Agenda of Regional Council - Thursday, 13 February 2025

Regional Council 13 February 2025

Recommendations in reports are not to be construed as Council policy until adopted by Council.

Agenda

E te Atua nui tonu, ko mātau ēnei e inoi atu nei ki a koe, kia tau mai te māramatanga ki a mātau whakarite mō tēnei rā, arahina hoki mātau, e eke ai te ōranga tonu ki ngā āhuatanga katoa a ngā tangata ki tō mātau rohe whānui tonu. Āmine.

“Almighty God we ask that you give us wisdom in the decisions we make here today and give us guidance in working with our regional communities to promote their social, economic, environmental and cultural well-being. Amen”.

1. Opening Karakia

2. Apologies

3. Public Forum

3.1 Presentation by the 2024/25 Toi Moana Summer Assistants

4. Items not on the Agenda

5. Order of Business

6. Declaration of Conflicts of Interest

7. Public Excluded Business to be Transferred into the Open

8. Minutes

Minutes to be Confirmed

8.1 Regional Council Minutes - 11 December 2024 17

9. Reports

9.1 Chairperson's Report 37

Decisions Required

9.2 Statement of Proposal - Fees & Charges Policy 40

Attachment 1 - 2025 Fees and Charges - Draft policy 44

Attachment 2 - 2025 Fees and Charges - Statement of Proposal 82

9.3 Parameters for Divestment of Port of Tauranga Shares by the Quayside Group 94

Attachment 1 - Workshop presentation 15 August 2024 - Public Excluded

Attachment 2 - Workshop pack 25 September 2024 - Public Excluded

Attachment 3 - Workshop pack 23 October 2024 - Public Excluded

Attachment 4 - Workshop pack 27 November 2024 - Public Excluded

Attachment 5 - Workshop pack 18 December 2024 - Public Excluded

Attachment 6 - Quayside advice on options January 2025 - Public Excluded

9.4 Regional Fares Review - Revision of Western Bay Zones 167

9.5 Toi EDA Council Controlled Organisation Exemption 174

9.6 Holding a Voting System Referendum in Conjunction with the 2025 Local Body Election 178

Information Only

9.7 Electoral Officer for the 2025 Local Authority Elections 183

9.8 Financial Performance Report P1-P6 2024/25 186

Attachment 1 - Financial Performance Report P1-P6 2024-25 190

10. Public Excluded Section

Resolution to exclude the public

Excludes the public from the following parts of the proceedings of this meeting as set out below:

The general subject of each matter to be considered while the public is excluded, the reason for passing this resolution in relation to each matter, and the specific grounds under section 48(1) of the Local Government Official Information and Meetings Act 1987 for the passing of this resolution are as follows:

Item No.	Subject of each matter to be considered	Reason for passing this resolution in relation to each matter	Grounds under Section 48(1) for the passing of this resolution	When the item can be released into the public
9.3	Parameters for divestment of Port of Tauranga shares by the Quayside Group - Attachments 1, 2 and 6	Withholding the information is necessary to protect information where the making available of the information would be likely to unreasonably prejudice the commercial position of the person who supplied or who is the subject of the information; Withholding the information is necessary to avoid prejudice to measures that prevent or mitigate material loss to members of the public; Withholding the information is necessary to enable any local authority holding the information to carry out, without prejudice or disadvantage, commercial activities; Withholding the information is necessary to prevent the disclosure or use of official information for improper gain or improper advantage.	48(1)(a)(i) Section 7 (2)(b)(ii); 48(1)(a)(i) Section 7 (2)(e); 48(1)(a)(i) Section 7 (2)(h); 48(1)(a)(i) Section 7 (2)(j).	On the Chief Executive's approval.
9.3	Parameters for divestment of Port of Tauranga shares by the Quayside Group - Attachments 3, 4 and 5	Withholding the information is necessary to protect information where the making available of the information would be likely to unreasonably prejudice the commercial position of the person who supplied or who is the subject of the information; Withholding the information is necessary to avoid prejudice to measures that prevent or mitigate material loss to members of the public; Withholding the information is necessary to maintain legal professional privilege; Withholding the information is necessary to enable any local authority holding the information to carry out, without prejudice or disadvantage, commercial activities; Withholding the information is necessary to prevent the disclosure or use of official information for improper gain or improper advantage.	48(1)(a)(i) Section 7 (2)(b)(ii); 48(1)(a)(i) Section 7 (2)(e); 48(1)(a)(i) Section 7 (2)(g); 48(1)(a)(i) Section 7 (2)(h); 48(1)(a)(i) Section 7 (2)(j).	On the Chief Executive's approval.
10.1	Public Excluded Regional Council Minutes - 11 December 2024	As noted in the relevant Minutes.	As noted in the relevant Minutes.	To remain in public excluded.
10.2	Procurement & Funding - Rotorua Urban Bus Contract	Withholding the information is necessary to enable any local authority holding the information to carry on, without prejudice or disadvantage, negotiations (including commercial and industrial negotiations).	48(1)(a)(i) Section 7 (2)(i).	On the Chief Executive's approval.
10.3	Eastern Bay of Plenty Regional Deal Proposal	Withholding the information is necessary to enable any local authority holding the information to carry on, without prejudice or disadvantage, negotiations (including commercial and industrial negotiations).	48(1)(a)(i) Section 7 (2)(i).	On the Chief Executive's approval.
10.4	Western Bay of Plenty Regional Deal Proposal	Withholding the information is necessary to enable any local authority holding the information to carry on, without prejudice or disadvantage, negotiations (including commercial and industrial negotiations).	48(1)(a)(i) Section 7 (2)(i).	On the Chief Executive's approval.
10.5	Rotorua-Taupō Regional Deal Proposal	Withholding the information is necessary to enable any local authority holding the information to carry on, without prejudice or disadvantage, negotiations (including commercial and industrial negotiations).	48(1)(a)(i) Section 7 (2)(i).	On the Chief Executive's approval.

