Agenda of Regional Council - Thursday, 23 February 2023


Informal Workshop Paper
To:	Regional Council
	23 February 2023
From:	Mark Le Comte, Principal Advisor, Finance; Karlo Keogh, Senior Management Accountant; Gillian Payne, Principal Advisor and Kumaren Perumal, Chief Financial Officer
	Mat Taylor, General Manager, Corporate

2023/24 Annual Plan - Financial Overview

1. Purpose

To provide Councillors with a summary of the financial context within which the Annual Plan (AP) 2023/24 is being developed and an overview of financial options available.

2. Guidance Sought from Councillors

Staff are seeking guidance from Councillors on the level of rates increases, use of reserves, and which Service Improvement Proposals to include in the AP.

3. Summary

At the December 2022 AP workshop, Councillors provided guidance to limit the real general rates increase to 5%. In response staff have reviewed the work programme and reprioritised, delayed, or stopped non-critical work to achieve this.

Council is forecasting operating expenditure of $182.1 million and capital expenditure of $28.9 million in 2023/24. The impacts of recent extreme weather events have not yet been fully assessed, and there may be additional capital works required to repair flood damage. Council does have flood damage reserves available if required.

In addition, there are a number of operational uncertainties that staff are working through that may impact the financial estimates. These include passenger transport contract negotiations, and potential Council property rentals. The best current assumptions have been included in the financial estimates, and these will be updated for the next AP workshop in May 2023.

The Long-Term Plan (LTP) 2021–2031 included the use of reserves to fund operating expenditure, and to reduce general rates. This was a major driver of the Financial Strategy to keep rates low as we recovered economically from COVID-19, the ongoing effects of Edgecumbe flooding in 2017, and other emergent issues like Cyclone Gabrielle and increasing pressures on the cost of living.

The LTP 2021-2031 included $4.8 million from Regional Fund (RF) to smooth general rates increases. The current estimated balance for the RF is higher than budgeted. Council can use $5 million from the RF to maintain a real general rates increase of 5%, and have a balance of $2 million available at the end of 2023/24.

This forecast balance gives Councillors the option to reduce rates further or fund Service Improvement Proposals (SIPs).

Targeted rates reserves are available to smooth some targeted rates increases. The summary balances are shown in section 5.2.2. These targeted rates reserves can only be applied to the specific targeted rate that they were funded from. Councillor direction is requested to confirm that these targeted rates smoothing options should be applied.

The current estimate of the total real rates revenue increase for 2023/24 (compared to AP 2022/23) is 10.6% comprised of:

· a real general rates increase of 5%, which is approximately $38 per ratepayer per annum including GST

· a real targeted rates increase of 16.3%, prior to using targeted rates reserves. The impact on individual ratepayers will vary depending on which targeted rates are applicable. Comparisons of the various impacts of targeted rates and reserve funding options will be presented at the workshop.

Draft AP 2023/24 capital expenditure has been reduced by $13.8 million following the further deliverability review discussed at the December AP workshop.

These figures are before consideration of new investment proposals outlined in the separate agenda report.

4. Financial Context

At the December AP workshop, staff presented the overall financial context within which this AP is being developed. A major driver of the LTP 2021-2031 Financial Strategy was to keep rates low as we recovered economically from COVID-19 and other uncertainties in our operating environment that are affecting ratepayers.

Some of the major factors are:

· Council approved use of reserves to smooth rates in the first three years of LTP 2021-2031.

· Ongoing major contract negotiations.

· Economic uncertainty and rapidly changing forecasts for inflation and interest rates.

· Households experiencing pressure on their cost of living.

· Unemployment is lower than expected, and filling jobs with suitably qualified and experienced staff is becoming more difficult and may lead to higher wage inflation.

· Reduced availability of some goods/supplies.

The impacts of Cyclone Gabrielle are not yet able to be quantified. but could result in additional capital works required to repair flood damage. Council has flood damage reserves totalling $3.6 million available if required.

5. Draft Annual Plan 2023/24

The draft AP estimates are based on year three of the LTP 2021-2031.

Since the LTP was adopted, inflation rates have been substantially higher than assumed which is a major contributor to increased expenditure. Decisions that Council made as part of Annual Plan 2022/23 have also had consequential impacts on the draft AP 2023/24 estimates.

The current draft AP estimates are shown below.

The major factors driving changes:

· Higher than forecast inflation.

· Salary budgets updated from LTP year 3 and higher than budgeted staff salary inflation for 2022/23 and 2023/24.

· Increased public transport driver wages increasing contractor costs and impact on targeted rates.

· Updated treasury assumptions for delayed borrowing and on-lending for Rangiuru.

· Additional investment in the Toi Moana Fund which has reduced interest revenue but increased dividend revenue.

