Agenda of Council - Tuesday, 12 March 2024

Council

12 March 2024

Reports

CEO Overview Report - Annual Plan 2024/25

Department: Civic and Finance

EXECUTIVE SUMMARY

1 On 16 February 2024, the Water Services Act Repeal Act 2024 (the Repeal Act) was enacted. Given the significant changes to 3 Water reform, the Repeal Act provides the ability to prepare an enhanced Annual Plan for the 2024/25 year, rather than completing a 10 year plan 2024-34.

2 At its meeting on 27 February, Council approved the preparation of a 2024/25 Annual Plan for community consultation. The 2024/25 Annual Plan will be followed by the completion of a 9 year plan for the period 2025-34.

3 This report provides an overview of the budgets to be included in the draft 2024/25 Annual Plan (the draft Annual Plan). The draft Annual Plan is an update of year four of the 10 year plan 2021-31. Draft Income Statements are at Attachment A, and draft Funding Impact Statements are at Attachment B.

4 This report highlights the budget challenges the DCC faces with the current economic climate of high inflation and interest rates. Savings have been found across the organisation, but these have largely been offset by rising costs.

5 The draft budgets propose a rate rise of 17.5% for 2024/25 which is higher than the 6.0% provided for in year four of the 10 year plan, and higher than the Financial Strategy rate limit of 6.5%.

6 Budgeted staffing numbers have reduced from 903 FTE to 852 FTE – a reduction in 51 FTE positions. All other controllable costs have been reviewed and reduced where possible.

RECOMMENDATIONS

That the Council:

a) Adopts the draft 2024/25 operating budgets for the purpose of community engagement as shown / amended at Attachment A.

b) Notes that any resolution made during this meeting relating to the 2024/25 Annual Plan reports may be subject to further discussions and decision by the meeting.

BACKGROUND

7 Following the enactment of the Repeal Act on 16 February 2024, at its meeting on 27 February, Council approved taking up the option of preparing an enhanced 2024/25 Annual Plan for community consultation, rather than preparing a 10 year plan 2024-34.

8 This decision was made following consideration of factors such as the changing legislative environment (both recent and signalled), and our need for more information that will allow us to prepare a more robust and informed 9 year plan.

9 The Local Government Act 2002 provides that Council must prepare and adopt an annual plan for each financial year. Section 95 (5) sets out the purpose of an annual plan as follows:

The purpose of an annual plan is to –

(a) Contain the proposed annual budget and funding impact statement for the year to which the annual plan relates; and

(b) Identify any variation from the financial statements and funding impact statement included in the local authority’s long-term plan in respect of the year; and

(c) Provide integrated decision making and co-ordination of the resources of the local authority; and

(d) Contribute to the accountability of the local authority to the community.

10 The Repeal Act provides that an enhanced Annual Plan is to include information additional to the Local Government Act requirements. The additional information includes financial statements and statement of service performance information for each group activity. This information will be included in the 2024/25 Annual Plan document adopted in June 2024.

11 The draft Annual Plan for 2024/25 is an update of year four of the 10 year plan. Budgets for the 2024/25 year have been reviewed and budget update reports for each activity of Council have been prepared for consideration at this meeting.

DISCUSSION

12 When the decision was made to prepare an enhanced Annual Plan, a significant amount of work had already been undertaken to prepare both operating and capital budgets for the 10 year period 2024 – 34. There was, however, a high level of uncertainty of our information for years 2 – 10, as legislative changes signalled by the new Government would likely take effect from 2025/26 year onwards. Staff have confidence in the 2024/25 information, which is being used to produce the draft Annual Plan.

13 We continue to have the pressures of high inflation rates, increased interest costs – both rate increases combined with increasing debt levels, and the impact of asset revaluation on our depreciation costs. Interest is estimated to be up $6.1 million (23.3% on 2023/24), and depreciation by $5.2 million.

14 Many of the cost increases we are experiencing are outside of the control of Council, e.g., increased energy costs to run our pools and other facilities, insurance costs, and new costs such as compliance monitoring to meet water quality standards.

15 A rate increase of 17.5% is proposed in the draft budgets. This increase in rates will maintain current service levels but also pay for an increased level of service for a new kerbside collection service. This new service, commencing in July 2024, replaces the black rubbish bag system. Of the 17.5% rate increase, 4.4% will cover the cost of this new service.

Significant forecasting assumptions

16 The 10 year plan sets out a number of Significant Forecasting Assumptions. Assumptions relating to inflation and interest rates have been updated for the draft budgets.

17 Key assumptions included in the preparation of the draft budgets will be further updated in May 2024 if required. This will include but not be limited to:

· Interest rates on borrowing – including the allocation of interest costs to each activity group.

· Forecast debt as at 30 June 2025.

· The impacts of inflation.

· The level of grant funding from NZTA Waka Kotahi (if available).

Rates breakdown at a high level

18 The summary below provides a breakdown of the main factors making up the rate increase:

3 Waters 5.4%

Increase in depreciation (excl. 3 waters) 4.9%

New kerbside collection service 4.4%

Interest (excl. 3 waters) 1.8%

All other costs 1.0%

Total rate increase 17.5%

19 The breakdown is relatively simplistic and does not take into account the impact of increases in other revenue but does highlight the three main drivers of the rates increase. Broadly this shows that costs have been absorb where they can be, and savings found in an attempt to control discretionary expenditure. Fees and charges have been reviewed more critically, and rather than apply a blanket increase across these, many have been modified to reflect the actual cost of the services provided.

20 The increase in 3 Waters includes increased regulation and compliance costs to meet water quality standards, such as for chemicals and laboratory testing.

21 The increase in depreciation reflects the revaluation of some assets and the budgeted capital programme.

22 The Kerbside collection rates are for the new service starting in July 2024, replacing the current black bag system.

Capital expenditure

23 The draft capital budget for the Annual Plan provides for replacing existing assets and infrastructure. Across the Council’s activities, the proposed budget is $207.357 million in the 2024/25 year, compared to $157.044 million provided for in year four of the 10 year plan.

24 One area of uncertainty is the amount of co-funding that may be received from NZTA Waka Kotahi for budgeted transport activities. The draft Government Policy Statement on land transport 2024-34 has now been released for consultation purposes. It sets out the Government’s priorities for land transport investment. Staff are reviewing the draft Statement to understand the impacts it may have on our assumptions around co-funding for transport initiatives. Our findings will be reported to Council before finalising the Annual Plan.

Operating budgets

25 The draft operating budgets provide for the day to day running of all the activities and services the DCC provides to its community. These include 3 Waters services, parks, galleries, libraries, pool, and roading.

26 The rate increase of 17.5% included in the draft budget does not deliver a balanced budget, but provides for a net deficit of $25.655 million.

27 The revaluation of three waters infrastructure assets in 2022/23 resulted in a significant increase in depreciation. Since this time, the depreciation charge has not been fully funded, and Council has been running an operating deficit budget.

28 As part of the development of the 9 year plan 2025-34, a financial strategy will be prepared that addresses the issue of ongoing deficits, and provide for balancing the budget before the end of the 9 year plan.

29 Expenses within our control have been reviewed and the operating budgets show that savings have been made in many of the group activities.

30 The biggest area of increase in operating budgets is in the Waste Management activity. This significant increase in operating budget is primarily due to new contracts for the new kerbside collection service and monitoring costs required in the consent for the new Smooth Hill Landfill.

31 Each of the groups of activities have updated year 4 of their draft operating budgets as provided for in the 10 year plan. The key changes in funding sources and expected costs of delivery are discussed in the group operating budget reports.

Revenue

Rates

32 The draft operating budget for 2024/25 shows overall rates revenue increasing by $35.588 million, which is 17.5% higher than 2023/24. It is also higher than the rate increase of 6.0% provided for in the 10 year plan.

External revenue

33 External revenue has increased by $5.405 million, 5.9%. The main changes to external revenue are:

· Waste Management – a net increase of $2.553 million reflecting an increase in landfill revenue due to an expected increase in tonnage because of the closure of a transfer station and an increase in landfill disposal charges to cover expected increases in waste levy and ETS charges. Offsetting these increases, revenue from the sale of black rubbish bags ceases.

· Property – an increase of $877k due primarily to an increase in community housing rental.

· 3 Waters – an increase of $647k due to increases in fees and charges, including water sales and trade waste.

· Regulatory – an increase of $499k in fees to recover increased costs of processing consents and licenses.

34 Fees and charges are discussed separately in the group budget reports. Rather than apply a fee increase of 3%, as has been done in past years, fee increases for some areas are reflecting the increase in costs from the 2023/24 year.

Grants

35 Grant funding received from NZTA Waka Kotahi for transport activities is based on the nature of the planned capital works, and their eligibility for funding. It is also dependent on how much funding assistance is available, noting that there has been a shortfall in the Funding Assistant Rate in recent years.

36 The 2024/25 draft budget shows operating grants and subsidies revenue is down $2.499 million. The main changes are as follows:

· 3 Waters – operating grant funding has decrease by $4.400 million. The Transition Support Package funded by the former Government, set up to contribute towards transitioning to the now repealed Water Services Entities has been discontinued. In addition, Government funding for the 3 Waters Strategic Work Programme has been replaced by Better off Funding.

· Governance – operating grant funding has increased by $2.559 million, being the Government’s Better Off Funding package. This funding is being used for various projects across Council.

37 Capital grants revenue is down $3.697 million. The main changes are as follows:

· Waste - capital grant revenue has decreased by $670k. In 2023/24 grant funding was provided from the Ministry for the Environment for the purchase of bins.

· Transport – capital grant revenue has decreased by $3.067 million, based on the proposed capital programme and estimated funding assistance from NZTA Waka Kotahi.

Expenditure

Staff costs

38 The draft budget provides for an increase in personnel costs of $2.667 million, 3.3%. This provides for a union negotiated salary increase for staff.

39 The 2023/24 budget did not provide for a salary increase, and the negotiated increase was absorbed within existing budgets.

40 This saving has been achieved by vacancy management and a slow-down in recruitment. Vacancy management and a thorough review of budgets has resulted in the budgeted headcount reducing from 903 FTE to 852 FTE – a reduction in 51 FTE positions. Management of vacancies continues to be a priority, along with careful recruitment and looking after existing staff.

Operations and maintenance costs

41 Operations and maintenance costs have increased by $12.706 million, 16.5%. The main changes are due to the following:

· Waste management – an increase of $10.158 million relates primarily to the new kerbside collection service, increases in ETS costs and Green Island landfill costs, and additional monitoring for Smooth Hill and the implementation of the Southern Black Back Gull management plan, both required under the resource consent.

· 3 Waters – an increase of $2.311 million relates to plant maintenance cost increases, chemical and laboratory cost increases. There is a reduction in contractor fees, as government funding for the 3 Waters Strategic Work Programme ends.

· Transport – an increase of $737k, with $486k relating to costal management work, and $234k for an increase in bus shelters (fully recoverable from the Otago Regional Council) and State Highway maintenance (fully recoverable from NZTA Waka Kotahi).

· Parks, Galleries Libraries and Museums, Community and Planning, Property, and Economic Development have all made savings in their operations and maintenance costs. Further details are provided in each of the group budget reports.

Occupancy costs

42 Occupancy and property related costs such as rates, insurance and fuel have increased by $3.150 million, 9.7%. These increases have largely impacted the Property activity with an increase of $1.780 million and 3 Waters with an increase of $1.005 million.

Consumables and general costs

43 Consumables and general costs have increased by $1.822 million. The main changes are due to the following:

· Waste Management – an increase of $870k due to an increase in waste levy costs at the Green Island landfill, reflecting an increased tonnage in materials entering the landfill, offset by a reduction in costs relating to communications and marketing of the new kerbside collection service.

· Governance – an increase of $970k largely due to increases in software licencing fees of $743k.

Depreciation

44 Depreciation expense has increased by $5.215 million, 4.5%, reflecting the valuation of assets at 30 June 2023 and the capital expenditure programme. The increase is reflected mainly in the Transport, 3 Waters, Property, and Parks and Recreation activities.

Interest

45 Interest expense has increased by $6.118 million, 23.3%, reflecting the increase in debt funding required to support the planned capital expenditure programme and an increase in interest rates.

46 The 10 year plan 2021-31 had an interest rate assumption of 2.85%. The DCC’s current interest rate applicable to its borrowing is 4.66% as advised by Dunedin City Treasury Limited. For the purposes of preparing the draft Annual Plan, an assumption has been made that the borrowing rate for the 2024/25 year will be 5%.

Funding impact statement

47 The budget for each group, and all of Council, includes a Funding Impact Statement, as provided at Attachment B. Funding Impact Statements differ from Income Statements because they:

· Remove non-cash items such as depreciation,

· Separate operating and capital funding

· Include how total funding will be used, i.e., capital expenditure

· Identify how any shortfall in funding will be financed, i.e., an increase in debt.

48 Ideally the available operating funding being “Surplus/(deficit) of operating funding (A-B)” plus “Subsidies and grants for renewal expenditure” will be sufficient to cover capital expenditure “to replace existing assets”.

Funding Impact Summary	Budget 2023/24 $000	Draft Budget 2024/25 $000
Surplus/(deficit) of operating funding (A-B)	59,579	71,707
Subsidies & grants for renewals expenditure	8,012	11,840
Capex to replace existing assets	(138,077)	(101,139)
Increase in investment DCHL	(2,550)	(2,550)
Funding surplus/(deficit)	(73,036)	(20,142)

49 The table above shows that we are borrowing $20.142 million in the draft budgets to fund renewals. While this is not sustainable long-term, this will be addressed in a review of the Financial Strategy that will be prepared for the 9 year plan 2025-34.

Debt

50 The Draft Forecast Financial Statements at Attachment C shows that by 30 June 2025, the estimated debt level will be $706.528 million which is 188.6% of revenue. The debt limit provided for in the current Financial Strategy is 250% of revenue. This is an increase in debt of $117.554 million on the 2023/24 Annual Plan.

OPTIONS

51 There are no options.

Signatories

Author:

Sharon Bodeker - Special Projects Manager

Carolyn Allan - Chief Financial Officer

Authoriser:

Sandy Graham - Chief Executive Officer

Attachments

	Title	Page
⇩a	Draft Operating Budget 2024/25	27
⇩b	Draft Funding Impact Statement 2024/25	29
⇩c	Draft Forecast Financial Statements 2024/25	30

SUMMARY OF CONSIDERATIONS

Fit with purpose of Local Government

This decision enables democratic local decision making and action by, and on behalf of communities, and promotes the social, economic, environmental, and cultural 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 Group Activities contribute to the objectives and priorities of the above strategies.

Māori Impact Statement

Council budgets impact broadly across all Dunedin communities including Māori. The adoption of Te Taki Haruru – Māori Strategic Framework signals Council’s commitment to mana whenua and to its obligations under the Treaty of Waitangi. Mana whenua and Māori will have an opportunity to engage on the Annual Plan 2024/25.

Sustainability

The Annual Plan 2024/25 is not proposing any changes to that provided for in the 10 year plan. Major issues and implications for sustainability are discussed in the Infrastructure Strategy and financial resilience is discussed in the Financial Strategy of the current 10 year plan 2021-31.

LTP/Annual Plan / Financial Strategy /Infrastructure Strategy

This report provides draft budget information for inclusion in the draft 2024/25 Annual Plan.

Financial considerations

Financial considerations are detailed in the report.

Significance

The 10 year plan 2021-31 budgets were considered significant in terms of the Council’s Significance and Engagement Policy, and were consulted on. Variations to those budgets are discussed in this report. The draft budgets will be included in the Annual Plan 2024/25, and will be consulted on.

Engagement – external

External engagement will be undertaken.

Engagement - internal

Staff from across Council have been involved in the development of the draft budgets and reports.

Risks: Legal / Health and Safety etc.

There are no identified risks.

Conflict of Interest

There are no known conflicts of interest.

Community Boards

Community Boards will have the opportunity to present on the draft 2024/25 Annual Plan.

Council

12 March 2024

Rating Method 2024/25

Department: Finance

EXECUTIVE SUMMARY

1 The draft budget as presented for 2024/25 includes an overall increase in rates of 17.5%. This increase in rates is collected using the rating method. The proposed rates charged to individual rate accounts incorporate the budget increase and changes in the rating database (new improvements and new homes).

2 The proposed changes to the rating method are discussed in this report. These include increases to the Community Services targeted rate (increase of 4.9%) and the Stadium differentiated rates (increase of 4.9%).

3 The Kerbside Collection targeted rate continues as a flat targeted rate to fund the new Kerbside Collection Service in keeping with the current rating method.

RECOMMENDATIONS

That the Council, for the purposes of the community engagement:

a) Approves an increase in the Community Services targeted rate for the 2024/25 year of $5.50 to $117.00 including GST.

b) Approves an increase in the Stadium 10,000 plus seat differentiated rates for the 2024/25 year based on the June 2023 Local Government Cost Index of 4.9%.

c) Approves the current rating method for the setting of all other rates for the 2024/25 year.

d) Revokes the decision made at the meeting of 28 November 2023, to combine the tourism/economic development targeted rate into the commercial general rate.

e) Notes that a decision to combine the tourism/economic development targeted rate into the commercial general rate will be requested as part of the development of the 9 year plan 2025-34.

BACKGROUND

4 The purpose of this report is to demonstrate the impact of the proposed rate increase by property and rating differential (how general rates are allocated across all ratepayers) for the 2024/25 year and confirm the proposed changes to the rating method.

5 At its meeting on 27 February 2024, Council made a decision to prepare an Annual Plan 2024/25, followed by a 9 year plan, rather than completing a 10 year plan 2021-31. Prior to making this decision, as part of the 10 year plan work programme, the Rating Workstream group undertook a review of how general rates are allocated by differential across all ratepayers. The review compared the general rate differential with other metropolitan and provincial councils.

6 It also considered the ongoing need for the Tourism/Economic Development targeted rate (Economic rate) introduced in 2010 and concluded that there were no identified benefits in keeping this rate.

7 On 28 November 2023, a report was presented to Council on the review of the general rates differential. Council resolved as follows:

Moved (Cr David Benson-Pope/Cr Steve Walker):

That the Council:

a) Decides for the purposes of preparing the 2024/25 Rating Method report for the Council meeting in January 2024, to combine the tourism/economic development targeted rate into the commercial general rate, and maintain all other current general rate differentials.

Motion carried (CNL/2023/283)

8 While there is no change to the rates collected from commercial ratepayers as a result of this resolution, it is recommended that this resolution be revoked for the purposes of preparing an Annual Plan 2024/25 but be considered again during the preparation of the 9 year plan 2025-34.

9 At the same Council meeting, in response to a request from Council, staff also provided a report outlining funding options for both flat and progressive targeted rates to fund a new Kerbside Collection Service. Council resolved as follows:

Moved (Cr Bill Acklin/Cr Kevin Gilbert):

That the Council:

a) Funds the new kerbside collection service from 1 July 2024 using a flat targeted rate (the current rating method).

Motion carried (CNL/2023/281)

10 Please note that unless specified, all rating figures in this report are GST inclusive.

DISCUSSION

11 The overall increase in rates to be collected is driven by the draft budget for 2024-25 which includes a 17.5% rate increase. This increase in rates is collected using the rating method.

12 The rating method comprises two main elements, general rates and targeted rates, as demonstrated in Attachment A. Attachment A provides a summary of current and proposed rates, provides details of the individual rates and the amount collected from each rate. Attachment B, summary information, provides a summary of fixed charges, general rates and total rates.

13 DCC rates are made up of general rates (56%) and targeted rates (44%). General rates are based on capital value. Targeted rates are made up of fixed charges (78%) and rates based on capital value (22%). When property values change because of a revaluation, the largest impact is on the general rate.

14 The general rate is collected as a rate in the dollar on the capital value (CV) of each property. The Council sets the general rate differentially for six property categories: Residential, Lifestyle, Commercial, Farmland, Residential Heritage Bed and Breakfast establishments, and the Stadium.

15 A differential, described as a factor, is the degree to which the rate (the cents in the dollar) on each category of property is higher or lower than residential property. For example, the rate paid by commercial properties for the current year is 2.5 times more than the rate paid by residential properties.

