Notice of Meeting:

I hereby give notice that an ordinary meeting of the Dunedin City Council will be held on:

 

Date:                                                    Tuesday 23 November 2021

Time:                                                   10.00 am

Venue:                                                Edinburgh Room, Municipal Chambers, The Octagon, Dunedin

 

Sandy Graham

Chief Executive Officer

 

Council

SUPPLEMENTARY AGENDA

 

MEMBERSHIP

 

Mayor

Mayor Aaron Hawkins

 

Deputy Mayor

Cr Christine Garey

 

Members

Cr Sophie Barker

Cr David Benson-Pope

 

Cr Rachel Elder

Cr Doug Hall

 

Cr Carmen Houlahan

Cr Marie Laufiso

 

Cr Mike Lord

Cr Jim O'Malley

 

Cr Jules Radich

Cr Chris Staynes

 

Cr Lee Vandervis

Cr Steve Walker

 

Cr Andrew Whiley

 

 

Senior Officer                                               Sandy Graham, Chief Executive Officer

 

Governance Support Officer                  Lynne Adamson

 

 

 

Lynne Adamson

Governance Support Officer

 

 

Telephone: 03 477 4000

Lynne.Adamson@dcc.govt.nz

www.dunedin.govt.nz

 

 

 

The meeting will be live streamed on the Council’s You Tube page: https://youtu.be/7vLnckW81IY   

 

 

 

 

Note: Reports and recommendations contained in this agenda are not to be considered as Council policy until adopted.

 

 


Council

23 November 2021

 

 

ITEM     TABLE OF CONTENTS                                                                                                                                   PAGE 20  

Reports

21           Future of Dunedin Railways                                                                                                                                 4

22           Notices of Motion                                                                                                                                                 31

Notice of Motion

23           Notice of Motion - Three Waters Reform                                                                                                     32

24           Notice of Motion - Three Waters Reform                                                                                                     33                    

    


Council

23 November 2021

 

Reports

 

Future of Dunedin Railways

Department: Enterprise Dunedin

 

 

 

 

EXECUTIVE SUMMARY

1          This report updates Council on continued financial and strategic analysis for Dunedin Railways Limited (DRL) in advance of the 2022/23 Annual Plan.

2          The report recommends Dunedin City Holdings Limited (DCHL) continue funding and operating DRL using the KiwiRail line and Taieri Gorge line to Hindon until 30 June 2024. This will enable the service to continue while a number of concurrent pieces of related work are concluded. The report recommends that the interim arrangements with DCHL continue until 30 June 2024 to allow for the various investigations to be completed and a strategic analysis undertaken.

RECOMMENDATIONS

That the Council:

a)     Directs Dunedin City Holdings Limited to continue to fund up to $2.4M per annum for maintaining and operating Dunedin Railways Limited using the KiwiRail line and Taieri Gorge line to Hindon until 30 June 2024.

b)     Approves Dunedin City Holdings Limited incurring a one-off cost of $400k in 2022/23 for developing an alternative storage and workshop facility for Dunedin Railways Limited.

c)     Notes staff will continue supporting the Otago Central Rail Trail Trust to develop a feasibility study on the possible options for the Otago Central Rail Trail between Middlemarch and Wingatui.

d)     Notes staff will report back to Council on options for the long-term operations and governance of Dunedin Railways Limited as part of the 10 year plan 2024-34.

 

BACKGROUND

3          In April 2020 DRL was put into hibernation. Assets were retained while future options for DRL were explored by DCHL through a reference group of industry leaders and specialist external advisors. DCHL short-listed four options which were presented to Council on 13 April 2021.

4          On 13 April 2021 Council agreed staff should analyse the financial and strategic implications of two options to retain a train operation in city ownership using either the national rail network only, or the national rail network and the Taieri Gorge line.