9.3 Parameters for Divestment of Port of Tauranga Shares by the Quayside Group (Public Excluded Attachments)

Attachment 1 - Workshop presentation 15 August 2024 - Public Excluded

Attachment 2 - Workshop pack 25 September 2024 - Public Excluded

Attachment 3 - Workshop pack 23 October 2024 - Public Excluded

Attachment 4 - Workshop pack 27 November 2024 - Public Excluded

Attachment 5 - Workshop pack 18 December 2024 - Public Excluded

Attachment 6 - Quayside advice on options January 2025 - Public Excluded

Minutes to be Confirmed

10.1 Public Excluded Regional Council Minutes - 11 December 2024

Decisions Required

10.2 Procurement & Funding - Rotorua Urban Bus Contract

Attachment 1 - Rotorua Urban Bus Service Procurement Plan

10.3 Eastern Bay of Plenty Regional Deal Proposal

Attachment 1 - EBOP Regional Deal Light-touch proposal_DRAFT

10.4 Western Bay of Plenty Regional Deal Proposal

10.5 Rotorua-Taupō Regional Deal Proposal

Attachment 1 - Rotorua-Taupō Regional Deal Registration Form

11. Public Excluded Business to be Transferred into the Open

12. Readmit the Public

13. Consideration of Items not on the Agenda

14. Closing Karakia

Regional Council Minutes

11 December 2024

Regional Council

Open Minutes

Commencing: Wednesday 11 December 2024, 09:30am

Venue: Council Chambers, Regional House, 1 Elizabeth Street, Tauranga and via Zoom (Audio Visual Meeting)

Chairperson: Chairman Doug Leeder

Deputy Chairperson: Deputy Chairperson Jane Nees

Members: Cr Malcolm Campbell

Cr Stuart Crosby

Cr Toi Kai Rākau Iti

Cr Matemoana McDonald

Cr Kat Macmillan

Cr Ron Scott

Cr Ken Shirley

Cr Paula Thompson

Cr Lyall Thurston

Cr Andrew von Dadelszen

Cr Te Taru White

Cr Kevin Winters

In Attendance: Fiona McTavish – Chief Executive, Mat Taylor – General Manager Corporate, Namouta Poutasi – General Manager Strategy & Science, Reuben Fraser – General Manager Regulatory Services, Chris Ingle – General Manager Integrated Catchments (via Zoom); Kataraina O’Brien – General Manager Strategic Engagement, Tone Nerdrum Smith – Committee Advisor

Presenters as set out in the minutes

Apologies: Cr Paula Thompson

Chairman Leeder reminded those present that this meeting was being livestreamed and recorded and that the recording would be made available on the Bay of Plenty Regional Council website following the meeting. https://www.youtube.com/watch?v=cDFp8Maq4VQ

1. Opening Karakia

A karakia was provided by Cr Te Taru White.

2. Apologies

Resolved

That the Regional Council:

1 Accepts the apology from Cr Thompson for lateness tendered at the meeting.

Leeder/von Dadelszen

CARRIED

3. Declaration of Conflicts of Interest

Cr Stuart Crosby – Agenda Items 10.5: Quayside Holdings Limited and Toi Moana Trust - Statement of Expectations 2025/26 and 10.6: Quayside Holdings Limited - Directors Remuneration Review as a Quayside Board Director.

Cr Te Taru White – Agenda Items 10.5: Quayside Holdings Limited and Toi Moana Trust - Statement of Expectations 2025/26 and 10.6: Quayside Holdings Limited - Directors Remuneration Review as a Quayside Board Director.

4. Minutes

Minutes to be Confirmed

4.1

Regional Council Minutes - 23 October 2024

Resolved

That the Regional Council:

1. Confirms the Regional Council Minutes - 23 October 2024 as a true and correct record, subject to the following amendments:

- Agenda page 15, item 6.2 (Approval of Funding Policies), resolution 4: Delegation is to ‘Chief Executive’, not ‘staff’.

- Agenda page 17, Cr Winter’s declaration of interest relates to Item 6.5: Royal New Zealand Coastguard - Regional Safety and Rescue Service Funding Agreement, not 6.6: Surf Lifesaving New Zealand - Regional Safety and Rescue Service Funding Agreement

Leeder/Nees

CARRIED

5. Presentations

5.1

Õhau Wall (Rotorua Lakes) - Lakes Water Quality Society

Presentation - LWQS Õhau Wall pdf - Council 11 December 2024: Objective ID A4860377

Presented by: Don Atkinson, Grant Wallace, Bob Smith and Geoff Dainty (in person) and John Gifford (on Zoom) - Lakes Water Quality Society

Key Points - Presentation:

· Outlined the history of the Õhau wall including its construction in 2007/2008, identification of wall corrosion in 2014, leakage identified in 2022 and community response in 2023

· Gave context about the importance of the wall to lakes restoration project

· Provided photography of the wall in its current state, including evidence of holes and leakage

· Outlined the impact on lake water quality resulting from leakage

· Advocated that Toi Moana Bay of Plenty Regional Council (BOPRC) take urgent steps to remedy the situation and set out important factors to consider in remediation.

Key Points:

· Provided an introduction of the matter of the Õhau Wall and the presentation made to BOPRC as part of the Long Term Plan 2024-34

· The wall as it was currently had failed and was no longer fit for purpose, i.e. separating the lakes and minimise/eliminate cross-pollution

· There was significant corrosion causing holes in the wall

· The absolute cause of the corrosion was not confirmed, with a number of contributing causes being cited

· Considered that the potential threats to its longevity had not been adequately considered when the wall was originally constructed

· Suggested that the wall would not last for another 10-15 years as indicated, and that the king-piles should be replaced and the wall repaired now

· Concerned that BOPRC was ‘procrastinating’ in making a decision with regards to the future of the wall

· Concerned that the wall would not be able to withstand an earthquake, volcanic tremor or extreme wind conditions

· If one king pile failed, it would create a domino effect along the wall

· Recognised the long term relationship with BOPRC

· Concerned that previous interactions had not resulted in BOPRC taking urgent action, which the Society had called for over the last two years

· Sought repair work to commence no later than December 2025

· If no commitment had been made by BOPRC in this matter by June 2025, the Society would seek an enforcement order through the Environment Court

· Suggested that cost should be spread across the Regional BOPRC, rather than limited to Rotorua residents

· Repairs now would eliminate the need for complete wall replacement if the piles failed

· The piles were not pitted below the lakebed, and options for repairs – taking this into account – were being considered

· Progressive repairs would have an immediate, positive effect.

Key Points - Members:

· Recognised the concerns of the Society, and was aware and took seriously the issues pertaining to the wall

· Noted the rapid deterioration and the holes now causing the wall to be ineffective

· When constructed, a 50-year lifespan had been indicated, which had proven incorrect

· Noted the comments in the staff report regarding repair/remediation options, both medium and long term

· The deterioration appeared to be occurring at an accelerated speed, make the matter more urgent than originally anticipated

· Recognised the increasing concerns and the need to learn from the past to create a better, long-lasting solution for the future.