· Increased internal loan rates to reflect updated borrowing cost forecasts which increases targeted rates and reduces general rates.

5.1 Rates

The current estimate for the total real rates increase is 10.6% (after allowing after allowing for inflation of 7.1% and growth of 1.25%) comprised of a real general rates increase of 5% and a real targeted rates increase of 16.3%.

The real general rates increase has been smoothed to 5% by using accumulated general reserve funds i.e. Regional Fund (RF), to fund the budget deficit in line with the LTP 2021-2031 Financial Strategy. The general rates increase is approximately $38 per ratepayer per annum including GST.

Real targeted rates have increased by 16.3%, however, the impact on individual ratepayers depends on which targeted rates they are charged. The majority of the increases are in public transport targeted rates (due to increased costs for staffing and driver wages) and rivers and drainage schemes (due to increased interest costs). Comparisons of the various targeted rates impacts will be presented at the workshop, including options to use targeted rates reserves to smooth the rates impacts.

5.2 Reserves

Reserve account balances have been updated using the audited figures from the 2021/22 Annual Report and the latest 2022/23 forecasts.

5.2.1 General Reserves

After applying general rates smoothing, the RF has a forecast balance of $2 million at 30 June 2024. The RF is being used as approved through Long Term Plan 2021-2031, which included $4.8 million to fund the budget deficit and smooth general rates which has been increased to $5 million to maintain the real general rates increase at 5%. The table below shows the opening balance, forecast use of the RF and closing balance.

The remaining balance of the RF Fund could be further applied to reduce rates, used to fund Service Improvement Proposals, or retained for unforeseen budget pressures. Future use of reserves will form part of the Financial Strategy discussion for the Long-Term Plan 2024-2034.

5.2.2 Targeted Rates Reserves

There is a separate targeted rates reserve account for each targeted rate. The available balances can be used to smooth the respective targeted rates, but cannot be applied to other targeted rates or general rates. A summary of the estimated balances is shown in the table below.

It is important to note that the Passenger Transport and Rivers and Drainage reserves, above, are the total of sub-regional reserves and can only be applied to the specific sub-regional targeted rates. Staff will work through each individual targeted rate and option for reserve use at the workshop.

5.3 Capital Expenditure

The table below shows the capital estimates for 2023/24 following a deliverability review carried out by staff. The capital estimates are currently $28.9 million, which is a reduction of $13.8 million from the estimates presented in December 2022 as shown in the table below.

The list of major capital projects for 2023/24 is shown in the table below:

Capital projects are funded from either the Asset Replacement Reserves or the LGFA Repayment Reserve (accumulated depreciation and principal repayments on internal loans).

5.4 Treasury

Council has a range of external borrowings from the LGFA. These are all currently on fixed rates that mature between April 2023 and April 2029. Treasury forecasts continue to be subject to high volatility in projected interest rates.

Council’s borrowing is currently $137.4 million at an average rate of 2.1%. However, $45 million of this borrowing matures in April 2023 which will be refinanced at higher rates. Council’s Treasury advisor (Bancorp) is preparing options for this refinancing for Council to consider at the March Council meeting. The current forecast is that refinancing this borrowing will increase the Council’s average cost of borrowing to approximately 3%.

Borrowing that is on-lent to Quayside is currently $55.1 million at an average rate of 4.1%. Staff are working with Quayside to update the forecast timing of on-lending for Rangiuru, for which a further $95 million of borrowing can be drawn down. This on-lending has zero net effect on Council’s funding as the interest cost is passed directly to Quayside, with a 0.2% margin on the total loan facility of $150 million.

The increasing interest rate environment has also increased interest revenue on investments. Council’s call accounts are earning rates equal to the Official Cash Rate.

5.5 Forecast Unbalanced Budget and Financial Prudence

The current AP 2023/24 estimates have an operating deficit of $4.5 million. This deficit is funded from reserves i.e. accumulated savings, not from increased debt. Council resolved that it was financially prudent to run unbalanced budgets for the first three years of the Long-Term Plan 2021-2031 and will be required to reaffirm this resolution when adopting the final AP 2023/24.

Balancing the budget and the use of reserves will be a key part of the Financial Strategy discussion for the Long-Term Plan 2024-2034.

6. Next Steps

Following direction at this workshop, staff will update the estimates. There are a range of financial planning matters that staff are working through over the next few months which include:

· Updating the current year 2022/23 forecasts and the impacts on reserves, internal loans and interest revenue.

· Concluding major contract negotiations.

· Confirming the dividends for Quayside Holdings and the Toi Moana Trust through the Statement of Intent process.

· Identifying and estimating further cost pressures including public transport contract indexation (which will impact targeted rates) and any impacts of Cyclone Gabrielle.

