Council's District Licensing Committee webpage. The report should remain in public excluded.

5. Council Committee Structure
Reference / Te Tohutoro:	22/1493539
Report of / Te Pou Matua:	Mary Richardson, General Manager Citizens & Community
General Manager / Pouwhakarae:	Mary Richardson, General Manager Citizens & Community (Mary.Richardson@ccc.govt.nz)

7. Capital Programme Performance Report for September 2022
Reference / Te Tohutoro:	22/1384886
Report of / Te Pou Matua:	Andrew Robinson, Head of Programme Management Office (andrew.robinson@ccc.govt.nz)
General Manager / Pouwhakarae:	Lynn McClelland, Assistant Chief Executive Strategic Policy and Performance (lynn.mcclelland@ccc.govt.nz)

Author	Andrew Robinson - Head of Programme Management Office
Approved By	Lynn McClelland - Assistant Chief Executive Strategic Policy and Performance