Moved (Mayor Aaron Hawkins/Cr Chris Staynes):

That the Council:

 

a)        Requests a report for the Ten Year Plan deliberation meeting that includes:

 

i)          Staff analysis of the financial and strategic implications of retaining a train operation in city ownership using either:

-          The national rail network only (Option 3) or

-          The national rail network and the Taieri Gorge line (Option 4).

 

ii)         the implications of maintaining the existing arrangements until June 30 2022, allowing for formal public consultation on future options through the Annual Plan 2022/23 process.

 

b)        Supports the Otago Central Rail Trust to seek funding for feasibility work on possible extensions to the Otago Central Rail trail between Middlemarch and Wingatui in collaboration with mana whenua and other interested parties.

 

Division

 

            The Council voted by division:

 

For:                              Crs Sophie Barker, David Benson-Pope, Rachel Elder, Christine Garey, Doug Hall, Carmen Houlahan, Marie Laufiso, Mike Lord, Jim O'Malley, Jules Radich, Chris Staynes, Steve Walker, Andrew Whiley and Mayor Aaron Hawkins (14).

Against:        Cr Lee Vandervis (1).

Abstained:   Nil

 

            The division was declared CARRIED by 14 votes to 1

 

Motion carried (CNL/2021/062)

5          On 31 May 2021 Council further resolved:

Moved (Cr Chris Staynes/Cr Rachel Elder):

That the Council:

        a)     Notes the initial staff feedback on strategic and financial implications of retaining Dunedin Railways Ltd services in city ownership as requested by Council on 13 April 2021.

        b)     Confirms that the Dunedin Railways Ltd operational services to include the KiwiRail national rail network and the Taieri Gorge service to Hindon for 2021/22. 

        c)     Directs DCHL fund the 2021/22 Dunedin Railways Ltd service based on the recommended option of providing a service using the national rail network and the Taieri Gorge line to Hindon.

        d)     Notes that Council would support the Otago Central Rail Trust to seek funding for feasibility work on possible extensions to the Otago Central Rail trail between Middlemarch and Wingatui in collaboration with mana whenua and other interested parties.

Division

The Council voted by division:

             For:                 Crs Sophie Barker, David Benson-Pope, Christine Garey, Doug Hall, Carmen Houlahan, Marie Laufiso, Mike Lord, Jim O'Malley, Jules Radich, Chris Staynes, Steve Walker, Andrew Whiley and Mayor Aaron Hawkins (13).

             Against:        Crs Rachel Elder and Lee Vandervis (2).

             Abstained:   Nil

             The division was declared CARRIED by 13 votes to 2

Motion carried (CNL/2021/101)

6          In the next steps of the 31 May 2021 report, staff advised that they would continue to progress the strategic and financial analysis of retaining DRL in Council ownership. The analysis would focus on using the national rail network only or using both the national rail network and the Taieri Gorge line. Staff also advised they would continue to support OCRT Trust with the development with a feasibility report on possible extension of the OCRT in consultation with mana whenua and other interested parties.

7          This report provides an update on this work and discusses a variety of factors that all play a part in the future options for DRL.

 

DISCUSSION

8          Since the May 2021 decision by Council there have been a number of related but independent pieces of work that have begun. In addition, there have been various changes to the economic outlook because of the emergence of the Delta variant of COVID-19 in the community. There is still a degree of uncertainty when considering strategic and financial options for DRL. This is due to the continuing impact of COVID-19 on domestic and international visitors including cruise visitors.

9          On 13 October 2021 The New Zealand Cruise Association noted the uncertainty of when cruise ships will return, with their best estimate being that the New Zealand cruise industry will not begin until the last quarter of 2022.

10        The Deputy Prime Minister Grant Robertson noted later in October 2021 that vaccination rates would be crucial when the trans-Tasman bubble was next reviewed in late November, and there was no guarantee it would resume before Christmas (2021).