· Identifying potential treasury opportunities for pre-funding/arbitrage from differences between borrowing and investing rates.

· Working through a detailed monthly cashflow for any interest opportunities e.g. through receiving rates revenue early due to direct debits.

The upcoming Council meetings and workshops for the development of the AP are:

· 16 March Council Meeting. Confirm decision not to consult on the AP, and to adopt consultation material for Fees and Charges Policy.

· 9 May Council Meeting. Hearing for Fees and Charges.

· 25 May Council Workshop. Deliberations on Fees and Charges and updates to financial estimates.

· 29 June Council Meeting. Adopt AP and Fees and Charges Policy.


Informal Workshop Paper
To:	Regional Council
	23 February 2023
From:	Graeme Howard, Corporate Planning Lead; Karlo Keogh, Senior Management Accountant and Olive McVicker, Corporate Performance Team Lead
	Mat Taylor, General Manager, Corporate

2023/24 Annual Plan – Service Improvement Proposals

1. Purpose

To update and seek guidance from Councillors on Service Improvement Proposals for inclusion in the draft Annual Plan 2023/24 budget.

2. Guidance Sought from Councillors

Councillors are requested to:

Provide guidance on whether to include funding in the Draft Annual Plan 2023/24 budget for the eight Service Improvement Proposals discussed in this paper:

1. Spatial Planning – He tirohanga hononga, He ara mu

2. Catchments - Coast Care Baseline and Priority Biodiversity funding

3. Rivers and Drainage - Making Room for the River

4. Transport - Rotorua Refresh

5. Rivers and Drainage - Safeguarding our Stopbanks

6. Rotorua Airshed - Support for homeowners to improve air quality

7. Transport - Tauranga Bus Shelters

8. Transport - Consultancy Support

Note the following Service Improvement Proposal is included for information only and will be presented to Council for a decision at a future meeting if required:

1. Transport – Tauranga on Demand Public Transport Trial

3. Service Improvement Proposals

Service Improvement Proposals (SIPs) included in this paper relate to work where additional funding would enable the delivery of an increased level of service or is required to maintain levels of service agreed through the Long Term Plan 2021-2031.

Council staff have reviewed the SIPs in terms of strategic alignment, deliverability, and cost. The SIPs with the highest alignment, based on the staff assessment, are listed first.

Staff are seeking guidance from Councillors on whether to include funding for the eight proposals in the table below in the draft Annual Plan Budget for 2023/24. One additional proposal is included for information only, and this is due to come to Council for direction at Deliberations in May 2023.

Section	Project Title	2023/24 ($000’s)	Proposed Funding ($000’s)
3.2	Spatial Planning – He tirohanga hononga, He ara mu	700	Reprioritisation (500) Regional Fund (200)
3.3	Coast Care Baseline and Priority Biodiversity funding	75	Regional Fund (75)
3.4	Making Room for the River	200	Reprioritisation (83) Regional Fund (113)
3.5	Transport - Rotorua Refresh	70	Reserves – Rotorua PT (70)
3.6	Rivers and Drainage - Safeguarding our Stopbanks	30 OPEX 700 CAPEX	Rivers & Drainage Targeted Rate (24) Regional Fund (6) CAPEX: Internal Loan Funded
3.7	Rotorua Airshed support for high deprivation homeowners to improve air quality	50	Reserves – Rotorua Air shed (50)
3.8	Transport - Tauranga Bus Shelters	50	Targeted Rate – Tauranga Passenger Transport (50)
3.9	Transport - Consultancy Support	250	Regional Fund (250)
TOTAL		1,425 OPEX 700 CAPEX	Regional Fund Reserve (644) Reprioritisation (587) Other Reserve (120) Targeted Rate (74)

Information only

3.9

Transport – Tauranga on Demand Public Transport Trial

675 OPEX

720 CAPEX

TBC

3.1.1 Summary of financial implications for 2023/24

If Councillors direct that any of the SIPs are to be included in the AP budget they will need to be funded.

As discussed in the financial overview, Council has a forecast uncommitted balance of $1.984 million in the Regional Fund at the end of 2023/24, that could be available to fund some or all of the SIPs. SIPs that require general funding have been assumed to be funded from the Regional Fund. SIPS that require targeted funding have been assumed to be funded from the relevant targeted reserve (if there is a balance available), Targeted Rate or from the Regional Fund.

If Councillor’s were to provide guidance that all of the eight SIPs are included in the draft Annual Plan budget, as set out in the table above. This would reduce the balance of the Regional Fund by $644,000 leaving a estimated balance of $1,340,000.

CAPEX amounts will be funded to spread the rates impact over time.