Resolved

That the Regional Council:

1. Receives the presentation from Lakes Water Quality Society regarding the Õhau Wall.

Winters/Thurston

CARRIED

6. Reports

Decisions Required

6.1

Õhau Diversion Wall Repair Progress and Water Quality Impact

Presentation - Deniz Ozkundakci pdf - Council 11 December 2024: Objective ID A4860362

Presentation - Õhau Diversion Wall Repair Progress pdf - Council 11 December 2024: Objective ID A4860380

Presented by: Andy Bruere – Lakes Operations Manager, Niroy Sumeran – Project Engineering Team Leader, Professor Deniz Ozkundakci – Lakes Chair, University of Waikato, Raed El Sarraf (WSP Consultant - via Zoom)

10.25 am – Cr Thompson entered the meeting.

Key Points - Presentations:

· Provided background on the wall’s construction and features and a timeline of assessing degradation of wall

· Outlined the engagement of WSP to provide options for remediation

· Outlined findings from the University of Waikato seven year review of Õhau wall including water quality data, water quality modelling and analysis of impact of leakage from wall

· Provided evidence that the wall provided immediate improvements in total nitrogen and Secchi depth, with more muted shifts over time in Chlorophyll and total phosphorus

· Detailed water quality modelling of various options, including complete removal of wall and the wall with holes, against water quality models if the wall operated as intended.

Key Points:

· Provided an introduction of the presenters and the report

· Recognised it might appear to be slow progress, however the importance of ensuring the repair solution was appropriate and long-lasting

· Provided a timeline since the installation of the wall in 2008, including discovery of deterioration and remediation

· Had engaged WSP to explore repair/remediation medium and long term options

· High level costings would be brought to BOPRC in May 2025

· ALUM dosing had significantly improved the quality of the Lake Rotorua water

· Microbial corrosion was not well known at the design stage, and was at that stage thought to relate to seawater, not fresh water

· Recognised that if using less favourable design/materials, the chance of faster deterioration increased

· Outlined the process currently being worked through by WSP to develop remediation options

· Assumptions on the improvement of Lake Rotoiti if the wall was removed, was based on the previous 10 years of lake quality data, which included ALUM dosing of Lake Rotorua

· It might be possible to undertake more detailed catchment modelling, including the retirement of farmland along the lakes to determine an impact on lake water quality

· Obtaining permission to undertake ALUM dosing of Lake Rotoiti would be challenging as the lake did not naturally have the high levels of phosphorous as Lake Rotorua

· It was often difficult to test new methods/products in the lake environment as positive outcomes were not yet proven

· Water entering the Rotorua Lakes from the Mamaku-Kaimai catchment was 65 years of age, which meant any land use changes today, would not be reflected until several decades into the future.

Key Points - Members:

· Concerned that there had been minimal intervention since the deterioration was initially discovered

· Sought funding options, recognising that the actual cost would not be known until an option had been chosen, to be presented to BOPRC as soon as practicably possible

· Indicated the importance of discussing the Õhau wall budget reduction as proposed in the draft Annual Plan 2025-26.

Key Points - Staff:

· Noted this was the only diversion wall of its kind in the world

· The Community Technical Panel was working towards presenting a preferred option to BOPRC in May 2025

· Noted that if options were agreed to in May 2025, the design and procurement process could commence in June 2025

· If no consultation was undertaken for the Annual Plan 2025/26, BOPRC would not be able to apply a targeted rate for the wall cost as introduction of a targeted rate required public consultation.

Resolved

That the Regional Council:

1. Receives the report, Õhau Diversion Wall Repair Progress and Water Quality Impact.

2. Directs staff to expedite the presentation of options for the Õhau Wall to Council

[Winters/Thurston]

[CARRIED]

6.2

Chairperson's Report

Resolved

That the Regional Council:

1. Receives the report, Chairperson's Report.

Leeder/White

CARRIED

11.15am – The meeting adjourned and Cr Crosby, Cr White, Cr Iti and Cr Shirley withdrew from the meeting.

11.29am – The meeting reconvened.

6.3

Quayside Holdings Limited and Toi Moana Trust - Statement of Expectations 2025/26

Noted that Cr Crosby and Cr White had declared an interest in this item and had withdrawn from Chambers prior to it commencing.

Presented by Kumaren Perumal – Chief Financial Officer.

Key Points:

· Provided an outline of the Statement of Expectations process.

Resolved

That the Regional Council:

1. Receives the report, Quayside Holdings Limited and Toi Moana Trust - Statement of Expectations 2025/26.

2. Approves the Quayside Holdings Limited Statement of Expectations, subject to minor editorial adjustments that may be agreed between the Chief Executive and the Chair, and notes that this will be sent to Quayside Holdings Limited to support the preparation of their draft Statement of Intent 2025/26.

Winters/Thurston

CARRIED

6.4

Quayside Holdings Limited - Directors Remuneration Review

Noted that Cr Crosby and Cr White had declared an interest in this item and had withdrawn from Chambers prior to it commencing.

Presented by: Lyndon Settle – Chief Executive and Mel Manley – General Manager Operations, Quayside Holdings Ltd.

Key Points:

· Noted the increasing complexity of Quayside Holdings Ltd, in particular in respect of the Port of Tauranga divestment, Rangiuru Business Park and divestment of non-share portfolio

· Noted there had been no remuneration change for the last two years

· Noted that a conditional sale & purchase contract had been signed for a considerable site at Rangiuru Business Park

· Future work programme included a review of the current Director Appointment Policy, which would be brought to BOPRC for consideration.

Resolved

That the Regional Council:

1. Receives the report, Quayside Holdings Limited - Directors Remuneration Review.

2. Approves the aggregate remuneration pool for Quayside Holdings Limited’s directors for 2024/25 at $520,000 (plus GST if any), which includes remuneration paid by Quayside Holdings Limited’s subsidiaries – Quayside Securities Limited and Quayside Properties Limited.

3. Approves increasing Quayside Holdings Limited’s directors’ fees for 2024/25, including remuneration paid by Quayside Holdings Limited’s subsidiaries – Quayside Securities Limited and Quayside Properties Limited, to:

a) Chair $140,000

b) Independent directors (three) $70,000 each

c) Councillor directors (two) $70,000 each

d) Supplement for Committee Chairs (three) $10,000 each

e) Council CEO director (one) $0.