16 Targeted rates fund particular activities and are either fixed charges, i.e., the same amount per property, or collected as a rate in the dollar on the CV of each property.

17 The impact of a rates increase on individual properties is driven by the budget increase, the rating method (how we rate) and changes in the property database (for example, new improvements or new houses).

Kerbside Collection Rate

18 As part of the 10 year plan 2021-31, Council resolved to introduce a new Kerbside Collection service consisting of four bins estimated to cost between $270 - $310 per year. Council uses targeted rates to pay for its Kerbside Collection services. Properties receiving the service are charged the flat rate for every separately used or inhabited part (SUIP). Commercial properties are charged the flat rate for each individual rating unit.

19 In November 2023, staff provided Council with the option to change the way the service was funded from the current method of a flat targeted rate to a progressive targeted rate or a combination of both. It was indicated at that time that the estimated cost had increased to $320 - $340 per year.

20 As per the Council resolution on 28 November 2023, the Kerbside Collection service will continue to be funded by a flat targeted rate.

21 Based on actual costs, the Kerbside Collection targeted rate will increase from $106.10 to $301.50 to fund the enhanced Kerbside Collection service which will commence in July 2024.

Community Services Rate

22 The Council has a Community Services targeted rate (CSTR) which funds the Botanic Garden and part of the Parks and Reserves activity. The CSTR is a fixed charge on all rateable properties and is normally increased annually by an indexed amount. An increase based on the June 2023 Local Government Cost Index (LGCI) of 4.9% would increase this rate from $111.50 to $117.00, an increase of $5.50 per property, for the 2024/25 year.

23 Council may decide to keep this rate at $111.50. If so, the foregone increase in this rate would need to be collected via the general rate, which is capital value based. For a median valued property (being $590,000), the impact of not increasing the community services rate would be a saving of $2.00, i.e., $5.50 would be saved on the fixed rate but the general rate would increase by $3.50.

Stadium Rates

24 The Council has a rating differential for the Forsyth Barr Stadium for the general rate, the Economic Development/Tourism rate, the capital value-based Drainage rate and the capital value-based Fire Protection rate. Since 2013/14, the differentiated Stadium rates have been inflation adjusted annually. For the 2024/25 year, it is proposed to increase these rates by the June 2023 LGCI of 4.9%.

Overall Impact

25 The following table shows the overall rates income (including GST) by property category for 2023/24 and 2024/25.

Category	2023/24 ($’000)	2024/25 ($’000)	$ change ($’000)	% change
Residential	152,945	182,605	29,660	19.4%
Lifestyle	8,469	9,851	1,382	16.3%
Commercial	67,010	76,150	9,140	13.6%
Farmland	5,437	6,181	744	13.7%
Total	233,861	274,787	40,926	17.5%

26 Attachment C provides sample property rate changes for each category of property. The increase for residential and lifestyle properties show the overall increase in rates proposed and the increase excluding kerbside. The sample property rate changes incorporate:

· The forecast rate increase of 17.5%, including the increase for the kerbside collection service

· An increase of 4.9%, $5.50 in the Community Services rate, and

· An increase of 4.9% in the differentiated rates paid by the Stadium.

27 Prior to engaging with the community, the sample property rate changes for each category of property will be updated to reflect more up to date property data, taking into account the growth in our city. Growth in the property database will result in individual property rates reducing.

Rate Maximum

27 Under the Local Government (Rating) Act 2002, certain rates must not exceed 30% of total rates revenue. This includes the use of a uniform annual general charge and any targeted rates that are set on a uniform basis, excluding targeted rates set solely for water supply or sewage disposal. Based on the draft budgets, these rates represent 23% of total rates revenue.

OPTIONS

28 No options are provided, as this report is giving effect to the current rating method and previous decisions of the Council.

NEXT STEPS

29 While the Council is engaging with the community on the draft 2024/25 Annual Plan, rate account information will be available on the DCC website that shows the proposed rating impact by individual rate account.

Signatories

Author:	Lara McBride - Assistant Accountant - Compliance
Authoriser:	Carolyn Allan - Chief Financial Officer

Attachments

	Title	Page
⇩a	Summary of Current and Proposed Rates	41
⇩b	Summary Information	42
⇩c	Sample Rate Accounts	43

SUMMARY OF CONSIDERATIONS

Fit with purpose of Local Government

This decision enables democratic local decision making and action by, and on behalf of communities,

and promotes the social, economic, environmental and cultural wellbeing 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 Annual Plan contributes to objectives across the strategic framework, as it describes the Council’s activities, which are aligned to community outcomes.

Māori Impact Statement

Sustainability

Sustainability is an underlying principle of the DCC’s strategic framework. The Annual Plan 2024/25 is not proposing any changes to that provided for in the 10 year plan. Major issues and implications for sustainability are discussed in the Infrastructure Strategy and financial resilience is discussed in the Financial Strategy of the current 10 year plan 2021-31.

LTP/Annual Plan / Financial Strategy /Infrastructure Strategy

The proposed rating method will be included as supporting documentation as part of the Annual Plan budget material during the community engagement period.

Financial considerations

The rating method gives effect to the draft budget. The financial implications of the draft budget are discussed Annual Plan 2024/25 overview report and the group budget reports.

Significance

The Annual Plan and rating are being consulted on.

Engagement – external

The content of the Annual Plan will be consulted on.

Engagement - internal

Staff and managers from across the Council have been involved in the development of the draft budgets.

Risks: Legal / Health and Safety etc.

There are no identified risks.

Conflict of Interest

There are no known conflicts of interest.

Community Boards

The rating method will be of interest to Community Boards.

Council

12 March 2024

Draft Capital Budget Including Zero Carbon Options 2024/25

Department: Civic and Finance

EXECUTIVE SUMMARY

1 This report seeks approval of the draft capital budget (draft budget) for inclusion in the 2024/25 Annual Plan (“Annual Plan”).

2 At its meeting on 27 February, Council approved the preparation of a 2024/25 Annual Plan for community consultation, rather than completing a 10 year plan 2024-34.

3 When the decision was made to prepare an Annual Plan, a significant amount of work had already been undertaken to develop capital budgets for the 10 year period 2024 – 34. There was, however, a high level of uncertainty of our information for years 2 – 10, as legislative changes signalled by the new Government would likely take effect from 2025/26 year onwards. The 2024/25 capital budget information that was prepared for the 10 year plan, is now being used to produce the draft Annual Plan.

4 The updated budget for 2024/25 is $207.357 million, compared to $157.044 million provided for in year four of the 10 year plan 2021-31, an increase of $50.313 million.

RECOMMENDATIONS

That the Council:

a) Approves the proposed capital expenditure budget for inclusion in the draft 2024/25 Annual Plan.

b) Decides what zero carbon investment option, if any, it wishes to include in the capital expenditure budget for the draft 2024/25 Annual Plan.

BACKGROUND

5 The 10 year plan 2021-31 provided a capital expenditure budget of $1.5 billion to be spent over 10 years.

6 The first three years spend is forecast to be $564 million compared to a budget of $450 million. Projects such as the Central City Upgrade were brought forward, and capital spend in Three Waters were accelerated.

7 Chart 1 below shows progress against the 10 year plan 2021-31. It shows:

a) Actual capital expenditure for the 2021/22 and 2022/23 years

b) Forecast capital expenditure for the 2023/24 year

c) 10 year plan 2021-31 capital expenditure budget for the 2021/22 to 2023/24 years.

Chart 1 – Bar chart showing actual and forecast capital expenditure vs budget

8 Capital expenditure is funded as follows:

· Funded depreciation – for renewals

· Debt – for new capital, and any shortfall in funded depreciation for renewals

· NZTA Waka Kotahi grant funding – renewals and new capital for transport projects

· Development contributions – for growth capital

DISCUSSION

9 The capital budgets proposed for the draft Annual Plan are year one of the budgets that were being prepared for the new 10 year plan 2024-34. The budget provides for a continuation of the capital programmes provided for in the current 10 year plan. The level of spend of $207.357 million is higher than that provided for in the current 10 year plan, but more accurately reflects the cost and delivery phases of various projects.

10 The draft capital budget for 2024/25 reflects the following:

· Asset management plans, incorporating current condition assessments and risk profiling to inform the timing of any renewal

· Update of costs to complete projects underway

· Priority of work – renewals over new capital

· Ability to deliver – both internally and the available market capacity

· Timing of work – forecasting progress against the current 2023/24 budget and considering how timing differences may impact the 2024/25 year

· Climate change and zero carbon targets – assessment of possible impacts from capital projects

· Ability to fund – debt limits and our ability to service debt

11 The draft capital budget for the 2024/25 year provides for replacing existing assets and infrastructure. Across the Council’s activities, the proposed budget is $207.357 million in the 2024/25 year, compared to $157.044 million provided for in year four of the 10 year plan. The draft capital budgets are at Attachment A.

Zero Carbon Plan approach

12 The Council’s Zero Carbon Policy provides that all DCC activities, including renewals, should seek to minimise emissions and contribute to achieving both city-wide and DCC emissions reduction.

13 Staff have assessed proposed capital projects to determine if they contribute to reducing Dunedin’s city-wide emissions. The capital expenditure budget at Attachment A indicate by project, what contribution they may make to Council’s zero carbon goals. Projects have been assessed as follows:

· A core city-wide emissions reduction initiative (a key focus of the project is to reduce city-wide emissions and/or it is a priority area in the Zero Carbon Implementation Plan)

· Contributes to reducing city-wide emissions (there is an emissions reduction aspect to the project, but city-wide emissions reduction is not a primary reason for investing in the project) or is an important aspect of the DCC’s own decarbonisation

· Complements emissions reduction efforts - the project is not focussed on emissions reduction; however emissions reduction is a co-benefit of this project

· Neutral where the project is considered to neither increase nor decrease city-wide emissions, nor significantly decrease DCC emissions.

14 Core emissions reduction projects identified in the draft budgets include:

· Shaping Future Dunedin Transport: improvements to public transport, including Mosgiel Park and Ride, and some funding for Central City Cycle and Pedestrian Improvements.

· Low Cost, Low Risk Improvements: - small projects aimed to improve pedestrian safety, particularly around schools.

· Waste Futures and Green Island Landfill: measures to reduce waste emissions, such as constructing facilities to store/process material diverted from landfill, and improvements to landfill gas capture and destruction.

15 Projects that contribute towards achieving city-wide emissions reduction include:

· South Dunedin Library and Community Complex.

· Construction of new infrastructure at wastewater treatment plants, including infrastructure to better capture and destroy greenhouse gases generated in treatment processes.

· EV Charging Infrastructure: development of a network to service the city’s fleet of electric vehicles.

16 There are a wide range of projects within the draft capital budgets that complement city-wide emissions reduction efforts. These projects will reduce emissions from stationary energy, transport and waste systems.

17 Most renewals are in the neutral category.

18 High/medium zero carbon investment scenarios are considered later in this report.

Draft 2024/25 Capital Expenditure Programme

19 Table 1 provides a summary of the draft capital expenditure budget for 2024/25 year, by group activity. It also shows the budget included in year 4 of the 10 year plan 2021-31.

Table 1 – 2024/25 draft capital expenditure budget vs year 4 of the 10 year plan 2021-2031

2024/2025 Capital Expenditure Budget $000s	Draft Budget	Year 4 of 10 Year Plan 2021-31	Increase (Decrease)
Community and Planning	105	201	(96)
Economic Development	60	5	55
Galleries, Libraries and Museums	2,816	1,574	1,242
Governance and Support Services	4,445	5,117	(672)
Property	33,795	24,086	9,709
Regulatory Services	600	731	(131)
Reserves and Recreational Facilities	15,975	17,198	(1,223)
Roading and Footpaths	41,226	48,916	(7,690)
Three Waters	80,123	48,047	32,076
Waste Management	28,212	11,169	17,043
Total Expenditure	207,357	157,044	50,313

20 Chart 2 below shows, for the larger groups of activities, the proportion of the $207.357 million budget is for each group.

Chart 2 – Draft 2024/25 capital expenditure budget by group

21 The level of spend at $207.357 million is higher than anticipated in the 10 year plan 2021-31 but more accurately reflects the delivery phases of various projects. The accelerated capital expenditure programme in Three Waters is continued.

22 Staff will manage the capital programme closely and look for any savings during the year. Regular reporting to either Council or the Finance & CCO Committee on progress on the capital programme will continue, with close attention to actual vs budget, to ensure that the capital budget is not exceeded.

Galleries, Libraries and Museums

23 The draft budget provides $600k for the opening collection of the South Dunedin Library and Community Complex. This expenditure was previously scheduled for 2023/24. Additional budget of $550k has been provided to renew the exhibition lighting at Toitū Otago Settlers Museum.

Governance and Support Services

24 Fleet Operations General Vehicle Replacement is lower than budgeted for in the 10 year plan due to the prior acceleration of spend to replace vehicles.

25 Business Information Services has $1.500 million budgeted for the continuation of work on the Customer Self Service Portal project. This project will enable ratepayers to easily access DCC information, log a complaint, pay their rates, complete online bookings, and any other online services the DCC can provide though a DCC web interface/portal. The hardware replacement budget has increased to $850k in response to the increasing cost of technology required.

Property

26 The Property budget provides $17.500 million for the South Dunedin Library and Community Complex, previously scheduled to be undertaken during the first three years of the 10 year plan. The budget provides $5.030 million for ongoing work on the Civic Centre. There is also an increase in the budget for Public Toilets (provision for two locations) due to escalating costs of construction.

27 This uplift in spend has been partially offset by the rephasing and prioritisation of asset renewals work across the portfolios. The Performing Arts budget has been rephased while work continues on investigating possible options.

Reserves and Recreational Facilities

28 Renewals expenditure includes an increase in budget of $4.128 million to $8.902 million, to undertake work at Moana Pool. This increase is a result of the redevelopment plan having been rescoped and timelines changing, with some works deferred from 2023/24 to 2024/25 and later years.

29 Funding for Playground Improvements has increased by $489k to $1.017 million ahead of work for the Destination Playgrounds. There is also increased provision for creating more burial capacity across the city and the associated infrastructure.

30 These increases have been offset by a reduction in recreation facilities renewals and a Botanic Garden improvement decrease of $720k. A Botanic Garden Strategic Plan is being developed, and this will inform a capital programme for the Garden.

Roading and Footpaths

31 Review of the transport capital budget has taken account of the uncertainty around the amount of co-funding that may be received from NZTA Waka Kotahi for new capital projects. Projects such as the Tunnels Trail and other cycleways will be considered in the development of the 9 year plan 2025-34.

32 The budget includes funding of $1.500 million for Bath Street works. It also includes budget for Shaping Future Dunedin projects such as $3.000 million for Central City Cycle and Pedestrian Improvements, $1.200 million for Central City Parking Management and $2.500 million for the Mosgiel Park and Ride.

33 Low Cost, Low Risk minor safety improvement projects such as intersection improvements and school safety are ongoing with an unchanged budget of $2.000 million.

34 Over the first three years of the plan, the Central City Upgrade was brought forward and because of early completion, the budget of $7.370 million for the 2024/25 year in the 10 year plan is not required.

35 An increase in budget of $7.232 million to $30.506 million for transport renewals highlights the work needed on the transport network. Of this, $10.824 million is for Pavement Renewals and $3.248 million is for Pavement Rehabilitations where roading surfaces require more intensive work than a standard renewal. Major Drainage Control, with a budget of $6.102 million, allows for kerb and channel renewals, along with renewals for the culvert and mud tank network.

36 The draft Government Policy Statement on land transport 2024 -34 has just been released for consultation purposes. A copy of the draft Government Policy Statement is at Attachment C. Staff are reviewing the draft Statement to understand the impacts it may have on our assumptions around co-funding for the transport initiatives included in our proposed capital expenditure programme. Staff will report back to Council on its findings.

37 In the interim, the budget assumes that NZTA Waka Kotahi will provide the full funding assistance rate (grant funding) on the new capital expenditure, but the grant funding on renewals will be capped. The shortfall in renewals grant funding is estimated to be $3.605 million and will be debt funded.

Zero Carbon - High and medium investment scenarios for roading and footpaths

38 At its meeting on 25 September 2023, Council considered a draft Zero Carbon Plan 2030, and at that meeting asked staff to develop a high investment option for the Zero Carbon Implementation plan (as the preferred option) with medium investment as the alternative option, to be done for the draft 10 year plan 2024-34.

39 With the decision to prepare an Annual Plan, two investment scenarios are presented below for the 2024/25 year only. Further work will be undertaken on these scenarios, to look at future investment for consideration as part of the 9 year plan 2025-34.

40 The high investment scenario for the 2024/25 year will require an additional $3.9 million to be added to the capital budget.

41 The zero carbon initiatives in the high investment scenario fall within the Transport activity. These projects encompass cycle and pedestrian improvements, intersection safety and accessibility upgrades, investment in the Princes Street bus and corridor plan, and enhancements to the accessibility of footpaths.

42 The medium investment scenario would require an additional $2.65 million to be added to the capital budget. These zero carbon initiatives mirror those in the high scenario, except for a reduction in the budget allocated for intersection safety and accessibility upgrades.

43 Staff have assumed that the items proposed will not attract co-funding from NZTA Waka Kotahi.

44 A summary table of the high and medium investment scenarios is shown in Figure 1.

		2024/25
Activity Name	Project Name	High Package $'000	Medium Package $'000
Shaping Future Dunedin	Central City Cycle and Pedestrian Improvements	500	500
	Princes Street Bus Priority and Corridor Safety Plan	400	400
Transport	Accessibility-driven Footpath Renewals	500	500
	Low Risk, Low Cost Improvements: Intersection Safety and Accessibility Upgrades	2,500	1,250
Total Additional Investment		3,900	2,650

25 Council is asked to consider what, if any investment option it may wish to include in the capital programme for the 2024/25 year. Given the uncertainty around co-funding from NZTA Waka Kotahi, and how this may impact on transport’s capital programme, it is recommended that no additional investment be added into the 2024/25 year.

45 This will allow more time to interrogate the programme, understand the implications of changes to co-funding priorities, refine the cost estimates and develop a more robust zero carbon investment programme in time for the 9 year plan 2025-34.

Three Waters

46 Three Waters capital expenditure budget of $80.123 million provides an increase of $32.076 million on year 4 of the 10 year plan. Tables 2 and 3 below provide a summary of the draft Three Waters capital budget.

Table 2 – 2024/25 Three Waters draft capital expenditure budget

Capital Expenditure $’000s		2024/25 Annual Plan Draft Budget	Year 4 of Current 10 Year Plan	Increase (Decrease)
Stormwater	Renewals supporting Growth	2,015	1,818	197
	Renewals	3,418	4,881	(1,463)
	Total Renewals	5,433	6,699	(1,266)
	New Capital for Growth	924	915	9
	New Capital	11,643	6,500	5,143
	Total New Capital	12,567	7,415	5,152
Total Stormwater		18,000	14,114	3,886
Wastewater	Renewals supporting Growth	648	1,566	(918)
	Renewals	13,539	13,718	(179)
	Total Renewals	14,187	15,284	(1,097)
	New Capital for Growth	851	1,881	(1,030)
	New Capital	13,386	0	13,386
	Total New Capital	14,237	1,881	12,356
Total Wastewater		28,424	17,165	11,259
Water Supply	Renewals supporting Growth	1,286	1,066	220
	Renewals	20,562	12,732	7,830
	Total Renewals	21,848	13,798	8,050
	New Capital for Growth	1,176	990	186
	New Capital	10,675	1,980	8,695
	Total New Capital	11,851	2,970	8,881
Total Water Supply		33,699	16,768	16,931
Total Three Waters Capital Expenditure		80,123	48,047	32,076

Table 3 – 2024/25 Summary of Three Waters draft capital expenditure

Capital Expenditure $’000s		2024/25 Annual Plan Draft Budget	Year 4 of Current 10 Year Plan	Increase (Decrease)
Three Waters	Renewals supporting Growth	3,949	4,450	(501)
	Renewals	37,519	31,331	6,188
	Total Renewals	41,468	35,781	5,687
	New Capital for Growth	2,951	3,786	(835)
	New Capital	35,704	8,480	27,224
	Total New Capital	38,655	12,266	26,389
Total Three Waters Capital Expenditure		80,123	48,047	32,076

Growth

47 3 Waters infrastructure is required to service areas rezoned within the 2GP and Dunedin’s anticipated growth as provided for in the draft Future Development Strategy.