3.2 Spatial Planning – He tirohanga hononga, He ara mu (a connected view, a pathway to the future)

This proposal seeks additional funding of $700,000 in 2023/24 and out years (out year funding to be considered via 2024-2034 Long Term Plan (LTP) process). It is proposed that this project is funded in 2023/24 via reprioritisation ($500,000) of the activity budget with the remaining funding from the Regional Fund reserve.

Funding is to deliver “He tirohanga hononga, He ara mua” and relates to the expansion to the regional spatial planning work programme to enable a more integrated and connected view of the region and associated sub-regions. It is intended to:

• Successfully navigate upcoming legislative change, particularly the Spatial Planning Act (bill released late 2022), which is expected to be passed into legislation in late 2023.

• Enhance our support and contributions to sub-regional spatial planning projects, particularly within the Eastern BOP and Rotorua districts.

• Develop and adapt our approach for tāngata whenua involvement in spatial planning.

• Foster effective and mutually beneficial relationships and/or partnerships.

• Build our evidential base for spatial planning at both a regional and sub-regional level.

The components that require additional funding are as follows:

· Sub-regional planning ($500,000 in 2023/24 and outyears)

o Rotorua Lakes sub-regional planning – increase in funding from $50,000 to $150,000 in 2023/24 and outyears.

o Eastern BOP sub-regional planning (Whakatāne/Kawerau/Ōpōtiki) – increase in funding from $50,000 to $350,000 in 2023/24 and outyears.

Current funding for Western Bay (Smartgrowth) is planned to remain at $465,000 per annum and the funding for Joint Agency Group Papakāinga Projects remains unchanged at $26,800.

The additional funding will provide Sub-regional Spatial Plan project support and contribute to essential technical assessments (e.g. industrial land study and housing business assessment).

· Technical assessments ($200,000 in 2023/24 and outyears)

Includes, but is not limited to:

o Development of a Regional Profile by 30 June 2024.

o Assessment and visualisation of intra-regional flows of people and freight.

o Additional research and/or assessments identified through sub-regional forums.

· Development of a Regional Spatial Strategy ($100,000 in 2023/24 and outyears)

Includes developing a significant amount of evidence (as noted above) and tāngata whenua involvement.

Strategic Alignment
He taiao ora	Good	Climate Change	Good	Legislative Alignment	Anticipates new Legislation
Te Mana O Te Wai	Good	Partnerships with Māori	Medium	Contribution to Levels of Service	Low
Kia haumaru, kia pakari to hapori	Good	Com Participation	Medium	Deliverability	Medium
Toitū te rohe	Good	Other Strategic Priorities	Medium
Funding
Operational Expenditure			Capital Expenditure
2023/24	2024/25	2025/26	2023/24	2024/25	2025/26
$700,000*	$700,000	$700,000 + ongoing
High level analysis
Items to consider
- Proposal required to support the delivery of requirements in the upcoming Spatial Planning Act, the current Bill is expected to be passed into legislation in late 2023. - Regional and Sub Regional spatial planning will inform future council outcome and priorities thereby informing Councils future work programme and deliverables. - Land use and transport planning (key to spatial planning) is one of BOPRC's strategic priorities in LTP 2021-2031. Good planning underpins delivery of several LOS in the current LTP - This work was identified through the AP 2022/23 development as an expected future requirement. - Regional Council has a statutory role in urban planning. Increase in sub regional funding will help balance the existing investment made in the western Bay via Smartgrowth. - Some uncertainty around feasibility and the costs. Especially in terms of measuring and quantifying the increased financial contributions and technical assessments. - While declining funding is unlikely to lead to materially impact levels of service in 2023/24, this would have a negative impact on Councils and our partners’ ability to deliver on responsibilities laid out under the Spatial Planning Bill.

*total costs for 2023/24 are $700,000. It is proposed to fund $500,000 through the reprioritisation of the activity budget and the remaining $200,000 through the Regional Fund Reserve.

3.2.1 Guidance sought

This proposal will enable Council to meet its expected legislative responsibilities in relation to the upcoming Spatial Planning Act, with the current Bill expected to be passed into legislation in late 2023. Staff are seeking council guidance for one of the following options.

Option 1: Include operational expenditure of $700,000 in the draft AP 2023/24 through the reprioritisation of the activity budget to fund $500,000 and $200,000 from the Regional Fund Reserve.

Option 2: Decline Proposal.

Note: Option 2 will negatively impact Council’s ability to meet its obligations under the upcoming Spatial Planning Act.

3.3 Coast Care Baseline and Priority Biodiversity funding

This proposal seeks additional funding of $75,000 in 2023/24 and $150,000 for 2024/25 and out years (out years to be considered via 2024-2034 LTP process) to increase support for the Coast Care coastal restoration programme.