4. Delegates authority to the Chief Executive to sign the Quayside Holdings Limited shareholder resolutions and any ancillary documentation required to give effect to such resolutions.

Thompson/Thurston

CARRIED

11.40 am – Cr White, Cr Crosby, Cr Iti and Cr Shirely entered the meeting.

6.5

2025/26 Annual Plan

Presented by: Mat Taylor – General Manager Corporate and Kumaren Perumal – Chief Financial Officer.

Key Points:

· Outlined the rationale behind a non-consulting Annual Plan 2025/26

· Noted that an Annual Plan community information campaign would be undertaken

· Public Transport targeted rates increase did not negate the private share increase expectation of Central Government

· The Õhau wall deferral of funding from the 2025/26 financial year was a reflection of when the spend was expected to occur, not an indication of down-prioritisation i.e. it would not be prudent financial practice to collect rates towards the wall that might in fact not be utilised until after the 2025/26 year

· Noted that BOPRC would have the opportunity to reintroduce the Õhau wall funding in the April 2025 Annual Plan report

· It was staff’s recommendation that the Õhau wall funding be deferred at this stage in recognition of the current uncertainty regarding options and costs

· The expert report regarding the Õhau wall options was expected to be ready in April 2025, and brought before BOPRC in May 2025. If the report was expedited, there might be insufficient time to explore all realistic options and identify/choose the most optimal one

· Noted that clear communication regarding the Õhau wall budget deferral would form part of the Annual Plan information campaign.

Key Points - Members:

· Concerned that removing current allocations for the Õhau wall in the 2025/26 budget – recognising the timing explanation – would send an unfortunate and potentially misinterpreted prioritisation signal to the community

· Suggested that the Õhau wall project be capitalised, rather than budgeted as operational expenditure

· Noted that BOPRC would consult on the User Fees and Charges schedule, as was legally required.

Resolved

That the Regional Council:

1. Approves for the purposes of setting budget estimates that the draft Annual Plan 2025/26 should include the identified savings and the additional expenditure as set out in section 2.1 of this report.

2. Confirms a preliminary financial envelope for the draft Annual Plan 2025/26, including:

(a) A 3% general rates increase.

1 (b) A 1% Total Targeted Rates increase (including a 5% public transport targeted rates increase).

3. Confirms that consultation is not required on the 2025/26 Draft Annual Plan.

4. Directs that public and targeted communication be undertaken to inform communities about the impacts of the 2025/26 Draft Annual Plan.

Thurston/Macmillan

CARRIED

6.6

2025/26 - Fees & Charges Review

Kumaren Perumal – Chief Financial Officer, Reuben Fraser – General Manager Regulatory Services and Alicia Burningham – Corporate Planner

Key Points:

· Report captured the output of previous workshops on fees and charges, and leads to a formal proposal for consultation in March/April of 2025.

Key Points - Members:

· Discussed that the proposed increase to harbour dues has not been included as projected shipping volumes were projected to generate sufficient revenue and the fundamental principle of fees is cost-recovery only.

Resolved

That the Regional Council:

1. Receives the report, 2025/26 - Fees & Charges review.

2. Approves the draft Fees and Charges Policy 2025/26, to enable preparation of a Statement of Proposal and Draft Fees and Charges Policy 2025/26 for consultation in 2025.

[Crosby/Scott]

[CARRIED]

6.7

Regional Fares Review

Presentation - Regional Fares Review pdf - Regional Council - 11 December 2024: Objective ID A4843667

Presented by: Oliver Haycock – Director Public Transport and Andrew Williams – Manager Transport Planning

Key Points – Presentation:

· Outlined the driver of this work was changes in private share targets set by Central Government

· Set out the process to date, including community consultation

· Outlined the proposed fare and concession options and associated modelling.

Key Points:

· Provided an outline of the review process to date, including the recommended options from the Public Transport Committee, which reflected today’s recommendations

· The intent was to confirm the proposed zones at today’s meeting

· Clarified the Fare confirmation process following today’s meeting, noting that the final confirmation would take place in March 2025, allowing for some time to ‘tweak’ zones if required

· Recognised this was not an easy nor necessarily desired decision for BOPRC to make.

Key Points - Members:

· Complimented the staff, recognising the challenges relating to fare pricing, largely caused by the significant and rapid changes introduced by Central Government

· Noted that fare box recovery in Bay of Plenty is lower than the national average currently

· Considered the final recommendations represented a pragmatic and acceptable solution

· Suggested fare reviews could favourably be undertaken more frequently than the legally required six yearly

· Recognised the financial impact on parts of the community and the genuine concerns this could generate; which highlighted the importance of communicating well about the changes

· Noted that the zones in the northern Western Bay of Plenty were significantly smaller/narrower than in other Bay of Plenty areas, which contradicted the fairness and equity principle BOPRC strived for

· Suggested a third recommendation be included that staff be directed to review the Northern Western Bay of Plenty Zones and report back to Council at its meeting in February 2025. Support for the additional recommendation was expressed.

Resolved

That the Regional Council:

1. Receives the report, Regional Fares Review.

2. Adopts the fare system recommended by the Public Transport Committee at the Public Transport Committee Meeting on 19 November 2024:

a) Fare structure	Zonal (as depicted in section 2.2)
b) Adult base fare	$3.70, with prepaid card
c) Concessions	· Infant (free) · Community Service Card (50%, national concession) · Supergold, as per national concession conditions (free travel between 9.00am and 3.00pm and after 6.30pm from Monday to Friday, and all day on weekends and public holidays) · Accessibility and +1 (free) · Child/young person (50%)
d) Time of travel discount	· 50% discount for off-peak travel (between 9.00am and 2.30pm and after 6.00pm)
e) Fare products	2 Revenue based caps: · Day cap (free travel after 3 trips p/day) · Week cap (free travel after 7 trips p/week) 3 Family pass

3. Directs staff to review the Northern Western Bay of Plenty Zones and report back to Council at its meeting in February 2025.

von Dadelszen/Scott

CARRIED

6.8

Tauranga Public Transport Joint Committee - Updated Terms of Reference

Presented by Oliver Haycock – Director Public Transport.

Key Points:

· Noted that the main purpose of the reframed Committee was to monitor the delivery of the Transport System Plan.