48 The capital budget includes $6.900 million for growth across the stormwater, wastewater and water supply activities, and of this, $2.951 million is for New Capital Supporting Growth which enables the creation of new reticulation assets.

49 The balance of $3.949 million is for “renewals supporting growth” projects. These renewal projects involve upsizing existing networks to cater for growth, e.g., upsizing pipes on renewal.

New capital

50 Stormwater - The new capital budget includes $5.059 million for the Bath St watercourse and $1.750 million for the Mosgiel Pumpstations and Network, both not provided for in the 10 year plan. There is also an uplift in the budget of $3.262 million for resilience projects, increased monitoring requirements and hydraulic model building.

51 Offsetting these increases is a reduction in the budget for South Dunedin Flood Alleviation of $5.250 million against the 10 year plan budget. This is due to the rephasing of this work, which will be included in the 9 year plan 2025-34.

52 Wastewater – the new capital budget provides $8.707 million for the construction of new infrastructure at the metro wastewater treatment plants, based on the outcomes of plant condition and resilience assessments. A budget of $4.679 million has been provided for other projects such as wet weather discharges, resilience work and system upgrades.

53 Water Supply – the new capital budget has increased by $8.695 million to $10.675 million. Of this, $4.859 million is for water supply resilience projects including upgrades to water treatment plants based on the outcomes of process capability assessments. A budget of $4.748 million has been provided for other capital works such as water network upgrades to support compliance with new regulations. A budget of $1.068 million has been provided for the design and construction of a water supply main to Port Chalmers.

Renewals

54 The 3 waters renewals programme is informed by condition assessment programmes on treatment plants and performance data.

55 The proposed renewals programme only includes projects that are required to maintain service levels or meet exiting service level shortfalls. Renewals will proactively target significant risk areas such as highly critical areas to prevent service level failure.

56 Where possible, rather than replace assets, rehabilitation work will be undertaken to repair assets and extend their useful lives. Rehabilitation is a cost-effective method for maintaining the 3 waters network.

57 Stormwater - a budget of $3.418 million provides for general network and pumpstation renewals, being an uplift in budget of $2.334 million.

58 Wastewater - $3.731 million has been provided for Metro Wastewater Treatment Plant Resilience and $8.623 million for other renewals including systems upgrades and consent renewals.

59 Water supply – there has been an uplift in the budget of $8.299 million to $15.125 million for the renewal of existing water supply treatment and network assets renewals. A budget of $5.437 million has been provided for the renewal of water treatment plants, and other critical water pump assets.

Waste Management

60 The Waste Futures budget is $14.682 million higher than the budget provided for in the 10 year plan, due to timing changes. Projects now planned to be underway and continuing in 2024/25, include $15.966 million for the construction of the Material Recovery Facility, $3.512 million for the Resource Recovery Park and $3.513 million for the Organics Facility. These projects will support the enhanced Kerbside Collection Services commencing on 1 July 2024.

61 Expenditure for Smooth Hill Landfill of $9.552 million has been rephased to future years. It is assumed that resource consent will be granted to extend the life of the Green Island Landfill beyond what was expected in the 10 year plan.

Comparison with 10 year plan 2021-31

62 Chart 3 compares actual and forecast capital expenditure with the 10 year plan for the first 4 years from 2021/22 – 2024/25.

Chart 3 – Capital Expenditure Years 1 – 4 of the 10 Year plan 2021-2031

63 Over the four year period from 2021/22 – 2024/25, capital expenditure is forecast to be $771.195 million, $164.684 million higher than the 10 year plan budget of $606.5111 million. This is made up as follows:

· the actual 2021/22 year expenditure was $1.352 million less than year 1 of the 10 year plan;

· the 2022/23 year expenditure was $48.263 million ahead of that provided for in year 2 of the 10 year plan;

· the 2023/24 year is forecast to be $67.460 million ahead of that provided for in year 3 of the 10 year plan; and

· in 2024/25 the draft budget provides for an increase of $50.313 million compared to that provided for in year 4 of the 10 year plan.

64 Table 4 provides a capital expenditure summary for the financial years ended 30 June 2022, 2023, 2024 and 2025 by activity group.

Table 4 – Capital Expenditure Years 1 – 4 of the 10 Year plan 2021-2031

Capital Expenditure $000s Years 1 - 4 10 Year Plan	Actual + Draft Budget	10 Year Plan 2021-31	Increase (Decrease)
Community and Planning	913	1,932	(1,019)
Economic Development	567	291	276
Galleries, Libraries and Museums	9,157	8,264	893
Governance and Support Services	15,107	19,835	(4,728)
Property	94,074	96,290	(2,216)
Reserves and Recreational Facilities	1,335	1,740	(405)
Regulatory Services	74,134	73,872	262
Roading and Footpaths	192,526	181,714	10,812
Three Waters	335,091	176,327	158,764
Waste Management	48,291	46,246	2,045
Total Expenditure	771,195	606,511	164,684

Three Waters

65 An increase of $158.764 million reflects the acceleration of the 3 waters programme provided for in the current 10 year plan. The accelerated programme has resulted in an increased investment in 3 water asset renewal, sooner than planned, to address areas of risk and increase resilience in these significant infrastructure assets.

OPTIONS

66 There are no options presented but Council may decide to modify the draft capital budgets.

NEXT STEPS

67 The decision of Council will be included in the draft Annual Plan 2024/25 for the purposes of community engagement.

Signatories

Author:

Sharon Bodeker - Special Projects Manager

Carolyn Allan - Chief Financial Officer

Authoriser:

Sandy Graham - Chief Executive Officer

Attachments

	Title	Page
⇩a	Capital Expenditure Comparison Summary	60
⇩b	Capital Expenditure Four Year Summary	71
⇩c	Draft Government Policy Statement on land transport 2024-34	82

SUMMARY OF CONSIDERATIONS

Fit with purpose of Local Government

This decision enables democratic local decision making and action by, and on behalf of communities and promotes the social, economic, environmental and cultural wellbeing of the 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 Activity Groups contribute to the delivery of all of the objectives and priorities of the strategic framework.

Māori Impact Statement

The Annual Plan provides a mechanism for Māori to contribute to local decision-making. The Council’s engagement with Mana Whenua and Mātāwaka is an ongoing and continuous process.

Sustainability

The Annual Plan budget is based on the 10 year plan 2021-31. Major issues and implications for sustainability were considered in the development of the 50 year Infrastructure Strategy and financial resilience was discussed in the Financial Strategy, both strategies being key to the development of the 10 year plan.

LTP/Annual Plan / Financial Strategy /Infrastructure Strategy

This report provides draft budgets for each Activity Group for inclusion in the Annual Plan.

Financial considerations

Financial considerations are detailed in the report.

Significance

The 10 year plan 2021-31 budgets were considered significant in terms of the Council’s Significance and Engagement Policy, and were consulted on. Variations to those budgets as discussed in this report are not considered significant in terms of the policy.

Engagement – external

There has been no external engagement in developing the draft budgets for the Activity Groups.

Engagement - internal

Staff and managers from across council have been involved in the development of the draft budgets.

Risks: Legal / Health and Safety etc.

There are no identified risks.

Conflict of Interest

There are no known conflicts of interest.

Community Boards

Community Boards will have an opportunity to engage on the Annual Plan.

Council

12 March 2024

Three Waters - Operating Budget 2024/25

Department: 3 Waters

EXECUTIVE SUMMARY

1 This report provides an overview of the operating expenditure budget for the Annual Plan 2024/25 for the Three Waters Group, as shown at Attachment A. A draft funding impact statement is shown at Attachment B. The following activities are provided for:

· Water Supply

· Wastewater

· Stormwater

2 A schedule of proposed fees and charges for the 2024/25 year is also presented at Attachment C.

RECOMMENDATIONS

That the Council:

a) Adopts for the purposes of developing the Annual Plan 2024/25 and consulting with the community:

i) The draft 2024/25 operating budget for the Three Waters Group as shown/amended at Attachment A.

ii) The draft 2024/25 fees and charges schedules for the Three Waters Group as shown/amended at Attachment C.

operating budgets

Revenue

3 The cost of providing 3 waters services is currently not being fully funded by operating revenue. The Income Statement at Attachment A shows that with the proposed rate and external revenue increase, this activity still has a deficit of $28.415 million. Ways to address this deficit will be considered as part of the 9 year plan 2025-34.

Rates

4 Rates have increased overall in the Three Waters Group by $11.104 million, 15%.

External Revenue

5 External revenue has increased by $647k, 9.5%, due to increases in fees and charges of $822k, 15% for water sales ($713k), trade waste, backflow prevention and tankered waste.

6 The increase in fees and charges is offset by a reduction in revenue received for consultancy work charged to third parties. The budget has been adjusted to reflect the level of consultancy work expected to be undertaken.

Grants & Subsidies

7 Grants and subsidies have decreased by $4.160 million. The Transition Support Package funded by the former Government, set up to contribute towards transitioning to the now repealed Water Services Entities has been discontinued. In addition, Government funding for the 3 Waters Strategic Work Programme has been replaced by Better off Funding.

8 Better off Funding has been provided for 15 approved projects across Council. From this fund, 3 Waters has been allocated $240k for a capital project, and a further $635k for operating projects. The operating grant has been allocated through internal revenue.

Internal Revenue

9 Internal revenue allocating $635k of Better off Funding to 3 Waters is for work on growth planning within the Future Development & Planning Programme.

Expenditure

Personnel costs

10 Personnel costs have increased by $440k, 3.8%. The budget includes a general salary increase and a change to the training budget to meet mandatory training requirements for operational staff. The increase has been offsets by the transfer of 2 FTE to the City Growth Team.

Operations and maintenance

11 Operations and maintenance costs have increased by $2.311 million, 16.4% due mainly to:

a) Plant Maintenance for all treatment plants increase of $2.219 million based on current condition assessments of infrastructure, increasing regulations and compliance costs.

b) Chemical cost increase of $688k for increased international freight and supply costs for CO2, following the closure of the Marsden Point refinery.

c) Laboratory cost increase of $131k for compliance with changing legislation such as the Water Services Act and Resource Management Act.

d) Network maintenance cost increase of $546k to incorporate maintenance contract cost increases, and to undertake a review of watercourse ownership rights.

e) Maintenance and support cost increase of $347k for smart water meters, as they become operational.

f) Contractor fee reduction of $1.657 million as government funding for the Three Waters Strategic Work Programme ends.

Occupancy costs

12 Occupancy costs have increased by $1.005 million, 7.5% which reflect increases in rates and insurance costs. Electricity costs have also risen due to treatment processes at two wastewater plants.

Consumables and general costs

13 Consumables and general costs have increased by $216k, 14%, primarily due to new software licence fees to accommodate increased compliance requirements across the 3 Waters activity.

Internal charges

12 Internal charges have decreased by $133k, 2.6%, due to Business Information System and Corporate Administration costs being reallocated to Waste Management. This is offset by an increase in costs for lime treatment of sludge transferred to the Green Island Landfill.

Depreciation

14 Depreciation has increased by $1.122 million, 1.8% reflecting the capital expenditure programme.

Interest

15 Interest has increased by $2.397 million, 22.9% reflecting the increase in borrowing to fund the capital expenditure programme along with the increase in the cost of borrowing.

FEES AND CHARGES

14 Fees and charges for 3 Waters have generally increased by 7% to reflect inflationary cost increases across the 3 Waters network. There are some exceptions:

a) City-wide unit rates for trade waste have increased by between 25% - 62%, $0.03 - $0.13 to reflect increased costs.

b) Wastewater consent application staff fees per hour for Consent Applications, Compliance Monitoring, Re-inspection and Consent Breaches has increased by 8% to reflect increased costs.

c) Water supply backflow prevention programme fees have increased by 22%, $14.67 for the backflow preventer test fee and by 19%, $22.34 for rescheduled tests, to reflect increased costs.

d) Central water scheme tariffs have increased by 15%, $0.02 for the supply of bulk raw water per cubic meter, and $0.29 for the supply of treated water per cubic meter to reflect increased costs of distributing and treating water.

Signatories

Author:	John McAndrew - Acting Group Manager, 3 Waters
Authoriser:	David Ward - General Manager, 3 Waters and Transition

Attachments

	Title	Page
⇩a	Three Waters Income Statement	131
⇩b	Three Waters combined FIS	132
⇩c	Three Waters - Water FIS	133
⇩d	Three Waters - Wastewater FIS	134
⇩e	Three Waters - Stormwater FIS	135
⇩f	Draft Fees and Charges 2024/25 Three Waters	136

SUMMARY OF CONSIDERATIONS

Fit with purpose of Local Government

This decision enables democratic local decision making and action by, and on behalf of communities, and promotes the social, economic, environmental and cultural 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 Water Supply Group activities primarily contribute to the objectives and priorities of the above strategies.

Māori Impact Statement

Council budgets impact broadly across all Dunedin communities including Māori. The adoption of Te Taki Haruru – Māori Strategic Framework signals Council’s commitment to mana whenua and to its obligations under the Treaty of Waitangi. Mana whenua and Mataawaka will have the opportunity to engage in the Annual Plan 2024/25 consultation process.

Sustainability

LTP/Annual Plan / Financial Strategy /Infrastructure Strategy

This report provides draft budgets for the 3 Waters Group for inclusion in the Annual Plan 2024/25.

Financial considerations

Financial considerations are detailed in the report.

Significance

Engagement – external

There has been no external engagement in developing the draft budgets for the 3 Waters Group.

Engagement - internal

Staff and managers from across council have been involved in the development of the draft budgets.

Risks: Legal / Health and Safety etc.

There are no identified risks.

Conflict of Interest

There are no known conflicts of interest.

Community Boards

Community Boards will have an opportunity to engage in the Annual Plan 2024/25 consultation process.

Council

12 March 2024

Roading and Footpaths - Operating Budget 2024/25

Department: Transport

EXECUTIVE SUMMARY

1 This report provides an overview of the operating expenditure budget for the Annual Plan 2024/25 for the Roading and Footpaths Group, as shown at Attachment A. A draft funding impact statement is shown at Attachment B.

2 A schedule of proposed fees and charges for the 2024/25 year is also presented at Attachment C.

RECOMMENDATIONS

That the Council:

a) Adopts for the purposes of developing the Annual Plan 2024/25 and consulting with the community:

i) The draft 2024/25 operating budget for the Roading and Footpaths Group as shown/amended at Attachment A.

ii) The draft 2024/25 fees and charges schedules for the Roading and Footpaths Group as shown/amended at Attachment C.

operating budgets

Revenue

Rates

3 Rates have increased overall by $10.1 million, 42.2%.

Grants and Subsidies (operating and capital)

4 Grants and subsidies operating revenue has increased by $175k, 1.6%. This reflects the recovery of costs for ORC bus shelters and NZTA Waka Kotahi State Highway maintenance work.

5 Grants and subsidies capital revenue has decreased by $3.067 million, 15.5%. NZTA Waka Kotahi funding for capital projects reflects the capital programme proposed for the 2024/25 year. The decrease combines an increase in subsidy on renewals of $3.828 million with a decrease in subsidy on new capital expenditure projects of $6.895 million.

6 NZTA Waka Kotahi funding constraints along with changing priorities, means that the draft budget assumes a shortfall in funding assistance on the eligible capital renewals budget. The draft budgets limit renewals funding from NZTA Waka Kotahi to $11.840 million (effectively 39%), short of the $15.445 million based on the standard subsidy rate of 51%. The Council needs to continue investing in the renewal of the network to ensure levels of service are maintained, therefore the estimated shortfall will be funded by debt.

7 The draft Government Policy Statement on land transport 2024-34 has been released, and this is being reviewed to understand the Government’s funding proposals, their impacts, and what they may mean for our levels of service.

Internal Revenue

8 Internal Revenue of $262k is the Roading and Footpath activity’s share of Better Off Funding.

Expenditure

Personnel costs

9 Personnel costs have increased by $359k, 7.3%. The budget includes a general salary increase and an increase of 3.0 full time equivalent staff (FTE). 2.0 FTE positions are being funded from the Better Off Funding programme.

Operations and maintenance

10 Operations and maintenance costs have increased by $737k, 4.4%. This is made up of an increase of $486k for the coastal management project to focus on seawall maintenance and long-term management of the Saint Clair to Lawyers Head coastline.

11 It also includes an increase of $234k for bus shelter and State Highway maintenance work, all of which is 100% recoverable from the Otago Regional Council and NZTA Waka Kotahi.

12 Work to find savings in the network maintenance budget, to absorb increased costs such as contract price escalations, is continuing. Updates to the transport budget will be provided in May 2024, when more work has been done to understand the cost pressures and impact on service delivery. Any proposed changes to levels of services will be prepared in time for the development of the 9 year plan 2025-34.

Occupancy costs

13 Occupancy costs have increased by $71k, 4.8% which reflects increases in insurance and rates.

Depreciation

14 Depreciation has increased by $2.118 million, 7.5% reflecting the 30 June 2023 revaluation and the capital expenditure programme. This valuation reflects assets condition and recent contract rates.

Interest

15 Interest has increased by $1.745 million, 28.4% reflecting an increase in interest rates and increased borrowing to deliver the capital expenditure programme.

FEES AND CHARGES

16 Fees and charges for activities in the Roading and Footpaths Group have generally been increased by 3% to reflect increased costs.

Signatories

Author:	Jeanine Benson - Group Manager Transport
Authoriser:	Scott MacLean - General Manager, Climate and City Growth

Attachments

	Title	Page
⇩a	Roading and Footpaths Income Statement	143
⇩b	Roading and Footpaths FIS	144
⇩c	Draft Fees and Charges 2024/25 Roading and Footpaths	145

SUMMARY OF CONSIDERATIONS

Fit with purpose of Local Government

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 Roading and Footpaths Group activities primarily contribute to the objectives and priorities of the above strategies.

Māori Impact Statement

Sustainability

The Annual Plan 2024/25 is not proposing any changes to that provided for in the 10 year plan. . Major issues and implications for sustainability are discussed in the Infrastructure Strategy and financial resilience is discussed in the Financial Strategy of the current 10 year plan 2021-31.

LTP/Annual Plan / Financial Strategy /Infrastructure Strategy

This report provides draft budgets for the Roading and Footpaths Group for inclusion in the Annual Plan 2024/25.

Financial considerations

Financial considerations are detailed in the report.

Significance

Engagement – external

There has been no external engagement in developing the draft budgets for Roading and Footpaths Group.

Engagement - internal

Staff and managers from across council have been involved in the development of the draft budgets.

Risks: Legal / Health and Safety etc.

There are no identified risks.

Conflict of Interest

There are no known conflicts of interest.

Community Boards

Community Boards will have an opportunity to present on the draft 2024/25 Annual Plan.

Council

12 March 2024

Waste Management - Operating Budget 2024/25

Department: Waste and Environmental Solutions

EXECUTIVE SUMMARY

1 This report provides an overview of the operating expenditure budgets for the Annual Plan 2024/25 for the Waste Management Group, as shown at Attachment A. A draft funding impact statement (FIS) is shown at Attachment B. The following activities are provided for:

· Landfills

· Waste minimisation

· Recycling,

· Refuse/litter collection

2 A schedule of proposed fees and charges for the 2024/25 year is also presented at Attachment C.

RECOMMENDATIONS

That the Council:

a) Adopts for the purposes of developing the Annual Plan 2024/25 and consulting with the community.

i) The draft 2024/25 operating budget for the Waste Management Group as shown/amended at Attachment A.

ii) The draft 2024/25 fees and charges schedules for the Waste Management Group as shown/amended at Attachment C.

operating budgets

Revenue

Rates

3 Rates have increased overall in the Waste Management Group by $10.209 million, 177.7%.

4 The rate increase includes$8.840 million for the new kerbside collection service, increasing the targeted rate from $4.768 million to $13.608 million. This targeted rate equates to $301.50 (GST inclusive) per household, compared to the current rate of $106.10, i.e., an increase of $195.40.