11        Tourism Export Council New Zealand (TECNZ), an organisation which represents the interests of New Zealand’s inbound tourism industry, notes that Australia, our largest visitor market, is not expected to reach pre-pandemic levels until at least May 2024. No other markets, including China and the United States, are expected to exceed 90% of pre-COVID-19 levels by this date.

12        Enterprise Dunedin commissioned a report in September 2021 with consultant Benje Patterson People and Places titled “Dunedin Railways – the economic impacts of future options” (the report) which is included as attachment A.

13        The report outlines the economic benefits generated by DRL using a baseline pre-COVID-19. It also outlines future scenarios based on a recovering tourism market, noting the difficulty of assessing when there will be a re-opening of borders, and highlighting that it is likely to take longer than previously expected.

14        The report summarises the impact on DRL passenger numbers pre-COVID-19 and the summer period 20 December 2020 to 28 March 2021 as follows:

a)         In 2019 there were 76,120 visitors who took a rail journey made up of 35,459 domestic, 21,167 international, and 19,503 cruise visitors, generating a $23,960,755 spend on rail and other activities in the city, and resulting in $9,968,860 of direct economic value add;

b)        In 2021 there were 5,831 rail passengers made up of 1,944 visitors from outside Dunedin generating a $553,555 spend on rail and other activities in the city (20 December 2020 – 28 March 2021) resulting in $200,000 of direct economic value add.

15        Two possible future economic scenarios based on a returning visitor market were presented in the report for indicative purposes. Actual visitor numbers are assumed to be well below pre-COVID-19 figures.

Scenario 1: Operations with minimal international visitors

16        Under this scenario the report assumes 22,606 ticket sales per annum composed of:

c)         16,775 out of town visitors (13,638 domestic and 3,137 international); and

d)        5,831 Dunedin based residents.

17        This scenario would contribute $2,020,634 direct economic value add to the city.

Scenario 2: Operations with improving tourist market

18        Under this scenario the report assumes 33,191 ticket sales per annum composed of:

e)        27,360 out of town visitors (17,128 domestic and 10,233 international); and

f)         5,831 Dunedin based residents.

19        This scenario would contribute $3,621,508 direct economic value add to the city.

20        In addition research from Angus and Associates consultants, the University of Otago and The Research Agency all confirm that interest in visiting Dunedin is based on our history and heritage, the accessible outdoors and to a lesser extent wildlife and food, which is consistent with DRL being aligned to Dunedin’s brand and identity.

21        Tourism New Zealand data shows there is still visitor interest in DRL. Over the 12 months to March 2021, 11% of all Dunedin operator referrals from the Tourism New Zealand website were for DRL, second only behind Larnach Castle. In the 12 months to February 2020 DRL accounted for 22% of all of Tourism New Zealand’s Dunedin referrals and was the Dunedin operator with the most referrals.

22        The DunedinNZ.com website shows similar interest in DRL. From 1 December 2020 to 28 February 2021, there was a total of 2,189 referrals to DRL’s website. This was the highest referral from DunedinNZ.com during this period.

23        Previously DRL supported other tourism businesses through package offerings such as combined rail and city sights tours, tours of Speight’s or Olveston, and connection to the OCRT for cyclists. COVID-19 has impacted on tourism operators in Dunedin affecting the wider tourism eco-system and overall city offering. A loss of DRL as a tourism operator (even in the short term) will have an impact on businesses that rely on DRL as part of their offering.

24        The Dunedin Destination Plan (DDP) and the Product Development Review (PDR) will both consider potential future marketing and product opportunities. This work is expected to be completed early in 2022.

25        Work on the feasibility study to extend the OCRT between Middlemarch and Wingatui has yet to be completed and analysed. The scope of this work is expected to include options including costs and benefits of extending the OCRT from Middlemarch to Wingatui. Engagement with mana whenua has not yet occurred. Until the engagement occurs, and the work is completed, an economic and strategic assessment of the benefits of a cycle trail versus the current DRL service cannot be undertaken.