Sand dunes are a unique ecosystem that supports a range of threatened species and buffer inland areas from severe storms. Sand dunes are classified as nationally endangered and are considered a national priority for protection of biodiversity on private land (Department of Conservation (DoC)/Ministry for Environment 2008). Only 18% of Bay of Plenty’s original sand dunes remain in a wild and undeveloped state.

Coast Care is a coastal restoration programme, run in close partnership with local communities, local authorities, care groups and schools, that aims to restore and protect the sand dunes along our Bay of Plenty beaches. Coast Care is one of the region’s most successful and long-running volunteer programmes. It is also a model for cross agency collaboration and is a significant contributor to the regions Climate Change mitigation programme. However, there is still much work to do in order to maintain and expand the area of healthy functioning sand dunes – particularly at Priority Biodiversity/Indigenous Biodiversity Sites.

In 2021 the programme planted approximately 83,750 dune plants with the help of 5,400 volunteers. In 2022 due to inflationary pressures on plant and contractor costs and the loss of free Department of Corrections labour that did much of our volunteer ‘unfriendly’ site preparation (due to COVID and change of management) we have had to reduce service levels. The 2022 programme planted 57,100 plants and 3,100 volunteers (less plants = less need for volunteers) as Council strove to stay within budget limits. It is also worth noting that neither Council nor our partners have adjusted our baseline funding since 2016.

Funding is sought to offset the decline in service levels experienced since 2021 due primarily to inflationary pressures ($75,000). New funding is also required for the restoration of Priority 1 Coastal Biodiversity sites that are currently not managed ($75,000).

Funding is proposed to scale up over two years due to the lead in time to grow plants i.e. $75k additional funding in 2023/24, and then $150k per annum. Approval of the funding request will enable staff to approach partner Councils, DoC and the private/philanthropic sector for similar proportional increases in their Coast Care baseline funding.

Strategic Alignment
He taiao ora	Good	Climate Change	Good	Legislative Alignment	Aligns with Legislation and Policy
Te Mana O Te Wai	N/A	Partnerships with Māori	Low	Contribution to Levels of Service	Medium
Kia haumaru, kia pakari to hapori	Medium	Com Participation	Good	Deliverability	Good
Toitū te rohe	Medium	Other Strategic Priorities	Low
Funding
Operational Expenditure			Capital Expenditure
2023/24	2024/25	2025/26	2023/24	2024/25	2025/26
$75,000	$150,000	$150,000 + ongoing
High level analysis
Items to consider
- Coast Care is a successful and long-running (30+ years) volunteer programme. It is also a model for cross agency collaboration and is a significant contributor to the regions Climate Change mitigation programme. - Aligns well to Council community Outcomes and broader Strategic Direction. - Directly contributes to the Community Participation Impact area. - Programme has a long history in delivering, providing additional confidence around planned outcomes and costs. - Additional Funding from Council is expected to leverage in additional funding from other sources e.g. Councils. - Increased funding would enable a return to previous levels of service and make a contribution to existing LTP KPI’s Makes a direct contribution to LOS and KPIs by adding at least one (25% increase) new Priority Biodiversity site under management each year. - High confidence in the feasibility and budget because the programme has been operating for a long period of time.

3.3.1 Guidance sought

This proposal will enable Council to offset the decline in service levels experienced since 2021 due to recent inflationary pressures and provide funding for managing at least one additional Priority Coastal Biodiversity site each year. Staff are seeking council guidance for one of the following options.

Option 1: Include additional operational expenditure of $75,000 in the draft AP 2023/24 budget funded through the Regional Fund Reserve.

Option 2: Decline Proposal.

3.4 Rivers and Drainage - Making Room for the River

This proposal seeks three years additional funding of $200,000 in 2023/24 and $200,000 in 2024/25 and 2025/26 (out years to be considered via 2024-2034 LTP). It is proposed that this project is funded in 2023/24 via reprioritisation $87,000 with the remaining $113,000 from the Regional Fund reserve.

This project would replace the previous groyne trial budget ($87,000) to allow for an updated and international best practice approach to river erosion and flooding issues.

Making Room for Rivers is increasingly being considered within the NZ context as an opportunity to respond and adapt to the impacts of climate change. Enabling additional width for rivers to flow helps to manage higher flood flows, minimising bank damage and reducing flood risk to adjacent land and infrastructure. This more nature-based solution is yet to be significantly trialled and tested in the Bay of Plenty.

The funds will provide an opportunity to work with private property owners to achieve more sustainable and natural solutions to localised erosion and or flooding problems. This approach will result in fewer assets being constructed, which otherwise would need to be monitored, maintained, and renewed.

Any physical works will be delivered by property owners, locals, and contractors with oversight by existing engineering staff. Procurement if needed will be provided through the Rivers and Drainage Panel contracts. Design will be undertaken in house. The outcomes will inform future scheme management strategies.