5 The new kerbside collection service, along with the propose rate increase, was consulted on as part of the 10 year plan 2021-31.

6 The rate increase also includes costs associated with operating the Green Island Landfill and monitoring costs associated with the proposed Smooth Hill Landfill.

External Revenue

7 External revenue has increased by $2.553 million, 20.4%. Landfill revenue has increased by $3.271 million to reflect an expected increase of 10,500 tonnes of material entering the Green Island Landfill, with the closure of the Wickliffe Street Transfer Station. Landfill disposal charges have also increased from $260/tonne to $280/tonne (incl. GST) to cover expected increases in waste levy and ETS charges.

8 Waste Minimisation revenue has increased by $673k, mainly due to the increased waste levy from $50/tonne to $60/tonne, collected from users of the Green Island landfill, and an expected increase in tonnage of material received at the landfill.

9 Offsetting the increases in external revenue is a decrease in refuse revenue of $1.392 million, as refuse black bag sales will stop from 1 July 2024.

Grants and Subsidies Revenue

10 Grants and Subsidies revenue has decreased by $670k, 100%. Capital grant revenue in 2023/24 from Ministry for the Environment for the purchase of bins is not required in 2024/25.

Expenditure

Personnel costs

11 Personnel costs have increased by $331k, 30%. The budget includes a general salary increase, and includes provision for three new waste minimisation positions. Two positions are fixed term for two years and are funded from the Better Off Funding revenue. The third position is a regional waste position funded 46% by other regional authorities (Queenstown Lakes, Waitaki, Clutha and Central Otago District Councils).

Operations and maintenance

12 Operations and maintenance costs have increased by $10.158 million, 82.4% due mainly to an increase of $7.767 million for the new Kerbside Recycling and Refuse Collection service. The contract includes $7.016 million for the collection of general refuse, mixed recycling, glass, food, and green waste, $1.320 million for kerbside processing and $3.609 million for disposal of kerbside waste at the Green Island landfill.

13 Green Island Landfill costs have increased $1.568 million, mainly due to a $938k increase in ETS costs and a $536k increase in landfill contract costs. ETS and variable contract cost increases largely reflect the increased tonnage of material entering the landfill, while the increased fixed component portion of the contract is due to CPI adjustments within the contract.

14 Smooth Hill Landfill costs have increased $1.080 million, due mainly to $340k additional monitoring costs and $700k for the implementation of the Southern Black Back Gull management plan, both being consent requirements.

Consumables and general costs

15 Consumables and general costs have increased by $870k, 25.5% mainly due to an increase in Waste Levy costs at the Green Island Landfill of $1.108 million reflecting an increased tonnage materials entering the landfill, coupled with an increased levy charge from $50/tonne to $60/tonne.

16 Offsetting this increase is a reduction in consultants costs relating to Waste Futures communications and marketing costs for the new kerbside contract ($186k), and a reduction in legal fees ($100k).

Internal charges

17 Internal charges have increased by $306k, 32.5% due to the reallocation of $298k of Business Information Systems and Corporate Administration internal charges from 3 Waters.

Depreciation

18 Depreciation has increased by $397k, 49.9% reflecting the capital expenditure programme.

Interest

19 Interest has increased by $993k, 112.1% due to the Waste Futures capital programme, namely the new kerbside collection bins and the construction of new waste recovery and processing facilities at the Green Island landfill.

FEES AND CHARGES

20 Changes to fees and charges for the Waste Management Group include the following:

21 The Waste Disposal Levy is increasing from $50 to $60 per tonne, and Emission Trading Scheme charges are estimated to increase from $65.00 to $79.00 per tonne. To cover these increases, landfill disposal charges have been updated and individual waste disposal charges are increasing by between $0.20 - $6.00, 3% - 12%.

22 Fees and charges for activities that do not incur Waste Disposal Levy or Emissions Trading Scheme charges remain largely unchanged, with the following exceptions.

a) Fees for Clean Fill (wet slip material) are being reclassified as Contaminated Soil Low Level.

b) The blue glass bin charge has increased by $3.00, 30%.

c) Changes relating to the new kerbside service commencing in July 2024 are:

i) The removal of fees for refuse collection bag.

ii) New fees for additional mixed recycling and optional garden waste bins.

Signatories

Author:	Chris Henderson - Group Manager Waste and Environmental Solutions
Authoriser:	Scott MacLean - General Manager, Climate and City Growth

Attachments

	Title	Page
⇩a	Waste Management Income Statement	152
⇩b	Waste Management FIS	153
⇩c	Draft Fees and Charges 2024/25 - Waste Management	154

SUMMARY OF CONSIDERATIONS

Fit with purpose of Local Government

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 Waste Management Group activities primarily contribute to the objectives and priorities of the above strategies.

Māori Impact Statement

Council budgets impact broadly across all Dunedin communities including Māori. The adoption of Te Taki Haruru – Māori Strategic Framework signals Council’s commitment to mana whenua and to its obligations under the Treaty of Waitangi. Mana whenua and Mataawaka will have the opportunity to engage in the Annual Plan 2024/25 consultation process.

Sustainability

LTP/Annual Plan / Financial Strategy /Infrastructure Strategy

This report provides draft budgets for the Waste Management Group for inclusion in the Annual Plan 2024/25.

Financial considerations

Financial considerations are detailed in the report.

Significance

Engagement – external

There has been no external engagement in developing the draft budgets for Waste Management Group.

Engagement - internal

Staff and managers from across council have been involved in the development of the draft budgets.

Risks: Legal / Health and Safety etc.

There are no identified risks.

Conflict of Interest

There are no known conflicts of interest.

Community Boards

Projects identified in Community Board Plans were considered in the development of the budgets for the 10 year plan, and Community Boards were consulted at this time. Community Boards will have an opportunity to engage with the Annual Plan 2024/25 consultation process.

Council

12 March 2024

Property - Operating Budget 2024/25

Department: Property

EXECUTIVE SUMMARY

1 This report provides an overview of the operating expenditure budgets for the Annual Plan 2024/25 for the Property Group, as shown at Attachment A. A draft funding impact statement is shown at Attachment B. The activities in this group include:

· Community housing

· Community Property

· Investment Property

· Operational Property

· Property management

· Holding Property

2 A schedule of proposed fees and charges for the 2024/25 year is also presented at Attachment C.

RECOMMENDATIONS

That the Council:

a) Adopts for the purposes of developing the Annual Plan 2024/25 and consulting with the community

i) The draft 2024/25 operating budget for the Property Group as shown/amended at Attachment A.

ii) The draft 2024/25 fees and charges schedules for the Property Group as shown/amended at Attachment C.

operating budgets

Revenue

Rates

3 Rates have increased in the Property Group by $2.997 million, 18.9%. The main driver of this is increases in budgeted costs that are only partially funded by increases in external rents.

External Revenue

4 External revenue has increased by $877, 5.1%. Community housing rentals have increased by $474k, which funds the majority of the budgeted increase in operating expenditure, mainly rates and insurance.

5 Investment property income has increased $379k. This is mainly due to the property at 414 Moray Place being fully tenanted following completion of the capital upgrade project.

Internal Revenue

6 Internal revenue has increased by $301k, 3.9%. Internal rents have increased $162k in line with the Local Government Cost Index projection of 3.1%.

7 Investment property internal rental has increased $167k for the portion of the property at 414 Moray Place being leased by Parking Operations.

Expenditure

Personnel Costs

8 Personnel costs have increased by $203k, 5.3%. The budget includes a general salary increase, along with one additional FTE.

Operations and maintenance

9 Operations and maintenance costs have decreased by $145k, -1.7%. Maintenance project budgets have reduced by $380k for the Railway Station and Dunedin Ice Stadium.

10 Offsetting this, planned and reactive maintenance costs for all other properties have increased by $236k, including a new maintenance budget of $105k for the Forbury Park property.

Occupancy costs

11 Occupancy costs have increased by $1.780 million, 19.4%, $329k of this increase relates to the South Dunedin Community Complex and Forbury Park properties, both of which were not included in the 2023/24 budget.

12 Rates have increased by $825k reflecting an increase in general rates across all portfolios, as well as a targeted rate increase for community housing for the new kerbside collection service. A new rates budget of $168k has been included for the Forbury Park property.

13 Insurance costs across the property portfolios have increased $396k.

14 Additional electricity and rental costs for Burns House total $254k due to an extension of the rental agreement to include the 8^th floor.

Grants and Subsidies

15 Grants and Subsidy costs have increased by $14k, 8.9%. These grants are paid to community hall committees that maintain and operate Council-owned community halls on behalf of Council. The grants have not increased for over ten years and this increase follows a review of operating budgets in consultation with the various hall committees.

Depreciation

16 Depreciation has increased by $932k, 6.7% reflecting the capital expenditure programme.

Interest

17 Interest expense has increased by $1.394 million, 35.8% reflecting the increase in borrowing to fund the capital expenditure programme along with the increase in the cost of borrowing.

FEES AND CHARGES

18 Fees and charges for activities in the Property Group, other than community housing, have increased by 3% and 4%, with an increase of 11% proposed for Community Housing.

19 An 11% increase is proposed for Community Housing. This is an increase of between $14 and $25 per week in rents for community housing tenants and reflects the increase in costs to provide this service. A separate report is on the agenda for Community Housing Fees & Charges.

Signatories

Author:	Anna Nilsen - Group Manager, Property Services
Authoriser:	Robert West - General Manager Corporate Services

Attachments

	Title	Page
⇩a	Property Income Statement	162
⇩b	Property Funding Impact Statement	163
⇩c	Draft Fees and Charges 2024/25 - Property	164

SUMMARY OF CONSIDERATIONS

Fit with purpose of Local Government

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 Property Group activities primarily contribute to the objectives and priorities of the above strategies.

Māori Impact Statement

Sustainability

LTP/Annual Plan / Financial Strategy /Infrastructure Strategy

This report provides draft budgets for the Property Group for inclusion in the Annual Plan.

Financial considerations

Financial considerations are detailed in the report.

Significance

Engagement – external

There has been no external engagement in developing the draft budgets for the Property Group.

Engagement - internal

Staff and managers from across council have been involved in the development of the draft budgets.

Risks: Legal / Health and Safety etc.

There are no identified risks.

Conflict of Interest

There are no known conflicts of interest.

Community Boards

Community Boards will have an opportunity to present on the draft 2024/25 Annual Plan.

Council

12 March 2024

Community Housing Fees and Charges

Department: Property

EXECUTIVE SUMMARY

1 This report asks Council to consider the Dunedin City Council (DCC) Community Housing fees and charges (rent) for 2024/2025.

2 The draft Annual Plan 2024- 2025 budget for Community Housing has been based on an 11% ($14 - $25 per week) increase in rent. An 11% increase in rent would cover the increased cost to operate the portfolio including, rates, insurance, and interest.

3 Tenants will be consulted with directly and as part of consultation on Annual Plan 2024/25. Staff will report back to Council with a summary of feedback during deliberations in May 2024.

RECOMMENDATIONS

That the Council:

a) Approves as its preferred option for consultation an 11% increase in Community Housing rental increase for 2024/25

Notes that tenant and public submissions on Community Housing rental increases for 2024/25 will be presented to Council for consideration as part of Annual Plan 2024/25 deliberations in May 2024.

BACKGROUND

4 As part of the Long Term Plan 2021/31 process, Council consulted the community on general rates revenue being used to subsidise community housing rents by asking the question “Do you support rates being used to subsidise rents for DCC community housing?”.

5 59% of submissions (1751) were in favour of rates revenue being used to subsidise rents and on 31 May 2021 Council resolved the following:

Moved (Cr Chris Staynes/Mayor Aaron Hawkins):

That the Council:

a) Amends the 2021-2031 Revenue and Financing Policy for Community Housing to be rates revenue at 10% and other revenue at 90%.

Division

The Council voted by division:

For: Crs Sophie Barker, David Benson-Pope, Christine Garey, Doug Hall, Carmen Houlahan, Marie Laufiso, Jim O'Malley, Chris Staynes, Steve Walker and Mayor Aaron Hawkins (10).

Against: Crs Rachel Elder, Mike Lord, Jules Radich, Lee Vandervis and Andrew Whiley (5).

Abstained: Nil

The division was declared CARRIED by 10 votes to 5

Motion carried (CNL/2021/094)

6 A Revenue Policy Compliance report to Council on the 22 February 2023 noted that to comply with the Revenue Policy, rents would need to increase by an average of 24% ($29 - $52 per week).

7 During the Annual Plan 2023/24 deliberations Council approved fees and charges for the housing portfolio including a 5% increase in rents.

8 Over the last ten years Council has increased rents between 0% - 8% annually. Rent increases for the ten years from 2014 till 2023 are summarised in Table 1.

Table 1 – Rent Increase History

Year	Community Housing Rent increase ($ increase from the previous year)	Community Housing Rent increase (average % from the previous year)
2014	No increase	0%
2015	No increase	0%
2016	No increase	0%
2017	No increase	0%
2018	$9 per week	8%
2019	$1 - $3 per week	1%
2020	No increase (COVID)	0%
2021	$3 - $6 per week	3%
2022	$4 - $8 per week	4%
2023	$6 - $11 per week	5%

9 Since 2020 the cost to operate the Community Housing portfolio has been increasing due to general rates, insurance, and depreciation. Changes in DCC Community Housing rental revenue versus expenditure since the 2013/14 financial year is outlined below in Table 2.

Table 2 – DCC Community Housing Revenue and Operating Costs.

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Description automatically generated with medium confidence

DISCUSSION

10 Council has 940 units in the Community Housing portfolio which are prioritised for people aged over 55 years, and in urgent need of housing. The portfolio complements other social and community housing providers in the city that prioritise other groups.

Demographics of tenants

11 The majority of tenants are single person households and 70% of the portfolio (733 units) are single bed units. The age demographics are –

71% (659) of tenants are over 65 years of age.

21% (202) of tenants are aged between 55 and 64 years of age.

8% (74) of tenants are aged below 55 years.

12 New Zealand citizens 65 years and older are eligible for NZ Superannuation payments. New Zealand citizens experiencing unemployment are eligible for Job Seeker benefit payments.

13 New Zealand citizens with income below regional limits are eligible for Accommodation Supplement payments. The Accommodation Supplement payment is worked out as a percentage of the cost of accommodation.

14 71% of DCC community housing tenants are aged over 65 years and are eligible for the Accommodation Supplement and NZ Superannuation. The remaining 29% of tenants are likely to be low income or receiving the Job Seeker benefit and Accommodation Supplement.

15 The affordability of rent increases for tenants is dependent on whether they are in receipt of Accommodation Supplement, benefits, or NZ Superannuation. Staff have attempted to outline affordability in Table 4 below.

Market rent information

16 Staff engaged property valuers CBRE to consider comparable market rents for DCC Community housing units. A detailed market assessment was not able to be completed in time for this report, however indicative values have been provided (based on ‘desk based’ assessment). The valuer noted the lack of comparable market data for single bed accommodation.

Table 3 – Market rent comparison

Unit Type	Number of units	2023/24 Rent	Market Rent (range)
Bedsits	67	$128	$225 - $240
Single (partitioned)	316	$131	$230 - $270
Single (separate)	349	$136	$260 - $270
Double (partitioned)	60	$179	$250 - $320
Double (separate)	47	$185	$285 - $450
1 Bedroom	54	$195	$285 - $400
2 Bedroom	47	$228	$370 - $450

17 Staff have prepared three rent increase examples for comparison. These were chosen because:

· A 3% increase in rent would be in line with previous annual increases to rent.

· An 11% increase in rent would cover the increased cost to operate the portfolio.

· A 26% increase would align the portfolio’s funding to current Revenue and Finance policy of user pays 90% plus rates revenue 10%.

18 Staff have outlined the three examples below. Each example outlines the rent increase as a percentage and dollar amount, alongside affordability information.

Tables 4 – Examples of rent increase

Example One – 3% increase, would be consistent with previous annual rent increases.
Actual Rent $ per week after the increase	$132 - $235
Increase $ per week	$4 - $7
Revenue & Financing	73% user fees ($7.4m) 27% rates revenue ($2.7m)
*Percentage of Income* NZ Superannuation + Accommodation Supplement	Single 26% Couple 24%
*Percentage of Income* Job Seeker + Accommodation Supplement	Single 32% - 34%
Example Two – 11% increase, which would cover the increased cost to operate the portfolio in 2024/25.
Actual Rent $ per week after the increase	$142 - $253
Increase $ per week	$14 - $25
Revenue & Financing	79% user fees ($7.7m) 21% rates revenue ($2.4m)
*Percentage of Income* NZ Superannuation + Accommodation Supplement	Single 28% Couple 26%
*Percentage of Income* Job Seeker + Accommodation Supplement	Single 34% - 36%
Example Three – 26% increase, which would align to the current Revenue and Funding Policy.
Actual Rent $ per week after the increase	$161 - $287
Increase $ per week	$33 - $59
Revenue & Financing	90% user fees ($9.1m) 10% rates revenue ($1m)
*Percentage of Income* NZ Superannuation + Accommodation Supplement	Single 30% Couple 29%
Percentage of Income Job Seeker + Accommodation Supplement	Single 39% - 41%

OPTIONS

19 Council is asked to consider options for community housing rent increases for 2024/2025.

20 Staff note that a community housing rent increase of 26% would align with Council’s Revenue and Finance Policy in the Long-Term plan 2021/31.

21 However, a 26% increase is not considered further in this report as it potentially would be a decision of high significance and staff consider the alignment of the policy and rents is better considered as part of the 9 Year Plan.

22 Whilst neither of the options put forward to Council for consideration aligns with the revenue and Finance Policy, Option 1 would meet cover the increased operating costs to operate the portfolio, and Option 2 would require additional operating costs to be met by rates.

23 Council’s preferred option would form part of the consultation process for the Annual Plan 2024/25 and will be open for submissions from any members of the public. In addition, under either option, Council would write to its tenants inviting submissions and providing an opportunity to be heard.

Option One – Approve, as its preferred option for consultation, an increase in DCC Community Housing rents for 2024/25 by 11% (Recommended Option).

24 The draft Annual Plan 2024/25 budget for Community Housing has been based on an 11% ($14 - $25 per week) increase in rent. An 11% increase in rent would cover the increased costs to operate the portfolio including, rates, insurance, and interest.

Advantages

· Covers the increased cost to operate the portfolio.

Disadvantages

· The affordability of the rent increase may be difficult for some tenants.

· Does not align with the Revenue and Finance Policy

Option Two – Approve, as its preferred option for consultation, an increase in DCC Community Housing rents for 2024/25 by 3%, or an amount less than 11%.

25 An increase of 3% in community housing rental is in line with previous increases.

Advantages

· The rental increase will be more affordable for tenants.

Disadvantages

· Does not cover the increased cost to operate the portfolio.

· Does not align with the Revenue and Finance Policy

NEXT STEPS

26 The community housing rental increase agreed by Council will be included into the draft Annual Plan 2024/25 budget and consultation material.

27 Staff will write to all tenants informing them of the proposed increase in the community housing rental and invite them to submit feedback as part of the Annual Plan 2024/25 consultation.

28 Council will receive a summary of feedback as part of Annual Plan 2024/25 deliberations in May 2024.

Signatories

Author:	Anna Nilsen - Group Manager, Property Services
Authoriser:	Robert West - General Manager Corporate Services

Attachments

There are no attachments for this report.

SUMMARY OF CONSIDERATIONS

Fit with purpose of Local Government

This decision enables democratic local decision making and action by, and on behalf of communities.

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

This decision promotes the economic 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	☐	☐	✔

Staff have worked with the Principal Policy Advisor Housing when preparing this report.