Key Points - Members:

· Suggested that BOPRC appoint an alternate member (in addition to the two primary members) to align with the Tauranga City Council representation.

Resolved

That the Regional Council:

1. Receives the report “Tauranga Public Transport Joint Committee – Updated Terms of Reference”.

2. Adopts the updated Terms of Reference for the Tauranga and Western Bay of Plenty Transport Committee (previously named the Tauranga Public Transport Joint Committee) in Attachment 1 and delegates the role and powers to, and sets the quorum for, the Committee as specified therein, with the following amendments:

- Removes “Joint” from the Committee name (consistent with the decision made by Tauranga City Council), the new name being the “Tauranga and Western Bay of Plenty Transport Committee”;

- Appoints Cr Kat Macmillan as an Alternate Member for Bay of Plenty Regional Council (in addition to the two primary members).

3. Notes that the Chairperson and Deputy Chairperson remain unchanged, along with the arrangements for administrative support, which will continue to be rotated between BOPRC and TCC on an annual basis, currently sitting with TCC for 2024.

McDonald/Crosby

CARRIED

6.9

Representative Action Litigation Funding

Presented by Monique Brooks – Legal and Commercial Manager and Mat Taylor – General Manager Corporate

Key Points:

· The nature of this public report was procedural, noting that details regarding the case before the Court could not be discussed

· Noted that this matter had been discussed in detail at the Public Excluded section of the Risk and Assurance Committee meeting.

Resolved

That the Regional Council:

4 Receives the report, Representative Action Litigation Funding .

1. Approves that up to $5m of the Regional Fund Reserve is identified as the source of funding for any potentially unfunded class action defence costs.

2. Delegates to the Chief Executive authority to approve expenditure on costs relating to the Representative Class Action Litigation.

3. Confirms the public be excluded on the grounds set out in the Local Government Official Information and Meetings Act 1987 from consideration of the following report attachment:

- Flood Litigation Work Programme Update (copy of R&A confidential report) under Section 48(1)(a)(i) Section 7 (2)(g) as withholding the information is necessary to maintain legal professional privilege and that this attachment be released to the public on the Chief Executive’s approval.

4. Confirms the decision has a medium level of significance as determined by the Council’s Significance and Engagement Policy. Council has identified and assessed different options and considered community views as part of making the decision, in proportion to the level of significance.

Scott/Crosby

CARRIED

6.10

Notice of Motion: Principles of the Treaty of Waitangi Bill

Presented by: Cr Toi Kai Rākau Iti as the mover of the Notice of Motion as included in the Agenda.

Key Points:

· Noted that there had been discussions regarding this Notice of Motion since it was notified to Members/included in the agenda

· Noted there was no seconder to the Motion at this stage

· Noted an email had been circulated to Elected Members by the Chief Executive relating to a draft submission in support of sector submission prepared by Te Uru Kahika (Regional and Unitary Councils Aotearoa)’s submission on the Bill

· Noted that if the Notice of Motion was not seconded, it would fail and not proceed

Key Points - Members:

· Noted that a draft submission to the sector submission prepared by Te Uru Kahika had been circulated to Members the evening before

· Questioned if it was appropriate for BOPRC to make/support a submission on the Bill as what it concerned was embedded in all of BOPRC’s business and responsibilities

· Suggested, if making a submission, it be neutral in nature, recognising the principles’ impact on BOPRC and the need for BOPRC to implement the consequences

· Any submission made on behalf of BOPRC would have to be approved and supported by Members, who should have the ability to agree/disagree/amend it accordingly

· BOPRC should showcase its experience of undertaking its responsibilities under the Treaty of Waitangi, and any submission should emphasize this

· If making a submission, suggested a focus on the five principles/interpretation as set out in the Bill, i.e. the submissions must be focussed on what was there, rather than what BOPRC may ideally like the Bill to be

· Considered it appropriate for BOPRC to make a submission, rather than remain silent

· Given the short submission timeframe, there was agreement to seek to agree content of any submission via email, which was in accordance with normal practice. It was further agreed that the submission would be finalised with 'majority agreement'.

Resolved

That the Regional Council:

1. Receives the Notice of Motion: Principles of the Treaty of Waitangi Bill

2. Presents a submission on the Principles of the Treaty of Waitangi Bill to the Justice Select Committee subject to the Council approving the substance of the submission by 7 January 2025.

Iti/Macmillan

3. A show of hands indicated seven for, seven against the changed notice of motion. The Chairman used his casting vote in support of the motion.

The Motion was CARRIED

6.11

Bay of Plenty Civil Defence Emergency Management Recovery Manager Nomination

Resolved

That the Regional Council:

1. Receives the report, Bay of Plenty Civil Defence Emergency Management Recovery Manager Nomination.

2. Endorses the nomination of Jacqui Rolleston-Steed, Director – Regional Public Service Commission – Bay of Plenty as a Civil Defence Emergency Management Recovery Manager under Section 29 of the Civil Defence Emergency Management Act 2002 (CDEM Act).

Thompson/Leeder

CARRIED

6.12

Appointment of Acting Chief Executive

Resolved

That the Regional Council:

1. Receives the report, Appointment of Acting Chief Executive.

2. Appoints Namouta Liza Poutasi – General Manager Strategy & Science as Acting Chief Executive for the period 23 December 2024 to 5 January 2025 (inclusive), during a period of leave for the Chief Executive.

Thompson/Macmillan

CARRIED

1.10 pm – The meeting adjourned.

1.35 pm – The meeting reconvened. Cr White and Cr von Dadelszen withdrew from the meeting.

6.13

Whakatāne Project Future Proof - Update

Presented by: Mark Townsend – Engineering Manager

1.45 pm – Cr White entered the meeting

Key Points - Presentation:

· Presented drone footage of stage one of Project Future Proof.

Key Points:

· Displayed a flyover video of the work to date at the Whakatāne Harbour as part of Project Future Proof

· Outlined that art by a local Whakatāne artist had been approved for inclusion in the design

· Advised that stage two of the project had been split into two

· Was working closely with landscape designers at Whakatāne District Council (WDC) in creating a visually appealing barrier between land and water

· The pohutukawa trees on the stopbank were protected and could not be removed. Sheet piling had been introduced to negate the effects of the root systems

· Provided clarification on the access points.

1.52 pm – Cr von Dadelszen entered the meeting (via Zoom)

· Stage four of the project incorporated the Wairere Stream bridge

· WDC were responsible for ongoing operating expenditure on any landscaping developed in the course of the project.