Strategic Alignment
He taiao ora	Medium	Climate Change	Good	Legislative Alignment	Not driven by Legislation
Te Mana O Te Wai	Low	Partnerships with Māori	Medium	Contribution to Levels of Service	Medium
Kia haumaru, kia pakari to hapori	Good	Com Participation	N/A	Deliverability	Low
Toitū te rohe	Medium	Other Strategic Priorities	Low
Funding
Operational Expenditure			Capital Expenditure
2023/24	2024/25	2025/26	2023/24	2024/25	2025/26
$200,000*	$200,000	$200,000
High level analysis
Items to consider
- Project appears to be a strong proposal in terms of alignment to council community outcomes. - Change in approach outlined in the proposal will enable Council to work alongside property owners to achieve more sustainable and natural solutions to localised erosion and or flooding problems, resulting in fewer assets being constructed, which otherwise would need to be monitored, maintained, and renewed. - Approach that responds to and provides for the impacts of Climate Change. - Completing this work will inform future asset management plans, strategies and Levels of Service. - Project is focused on medium to longer term outcomes, as a result a choice to not fund this initiative is unlikely to lead to impact levels of service in 2023/24 but is intended to deliver future benefits.

*Total cost for 2023/24 is $200,000. This is partly offset by reprioritising funding for the Groyne trial currently in the budget $87,000, bringing the additional funding required to for 2023/24 to $113,000.

3.4.1 Guidance sought

This proposal will enable Council to work with private property owners to achieve more sustainable and natural solutions to localised erosion and or flooding problems and will be used to inform future asset management plans, strategies and Levels of Service. Staff are seeking council guidance for one of the following options.

Option 1: Include additional operational expenditure of $200,000 in the draft AP 2023/24 budget funded through the Regional Fund Reserve ($113,000) and reprioritisation ($87,000).

Option 2: Decline Proposal.

3.5 Transport - Rotorua Refresh

This proposal seeks additional funding of $70,000 in 2023/24 to complete work relating to the refresh of the Rotorua Passenger Transport network. There is capacity to fund this work via the Rotorua Passenger Transport Targeted Rate Reserve.

Council has progressed plans for a refresh of the Rotorua network, including undertaking public consultation. Infrastructure upgrades on this project are being funded by NZTA’s Transport Choices Programme, making the delivery of this project of significant interest. Work to refresh the network will commence during the current 2022/23 year; this proposal is seeking funding for the 2023/24 financial year.

To support the delivery of the Rotorua Refresh, staff are requesting $40,000 for external project management resource to support the team for 10 weeks as insufficient resource exists internally. Staff are also seeking additional $30,000 to support a multi-channel marketing and promotional campaign to support the launch of the new network.

Public Transport expenditure in Rotorua is typically funded through targeted rates, however there is sufficient balance in the Rotorua PT reserve to accommodate this cost.

Strategic Alignment
He taiao ora	Low	Climate Change	Medium	Legislative Alignment	Not driven by Legislation
Te Mana O Te Wai	N/A	Partnerships with Māori	N/A	Contribution to Levels of Service	Good
Kia haumaru, kia pakari to hapori	Low	Com Participation	Medium	Deliverability	Low
Toitū te rohe	Good	Other Strategic Priorities	Low
Funding
Operational Expenditure			Capital Expenditure
2023/24	2024/25	2025/26	2023/24	2024/25	2025/26
$70,000
High level analysis
Items to consider
- Strong alignment to our Strategic Framework including multiple Community Outcomes and ‘Climate Change’ Impact Area. - Will directly contribute to Councils Transport Level of Service (Patronage) though promoting refreshed services. - This work will support the delivery of the Rotorua Refresh and follows on from current work delivered in 2022/23, including public consultation.

3.5.1 Guidance sought

This proposal will support Council to complete work relating to the refresh of the Rotorua Passenger Transport network. Staff are seeking council guidance for one of the following options:

Option 1: Include additional operational expenditure of $70,000 in the draft AP 2023/24 budget, funded via the Rotorua Passenger Transport reserve.

Option 2: Decline Proposal.

3.6 Rivers and Drainage - Safeguarding our Stopbanks

This project seeks additional funding of $30,000 operational expenditure and $700,000 Capital Expenditure in 2023/24 and a total of $970,000 Capital expenditure in 2024/25 and 2025/26 (out years to be considered via 2024-2034 LTP) to remedy uncontrolled use and remediate damage to urban stopbanks.

Over the years non-approved structures, trees and gardens have been established outside private property boundaries (encroachments) by property owners who may not have understood the risks associated with living alongside a stopbank or the possible implications of activities/development of their land and the adjacent stopbank land. These non-approved structures can create weakness in the stopbank structure through which water can flow in a flood and lead to the stopbank failing.