Māori Impact Statement

Ensuring adequate affordable healthy housing, supports quality of life and wellbeing. Mana whenua and Māori will have an opportunity to engage on the Annual Plan 2024/25.

Sustainability

Ensuring adequate affordable healthy housing, which meets the needs of all residents, supports the quality of life and wellbeing of lower income residents.

LTP/Annual Plan / Financial Strategy /Infrastructure Strategy

Council’s preferred option will be included in the 2024-2025 Annual Plan consultation material.

Financial considerations

2024-2025 draft budgets are based on an 11% rental increase.

Significance

Council’s decision is considered low in terms of Council’s Significance and Engagement Policy.

Engagement – external

Council’s preferred option will be included in the Annual Plan 2024/25 consultation material. Staff will write to tenants directly to inform them of Council’s decision and invite them to submit their feedback for consideration as part of the Annual Plan process.

Engagement - internal

Property Services staff have worked with the Finance and Legal Teams.

Risks: Legal / Health and Safety etc.

There are no known risks.

Conflict of Interest

There are no known conflicts of interest.

Community Boards

There are DCC Community Housing units within Community Board areas and the decision made by Council will affect community housing tenants in these areas.

Council

12 March 2024

Reserves and Recreational Facilities - Operating Budget 2024/25

Department: Parks and Recreation

EXECUTIVE SUMMARY

1 This report provides an overview of the operating expenditure budgets for the Annual Plan 2024/25 for the Reserves and Recreational Facilities Group, as shown at Attachment A. A draft funding impact statement is shown at Attachment B. The following activities are provided for:

· Aquatics services

· Botanic garden

· Cemeteries and crematorium

· Parks and recreation

2 A schedule of proposed fees and charges for the 2024/25 year is also presented at Attachment C.

RECOMMENDATIONS

That the Council:

a) Adopts for the purposes of developing the Annual Plan 2024/25 and consulting with the community:

i) The draft 2024/25 operating budget for the Reserves and Recreational Facilities Group as shown/amended at Attachment A.

ii) The draft 2024/25 fees and charges schedules for the Reserves and Recreational Facilities Group as shown/amended at Attachment C.

operating budgets

Revenue

Rates

3 Rates have increased overall in the Reserves and Recreational Facilities Group by $914, 2.5%.

External Revenue

4 External revenue has increased by $159k, 2.3%. The main changes relate to aquatic fee income, which is budgeted to increase by $426k, $10% to recover some of the increase in costs to provide this service. Fees increases have been offset by removal of the revenue received by FIFA in 2023/24 of $312k.

5 The proposed increase in aquatic fees will result in this activity being funded 33% from fees and charges, and 67% from general rates. This does not comply with the current revenue policy which provides that 45% of the costs should be funded from fees and charges, and 55% from general rates. To achieve the policy, fees would need to increase by around 46% on current charges.

6 A full review of the revenue policy will be undertaken as part of the development of the 9 year plan 2025-34.

Grants and Subsidies Revenue

7 Grants and subsidies revenue has reduced $182k, 42.6%, due to Predator Free Jobs for Nature funding expiring in February 2024 and City Sanctuary expansion funding expiring in February 2025.

Expenditure

Personnel costs

8 Personnel costs have increased by $378k, 3.6%. The budget includes a general salary increase and provision for a living wage increase.

Occupancy costs

9 Occupancy costs have increased by $173k, 3.1% which reflect increases in rates, insurance, and electricity and gas costs.

Consumables and general costs

10 Consumables and general costs have decreased by $251k, 22% due to a reduction in consulting costs mainly related to playground design.

Grants and Subsidies

11 Grants and Subsidies decrease by $88k mainly due to the removal of expiring grants:

a) Tomahawk Smails Beach Care Trust $30k and

b) Dunedin Wildlife Hospital $75k.

Depreciation

12 Depreciation has increased by $773k, 11.0% reflecting the capital expenditure programme, and an increase in depreciation for the new Te Puna o Whakaehu asset.

FEES AND CHARGES

13 Proposed changes to fees and charges are discussed below.

· Aquatic services: fees have generally been increased by around 10% (between 8% -13%) to recover some of the cost increases. One main exception to relates to the Premium, Swim and Gym monthly (1, 3 , 6 and 12 months) membership fees. These have been adjusted by between -$14.50 to $89.00, 8% to 10%, to align more appropriately with weekly and fortnightly fees, however, five of the monthly fees were reduced to ensure the prices were equal to, or cheaper than the weekly membership fees.

· Cemeteries and crematorium fees and charges have generally been increased by 3%. However, the fee for Placement of Ashes - Columbarium Wall has been reduced by $15.10, 7%, to align with the fee for Ash Plot Interments.

· Parks and Recreation – Reserves: the Standard Lease, Licence or Agreement application/processing fee has increased $28.75, 50%. This fee has not increased in 25 years and the change reflects increased costs.

· Parks and Recreation – Sportsgrounds: fees have generally been increased by 3%, the exception being field lighting per booking (non-sports codes) which has been increased by $2.70, 15%, to reflect increased costs.

· Parks and Recreation – Facilities: fees have generally been increased by 3%, with the following exceptions:

o A range of fees have been added to the schedule which relate to Commercial Concessions, Commercial Use of Jetties/Wharves, Easements and Encroachments.

o Deborah Bay Marina – Berth (annual fee) has increased by $1,123.40, 69%, to align with comparable berthage facilities, following a review of several similar marina facilities managed by local authorities.

o Standard Lease, Licence or Agreement application/processing fee has increased by $28.75, 50%, reflecting increased costs.

Signatories

Author:	Heath Ellis - Acting Group Manager Parks and Recreation
Authoriser:	Jeanette Wikaira - General Manager Arts, Culture and Recreation

Attachments

	Title	Page
⇩a	Reserves and Recreational Facilities Income Statement	179
⇩b	Reserves and RecreationalFIS	180
⇩c	Draft Fees and Charges 2024/2025 Reserves and Recreational Facilities	181

SUMMARY OF CONSIDERATIONS

Fit with purpose of Local Government

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 Reserves and Recreational Facilities Group activities primarily contribute to the objectives and priorities of the above strategies.

Māori Impact Statement

Council budgets impact broadly across all Dunedin communities including Māori. The adoption of Te Taki Haruru – Māori Strategic Framework signals Council’s commitment to mana whenua and to its obligations under the Treaty of Waitangi. Mana whenua and Māori will have the opportunity to engage in the Annual Plan consultation process.

Sustainability

The Annual Plan 2024/25 is not proposing any changes to that provided for in the 10 year plan. Major issues and implications for sustainability are discussed and considered in the 50 year Infrastructure Strategy and financial resilience is discussed in the Financial Strategy of the current 10 year plan 2021-31.

LTP/Annual Plan / Financial Strategy /Infrastructure Strategy

This report provides draft budgets for the Reserves and Recreational Facilities Group for inclusion in the Annual Plan 2024/25.

Financial considerations

Financial considerations are detailed in the report.

Significance

Engagement – external

There has been no external engagement in updating the draft budgets for the Reserves and Recreational Facilities Group.

Engagement - internal

Staff and managers from across council have been involved in the development of the draft budgets.

Risks: Legal / Health and Safety etc.

There are no identified risks.

Conflict of Interest

There are no known conflicts of interest.

Community Boards

Community Boards will have an opportunity to engage with the Annual Plan 2024/25 consultation process.

Council

12 March 2024

Options for the replacement of the Hockey Turfs at Logan Park

Department: Executive Leadership Team

EXECUTIVE SUMMARY

1 The Otago Hockey Association (1990) Incorporated (Otago Hockey), submitted to the draft 2023-24 Annual Plan, seeking a funding grant of between $685,000 to $950,000 to replace the two artificial turfs at McMillan Hockey Centre at Logan Park.

2 Council asked staff to work with Otago Hockey to investigate options for the replacement of the hockey turfs and bring these options back in time for the 10 year plan 2024-34.

3 Council resolved at the meeting on 27 February 2024 to defer the 10 year plan 2024-34 and to prepare an Annual Plan for 2024/25.

4 This report updates Council on discussions held with Otago Hockey in relation to the replacement of artificial turfs at the McMillan Hockey Centre at Logan Park.

5 This report proposes that feedback be sought through the Annual Plan 2024/25 consultation process on Council’s preferred option for funding the replacement of the hockey turfs at the McMillan Hockey Centre at Logan Park.

6 Staff will report back to Council with recommendations during deliberations on the Annual Plan 2024/25.

RECOMMENDATIONS

That the Council:

a) Decides on preferred option for the replacement of the hockey turfs at Logan Park.

b) Notes that Council’s preferred option will be added into the draft Annual Plan 2024/25 budgets for the purpose of consulting with the community.

BACKGROUND

History of the artificial turfs at Logan Park

7 Records indicate that a formal hockey competition was established in Dunedin during the late 19th century. Since then, and up until 1990, hockey was played on grass fields. The DCC was responsible for furnishing and upkeeping 28 grass playing fields for this purpose.

8 Due to the ongoing, variable condition of grass playing surfaces in Dunedin during winter and recognising the need for a more reliable and suitable playing surface, discussions about the introduction of artificial turfs gained momentum in the late 1980s.

9 There are typically two types of artificial hockey turfs, being sand-based and the more modern water-based surface. Water-based turfs are the preferred playing surface as the water lubricates the pitch, reducing friction and allowing for quicker and smoother play, giving the ball a true and uniform roll. The water is continuously recycled and reused through a recovery pump and irrigation system.

10 Following a meeting in April 1988, The Otago Artificial Surfaces Trust (the Trust) was established for the purpose of raising funds for the construction of an artificial hockey turf.

11 This facility would be Dunedin’s first sand based artificial hockey surface comprising approximately 12,000m2 to be sited at Logan Park. The surface was for the benefit of the public of Otago and to provide a multi-purpose sporting and recreation area. This development led to a reduction in the number of grass fields required from the DCC for hockey.

12 By 1990, the Trust, alongside Otago Hockey had completed the first turf, accessed via a footpath from Union Street. This development was achieved entirely by funding raised by the Trust.

13 Over the next few years, the Trust raised further funds, including a Council funding grant of $175,000 and a loan of $450,000 that was guaranteed by the DCC. This enabled the construction of a second turf, this time a water-based turf, in 1998. The onsite pavilion was also completed the same year. The facility is known as the McMillan Hockey Centre.

14 After the completion of the second turf and the pavilion, all hockey games transferred to the McMillan Hockey Centre. At this time, the hockey facilities were passed over from the Trust to Otago Hockey for ongoing management.

15 In 2009, the original sand-based turf was replaced with a second water-based turf.

16 Due to increasing player numbers, capacity issues emerged at the McMillan Hockey Centre. Otago Hockey managed these capacity issues until 2021, when a third artificial turf was constructed to meet growing demand, this time at King’s High School and known as the Otago Community Trust King’s Turf (OCTKT).

17 Otago Hockey have said that there are around 2700 registered competition hockey players in Dunedin.

Lease Agreement at Logan Park

18 DCC and the Trust entered a lease for the premises forming part of Logan Park which commenced on 1 July 1999 and expired on 30 June 2019. A Deed of Variation of Lease was entered to vary the boundary of land.

19 A new lease was entered between DCC and Otago Hockey for the land situated on part of Logan Park at 65 Harbour Terrace (Premises) on 21 September 2020. The lease is for a term of 15 years, commencing on 1 July 2020 and expiring 30 June 2035.

20 The annual lease cost for the 2023/24 year for the Premises including 35 carparks is $9,518.20 + GST, being:

· Rent $6,438.20 + GST

· 35 carparks $3,080.00 + GST

21 The lease provides for annual rent reviews in line with the percentage increase or decrease of the Council’s general and community services rates.

22 In accordance with the lease, Otago Hockey must pay for all outgoings associated with the Premises, including building maintenance. The lease recognises that all buildings on the Premises are owned by Otago Hockey and also acknowledges that as at 1 July 2020 Otago Hockey owns all improvements located on the Premises including the building and associated facilities located on the Premises.

23 The lease provides that Otago Hockey may on the expiry of the Lease remove all or any of its improvements from the Premises on certain conditions. Otago Hockey may also be required by DCC to remove all or any of its improvements (including but not limited to drains, fencing and buildings) on written notice under the Lease.

Logan Park Reserve Management Plan

24 The McMillan Hockey Centre is located within the area known as Logan Park.

25 At its 27 April 2023 meeting, Council approved the Statement of Proposal to prepare a Reserve Management Plan for Logan Park.

Moved (Cr Andrew Whiley/Cr Jim O'Malley):

That the Council:

a) Approves the Statement of Proposal and the Stage 1 Engagement Questions for Logan Park Recreation Reserve, and the commencement of the public consultation process required by section 41(5) of the Reserves Act 1977.

Motion carried (CNL/2023/090)

26 While Logan Park is a long-established sport and recreation space in Dunedin there is no site-specific reserve management plan for the space. Logan Park is currently managed under the General Policies Reserve Management Plan and the Sports Grounds Reserve Management Plan.

27 The development of Logan Park in the past has been ad-hoc, compromising the efficient and effective use of the available space. Council occasionally receives requests to develop discrete parts of Logan Park for specific uses, for example the establishment of a sports hub.

28 Users of Logan Park have suggested that the area would benefit from a management plan to enable a more integrated approach to the management and use of the area.

29 Development of a site-specific management plan for Logan Park will establish an overarching approach which outlines Council’s role in the current and future planning, development, and management of the area. This will enable more informed and consistent decision making.

30 The development of a management plan will give the Council an opportunity to respond to the community’s changing needs and requirements and will enable best practice models and trends to be considered.

Previous DCC Funding Arrangements

31 A summary of DCC funding for hockey turfs is shown in Table 1.

Year	Type	Annual Amount	Term	Total Amount
1998	Funding Grant	N/A	One-off	$175,000
2008	Loan $500,000 (principal plus interest - forgiven)	$72,373.30 (incl interest)	10 years	$725,373
2012	Funding Grant	$30,000	10 years	$300,000
2021	Funding Grant (OCTKT)	$500,000	One-off	$500,000
2021	Funding Grant (OCTKT)	$10,000	10 years (to June 2030)	$100,000
		Total 1998 - 2030		$1,800,373

Table 1 DCC Funding Grants for Hockey Turfs

32 In addition to the original funding grant of $175,000 and underwriting of a $450,000 loan in 1998, DCC has provided financial assistance in various forms over the years, to support Otago Hockey in the provision of the artificial turfs.

33 In 2008, Otago Hockey asked DCC for financial assistance to replace the original sand-based turf, which had worn out, with a new, water-based turf.

34 A report was presented to DCC’s Community Development Committee at their meeting of 15 July 2008 outlining the urgency and the funding required.

Following discussion, it was moved (Butcher/Cull):

"1 That the Council loans Otago Hockey Association (Otago Hockey) $500,000 for construction of a second water turf. The Loan Interest plus principal would be forgiven at a rate of $76,355 pa for 10 years, subject to the Otago Hockey meeting criteria to be set out in a Service Level Agreement. The reduction in debt would begin in the 2008/09 year and would continue for 10 years.

2 That the over-expenditure of $38,178 in the 2008/09 financial year is met by a reprioritisation or deferral of items in the 2008/09 Parks and Reserves Budget.

3 That from the 2009/10 year this debt forgiveness in Parks and Reserves be funded by an increase in rates. The total cost to ratepayers will be $725,373 over the 10 years.”

35 In 2012, Otago Hockey submitted to the draft 2012-22 Long Term Plan requesting funding for the replacement of the original water-based turf that had reached the end of its useful life.

36 The minutes of the Annual Plan Hearings of May 2012 reflect that:

xii) Otago Artificial Surface Trust

It was moved (Staynes/Noone):

“1 That an additional $30,000 be included annually commencing in 2013/14 for a period of 10 years to assist the Otago Artificial Surface Trust to replace the worn out artificial turf situated at the Otago Hockey Facility at Logan Park.

2 That staff work with the Otago Hockey Association to identify the best mechanism, up to $30,000 pa, to achieve the upgrade of an artificial turf.

3 That Otago Hockey make the turf available to other sporting organisations when not required for hockey purposes."

Following discussion, the motion was put and carried.

37 A new artificial hockey turf was constructed at King’s High School in 2021. DCC provided Otago Hockey with a $500,000 funding contribution towards the construction of this facility.

38 DCC also provides Otago Hockey with an annual funding grant of $10,000 (ending June 2030) as a contribution towards maintenance of the King’s Hockey Turf.

DISCUSSION

39 Supporting quality sport and recreation facilities is a key part of the Parks and Recreation Strategy 2017 - 2027.

40 The McMillan Hockey Centre provides for formal and casual hockey games, festival, tournaments, and training.

41 Otago Hockey estimate that during the hockey season, the turfs are booked for 130 hours per week, from early morning into the night. Outside of the hockey season, the turfs are used for a variety of sporting codes for organised training purposes, plus casual, informal use.

42 The two existing turfs were installed in 2009 and 2012 respectively. With a nominal life expectancy of 10 years, both turfs are now past their useful life and require replacement. Otago Hockey report that the playing surfaces on both turfs at the McMillan Hockey Centre are becoming difficult and costly to repair and increasingly dangerous to play on.

43 Otago Hockey have indicated that if the turfs are not replaced with urgency, they will be approaching DCC to request the preparation of up to 20 dedicated grass fields for junior and lower grade adult hockey to allow for the continuation of the sport at current participation rates.

44 There is an insufficient number of available DCC owned grass fields to accommodate hockey if this were to happen.

Economic Impact - Tournaments

45 In 2022, Dunedin hosted the National Hockey Championship, which attracted 35 teams and 60 officials from across New Zealand. That tournament was held over seven days and eight nights, resulting in an estimated 7000 bed night impact for Dunedin accommodation providers.

46 In 2023, Hockey New Zealand Incorporated (Hockey New Zealand) awarded the National U18 Boys tournament hosting rights to Dunedin. That tournament was also held over seven days and eight nights, with 21 teams from across New Zealand. This resulted in an estimated 4000 participant bed nights impact for Dunedin accommodation providers.

47 Hockey New Zealand have stated that Dunedin is an important hosting venue for premier national (Tier 1) tournaments, as one of only two Hockey Associations in the South Island with 3 turfs within proximity of each other.

48 Hockey New Zealand have further stated that despite Dunedin’s importance as a tournament venue, the core infrastructure needs to be at a level that supports premier national events.

49 We understand that Hockey New Zealand’s opinion now is that the turfs at the McMillan Hockey Centre are no longer at that level and feedback from recent premier tournament participants indicates a reluctance to return to Dunedin until the turfs have been replaced.

50 Otago Hockey has recently completed the “Expressions of Interest” phase with Hockey New Zealand for 2024 tournaments. Hockey New Zealand allocated a Schools Second Eleven tournament to Dunedin. No higher tier tournaments were allocated and are unlikely to be allocated until the turfs are replaced.

Funding options

51 Otago Hockey submitted to the draft 2023-24 Annual Plan, seeking a funding grant of between $685,000 to $950,000 to replace the two artificial turfs at Logan Park. Council asked that staff work with Otago Hockey to explore funding options.

52 Otago Hockey report that it is increasingly difficult to secure third-party funding (e.g., gaming trust funding) and that any such funding is used to support the operating costs of running a regional sports association. There is usually insufficient additional funding to pay for large-item capital upgrades such as turf replacement.

53 DCC has previously guaranteed loan arrangements for resurfacing the turfs since the establishment of the McMillan Hockey Centre. Acting as a financial guarantor for a third-party presents unnecessary risk to the DCC and may no longer be a viable position for Council.

54 If Council wishes to fund the replacement of the hockey turfs, there are two funding models that can be utilised:

i. funding the replacement work and taking over the ownership of the hockey turfs at the McMillan Hockey Centre, or;

ii. providing a grant to Otago Hockey.

55 To support Otago Hockey’s submission to the 2023-24 Annual Plan, Otago Hockey obtained a quote for between $685,000 and $950,000 to replace the turfs. The higher figure being a full replacement of the underlay (this would not be known until the turfs were lifted).