26        The Otago Excursion Train Trust (OETT) has expressed an interest in operating the railway as a not-for-profit entity. OETT has recently developed a business case including proposed governance and operating structures for consideration. They propose to undertake further work on costing asset maintenance and review of structures as part of their business model for an ongoing service.

27        Staff have seen the business case but have not had an opportunity to fully assess the content or compare projected visitor numbers with the Benje Patterson People and Places report. An initial high-level review shows that the OETT business case seeks several commitments from Council which have yet to be considered in any detail. Some of the commitments would involve a direct financial contribution from the Council.

28        Given all of the factors that have been outlined in the body of this report there is too much uncertainty for a full strategic analysis to be completed at this time. The economic situation, the lack of certainty about the visitor industry and how it will rebound from COVID-19, OCRT aspirations (but without a feasibility study) and work on possible governance options are all required before a full strategic analysis can be completed.

29        The other considerations are, that without the DDP and PDR being completed, the role that DRL plays in the overall tourism market for the city cannot be accurately assessed. While it appears to be an important element in the city’s tourism offering, the work on the DDP needs to be completed so the future of DRL can be assessed in the wider destination context.

30        The scale and scope of the decision on the future of DRL has potential long-term impacts that cannot be easily reversed. There are competing options that may or may not be compatible – e.g. any decision to extend the cycle trail may not be compatible with the ongoing operations of a train service. The various options offer different tourism outcomes and without the OCRT feasibility study, the DDP and the PDR, it is not possible to assess the strategic and financial benefits of one option over another. It is also not possible to consider if there is a mixed model that may work as there is not sufficient information available to make that decision at this time.

31        Nothing in the recommended option would prevent DRL working with another provider that may be able to provide a viable service and presenting that back to Council within the proposed two-year timeframe.

 

OPTIONS

32        Two options are presented below. While other options may be available in the future (such as partnering with other entities), it is too early to evaluate these now. This is because there is insufficient information available and great uncertainty around the ongoing effects on visitor numbers due to COVID-19.

33        In order for all the components to be completed, staff recommend that the current interim arrangements continue for two more years. This would see the current interim service continue while ensuring the maintenance of the assets (including rolling stock) and the regulatory compliance of the operation is maintained.

34        Maintaining the infrastructure, rolling stock and ensuring regulatory compliance through the continuing interim operation by DCHL to 2023/24 remains the preferred model. DCHL has two years’ experience and the expertise in maintaining and operating the asset, as well as marketing the service based on the ‘trains not planes’ promotional campaign.

35        Staff recommend DCHL continue to fund the costs through debt and/or revenue with no direct financial impact on Council. DCHL estimate continuing the service will cost up to $2.4M per annum based on the following assumptions:

·    A limited schedule based on the “Trains Not Planes” service;

·    Forecast ticket sale revenue of $250k per annum;

·    Track maintenance for rail services as far as Hindon and minimal maintenance between Hindon and Middlemarch. 

36        DCHL have indicated that a one-off cost of approximately $400k will be required in 2022/23 for an alternative storage and workshop facility, due to Dunedin Railways current workshop in Cumberland Street being required by KiwiRail during the redevelopment of Hillside workshops.

Option One – Recommended Option – continue with the DCHL model until 30 June 2024

 

37        Continue with the current interim DCHL model including funding, operating and maintaining the DRL service using the national rail network and Taieri Gorge to Hindon until 30 June 2024.

Advantages

·    Keeps all options open including future operating models and does not preclude DRL from investigating alternatives during the next two years;

·    Allows time for OCRT to conduct a feasibility study and engagement with mana whenua on options for cycle trail extensions from Middlemarch to Wingatui;

·    Allows time for OETT to further develop their business case and assess track maintenance requirements;

·    Costs of providing the service can be partially offset by passenger revenue;

·    Allows time, and greater certainty and understanding of future visitor numbers to the city;

·    Allows the interim operation of the DRL service, maintenance of assets and regulatory requirements to be met;

·    Retains a visitor attraction in the city at a time when other tourism attractions are reduced in the city;

·    Allows for a service by a provider (DCHL) with two years’ experience of running DRL in an unpredictable market;

·    Allows an opportunity to engage with Kanoa through the Regional Strategic Partnership Fund and other potential funders and investors on the long-term decisions on DRL.