This project involves the remediation of stopbank assets on public land in urban locations. For practical purposes the work is undertaken in stages over summer construction seasons. Some investigative, assessment, scoping and communications work is possible outside of the construction seasons.

Strategic Alignment
He taiao ora	Medium	Climate Change	Good	Legislative Alignment	Not driven by Legislation
Te Mana O Te Wai	Low	Partnerships with Māori	Medium	Contribution to Levels of Service	Medium
Kia haumaru, kia pakari to hapori	Good	Com Participation	N/A	Deliverability	Low
Toitū te rohe	Medium	Other Strategic Priorities	Low
Funding
Operational Expenditure			Capital Expenditure
2023/24	2024/25	2025/26	2023/24	2024/25	2025/26
$30,000	$45,000	$45,000 + Ongoing	$700,000	$900,000	$70,000
High level analysis
Items to consider
- Project appears to be a strong proposal in terms of alignment to council community outcomes and impact areas. - Addresses defects that have been previously identified that are needing to be addressed. - Contributes to maintaining Council LOS - Consultation and rate payer communication is in progress and funding the continuation of this project is necessary to continue the momentum gained to date. - Appears to be good value for money, avoiding greater costs that could result from repair or failure in future - Funding will contribute to maintaining LOS, however a choice to not fund this initiative is unlikely to lead to a failure to deliver on levels of service for 2023/24.

3.6.1 Guidance sought

This proposal will support Council to remedy uncontrolled use and remediate damage to urban stopbanks. Staff are seeking council guidance for one of the following options:

Option 1: Include additional operational expenditure of $30,000 and capital Expenditure of $700,000 in the draft AP 2023/24 budget, with operational expenditure funded through a mix of the Regional Fund Reserve $6,000 (20%) and targeted rates $24,000 (80%), and capital expenditure funded through borrowings.

Option 2: Decline Proposal.

3.7 Rotorua Airshed support for high deprivation homeowners to improve air quality

This proposal seeks additional funding of $50,000 operational expenditure in 2023/24 and for the next three years (ending in 2026/27) via the Rotorua Air shed reserve (out years to be considered via 2024-2034 LTP), to support a small number of homeowners in the Rotorua Airshed to improve home heating options and to improve air quality. There is capacity to fund this work via the Rotorua Air Targeted Rate Reserve.

The increased funding is sought to provide financial support to homeowners experiencing high levels of socio-economic deprivation to either:

1. Remove their existing inefficient burners for free if they already have a separate compliant form of heating (where we have found them still using their non-compliant burners), or

2. Where they do not have a compliant source of heating, we offer to supply them with compliant heating IF they agree for us to remove their non-complying burners.

Affordability is a barrier to people replacing their non-complying solid fuel burners with compliant heating. Support includes Council’s contribution of the 20% unfunded portion of EECA Warmer Kiwi Homes grants (EECA fund 80%).

This is a continuation of the Rotorua Air Quality Implementation Programme and will be supervised by existing staff. The work will be undertaken by EECA approved contractors who are also BOPRC approved contractors.

Strategic Alignment
He taiao ora	Good	Climate Change	Low	Legislative Alignment	Aligns with and supports Legislation and Policy
Te Mana O Te Wai	N/A	Partnerships with Māori	Low	Contribution to Levels of Service	Good
Kia haumaru, kia pakari to hapori	Low	Com Participation	Low	Deliverability	Medium
Toitū te rohe	Low	Other Strategic Priorities	Low
Funding
Operational Expenditure			Capital Expenditure
2023/24	2024/25	2025/26	2023/24	2024/25	2025/26
$50,000	$50,000	$50,000 + $50,000 for 2026/27
High level analysis
Items to consider
- Strong alignment to our Strategic Framework including multiple Community Outcomes and ‘Climate Change’ Impact Area. - Supports the LOS of meeting relevant air quality requirements and has a positive impact on the KPI to reduce the number of PM10 exceedances. - Projects helps to fill a gap created through delays to the loans part of the sustainable homes programme (delays due to changes to the Credit Contracts and Consumer Finance Act). - Work can be funded from existing reserves.

3.7.1 Guidance sought

This proposal will enable Council to support a small number of homeowners in the Rotorua Airshed to improve home heating options and to improve air quality and will help fill a gap created by the delay to Council’s Sustainable Homes programme (delay due to changes to the Credit Contracts and Consumer Finance Act). Staff are seeking council guidance for one of the following options.

Option 1: Include additional operational expenditure of $50,000 in the draft AP 2023/24 budget to be funded via the existing Rotorua Air Targeted Rate reserve.

Option 2: Decline Proposal.