OPTIONS

Option 1 – Take over ownership of the turfs and replace the turfs in the 2024-25 year (Recommended Option)

56 If Council wishes to replace the hockey turfs and take over ownership of the turfs and the associated irrigation system, the cost could be capitalised and be depreciated over a ten-year period.

57 The turfs would be managed and maintained by Parks and Recreation Services and leased back to the users of the turf through annual hire-agreements, aligned to DCC’s fees and charges for sports fields. This is consistent with how the multi-use artificial turfs at Logan Park are managed.

58 This option would require a variation to the Lease to acknowledge the change of ownership of the turfs at the Premises from Otago Hockey to DCC.

59 Otago Hockey have said that the annual maintenance costs for the McMillan Hockey Centre turfs are approximately $10,000 per annum, which includes annual turf grooming undertaken by the turf supplier. Towards the end of their nominal ten-year life, some repairs are typically required. This increases the annual maintenance costs to approximately $15,000.

60 This option would require capital budget to be added to the draft Annual Plan 2024/25.

61 A breakdown of annual budget impact over 10 years for this option is shown in Table 2.

Expenditure Option 1 – ownership of turfs	24/25	25/26	26/27	27/28	28/29	29/30	30/31	31/32	32/33	33/34
	$000	$000	$000	$000	$000	$000	$000	$000	$000	$000
Capital	1,000
Operational (incl Depreciation, maintenance, principal and interest)	41	207	207	207	207	207	207	212	212	212

Table 2 – Expenditure 2024-34 – Option 1

Advantages

· Gives DCC the opportunity to undertake an integrated planning approach of the recreational assets at Logan Park and decision-making ability for reserve management planning on the future use of the site.

· Allows competition hockey to continue to be played on a quality surface and retain current player numbers for the sport.

· Does not impact on DCC grass sports fields that are at capacity during the winter.

· Dunedin would be recognised by Hockey New Zealand as having facilities that are suitable for Tier 1 national level tournaments.

Disadvantages

· Impacts Council’s capital (year 2024-25) and operational budget (depreciation and maintenance), in years 2024-34.

Option Two – Grant Funding – Lump sum

62 If Council decides to provide a lump sum grant then Otago Hockey would continue to own, manage and maintain the turfs at Logan Park and would manage the replacement project and draw upon the grant funds in the 2024-25 year.

63 A new funding agreement would be entered into with Otago Hockey.

64 A breakdown of annual budget impact over 10 years for this option is shown in Table 3.

Expenditure Option 2 – Grant – Lump Sum	24/25	25/26	26/27	27/28	28/29	29/30	30/31	31/32	32/33	33/34
	$000	$000	$000	$000	$000	$000	$000	$000	$000	$000
Capital	0	0	0	0	0	0	0	0	0	0
Operational (incl. Depreciation, maintenance, principal and interest)	1,000	0	0	0	0	0	0	0	0	0

Table 3 – Expenditure 2024-34 - Option two

Advantages

· Allows competition hockey to continue to be played on a quality surface and retain current player numbers for the sport.

· Does not impact on DCC grass sports fields that are at capacity during the winter.

· Dunedin would be recognised by Hockey New Zealand as having facilities that are suitable for Tier 1 national level tournaments.

· Does not impact Council’s capital budget.

Disadvantages

· Does not give DCC greater control of the recreational assets at Logan Park and decision-making ability on the future use of the site.

· Impacts Council’s operational budget in the 2024-25 year.

Option Three – Grant funding – Annual

65 If Council decides to provide an annual grant for 10 years then Otago Hockey will need to secure a loan for the full replacement costs. Otago Hockey would continue to own, manage and maintain the turfs at Logan Park and would manage the replacement project and draw upon the grant funds each year between 2024-34.

66 A new funding agreement would be entered into with Otago Hockey.

67 A breakdown of annual budget impact over 10 years for this option is shown in Table 4.

Expenditure Option 3 – Grant - Annual	24/25	25/26	26/27	27/28	28/29	29/30	30/31	31/32	32/33	33/34
	$000	$000	$000	$000	$000	$000	$000	$000	$000	$000
Capital	0	0	0	0	0	0	0	0	0	0
Operational (incl. Depreciation, maintenance, principal and interest)	100	100	100	100	100	100	100	100	100	100

Table 4 Expenditure 2024-34 Option three

Advantages

· Allows competition hockey to continue to be played on a quality surface and retain current player numbers for the sport.

· Does not impact on DCC grass sports fields that are at capacity during the winter.

· Dunedin would be recognised by Hockey New Zealand as having facilities that are suitable for Tier 1 national level tournaments.

· Does not impact Council’s capital budget.

Disadvantages

· Does not give DCC greater control of the recreational assets at Logan Park and decision-making ability on the future use of the site.

· Impacts Council’s operational budgets in the years 2024-34.

· Risk that Otago Hockey would not be able to secure a loan facility without a guarantor.

Option Four – Do not fund the replacement of the hockey turfs.

Advantages

· Does not impact Council budgets.

Disadvantages

· Hockey games are likely to be suspended while Otago Hockey seek alternative third-party funding.

· Dunedin will not be recognised by Hockey New Zealand as having facilities that are suitable for Tier 1 national level tournaments until the turfs at the McMillan Hockey Centre are replaced.

· Otago Hockey will request the preparation of DCC grass fields for lower and junior grade hockey for continuity of the hockey competition. DCC grass sports fields are already at capacity during the winter.

NEXT STEPS

68 The Annual Plan 2024/25 consultation information will reference Council’s preferred option and enable the community to provide feedback.

Signatories

Author:	Scott MacLean - General Manager, Climate and City Growth
Authoriser:	Jeanette Wikaira - General Manager Arts, Culture and Recreation

Attachments

There are no attachments for this report.

SUMMARY OF CONSIDERATIONS

Fit with purpose of Local Government

This decision enables democratic local decision making and action by, and on behalf of communities and promotes the social, economic, environmental and cultural 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	☐	☐	☒

Supporting quality sport and recreation facilities is a key part of the Parks and Recreation Strategy 2017. Hockey tournaments provide an economic benefit to Dunedin.

Māori Impact Statement

Feedback gained through engagement with Māori during the Sports Facilities Review, indicates that provision of quality sport and recreational facilities is one way that would encourage greater participation of Māori in sports and active recreation. Mana whenua and Māori have an opportunity to engage with the Annual Plan consultation process.

Sustainability

The hockey turfs at Logan Park are near major public transport routes and cycleways, enabling alternative modes of transport to be used for those participating and watching hockey.

LTP/Annual Plan / Financial Strategy /Infrastructure Strategy

No allowance has been made in the draft Annual Plan budgets for the replacement of the hockey turfs.

Financial considerations

Financial considerations are discussed in the report.

Significance

Information on the hockey turf replacement will be made available as part of the Annual Plan 2024/25 consultation.

Engagement – external

Extensive engagement with Otago Hockey and New Zealand Hockey has been undertaken.

Engagement - internal

Parks and Recreation Services, Legal and Finance staff have been consulted.

Risks: Legal / Health and Safety etc.

The are no identified legal risks. As DCC is the primary provider of sport and recreational facilities in Dunedin, there is reputational risk of not funding the turf replacement.

Conflict of Interest

There are no identified conflicts of interest.

Community Boards

There are no implications for Community Boards, although this decision may be of interest to Community Boards.

Council

12 March 2024

Governance and Support Services - Operating Budget 2024/25

Department: Civic and Finance

EXECUTIVE SUMMARY

1 This report provides an overview of the operating expenditure (opex) budgets for the Annual Plan 2024/25 for the Governance and Support Services Group, as shown at Attachment A. A draft funding impact statement (FIS) is shown at Attachment B. Activities within this group include:

· Business services (IT)

· Civic and administration

· Civil defence

· Corporate leadership

· Council communications and marketing

· Customer services agency

· Māori Partnerships

· South Dunedin Future

· Zero Carbon

2 A schedule of proposed fees and charges for the 2024/25 year is also presented at Attachment C.

RECOMMENDATIONS

That the Council:

a) Adopts for the purposes of developing the Annual Plan 2024/25 and consulting with the community

i) The draft 2024/25 operating budget for the Governance and Support Services Group as shown/amended at Attachment A.

ii) The draft 2024/25 fees and charges schedules for the Governance and Support Services Group as shown/amended at Attachment C.

operating budgets

Revenue

External Revenue

3 External revenue has increased overall in the Governance and Support Services Group by $334k, 1.57% due in part to increased revenue from the Waipori Fund. Offsetting this increase is a reduction in recoveries from DCHL.

Grants & Subsidies

4 Grants and subsidies have increased in the Governance and Support Services Group by $2.559 million. Government funding for the 3 Waters Strategic Work Programme has been replaced by Better off Funding. Better off Funding has been provided for various projects across Council. The operating grant is being managed corporately and allocated to individual activities through internal revenue.

Internal Revenue

5 Internal revenue has increased overall in the Governance and Support Services Group by $2.012 million, 7% due in part to Better off funding allocations within the group.

6 Other internal recoveries, including BIS and corporate charges have increased in line with the Local Government Cost Index.

Expenditure

Personnel costs

7 Personnel costs have decreased by $490k, 2.6%. The budget includes a general salary increase, partially offset by a reduction in staff numbers.

Operations and maintenance

8 Operations and maintenance costs have increased by $701k, 13% due to:

· CCM - increased costs for web analytics and security, $76k.

· BIS - increased Microsoft and upgrade costs to move to Windows 11, $250k.

· Fleet operations – increased fuel costs, $95k.

· South Dunedin Future’s - budget for impact assessments, community engagements and technical advice $293k. Note this budget has been transferred from consumables and general costs.

Consumables and general costs

9 Consumables and general costs have increased by $970k, 9% partly due to:

· CCM - increased software licence and advertising printing costs, $113k.

· BIS - an increase in software licence fees of $743k including Microsoft licencing, Pathway, and new software for contract management, procurement, customer services, infrastructure asset management and recruitment.

· South Dunedin Future’s – consultancy costs have increased by $643k, funded by Better off Funding. Offsetting this increase is a $293k transfer of budget to operations and maintenance – see note above.

Grants and subsidies

10 Grants and subsidies have increased by $100k, 24.3%, reflecting the unallocated grants budget discussed separately in the Grants Report.

Internal charges

11 Internal charges have increased by $2.858 million, 40% reflecting increased corporate charges and the Better of Funding being allocated to other council activities.

FEES AND CHARGES

12 Fees and charges for activities in the Governance and Support Services have largely remained the same or have been increased by 3% to reflect increased costs.

13 New fees are proposed in relation to provision of in-house legal services. This is to cover the costs of legal services that are provided for private benefit.

Signatories

Authoriser:

Robert West - General Manager Corporate Services

Leanne Mash - General Manager Business and Community Engagement

Attachments

	Title	Page
⇩a	Governance and Support Services Income Statement	205
⇩b	Governance and Support Services FIS	207
⇩c	Draft Fees and Charges 2024/25 Governance and Support Services	208

SUMMARY OF CONSIDERATIONS

Fit with purpose of Local Government

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 Governance and Support Services Group activities primarily contribute to the objectives and priorities of the above strategies.

Māori Impact Statement

Council budgets impact broadly across all Dunedin communities including Māori. The adoption of Te Taki Haruru – Māori Strategic Framework signals Council’s commitment to mana whenua and to its obligations under the Treaty of Waitangi. Mana whenua and Māori will have the opportunity to engage in the Annual Plan 2024/25 consultation process.

Sustainability

LTP/Annual Plan / Financial Strategy /Infrastructure Strategy

This report provides draft budgets for the Governance and Support Services Group for inclusion in the Annual Plan 2024/25.

Financial considerations

Financial considerations are detailed in the report.

Significance

Engagement – external

There has been no external engagement in developing the draft budgets for the Governance and Support Services Group.

Engagement - internal

Staff and managers from across council have been involved in the development of the draft budgets.

Risks: Legal / Health and Safety etc.

There are no identified risks.

Conflict of Interest

There are no known conflicts of interest.

Community Boards

Community Boards will have an opportunity to engage with the Annual Plan 2024/25 consultation process.

Council

12 March 2024

Dunedin Railways 2024/25

Department: Enterprise Dunedin

EXECUTIVE SUMMARY

1 The purpose of this report is to defer the proposed decision on the future of Dunedin Railways Limited (DRL) to the 9 year plan 2025-34 and direct Dunedin City Holdings Limited (DCHL) to continue to fund up to $2.0M per annum to maintain and operate DRL using the KiwiRail line and Taieri Gorge line to Hindon until 30 June 2025.

2 On 31 January 2023, Council approved the retention of a train service through the Taieri Gorge and noted that staff would provide further updates in time for the 10 year plan 2024-34. On 27 February 2024 Council approved the preparation of an Annual Plan 2024/25 for community consultation followed by a 9 year plan 2025-34.

3 Since the Council resolution to separate operational above-rail services and below-rail maintenance several challenges have been identified. Advice from Deloitte has indicated that additional regulatory compliance and costs would eventuate in separating above rail services and below maintenance and therefore this option is longer recommended.

4 An economic impact assessment on the possible extension of the Taieri Gorge to the Otago Central Rail Trail was produced for the Otago Central Rail Trail Trust (OCRTT) by Benje Patterson People and Places in October 2023.

5 This report, Economic Impact of a Taieri Gorge Extension to the Otago Central Rail Trail followed two previous reports prepared by Mr Patterson for Dunedin Council in relation to rail usage through the Taieri Gorge:

a) Dunedin Railways - Economic Impacts on Dunedin’s Economy report (March 2020).

b) Dunedin Railways - The Economic Impacts of Future Options report (September 2021).

6 MartinJenkins was commissioned to undertake a peer review of the three Benje Patterson reports. They concluded the timing and use of economic impact assessment methodology makes it difficult to compare the relative costs and benefits of using the Taieri Gorge corridor for either rail, cycling or walking.

7 As a result, staff propose to undertake further work to compare the continued use of the Taieri Gorge for rail services with options including cycling or walking. This work would be carried out independently using cost benefit analysis and brought back to Council in advance of the 9 year plan 2025-34.

8 In order to meet the future visitor demand for DRL particularly the cruise market, DCHL will need to continue to maintain the current hibernated service for the 2024/25 summer period.

RECOMMENDATIONS

That the Council:

a) Defers the proposed decision on the future of Dunedin Railways to the 9 year plan 2025-34.

b) Directs Dunedin City Holdings Limited to continue to fund up to $2.0M per annum for maintaining and operating Dunedin Railways Limited using the KiwiRail line and Taieri Gorge line to Hindon until 30 June 2025.

c) Directs staff to prepare an options assessment of rail, cycling and walking in advance of the 9 year plan 2025-34.

d) Notes the report will also include governance options and will align with any proposals in the Council’s Draft Investment Plan.

e) Notes this work will include liaison with various groups interested in the future use of the rail corridor.

BACKGROUND

9 On 6 April 2020, Council instructed DCHL to hibernate DRL as a result of the Covid-19 pandemic while potential sustainable options for the future were identified and evaluated.

10 In a report to Council on 23 November 2021, Council directed DCHL to continue to fund up to $2.4M per annum for maintaining and operating DRL using the KiwiRail line and Taieri Gorge line to Hindon until 30 June 2024:

Moved (Cr Sophie Barker/Cr Steve Walker):

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 2021/22 for developing an alternative storage and workshop facility for Dunedin Railways Limited.

c) Notes that staff would 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 that staff would 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.

Division

The Council voted by division:

For: Crs Sophie Barker, David Benson-Pope, Rachel Elder, 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: Cr Lee Vandervis (1).

Abstained: Nil

The division was declared CARRIED by 13 votes to 1.

Motion carried (CNL/2021/195).

11 Since this time DRL has entered into a charter service agreement with Pounamu Tourism Group. Under this arrangement DRL has operated services through the Taieri Gorge during 2022/23 and 2023/24 targeted to the cruise market. Public excursions have also been operated during this period.

12 On 31 January 2023 Council resolved to retain a train service through the Taieri Gorge.

Moved (Cr Sophie Barker/Cr Mandy Mayhem):

That the Council:

a) Approves the retention of a train service through the Taieri Gorge.

b) Approves the separation of above-rail operations and below-rail maintenance in any future Dunedin Railways Limited model.

c) Authorises the Chief Executive Officer to seek proposals from potential operators for above and below-rail services along the Taieri Gorge.

d) Notes that staff will provide further updates to Council on these matters in time for the 10-year plan 2024-34.

Division

The Council voted by division.

For: Crs Bill Acklin, Sophie Barker, David Benson-Pope, Christine Garey, Kevin Gilbert, Carmen Houlahan, Marie Laufiso, Cherry Lucas, Mandy Mayhem, Jim O'Malley, Steve Walker, Andrew Whiley and Mayor Jules Radich (13).

Against: Crs Lee Vandervis and Brent Weatherall (2).

Abstained: Nil

The division was declared CARRIED by 13 votes to 2.

Motion carried (CNL/2023/019)

Lease Arrangements

13 In April 2020 DCHL became the sole shareholder in DRL after purchasing the Otago Excursion Train Trust’s (OETT) 27.97% holding.

14 The Taieri Gorge Rail corridor, bridges, and tunnels are owned by the New Zealand Railways Corporation (NZRC) who lease them to KiwiRail, who in turn sublease the corridor to DRL for $1 per annum.

15 Although NZRC owns the corridor, bridges, and tunnels, DRL has responsibility for maintenance of the corridor, bridges, and tunnels. DRL owns the railway track, sleepers, and other railway infrastructure (fastening, ballast, poles, pylons, and signalling equipment).

16 The current lease between DCC and KiwiRail is for 40 years (less one day) with one right of renewal for another 40 years (less one day). Subject to renewal on 31 December 2030 the lease has an end date of 30 December 2070.

17 Under the current lease DRL is not required to operate a railway. However, NZRC and KiwiRail approval is required for any use of the corridor other than a railway. Further details of the lease arrangements, ownership and health and safety are set out in Attachment A.

DISCUSSION

18 Since Council’s 31 January 2023 resolution, staff have sought further advice from Deloitte to understand the implications of separating above rail operations and below rail maintenance.

19 Deloitte noted the following disadvantages with this option:

a) The NZTA requirements would be more onerous.

b) There would be additional compliance costs, including:

· Governance.

· Administrative.

· Accounting, financial reporting and statutory auditing.

· Management.

· The need for a contract between the respective entities covering the commercial aspects of the arrangement/use of asset.

20 Deloitte have advised this approach would result in further regulatory compliance and additional costs and therefore the option to separate above rail services and below rail maintenance is longer recommended.

Economic Impact Reports – (Attachments B, C and D)

21 The three Economic impact reports are attached even though they have a confidential watermark, the reports are public documents.

22 A report Economic impact assessment on the possible extension of the Taieri Gorge to the Otago Central Rail Trail was produced for the Otago Central Rail Trail Trust (OCRTT) by Benje Patterson People and Places (Mr Patterson) in October 2023.

23 This report followed two previous reports prepared by Mr Patterson in relation to rail usage through the Taieri Gorge:

a) The March 2020 Dunedin Railways-Economic Impacts on Dunedin’s Economy report prepared for Dunedin City Council.

b) The September 2021 Dunedin Railways – The Economic Impacts of Future Options report prepared for Dunedin City Council.

24 The three reports are included in Attachments B-D of this report.

Review of Economic Impact Assessments

25 A peer review of the three reports prepared by Mr Patterson was undertaken by MartinJenkins, see Attachment E. The intention of the review was to develop a better understanding of the methodology and assumptions used across all three reports which were produced at different times. MartinJenkins concluded:

a) Overall, the individual analyses and underlying methods used in each of the reports are based on accepted economic principles and methods.

b) But when considered together there are some inconsistencies in approach that make direct comparison difficult.

c) In some instances, there was limited evidence or justification regarding some key inputs and assumptions could have been more clearly stated and validated.

d) The omission of relevant factors set out elsewhere in this report, specifically the exclusion of the wider direct and indirect economic impacts of DRL’s capital and operational expenditure, underestimate the total economic impact of DRL.

e) Further, the exclusion of employment impacts in DRL reports and their inclusion in the impact of the trail extension, makes the reports incomparable.

f) The Taieri Gorge cycle track extension analysis acknowledges that it does not include any assessment of the costs of removing the existing rail track and establishing the cycle track.

g) These differences in approach and method make it difficult to make direct comparisons between the assessments.

h) More generally, the economic impact analysis reports should not be confused with evaluative methods like cost benefit analysis where the economic benefits (among others) would be weighed against investment costs and other opportunity costs to estimate the return on investment.