In response to questions:

· The Fishing Club was considering shifting their building within their existing site boundaries to stand on the landward side of the realigned floodwall.

6.14

Recognition of Cr Paula Thompson's Contribution in Various Council Appointed Roles

Presented by: Chairman Leeder

· The Chair noted that Cr Thompson recently made the decision to step down from her roles on SmartGrowth, Tauranga Moana Advisory Group (TMAG), and Mount Air Quality Working Party

· Acknowledged Cr Thompson’s significant contribution to these groups, and by extension the impact she has made for the region

· Noted that Cr Thompson has been a part of the leadership of SmartGrowth since her first term at BOPRC in early 2011, has been part of TMAG since its inception in 2014 and part of Mt Air Quality Working Party since its inception three years ago

· Noted her ability to build credibility of new forums and her collaborative and strategic approach

· Noted the selfless and future-focused decision to provide the opportunity for other councillors to take up opportunities with these groups

· On behalf of BOPRC and staff acknowledged and thanked Cr Thompson for the significant contribution to these groups

· Members noted their support of this acknowledgement.

7. Public Excluded Section

Resolved

Resolution to exclude the public

1 Excludes the public from the following parts of the proceedings of this meeting as set out below:

Item No.	Subject of each matter to be considered	Reason for passing this resolution in relation to each matter	Grounds under Section 48(1) for the passing of this resolution	When the item can be released into the public
10.9	Representative Action Litigation Funding - Attachment 1 - Flood Litigation Work Programme Update (copy of R&A confidential report) - Public Excluded	Withholding the information is necessary to maintain legal professional privilege.	48(1)(a)(i) Section 7 (2)(g).	On the Chief Executive's approval.
7.1	Public Excluded Regional Council Minutes - 23 October 2024	As noted in the relevant Minutes.	As noted in the relevant Minutes.	To remain in public excluded.
7.2	Rotorua Land Acquisition Business Case Update and Next Steps	Withholding the information is necessary to protect the privacy of natural persons, including that of deceased natural persons; Withholding the information is necessary to enable any local authority holding the information to carry on, without prejudice or disadvantage, negotiations (including commercial and industrial negotiations).	48(1)(a)(i) Section 7 (2)(a); 48(1)(a)(i) Section 7 (2)(i).	On the Chief Executive's approval.
7.3	Regional Deals Governance Delegation	Withholding the information is necessary to enable any local authority holding the information to carry on, without prejudice or disadvantage, negotiations (including commercial and industrial negotiations).	48(1)(a)(i) Section 7 (2)(i).	On the Chief Executive's approval.
7.4	Chief Executive’s Recruitment – Chief Executive Job Description and Job Sizing	Withholding the information is necessary to enable any local authority holding the information to carry on, without prejudice or disadvantage, negotiations (including commercial and industrial negotiations).	48(1)(a)(i) Section 7 (2)(i).	On the Chief Executive's approval.
7.5	Council Chair and Deputy Chair Chief Executive negotiation delegations	Withholding the information is necessary to enable any local authority holding the information to carry on, without prejudice or disadvantage, negotiations (including commercial and industrial negotiations).	48(1)(a)(i) Section 7 (2)(i).	On the Chief Executive's approval.

2 That Paul Spurdle – Consultant, Versos be permitted to stay in the public excluded section of the meeting due to their knowledge of the matter under discussion, being Report: Rotorua Land Acquisition Business Case Update and Next Steps.

Leeder/Thurston

CARRIED

8. Resolutions Transferred Into the Open Section

8.1

Resolutions and Reports

Tabled Document 1 - Documents Released into the Open pdf - CE Recruitment - Council 11 December 2024: Objective ID A4847307

Item 14.4 Chief Executive’s Recruitment – Chief Executive Job Description and Job Sizing

1. Receives the report, Chief Executive’s Job Description and Job Sizing.

2. Endorses the Executive Employment Committee’s recommendation and approves the Chief Executive’s Job Description as per Attachment 1.

3. Endorses the Executive Employment Committee’s recommendation and approves the salary range to be negotiated with the preferred candidate between 85% - 115% of the mid-range identified in Strategic Pay’s Chief Executive Job Sizing and Remuneration Recommendation Report December 2024.

4. Confirms the public be excluded from consideration of this report on the grounds set out in the Local Government Official Information and Meetings Act 1987 under 48(1)(a)(i) Section 7 (2)(i) withholding the information is necessary to carry on, without prejudice or disadvantage, negotiations (including commercial and industrial negotiations).

5. Confirms that the report, attachment 1 and resolutions be released to the public for inclusion in the Chief Executive recruitment process.

Item 14.5 Council Chair and Deputy Chair Chief Executive negotiation delegations

1. Receives the report, Council Chair and Deputy Chair Chief Executive negotiation delegations.

2. Endorses the Executive Employment Committee’s recommendation and delegates authority to the Regional Council’s Chair and Deputy Chair to negotiate and finalise contract terms with the preferred candidate.

3. Confirms the public be excluded from consideration of this report on the grounds set out in the Local Government Official Information and Meetings Act 1987 under Section 48(1)(a)(i) Section 7 (2)(i) as withholding the information is necessary to enable any local authority holding the information to carry on, without prejudice or disadvantage, negotiations (including commercial and industrial negotiations).

4. Confirms that the report be released to the public on the Chief Executive’s approval.

9. Closing Karakia

A karakia was provided by Cr Te Taru White.

2.52 pm – the meeting closed.