Disadvantages

·    Requires investment of up to $2.4M per annum by DCHL in maintenance and operations until 30 June 2024;

·    Economic benefit to the city is low if visitor numbers remain low.

Option Two – Discontinue interim funding

40        Do not continue with current interim DCHL model including funding, operating and maintaining the DRL service using the national rail and Taieri Gorge to Hindon until 30 June 2024.

Advantages

·    Allows an opportunity to consider alternative use of the Taieri Gorge line including options for rail trail extensions;

·    Allows time for OETT, or others, to develop a business case and undertake track assessment as potential operator of DRL.

Disadvantages

·    No interim operation of the DRL service;

·    Requires similar investment in maintenance by DCHL without the opportunity to generate revenue;

·    May impact and defer future maintenance costs should a service be reinstated to meet increasing visitor demand in the future;

·    Loss of a visitor attraction in the city at a time when other tourism attractions are reduced in the city.

NEXT STEPS

41        If Council approves the recommended option:

·    Staff will continue supporting OCRT Trust to conduct a feasibility study and engagement with mana whenua on options for cycle trail extensions from Middlemarch to Wingatui.

·    Further work will be undertaken on potential future operating models (including OETT) based on a returning visitor market.

·    Staff will engage with potential other funders such as Kanoa through the Regional Strategic Partnership Fund on possible support for future long-term options.

·    Staff will report back as part of the next 10 year plan.

42        If Council approves Option Two:

·        Staff will work with DCHL and report back to Council.

·        Staff will continue supporting OCRT Trust to conduct a feasibility study and engagement with mana whenua on options for cycle trail extensions from Middlemarch to Wingatui.

 

 

Signatories

Author:

John Christie - Manager Enterprise Dunedin

Authoriser:

Sandy Graham - Chief Executive Officer

Attachments

 

Title

Page

a

Dunedin Railways - the economic impacts of future options

14

 

SUMMARY OF CONSIDERATIONS

 

Fit with purpose of Local Government

This decision promotes the economic and social well-being of communities in the present and for the future.

Fit with strategic framework

 

Contributes

Detracts

Not applicable

Social Wellbeing Strategy

Economic Development Strategy

Environment Strategy

Arts and Culture Strategy

3 Waters Strategy

Spatial Plan

Integrated Transport Strategy

Parks and Recreation Strategy

Other strategic projects/policies/plans

The operation of Dunedin Railways Limited and its assets contributes to the Dunedin 2013-23 Economic Development Strategy theme of a “Compelling Destination” through the tourism service it provides. Dunedin Railways Limited operations also contribute to the Social Wellbeing Strategy by supporting stronger communities.

Māori Impact Statement

There was a commitment for mana whenua to be engaged by OCRT as part of the feasibility study into the future options for the rail trial. That engagement has yet to occur.

Sustainability

It is not possible to assess the sustainability implications around the future options for DRL in the absence of the DPP, PDR and OCRT feasibility study. Once this work has been completed, the sustainability implications will be considered as part of the next report to Council.

LTP/Annual Plan / Financial Strategy /Infrastructure Strategy

There are no implications for either the LTP or Annual Plan in any of the options presented in this report.

Financial considerations

DCHL have estimated the financial support for Dunedin Railways Limited will be up to $2.4M per annum until 30 June 2024.

Significance

The decision to maintain the current arrangements for a further two years is considered low in terms of Council’s Significance and Engagement Policy. Any decision on the future of DRL may require formal consultation but that will be assessed and reported to Council at the time.