26 DRL have continued to undertake required maintenance to run charter services to Hindon and operational activities including marketing and staffing. DRL estimate the cost to continue these services at their current levels will be up to $2M for 2024/25.

2024/25 Annual Plan and Next Steps for the 9 year plan 2025-34

27 As noted by MartinJenkins the three economic impact assessment reports produced by Mr Patterson make it challenging to compare the relative costs and benefits of rail with cycling and walking options in the Taieri Gorge.

28 As a result, further work will be undertaken to compare the continued use of the Taieri Gorge for rail services with alternative options such as cycling or walking. This work would be carried out independently by a consultant and would take a broad approach that will include a cost benefit analysis.

29 This analysis will consider a wide range of options including but not limited to:

· The use of the Taieri Gorge and rail corridor for rail services.

· Use of the Taieri Gorge rail corridor for cycling and walking.

· Use of the Taieri Gorge corridor for rail and other areas of the Taieri Gorge for cycling and walking.

30 The consultant would work with various interested groups in preparing advice for Councillors to consider as part of the 9 year plan process. These groups would include (but are not limited to) the Otago Excursion Train Trust, Project Steam, Otago Central Rail Trail Trust, and the Dunedin Tracks Network Trust.

31 The two community boards would be key contributors to this work.

32 At the same time, staff would review governance options for ongoing operation of the train to ensure that the advice provided to Council was aligned to any proposals in the Council’s draft Investment Plan that will also be considered and consulted on as part of the 9 year plan.

33 Enterprise Dunedin staff will work with the local Strath Taieri community to look at opportunities in Middlemarch and surrounds for the development of further tourism product were the train service to resume to the village on a regular basis.

34 In order to meet the future visitor demand for DRL (particularly the cruise market), DCHL would need to maintain the current hibernated level of service for the 2024/25 summer period.

35 This would continue the current arrangements whereby DCHL funds up to $2.0m per annum for maintaining and operating Dunedin Railways Limited using the KiwiRail line and Taieri Gorge line to Hindon until 30 June 2025.

OPTIONS

Option One – Recommended Option - Continue with the DCHL model until 30 June 2025 and undertake evaluation of options for use of Taieri Gorge

36 This option would continue the current arrangements whereby DCHL funds up to $2.0m for the operation and maintenance of the DRL service using the national rail network and Taieri Gorge to Hindon until 30 June 2025.

37 An independent cost benefit analysis would be undertaken to compare the continued use of the Taieri Gorge for rail services with alternative use such as cycling or walking. The consultant will engage with a wide range of stakeholders on this work which would inform advice to Council in advance of public consultation as part of the 9 year plan 2025-2034.

38 Staff will look at options for ongoing governance for DRL aligned to any decision of Council in their draft Investment Plan.

39 Enterprise Dunedin staff will look at opportunities for developing additional tourism product in Middlemarch to strengthen the tourism offering for domestic and international visitors.

Advantages

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

· Retains an important visitor attraction in the short term while not constraining future decision making on the long-term use of the Taieri Gorge.

· Maintains the current rail service provided by DCHL with the potential for costs being partially offset by passenger revenue.

· Allows time for a comprehensive analysis on the costs and benefits of continued use of the Taieri Gorge corridor for rail services with other options such as cycling and walking (or combination of rail, cycling and walking).

· Allows time for OCRTT to complete their feasibility study on options for cycle trail extensions from Middlemarch to Wingatui.

· Allows time for OETT to further develop their business case on future rail use of the Taieri Gorge.

Disadvantages

· Requires investment of up to $2.0M per annum by DCHL in maintenance and operations until 30 June 2025.

· Continued constrained economic benefit to the city due to the operation of hibernated rail services.

· May require additional investment by DCHL to maintain rail infrastructure from Hindon to Middlemarch to 30 June 2025.

· Ongoing hibernation may impact on the brand value of DRL as a product and attractiveness of Dunedin as a visitor destination.

Option Two – Discontinue Funding

40 Under this option (which was also presented to Council on 23 November 2021) staff would prepare further advice to discontinue the use of the Taieri Gorge and report back to Council.

Advantages

· Allows consideration of alternative uses of the Taieri Gorge.

· Less investment may be required than maintaining infrastructure tracks and structures from Wingatui to Middlemarch.

Disadvantages

· No interim operation of the DRL service, loss of a tourism product and attractiveness of Dunedin as a visitor destination.

· Constrains future decision making and public consultation on the future use of the Taieri Gorge corridor.

· Will still likely require some investment by DCHL for the maintenance of the rail corridor, bridges, and tunnels under the sublease with NZRC and KiwiRail 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.

NEXT STEPS

41 If Council approves the recommended option staff will prepare a scope of work and then engage a consultant to undertake the review of the Taieri Gorge for rail services, cycling and walking.

42 The work will be added to the forward work programme for the Strategy, Planning and Environment Committee to ensure Councillors are kept up-to-date with the progress of the work.

43 A report will be prepared in time for Council to consider options for consultation with the community as part of the 9-year plan 2025-34.

Signatories

Author:	Fraser Liggett - Economic Development Programme Manager
Authoriser:	Sandy Graham - Chief Executive Officer

Attachments

	Title	Page
⇩a	Summary of Leasing, Ownership and Health and Safety Matters for the Taieri Gorge Corridor	219
⇩b	Dunedin Railways- Economic Impacts on Dunedin's Economy March 2020	224
⇩c	Dunedin Railways - The Economic Impacts of Future Options September 2021	233
⇩d	Economic Impacts of a Taieri Gorge Extension to the Otago Central Rail Trail October 2023	250
⇩e	MartinJenkins Peer Review of Economic Impact Assessment Reports	267

SUMMARY OF CONSIDERATIONS

Fit with purpose of Local Government

This decision enables democratic local decision making and action by, and on behalf of communities.

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 which it provides. Dunedin Railways Limited operations also contribute to the social wellbeing strategy by supporting stronger communities.

Māori Impact Statement

Representatives from Te Runaka o Otakou and Kati Huirapa Runaka ki Puketeraki have previously been engaged in discussions and workshops regarding Dunedin Railways Limited.

Sustainability

Representatives from Council’s Zero Carbon Team have been engaged and involved in the future options on Dunedin Railways Limited. Dunedin Railways Limited have developed an emissions reduction action plan that states while some operational efficiency savings could be achieved in the use of diesel fuel, this would be minor, and more significant changes would be required to achieve substantial gross emissions reduction.

LTP/Annual Plan / Financial Strategy /Infrastructure Strategy

The options proposed in the report will result in a report for Councillors to consider as part of the 9 year plan.

Financial considerations

DCHL have previously estimated the financial support for Dunedin Railways Limited will be up to $2.4M per annum until 30 June 2024. DRL estimate up to $2M may be required for 2024/25.

Significance

The decision to maintain the current arrangements for a further year is considered low in terms of Council’s Significance and Engagement Policy. The decision on the future of Dunedin Railways limited will be further considered as part of the 9 Year Plan 2025-34.

Engagement – external

The report that will be prepared for the 9 year plan will involve engagement with a wide range of external groups.

Engagement - internal

The Finance, Legal, Transport, Zero Carbon, Procurement and Māori Partnerships have been engaged on the future options for Dunedin Railways Limited.

Risks: Legal / Health and Safety etc.

Risks have been identified in the main body of this report.

Conflict of Interest

There are no known conflicts of interest.

Community Boards

Matters in this report will be of particular interest to the Mosgiel-Taieri and Strath Taieri boards who have a direct interest in future plans for the Taieri Gorge part of the DRL service. Both the West Harbour and Waikouaiti Coast Community Boards also have an interest in the future operation of the train .

Council

12 March 2024

DCC Grants - Update Report

Department: Corporate Policy

EXECUTIVE SUMMARY

1 This report provides an update about the Dunedin City Council’s (DCC) Grants Review.

2 It outlines the next steps in the Grants Review work programme taking into account Council’s decision to proceed with an annual plan for 2023/2024, followed by a 9-year plan 2025-2034 (9YP).

RECOMMENDATIONS

That the Council:

a) Notes the next steps in the DCC’s Grants Review work programme.

BACKGROUND

3 DCC grants support the well-being of Ōtepoti Dunedin residents through investment in local community activities and events, and supporting local groups who want to make a positive contribution to the city.

4 A grants workstream was established as part of 10-year plan 2024-2034 (10YP) preparations. This workstream has collated and identified a range of DCC grant categories, budgets and expenditure in order to inform the 10YP process.

5 In September 2023, Council was provided with an overview of 10 DCC grant categories, budgets, and expenditure. The overview report noted the need to better understand the wider granting context and Council’s role, noting that the DCC’s Grants Management Policy (the Grants Policy) was due to be reviewed in 2024.

6 In February 2024, Council agreed to proceed with an annual plan for 2023/2024, followed by a nine-year plan (9YP).

7 This report outlines the work undertaken since September 2023. It details the next steps in the Grants Review work programme, taking into account the annual plan process for 2024/2025, and the review of the Grants Policy.

DISCUSSION

A summary of work undertaken since September 2023

8 The initial review of DCC’s grant information suggests that further assessment is required to establish whether:

a) some grants need to increase in order to meet short-to-medium term community need;

b) grants align with original intent and purpose and

c) whether grants meet medium-to-longer term need (where appropriate.)

9 Other factors to consider are:

a) grant criteria. For example, whether grants to maintain community assets such as community halls, include factoring in the increase cost in building materials, labour or inflation;

b) opportunities to streamline grants administration, monitoring and reporting.

10 The above work will inform the Grants Policy Review. This is expected to take 12 months to complete. The review findings in turn, will be integrated into the DCC’s 9YP.

Annual Plan Considerations

11 An updated list of Grants budgets will be circulated on 12 March 2024 as these are still being finalised. The updated figures reflect some minor changes from the September 2023 numbers which will be explained by staff.

12 A budget of $13,372,512 has been allocated for all grants and SLAs in the draft Annual Plan. This includes an unallocated amount of $100,000 due to several expired grants. A separate report discusses the approach to the Tuhura Otago Museum Grant.

13 The Grants Policy Review and processes will provide an opportunity to align grants with the DCC’s Strategic Refresh work programme and the DCC’s Level of Services, for 9YP preparations.

14 This approach will provide the community with assurance that the DCC’s grant funding will continue, while the review of the Grants Policy is underway.

OPTIONS

15 As this report is for noting, there are no options.

NEXT STEPS

16 The next steps are to define the Grants Review process over the next 12 months that aim to:

· produce a cohesive picture of grants that are currently being delivered from across the DCC;

· understand the community’s short-to-medium term needs and priorities;

· identify the Council’s role in granting along with central government and philanthropic funding;

· identify how grants contribute to wellbeing outcomes for Ōtepoti Dunedin and

· align grants with Levels of Service and DCC’s Strategic Framework.

17 Grants Management Policy and Review will be reported via the Strategy, Planning and Engagement Committee (SPEC). Regular reports will be included in SPEC’s forward work programme.

18 An options report will feed into the 9YP in time for consultation with the community.

Signatories

Author:	Gina Hu'akau - Corporate Policy Manager
Authoriser:	Nicola Morand - Acting Manahautū (General Manager Māori Partnerships and Policy)

Attachments

There are no attachments for this report.

SUMMARY OF CONSIDERATIONS

Fit with purpose of Local Government

This report supports democratic local decision making and action by, and on behalf of communities. This report supports future decisions about the social, economic, environmental and cultural 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 review of the DCC’s grants contributes to many of the objectives and priorities of the DCC’s strategies.

Māori Impact Statement

The distribution of DCC grants has been used to support and give effect to the Council’s commitment to Māori and to its obligations under the Treaty of Waitangi. The adoption of Te Taki Haruru outlines the DCC’s commitment to mana whenua. Te Taki Haruru will guide the grants review including assessing the potential impacts that grants can have for Māori. During the grants management policy review, consultation with mana whenua and and mātā waka will take place.

Sustainability

DCC grants have been used to support and give effect to the Council’s commitment to sustainability. In reviewing the grant policy, the Zero Carbon Policy as well as Council’s commitment to sustainability more broadly will be included in the process.

LTP/Annual Plan / Financial Strategy /Infrastructure Strategy

Decisions related to the upcoming 10 Year Plan will be taken into consideration in the grants review of the policy, and in relation to granting budgets.

Financial considerations

Financial considerations will be taken into consideration in the grants review of the policy, and in relation to granting budgets.

Significance

There are no significant matters

Engagement – external

A review of the grants management policy will require engagement with the wider community

Engagement - internal

A review of the grants management policy will require engagement with internal staff teams. In preparing granting information for the upcoming 10 Year Plan, the grants workstream included representatives from Council and from across key staff teams involved with grants.

Risks: Legal / Health and Safety etc.

There is legal, reputational, financial and strategic risk if the DCC grants are not delivered or managed well. The grants review work programme will actively manage these risks by ensuring any recommendations for change, take into account the role of the DCC in managing public resources well.

Conflict of Interest

There are no known conflicts of interest.

Community Boards

Community Boards will be engaged with as part of the grants policy review.

Council

12 March 2024

Economic Development - Operating Budget 2024/25

Department: Civic

EXECUTIVE SUMMARY

1 This report provides an overview of the operating expenditure budgets for the Annual Plan 2024/25 for the Economic Development Group, as shown at Attachment A. A draft funding impact statement is shown at Attachment B. The following activities are provided for:

· Economic development

· Marketing Dunedin

· Dunedin i-site visitors’ centre

2 A schedule of proposed fees and charges for the 2024/25 year is also presented at Attachment C.

RECOMMENDATIONS

That the Council:

a) Adopts for the purposes of developing the Annual Plan 2024/25 and consulting with the community:

i) The draft 2024/25 operating budget for the Economic Development Group as shown/amended at Attachment A.

ii) The draft 2024/25 fees and charges schedules for the Economic Development Group as shown/amended at Attachment C.

operating budgets

Revenue

Rates

3 Rates revenue has increased in the Economic Development Group by $240k, 4.5%.

External Revenue

4 External Revenue has increased by $40k, 6.9% due to an increase in expected merchandise sales.

Grants and Subsidies Revenue

5 Grants and subsidies operating revenue has decreased by $77k, 100%. A subsidy from NZTA NZTA Waka Kotahi of $77k relating to the central city upgrade is not required in the 2024/25 year.

6 Grants and subsidies capital revenue has decreased by $200k, 100%. In 2023/24 Council received a one-off capital grant towards the Dunedin Visitor Centre i-site refresh.

Expenditure

Personnel costs

7 Personnel costs have increased by $325k, 13.5%. This includes a general salary increase, and one additional FTE position transferred from another department of Council.

Consumables and general costs

8 Consumables and general costs have decreased by $152k, 13.2% due to removal of the central city marketing budget.

FEES AND CHARGES

9 Fees and charges for activities in the Economic Development Group remain unchanged from 2023/24.

Signatories

Authoriser:

Leanne Mash - General Manager Business and Community Engagement

Attachments

	Title	Page
⇩a	Economic Development Income Statement	291
⇩b	Economic Development FIS	292
⇩c	Draft Fees and Charges 2024/25 Economic Development	293

SUMMARY OF CONSIDERATIONS

Fit with purpose of Local Government

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 Economic Development Group activities primarily contribute to the objectives and priorities of the above strategies.

Māori Impact Statement

Council budgets impact broadly across all Dunedin communities including Māori. The adoption of Te Taki Haruru – Māori Strategic Framework signals Council’s commitment to mana whenua and to its obligations under the Treaty of Waitangi. Mana whenua and Māori will have the opportunity to engage in the Annual Plan 2024/25 consultation process.

Sustainability

LTP/Annual Plan / Financial Strategy /Infrastructure Strategy

This report provides draft budgets for the Economic Development Group for inclusion in the Annual Plan 2024/25.

Financial considerations

Financial considerations are detailed in the report.

Significance

Engagement – external

There has been no external engagement in developing the draft budgets for the Economic Development Group.

Engagement - internal

Staff and managers from across council have been involved in the development of the draft budgets.

Risks: Legal / Health and Safety etc.

There are no identified risks.

Conflict of Interest

There are no known conflicts of interest.

Community Boards

Community Boards will have an opportunity to engage with the Annual Plan 2024/25 consultation process.

Council

12 March 2024

Galleries, Libraries and Museums - Operating Budget 2024/25

Department: Arts and Culture

EXECUTIVE SUMMARY

1 This report provides an overview of the operating expenditure budgets for the Annual Plan 2024/25 for the Galleries, Libraries and Museums Group, as shown at Attachment A. A draft funding impact statement is shown at Attachment B. The following activities are provided for:

· Dunedin Public Libraries and City of Literature

· Dunedin Public Art Gallery (DPAG),

· Lan Yuan Chinese Garden

· Toitū Otago Settlers Museum (Toitū),

· Creative partnerships

· Olveston Historic Home

· Otago Museum Levy

2 A schedule of proposed fees and charges for the 2024/25 year is also presented at Attachment C.

RECOMMENDATIONS

That the Council:

a) Adopts for the purposes of developing the Annual Plan 2024/25 and consulting with the community:

i) The draft 2024/25 operating budget for the Galleries, Libraries and Museums Group as shown/amended at Attachment A.

ii) The draft 2024/25 fees and charges schedules for the Galleries, Libraries and Museums Group as shown/amended at Attachment C.

operating budgets

Revenue

Rates

3 Rates have increased overall in the Galleries, libraries and museums group by $967k, 3.6%. This is due to cost increases and grants expenditure transferred from the Community Development activity.

External Revenue

4 External revenue has increased by $160k, 9.1%. The main changes incorporate the following:

a) An increase in DPAG, Toitū and Lan Yuan revenue of $85k due to increased shop sales, functions and facility hire and increased admissions revenue at Lan Yuan.

b) An increase in Olveston revenue of $77k due to increased admissions, merchandise sales and event revenue.

Grants and Subsidies Revenue

5 Grants and subsidies revenue has increased by $163k. The increase relates to:

a) the transfer of $93k grant revenue, from Creative New Zealand (CNZ), previously received by Community Development,

b) a $64k grant received to produce an Olveston Book, and

c) a $7k increase in funding from CNZ to the Art Gallery for International and NZ Artist residency.

Expenditure

Personnel costs

6 Personnel costs have increased by $553k, 5.0%. This includes a general salary increase and an increase in staffing for the opening of the South Dunedin Community Complex from May 2025.

Consumables and general costs

7 Consumables and general costs have increased by $210k, 16.1%. The main changes incorporate the following:

a) Increased stock purchases and catering at DPAG, Toitū and Olveston of $157k which are recovered through external revenue.

b) An increase in the Dunedin Public Libraries budget of $51k due mainly to additional subscription fees and 10-year anniversary celebrations for City of Literature.

Grants & Subsidies

8 Grants and subsidies costs have increased by $550k, 10.9% due to the following:

a) A transfer of budget ($501k) from Community Development, $93k of which is funded by Creative New Zealand

b) Re-categorisation of a $50k grant paid to Dunedin Dream Brokerage, previously coded to operations and maintenance expenses.

c) No provision has been included in the budget for an increase in the levy for the Tūhura Otago Museum. A separate report on a funding approach for the museum is on the agenda.

Internal charges

9 Internal charges have increased by $184k, 2.6% due to increased Corporate, Fleet and Business Information Services charges.

Depreciation

10 Depreciation has decreased by $224k, 14.5% reflecting certain Library assets becoming fully depreciated.

FEES AND CHARGES

11 Fees and charges remain largely unchanged with the exception of:

· Lan Yuan Chinese Garden admission fees have increased by between 6%-11% ($0.80 - $2.00) to reflect an increase in operational costs.