Confirmed

Chairman Doug Leeder

Chairperson, Regional Council

Date	Meeting / Engagement	Comment
5 December 2024	Meeting with Denis Collins, Ministry for Primary Industries - Videoconference	Attended.
6 December 2024	Regional Deals weekly teams meeting catch-up with Western Bay of Plenty District Council Mayor James Denyer, Tauranga City Council Mayor Mahé Drysdale and Priority One Chief Executive Nigel Tutt - Videoconference	BOPRC Chief Executive Fiona McTavish and the other council CEOs were also in attendance.
Regional Sector Chairs/Mayors monthly informal catch-up - Videoconference	Attended.
9 December 2024	Meeting with Alison Dewes from Tipu Whenua, and Farmer/ Coastal Catchment Leads – Whakatane	Discussed BOPRC and famers finding alignment.
12 December 2024	Port of Tauranga Ltd meeting – Mount Maunganui	Attended.
13 December 2024	Regional Deals weekly teams meeting catch-up with Western Bay of Plenty District Council Mayor James Denyer, Tauranga City Council Mayor Mahé Drysdale and Priority One CEO Nigel Tutt - Videoconference	Fiona McTavish and the other council CEOs were also in attendance.
Port of Tauranga Ltd meeting – Mount Maunganui	Attended.
18 December 2024	Meeting with Western Bay of Plenty District Council Mayor James Denyer and Tauranga City Council Mayor Mahé Drysdale – Tauranga	Attended.
4 January 2025	Lake Rotoiti Community Association Inc Annual General Meeting - Rotorua	Invited to the AGM along with BOPRC Acting CEO Namouta Poutasi.
12 January 2025	Lake Tarawera Ratepayers' Association – Annual General Meeting - Rotorua	Attended with Fiona McTavish and General Manager Integrated Catchments Chris Ingle.
13 to 14 January 2025	Hawkes Bay Land for Life Study Tour – Hawkes Bay	An opportunity to learn about Hawke’s Bay Regional Council’s (HBRC) Land for Life programme which is a collaboration with Ministry for Primary Industries and The Nature Conservancy Aotearoa New Zealand, to help farmers reduce erosion on their farms and adopt more regenerative, resilient, and profitable farming systems. We also had the opportunity to discuss HBRC’s Biodiversity, Biosecurity, Sustainable Land Management and Rural Partnerships programme Attended with Fiona McTavish and Chris Ingle.
29 January 2025	Catchup meeting with Priority One Independent Chair Todd Muller – Tauranga	Attended.
30 January 2025	Meeting with Chair of the Lake Tarawera Ratepayers Association Mike Allen – Rotorua	Councillor Kevin Winters also in attendance.
4 February 2025	BOPRC Elected Members site visit to Rangiuru Business Park – Paengaroa	Invited by Quayside Holdings Ltd, this was an opportunity to see the site and get an update as Stage 1A titles near issue and the infrastructure of the park comes to life.



Report To:	Regional Council
Meeting Date:	13 February 2025
Report Writer:	Mark Le Comte, Principal Advisor, Finance; Monique Brooks, Legal and Commercial Manager; Gillian Payne, Principal Advisor and Kataraina O'Brien, General Manager, Strategic Engagement
Report Authoriser:	Mat Taylor, General Manager, Corporate
Purpose:	To set parameters for the divestment of Port of Tauranga Shares by the Quayside Group.

Parameters for Divestment of Port of Tauranga Shares by the Quayside Group

Executive Summary

The Port of Tauranga Limited (PoTL) shares held through Quayside Holdings Limited (QHL) are a strategic asset of the Council (listed in Council’s Significance and Engagement Policy). Through the 2024-2034 Long Term Plan, Council enabled a managed sell-down of PoTL shares to a minimum holding of 28%, subject to Council approval of the sale process and any conditions/parameters applying to the sale of the shares, including determining any strategic control imperatives and engaging with Mana Whenua.

This report seeks Council decisions on the parameters that will apply to the sale of PoTL shares by the Quayside Group (Quayside), and in turn a decision to permit Quayside to sell the shares within those parameters. In setting these parameters, and permitting a sale, the Council is not advising or encouraging Quayside to undertake any transaction in PoTL shares. Rather, it is identifying the parameters of the transaction it is permitting Quayside to undertake. Any proposed transaction remains an incomplete and confidential proposal, until it is finally implemented by Quayside.

The purpose of the parameters is to ensure that Quayside when implementing any sale of PoTL shares delivers on Council’s objectives for the divestment of the PoTL shares, which include:

· diversifying the investment portfolio to reduce risk

· enabling a more sustainable dividend to Council that meets (or exceeds) forecasts in the LTP

· retaining a degree of strategic control to preserve Port of Tauranga’s ability to support the regional economy

· adhering to the expectations set in the LTP consultation document for the outcome of the divestment

Prior to this meeting, commercially sensitive and confidential workshops were held to provide Councillors with information to support this decision making. Engagement with relevant Iwi Representatives has taken place.

Any decision that Council makes on the parameters is the final part of Council’s decision making in this process following which Quayside will be responsible for compliance with the parameters in execution of any transaction and reporting to Council.

Recommendations

That the Regional Council:

1 Receives the report, Parameters for divestment of Port of Tauranga shares by the Quayside Group.

2 Notes that the Port of Tauranga Limited (PoTL) shares held through Quayside Holdings Limited (QHL) are a strategic asset of the Council and that Council’s 2024-2034 Long Term Plan enabled a managed sell-down of PoTL shares to a minimum holding of 28%, subject to Council approving the sale process and any conditions/parameters applying to the sale of the shares, including determining any strategic control imperatives and engaging with Mana Whenua.

3 Permits QHL to permit its relevant subsidiaries to negotiate and undertake sales of ordinary shares in PoTL within Council approved parameters, and to report back to Council on progress on a regular basis, as agreed between Quayside and Council.

4 Sets the following parameters that apply to any sale of PoTL shares by Quayside:

(a) Value:

(i) Optimise value to provide higher dividends to Council than the dividend projections set out in the 2024-2034 Long Term Plan.

(ii) In doing so, have regard for both long-term market value and short-term market value of the PoTL and QHL’s investment portfolio and undertake an efficient and effective sale process.

(iii) If required, use part of the proceeds from the sale of the PoTL shares to repurchase the $200 million Perpetual Preference Shares of QHL.

(b) Timing: Be timed to align with current and forecasted economic conditions.

(c) Strategic: To ensure Council can achieve its objectives:

(i) Diversification – Aim to reduce the proportional market value of Port of Tauranga shares to no more than 50% of QHL’s investment assets.

(ii) Control - Minimum shareholding in PoTL is 28% of the ordinary shares issued, although dependent on sale proceeds, a higher proportion may be retained.

(iii) As far as practicable, ensure that the PoTL’s operations continue to support the Bay of Plenty regional economy. This includes minimising the risk of ownership and control passing beyond the preferred Australasia/Pacific region.

(d) Mana Whenua: Provide Mana Whenua with an initial opportunity to purchase PoTL shares recognising the long-term value that Mana Whenua bring.

(e) Longer term settings: Align with an optimised Council Group tax position.