3.8 Transport - Tauranga Bus Shelters

This proposal seeks additional funding of $50,000 operational expenditure in 2023/24 to support Tauranga City Council with their bus shelter improvement programme, it is proposed that BOPRC contributes funding for three high quality bus shelters in prominent locations.

A recent strategic review of BOPRC’s transport function identified the opportunity for investment in infrastructure. The aim of this investment would be to further strengthen relationships with partner organisations, as well as raise the profile of the organisation within the community.

Strategic Alignment
He taiao ora	Low	Climate Change	Medium	Legislative Alignment	Not driven by Legislation
Te Mana O Te Wai	N/A	Partnerships with Māori	N/A	Contribution to Levels of Service	Medium
Kia haumaru, kia pakari to hapori	Medium	Com Participation	Medium	Deliverability	Low
Toitū te rohe	Medium	Other Strategic Priorities	Low
Funding
Operational Expenditure			Capital Expenditure
2023/24	2024/25	2025/26	2023/24	2024/25	2025/26
$50,000
High level analysis
Items to consider
- Some alignment to our Strategic Framework including multiple Community Outcomes and ‘Climate Change’ Impact Area. Potential small impact on GHG outcomes. - May contribute to LOS (patronage) by improving customers experience and therefore use of bus network. - An example of BOPRC supporting Joint Outcomes for the BOP (as we would be funding typical TCC project). - No legislative requirement. Transport infrastructure/bus shelters are not BOPRC's core service. - This project would represent a shift from Regional Council’s typical role in terms of funding transport infrastructure and potentially sets a precedent.

3.8.1 Guidance sought

This proposal will enable Council to support Tauranga City Council with their bus shelter improvement programme by contributing funding for three high quality bus shelters in prominent locations. Staff are seeking council guidance for one of the following options:

Option 1: Include additional operational expenditure of $50,000 in the draft AP 2023/24 budget, funded via the Tauranga Passenger Transport Targeted Rate.

Option 2: Decline Proposal.

3.9 Transport - Consultancy Support

This proposal seeks additional funding of $250,000 operational expenditure in 2023/24 to fund contractor/consultancy support to help deliver the wider transport programme.

There continues to be a number of staff vacancies in Transport Planning, leading to a number of projects being delayed across the programme. Whilst the Transport team has recently restructured, there is a backlog of projects where further resource will be needed to expedite work, to ensure delivery within reasonable timescales. Delivery is therefore dependant on the use of contractors, for which there is currently no funding.

Increased budget sought for support to help deliver the wider transport programme. This includes expected additional work required around Travel Demand Management and a new community development forum as well as anticipated additional requirements as a result of requirements relating to the development of the new Regional Land Transport Plan.

Strategic Alignment
He taiao ora	N/A	Climate Change	N/A	Legislative Alignment	Not driven by Legislation
Te Mana O Te Wai	N/A	Partnerships with Māori	N/A	Contribution to Levels of Service	N/A
Kia haumaru, kia pakari to hapori	N/A	Com Participation	N/A	Deliverability	Low
Toitū te rohe	Low	Other Strategic Priorities	Low
Funding
Operational Expenditure			Capital Expenditure
2023/24	2024/25	2025/26	2023/24	2024/25	2025/26
$250,000
High level analysis
Items to consider
- Funding proposal would help to enable the wider transport programme to deliver the planned Transport work programme. - Transport and Urban Planning is a strategic Priority for Council. - Challenges with recruitment has led to a number of projects slipping across the programme. - There is a backlog of projects where further resource will be needed to expedite work, to ensure delivery within reasonable timescales.

3.9.1 Guidance sought

This proposal will enable Council to fund contractor/consultancy support to help deliver the wider transport programme. Staff are seeking council guidance for one of the following options:

Option 1: Include additional operational expenditure of $250,000 in the draft AP 2023/24 budget, funded from the Regional Fund Reserve.

Option 2: Decline Proposal.

4. For information only

4.1 Transport – Tauranga On Demand Public Transport Trial.

As part of the Passenger Transport work programme, staff are progressing a feasibility assessment of an On-Demand Public Transport Trial. This study will identify a trial area, vehicle numbers and procurement options and is due to be considered by the Public Transport Committee (PTC) in March/April 2023.

Firm cost estimates are expected to be available to Council for consideration at Annual Plan 2023/24 Deliberations meeting in May 2023. Early indications are that this proposal will cost Council approximately $700,000 additional operational expenditure in 2023/24 and 2024/25 and $700,000 Capital Expenditure in 2023/24 to fund a two year On-Demand Public Transport Trial starting in early 2023/24. These estimates are forecast contributions from NZTA and other income is factored in.

5. Next Steps

Staff will incorporate guidance provided at today’s workshop into the draft Annual Plan and Annual Plan Budget for 2023/24 and will prepare information to inform Council Deliberations on the Annual Plan in May 2023.