Engagement – external

There has been external engagement with Dunedin City Holdings Ltd, Otago Excursion Train Trust, Dunedin Venue Management Limited and Otago Central Rail Trail Trust.

Engagement - internal

There has been internal engagement with Legal and Finance.

Risks: Legal / Health and Safety etc.

The preferred option addresses infrastructure, compliance and regulatory risks and costs associated with running the Dunedin Railways Limited service.

Conflict of Interest

There are no known conflicts of interest.

Community Boards

Any decision on the future of Dunedin Railways Limited will be of interest to Mosgiel-Taieri, Strath Taieri, West Harbour and Waikouaiti Coast Community Boards.

 

 


Council

23 November 2021

 

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Council

23 November 2021

 

 

Notices of Motion

Department: Executive Leadership Team

 

 

 

 

EXECUTIVE SUMMARY

1          This report provides procedural advice on two notices of motion that are included in the Council agenda.

2          The notices of motion were received on the same topic within the required timeframe for the meeting.  In the absence of a Standing Order providing guidance on this, and following discussion with the movers of the motions, the notices of motion will be taken in the order that they were received.

3          The decision of the meeting regarding the first notice of motion will determine how to proceed with the second notice.  Both parties have been advised of the process. 

 

RECOMMENDATIONS

That the Council:

a)     Notes the advice provided.

 

 

Signatories

Author:

Sandy Graham - Chief Executive Officer

Authoriser:

Sandy Graham - Chief Executive Officer

Attachments

There are no attachments for this report.

 

  


Council

23 November 2021

 

Notice of Motion - Three Waters Reform

 

 

EXECUTIVE SUMMARY

1          In accordance with Standing Order 26.1, the following Notice of Motion was received from Mayor Aaron Hawkins on Tuesday 2 November 2021 for inclusion on the agenda for the meeting being held on Tuesday, 23 November 2021:

 

 

RECOMMENDATIONS

That the Council:

a)     Express its disappointment in the decision to make participation in the Three Waters reform programme mandatory;

b)     Reaffirm its desire to see an enduring role for iwi Māori in the governance of three waters service delivery; 

c)     Actively promote community participation in the relevant Select Committee processes; and 

d)     Continue to work constructively, through any available avenues, in an attempt resolve our concerns around system design.

 

 

Attachments

There are no attachments for this report.

 


Council

23 November 2021

 

Notice of Motion - Three Waters Reform

 

 

EXECUTIVE SUMMARY

1          In accordance with Standing Order 26.1, the following Notice of Motion has been received from Cr Jim O’Malley for inclusion on the agenda for the meeting being held on Tuesday, 23 November 2021:

 

RECOMMENDATIONS

That the Council:

a)     Expresses to Government broad support for reforms in three waters.  Specifically the Council:

i)          Supports the formation of Taumata Arowai and increased water standards.

ii)          Supports Ngai Tahu participation in water services decision making.  Especially with reference to obligations under Te Tiriti o Waitangi, The Treaty of Waitangi and the Ngai Tahu Claims Settlement 1998.

iii)         Supports the aim that three waters activities must give effect to te mana o te wai.

iv)        Acknowledges that efficiencies can be gained by cooperative and coordinated behaviour between councils.

b)     Affirms to Government that it does not currently support the formation of the four water entities.  Specifically:

i)          We are disappointed the Government appears to have given little consideration to alternative models for water services delivery other than the proposed establishment of asset owning, multi-regional water services entities.

ii)         We state that the Three Waters Reform Programme needs to be reset.

iii)       We seek that the Government commits to meaningful engagement with our community before advancing any further with water entity reform.

c)     Delegates authority to the Chair of Infrastructure Services Committee to work with staff and engage with the council, the government and other councils in the development of an alternative regional three waters services model to be completed in time to inform the government three waters reform programme.

 

 

Attachments

There are no attachments for this report.