· Olveston Historic Home fees and charges have increased by between 2% - 10% ($0.50-$5.00) with an average increase of around 4%, due to increased costs. Some of the 1 hour tour fees have been removed in order to simplify the tour options and charging structure.

· Toitū Otago Settlers Museum Archive/Collection queries fees have increased 2% ($1.50).

Signatories

Author:	Cam McCracken - Director DPAG, Toitū, Lan Yuan and Olveston
Authoriser:	Jeanette Wikaira - General Manager Arts, Culture and Recreation

Attachments

	Title	Page
⇩a	Galleries, Libraries and Museums Income Statement	299
⇩b	Galleries, Libraries and Musems FIS	300
⇩c	Draft Fees and Charges 2024/25 - Galleries, Libraries and Museums	301

SUMMARY OF CONSIDERATIONS

Fit with purpose of Local Government

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 Galleries, Libraries and Museums Group activities primarily contribute to the objectives and priorities of the above strategies.

Māori Impact Statement

Council budgets impact broadly across all Dunedin communities including Māori. The adoption of Te Taki Haruru – Māori Strategic Framework signals Council’s commitment to mana whenua and to its obligations under the Treaty of Waitangi. Mana whenua and Māori will have the opportunity to engage in the Annual Plan 2024/25 consultation process.

Sustainability

LTP/Annual Plan / Financial Strategy /Infrastructure Strategy

This report provides draft budgets for the Galleries, Libraries and Museums Group for inclusion in the Annual plan.

Financial considerations

Financial considerations are detailed in the report.

Significance

Engagement – external

There has been no external engagement in developing the draft budgets for Galleries, Libraries and Museums Group.

Engagement - internal

Staff and managers from across council have been involved in the development of the draft budgets.

Risks: Legal / Health and Safety etc.

There are no identified risks.

Conflict of Interest

There are no known conflicts of interest.

Community Boards

Community Boards will have an opportunity to present on the draft Annual Plan 2024/25.

Council

12 March 2024

Tuhura Otago Museum - DCC Funding Approach

Department: Executive Leadership Team

EXECUTIVE SUMMARY

1 This report provides background information in relation to the Otago Museum Trust Board Act 1996 (the Act). In particular the sections of the legislation that outline the calculation of the museum levy to be paid by the Dunedin City Council (DCC).

2 The report also provides a summary of the DCC levy that has been paid to Tūhura – The Otago Museum (Otago Museum) over the previous 26 years since the legislation was enacted.

3 The report also outlines proposed next steps to be undertaken by DCC staff in collaboration with Otago Museum. This work will seek to develop a plan with long term sustainable options for supporting the museum.

RECOMMENDATIONS

That the Council:

a) Notes an options report on the Otago Museum operating budget requirements will be prepared in time for Annual Plan deliberations in May 2024.

b) Notes an options report on the Otago Museum’s ongoing operating budget requirements will be prepared for consideration as part of the DCC’s 9 Year Plan.

BACKGROUND

1 The DCC has a commitment to provide opportunities to access and experience arts, culture and heritage by viewing and experiencing collections held in safe and quality environments. The DCC maintains and preserves a rich heritage of stories, treasures and knowledge through the cultural facilities we own and operate as well as through the support we provide to the Otago Museum.

2 The DCC currently supports the Otago Museum by contributing to the management and funding of the museum under the Otago Museum Trust Board Act 1996. In particular, sections 16 and 17 of the Act relate to the process by which contributing Council’s pay levies for the operation of the Otago Museum.

3 The DCC is one of four local authorities in Otago (Dunedin, Central Otago, Clutha and Waitaki Councils) that contributes to the management and funding of the museum under the Act.

4 The museum levy for each contributing local authority is calculated in accordance with s17 of the Act. This section outlines a method for apportionment of levies between the contributing authorities. The initial schedule that was established in 1996 was set in place for first 5 years after the Act was passed (July 1997 to July 2001).

5 Following the first 5 years of the Act, the Act then made an allowance for the contributing authorities to come to an apportionment funding agreement between Councils. The Act also makes an allowance for if the contributing local authorities failed to come to an agreement. In the event that Councils did not come to an agreed approach, the Act sets out the default calculation method under schedule 2 of the Act.

DISCUSSION

6 Historically there has not been an agreed funding apportionment arrangement between the relevant local authorities. Therefore, the default levy calculation mechanism set out at schedule 2 of the Act has been applied.

7 The DCC has currently received a draft annual budget from Otago Museum in accordance with s15 (3) of the Act.

8 Over the last 26 years the DCC has paid the levy in accordance with the Act. The levy paid by DCC is over and above a standard CPI adjusted amount from the base year (1997). This is in recognition of the importance of cultural heritage to both our city and the region. The DCC also acknowledges the unique stories and taonga (cultural artefacts) that the Otago Museum holds and shares for all of Aotearoa New Zealand and the world.

9 The total amount paid by the DCC to the Otago Museum over the last 26 years (1997-2023) is outlined below.

DCC Levy Calculation

Based on the CPI adjusted amount from the base year (1997)

TOTAL (1997-2023)

Actual DCC Levy Paid to Otago Museum

TOTAL (1997-2023)

$52,645,242

$88,034,414

10 The below graph shows the calculated levy amount in blue (based on a CPI adjusted amount from the base year of 1997); and the actual levy amount in red, paid by the DCC to Otago Museum over the period from 1997 to 2023.

11 The DCC has worked collaboratively with the museum over many years. The DCC has four appointed members on the Otago Museum Board ensuring that there is aligned strategic governance oversight between the DCC and the Museum. At a staff level, senior management across both organisations meet on a regular basis to discuss operational matters and to keep updated on proposed annual plan budgets. However, for many years the Otago Museum has been seeking a more consistent approach to its funding to provide certainty.

12 The Otago Museum’s proposed 2024-25 draft budget includes an increase in the DCC’s levy from $4,949,232m in 2023-24 to $5,162,124m in 2024-25. The Otago Museum’s proposed budget is a 4.3% increase of $212,892.

13 This increase has not been included in the DCC’s proposed annual plan budget 2024-25.

14 Under the Act, the DCC may give notice in writing, objecting to the levy proposed by the Otago Museum Board. This notice must be undertaken prior to 31 May and state the grounds for DCC’s objection. The process following this notice is set out in section 16 of the Act.

15 If the DCC wishes to object, the following steps are to be taken:

a) The DCC is to write to the Museum Board, no later than 31 May 2024, stating the grounds of objection.

b) Within 14 days the Museum Board is to convene a meeting of all contributing authorities, who are to be represented by at least one delegate. The meeting is to be held no later than 1 month following 31 May 2024.

c) Within 14 days of this meeting, the delegates are required to make a recommendation to their authority who are to inform the Board of such recommendations.

d) If an agreement cannot be reached within 28 days of the meeting, the contributing authorities may resolve that the total Levy be reduced to an amount not less than the previous year.

NEXT STEPS

16 In the short term the recommendation is that DCC staff work with Otago Museum to discuss and understand the Otago Museum operating budget requirements. A report with options will be presented to Council as part of the DCC’s Annual Plan 2024-25 deliberations in May. This report would be prepared for consideration in time to give written notice to Otago Museum (under section 16 of the Act) if Council decides to object to the proposed levy increase.

17 In the medium term the recommendation is that staff work with Otago Museum to develop a long term forecast of operating revenue and operating expenditure. This information would form the basis of a sustainable funding mechanism to provide the necessary certainty to both parties for how the DCC will continue to support the Otago Museum. A report outlining the plan with options will be prepared for consideration as part of the DCC’s 9 Year Plan.

18 OPTIONS There are no options.

Signatories

Author:	Jeanette Wikaira - General Manager Arts, Culture and Recreation
Authoriser:	Sandy Graham - Chief Executive Officer

Attachments

There are no attachments for this report.

SUMMARY OF CONSIDERATIONS

Fit with purpose of Local Government

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	✔	☐	☐

Tūhura – The Otago Museum primarily contributes to the objectives and priorities of DCC’s Arts and Culture Strategy.

Māori Impact Statement

As a cultural heritage institution, Tūhura – The Otago Museum impacts broadly across all Dunedin communities including Māori. The adoption of Te Taki Haruru – Māori Strategic Framework signals Council’s commitment to mana whenua and to its obligations under the Treaty of Waitangi. Mana whenua and Māori will have the opportunity to engage in the Annual Plan 2024/25 consultation process.

Sustainability

Major issues and implications for sustainability are discussed in the Infrastructure Strategy and financial resilience is discussed in the Financial Strategy of the current 10 year plan 2021-31.

LTP/Annual Plan / Financial Strategy /Infrastructure Strategy

There are no immediate implications for the Annual Plan.

Financial considerations

An increase to Tūhura – The Otago Museum’s 2024-25 funding levy would have budgetary implications for Council.

Significance

The decision is assessed to be of low significance in terms of the Council’s Significance and Engagement Policy.

Engagement – external

Relevant DCC staff have met and been in contact with senior Museum representatives and financial advisors to the Museum.

Engagement - internal

Staff and managers from across council have been involved in the development of this report.

Risks: Legal / Health and Safety etc.

There are no identified risks.

Conflict of Interest

There are no known conflicts of interests.

Community Boards

Tūhura – The Otago Museum is of interest to all Community Boards in Dunedin.

Council

12 March 2024

Community and Planning - Operating Budget 2024/25

Department: Executive Leadership Team

EXECUTIVE SUMMARY

1 This report provides an overview of the operating expenditure budgets for the Annual Plan 2024/25 for the Community and Planning Group, as shown at Attachment A. A draft funding impact statement is shown at Attachment B. The following activities are provided for:

· Community development

· Events

· City development

· Resource consents

2 A schedule of proposed fees and charges for the 2024/25 year is also presented at Attachment C.

RECOMMENDATIONS

That the Council:

a) Adopts for the purposes of developing the Annual Plan 2024/25 and consulting with the community:

i) The draft 2024/25 operating budget for the Community and Planning Group as shown/amended at Attachment A.

ii) The draft 2024/25 fees and charges schedules for the Community and Planning Group as shown/amended at Attachment C.

operating budgets

Revenue

Rates

3 Rates have decreased in the Community and Planning Group by $934k, -6.5%. In 2023/24, the budget included FIFA associated costs which are not required in 2024/25, and some rates funded costs have been transferred to other activities.

External Revenue

4 External Revenue has increased by $70k. Resource consents revenue is budgeted to increase by $242k but is offset by a reduction in revenue of $139k for the Masters Games, as no games will be held in 2024/25, and a reduction in FIFA reimbursement of costs.

Grants and subsidies

5 Grants and subsidies operating revenue had decreased by $739k, 100%. The 2023/24 budget included a grant for the FIFA event of $645k. It also included subsidy from NZTA Waka Kotahi of $76k relating to the central city upgrade. These budgets are not required in the 2024/25 year.

Internal Revenue

6 Internal Revenue has increased by $296k, 106.5% reflecting Better Off Funding for City Growth within the City Development activity.

Expenditure

Personnel Costs

7 Personnel costs have increased by $352k, 5.1%. The budget includes a general salary increase and the transfer of 3 FTE positions from 3 Waters. One FTE position is funded through the Better Off Funding revenue.

Operations and maintenance

8 Operations and Maintenance costs have decreased by $1.080 million, -40.2% due mainly to the removal of FIFA costs not required in 2024/25.

Consumables and general costs

9 Consumables and general costs have decreased by $113k, -11% due mainly to removal of FIFA costs not required for 2024/25.

Grants and subsidies

10 Grants and subsidies have decreased by $517k, 12.1%, due primarily to the transfer of $501k budget to Creative Partnerships (in Galleries, Libraries and Museums).

11 The draft budget provides for an increase in place-based grants of $30k to $490k, approved as part of the 10 year plan 2021-31.

FEES AND CHARGES

12 Fees and charges have generally remained the same or have been increased by 4% - 10%. A small number of fees have increased by 14% - 57%. The increases in fees and charges provide for the recovery of actual and reasonable costs from consent applicants, and better reflect the average processing time. Changes to the fees and charges include:

· Consent monitoring fees have increased by between $5 - $70, 4% - 28%.

· Designations/Heritage Orders/Plan Change charges have increased by between $360 - $7,000, 30% - 56%.

· Development contribution objection and remission fees have increased by $40, 9%.

· Planning - Other Legislation deposit fees have increased by between $10 - $240, 4% - 36%.

· Pre-application meeting cost will be charged on a time cost basis from 1 July 2024. Initial consultations will remain a “public good” service and there would also be no charge to applicants who do not proceed with their development.

· Site contamination search fixed fees are increasing by $200 - $230, 37% - 57%.

Signatories

Authoriser:

David Ward - General Manager, 3 Waters and Transition

Claire Austin - General Manager Customer and Regulatory

Attachments

	Title	Page
⇩a	Community and Planning Income Statement	315
⇩b	Community and Planning FIS	316
⇩c	Draft Fees and Charges 2024/25 - Community and Planning	317

SUMMARY OF CONSIDERATIONS

Fit with purpose of Local Government

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 Community and Planning Group activities primarily contribute to the objectives and priorities of the above strategies.

Māori Impact Statement

Council budgets impact broadly across all Dunedin communities including Māori. The adoption of Te Taki Haruru – Māori Strategic Framework signals Council’s commitment to mana whenua and to its obligations under the Treaty of Waitangi. Mana whenua and Māori will have the opportunity to engage in the Annual Plan 2024/25 consultation process.

Sustainability

LTP/Annual Plan / Financial Strategy /Infrastructure Strategy

This report provides draft budgets for the Community and Planning Group for inclusion in Annual Plan 2024/25.

Financial considerations

Financial considerations are detailed in the report.

Significance

Engagement – external

There has been no external engagement in developing the draft budgets for Community and Planning Group.

Engagement - internal

Staff and managers from across council have been involved in the development of the draft budgets.

Risks: Legal / Health and Safety etc.

There are no identified risks.

Conflict of Interest

There are no known conflicts of interest.

Community Boards

Community Boards will have an opportunity to engage with the Annual Plan 2024/25 consultation process.

Council

12 March 2024

Regulatory Services - Operating Budget 2024/25

Department: Customer and Regulatory and Finance

EXECUTIVE SUMMARY

1 This report provides an overview of the operating expenditure budgets for the Annual Plan 2024/25 for the Regulatory Services Group, as shown at Attachment A. A draft funding impact statement is shown at Attachment B. The following activities are provided for:

· Animal services

· Building services

· Environmental health and alcohol licensing

· Parking operations

· Parking services (enforcement)

2 A schedule of proposed fees and charges for the 2024/25 year is also presented at Attachment C.

RECOMMENDATIONS

That the Council:

a) Adopts for the purposes of developing the Annual Plan 2024/25 and consulting with the community:

i) The draft 2024/25 operating budget for the Regulatory Services Group as shown/amended at Attachment A.

ii) The draft 2024/25 fees and charges schedules for the Regulatory Services Group as shown/amended at Attachment C.

operating budgets

Revenue

External Revenue

3 External revenue has increased by $499k, 2.5% due to fee increases to recover increased costs of processing consents and licenses.

4 A review of fees and charges was undertaken, and fees amended to reflect the cost of providing regulatory services. Increases in revenue are made up of:

· Animal Services $68k increased revenue is due to proposed 5 % fee increase in registration fee to cover increased operational costs.

· Building Services revenue increase of $281k with the proposed increase in hourly charges which are benchmarked against similar sized Councils to cover the increased cost of consent processing and inspection costs.

· Environmental Health revenue increase of $92k from the proposed 20% fee increase.

· Alcohol Licensing $20k revenue increase was based on actual number of licenses issued.

· Parking Operations revenue is budgeted to reduce by $36k. The on-street parking revenue budget has reduced by $547k, to reflect lower occupancy due to the Central City upgrade and other works around the city. Offsetting this is an increase in revenue of $486k from parking buildings and off-street metered parking.

Expenditure

Personnel costs

5 Personnel costs have increased by $216k, 2.1%. The budget provides for a general salary increase, but this has been partially offset by a reduction in staff numbers of 2.4 FTEs. Parking Operations and Animal Services have decreased by 1 FTE each, and Alcohol Licensing has decreased by 0.4 FTE.

Operations and maintenance

6 Operations and maintenance costs have increased by $124k, 15.9% due to increased Animal Control afterhours services and increased City Safety costs for the Bus Hub project, which is run in conjunction with the Otago Regional Council (ORC). DCC City Safety officers cover the 3pm-7pm weekday timeslot and the later times are covered by the ORC.

Occupancy costs

7 Occupancy costs have increased by $138k, 21.3%, reflecting increases in insurance costs and rates for off-street metered and leased carparks.

Internal charges

8 Internal charges have increased by $352k, 5.8% due to increases in Business Information Services, administration, and property charges.

9 For parking operations, $140k of the increase reflects the return to full year rental for the Lower Moray Place carpark building. The carpark, which has been closed since March 2023 for earthquake strengthening, reopens in April 2024.

FEES AND CHARGES

10 Fees and charges for activities in the Regulatory Services Group have either remained the same or have been increased to reflect the actual costs to deliver services.

· Animal Services fees largely remained the same with about a third increasing by 2% - 6% to reflect actual costs. Fees for impounding animals other than dogs have increased by between 54%-150%, being $18-$35, also to reflect actual cost.

· Around half of the Building Services fees are increasing by between 4%-15% to reflect increases in actual and projected consent processing and inspections costs.

· Environmental health fees that are not set by legislation are increasing by between 15-38% to reflect actual costs.

· Alcohol licensing fees are set by legislation and are unchanged.

· Parking Services (enforcement) fees are set by legislation and are unchanged. E-scooter fees per ride have increased by 2 cents.

· Parking Operations fees and charges have remained generally the same, with no changes to the fees and charges for on-street parking or leased parking.

· The one day Parking Permit charge for areas outside of the Octagon and George Street (Octagon – Albany Street) has increased by $1.00, 4%.

· Hourly fees for off-street metered carparks and parking buildings have increased by $0.50. Most of these have not had a fee increase in the previous 13 years. The proposed changes reflect increased costs, and a move toward aligning with other parking options available.

· There are no changes to regulatory fines, licensing and levies as these are set by legislation.

Signatories

Author:

Ros MacGill - Manager Compliance Solutions

Carolyn Allan - Chief Financial Officer

Authoriser:

Claire Austin - General Manager Customer and Regulatory

Attachments

	Title	Page
⇩a	Regulatory Services Income Statement	327
⇩b	Regulatory Services FIS	328
⇩c	Draft Fees and Charges 2024/2025 - Regulatory Services	329
⇩d	Draft Fees and Charges 2024/2025 - Regulatory Services: Building Services	341

SUMMARY OF CONSIDERATIONS

Fit with purpose of Local Government

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 Regulatory Services Group activities primarily contribute to the objectives and priorities of the above strategies.

Māori Impact Statement

Sustainability

LTP/Annual Plan / Financial Strategy /Infrastructure Strategy

This report provides draft budgets for the Regulatory Services Group for inclusion in the Annual Plan 2024/25.

Financial considerations

Financial considerations are detailed in the report.

Significance

Engagement – external

There has been no external engagement in developing the draft budgets for the Regulatory Services Group.

Engagement - internal

Staff and managers from across council have been involved in the development of the draft budgets.

Risks: Legal / Health and Safety etc.

There are no identified risks.

Conflict of Interest

There are no known conflicts of interest.

Community Boards

Community Boards will have an opportunity to present on the draft 2024/25 Annual Plan.

Mayor	Mayor Jules Radich
Deputy Mayor	Cr Cherry Lucas
Members	Cr Bill Acklin	Cr Sophie Barker
	Cr David Benson-Pope	Cr Christine Garey
	Cr Kevin Gilbert	Cr Carmen Houlahan
	Cr Marie Laufiso	Cr Mandy Mayhem
	Cr Jim O'Malley	Cr Lee Vandervis
	Cr Steve Walker	Cr Brent Weatherall
	Cr Andrew Whiley

Author:	Clare Sullivan - Manager Governance
Authoriser:	Leanne Mash - General Manager Business and Community Engagement