(f) Other Matters:

(i) Any and all transactions are to be consistent with expectations set in the Long Term Plan 2024-2034 and Consultation Document which included continued listing of PoTL shares on the NZX.

(ii) Complies with divestment reporting and accountability measures and reporting to be established by the Chief Executive in consultation with Quayside. Note that future Statement of Intent processes will set and review results from, and effectiveness of, the parameters.

(iii) Notes that QHL have the opportunity to report back to Council in due course, if in their considered opinion, the parameters are not commercially optimal or achievable.

5 Confirms the public be excluded on the grounds set out in the Local Government Official Information and Meetings Act 1987 from consideration of the following report attachments:

Attachments 1 to 6 pursuant to Section 48(1)(a)(i) and the following sections:

o Section 7 (2)(b)(ii) as withholding the information is necessary to protect information where the making available of the information would be likely to unreasonably prejudice the commercial position of the person who supplied or who is the subject of the information,

o Section 7 (2)(e) as withholding the information is necessary to avoid prejudice to measures that prevent or mitigate material loss to members of the public

o Section 7 (2)(h) as withholding the information is necessary to enable any local authority holding the information to carry out, without prejudice or disadvantage, commercial activities,

o Section 7 (2)(j) as withholding the information is necessary to prevent the disclosure or use of official information for improper gain or improper advantage;

Attachments 3, 4 and 5 pursuant to Section 48(1)(a)(i) and section 7 (2)(g) as withholding the information is necessary to maintain legal professional privilege.

And that these attachments be released to the public on the Chief Executive’s approval.

1. Introduction

1.1 Purpose of this report

In its decisions on its Long Term Plan 2024-2034 (LTP), the Council enabled a managed sell down of its 54.14% shareholding in PoTL to a minimum holding of 28%. Council holds these PoTL shares through its subsidiary, Quayside Holdings Limited (QHL). QHL, in turn, holds the shares through the Quayside Unit Trust (QUT), the trustee of which is QHL’s wholly owned subsidiary Quayside Securities Limited (QSL). QSL, as trustee of QUT, will be the primary transacting party which undertakes any potential sale of shares in PoTL. In this report some entities are referred to explicitly where appropriate otherwise reference may be made to “Quayside” which may refer to QHL, its relevant subsidiary or the entire Quayside Group.

Council is intending to set parameters that will apply to any sale of the PoTL shares by Quayside. This is consistent with decisions taken by Council during the adoption of the LTP as explained below.

1.2 Prior decisions during development of LTP 2024-2034

The decisions being sought in this meeting are the next step in a process that began in 2023, as part of the development of Council’s financial strategy in the LTP. The financial strategy sets out Council’s approach to how it funds its activities and includes forecasts for revenue from all sources.

The financial strategy also specifies the Council’s objectives for holding and managing its investments in equity securities, which includes its PoTL shareholding. As good practice and to meet legislative requirements, Council must demonstrate prudent and sustainable financial management in its long-term revenue planning.

Dividends from Council’s subsidiary, QHL, are an important source of revenue for Council, contributing $47 million in the 2024/25 financial year which is 24% of Council’s total revenue. These dividends reduce the amount of general rates required and provide a benefit to all ratepayers. For Quayside, dividends received from its PoTL shares are the main source of income to pay dividends to Council.

1.2.1 Need to diversify portfolio

In this context, Council considered the future of Quayside’s 54.14% shareholding in PoTL valued at the time (December 2023) at around $2.2 billion, representing 82% of QHL’s total investment portfolio. Dividends from QHL are used to reduce the rates revenue required to deliver Council’s services, so it is important that the revenue stream is sustainable and reliable to avoid large fluctuations. Without managing this risk, ratepayers could face unexpected increases in rates or lower levels of service if expenditure was reduced as result of lower QHL dividends.

Advice from QHL was that a more diversified investment portfolio was necessary to manage the risk of volatility in QHL dividends. Given the size of the PoTL shareholding in relation to the total QHL portfolio, it was not feasible to achieve the necessary degree of diversification through natural growth in the portfolio.

In addition, because PoTL shares are a strategic asset for Council, legislation prohibits the sale of any of the shares unless a sale had been expressly provided for in the Council’s LTP. This meant that if the value of the PoTL increased any gains through sale of shares could not be realised by Quayside through a divestment. This constrained future dividends to Council or options for diversification.

1.2.2 Options developed through LTP development workshops

Through a series of workshops held in 2023, Council discussed a range of options for reducing the shareholding in PoTL, alongside the status quo. Advice was sought and received from consultants engaged by Council and QHL.

On 14 December 2023, at a public meeting of Council, a draft Consultation Document and supporting material was approved for audit. This was the first public announcement of Council’s proposal to sell-down the PoTL portfolio, to a minimum of 28%, and it was accompanied by a press release and an information release to the NZX.

1.2.3 Proposal for public consultation

On 6 March 2024, Council approved the LTP 2024-2034 Consultation Document and its supporting information. The Consultation Document included the proposal for a managed sell-down of PoTL shares to a minimum of 28% as a key topic for submissions. The supporting information (provided by QHL’s and Council’s consultants, Cameron Partners and PwC respectively) contained details of the options Council had discussed through the series of workshops in 2023, including the advantages and disadvantages of each option, and the degree to which the options would achieve Council’s objectives, both financial and non-financial. Two independent reports were published on Council’s Participate website, explaining the rationale for the proposal^{^[1]} and the options, benefits, risks and constraints that had been considered before making the proposal.

1.2.4 Key points from submissions and decision to enable sell down in final LTP

Council received 260 responses to the question relating to the proposed managed sell-down of the PoTL shares to a minimum of 28% detailed in the LTP Consultation Document. Responses were evenly split for and against Council’s proposal to enable a sell down.

Submissions that opposed the proposal included the following reasons:

· the shares generate a dividend that benefits the region through reduced rates

· sell down was short-sighted and would lead to rates increases in the future

· the national/regional significance of the PoTL

· importance of local ownership

· power to appoint directors may be lost

· threats posed by new owners

· the risk of not having local and community interests at the forefront

· portfolio diversification was a risk because new investments could not be guaranteed to match the performance of the PoTL

· there was not enough information about new investments.

Submissions that supported the proposal provided similar reasons to the rationale presented by Council in the proposal. Some suggested conditions and considerations for a sell down process including suggestions on the use of the proceeds and limiting the sale of shares to local or New Zealand residents.

Submissions from Māori were generally in favour of enabling the managed sell down. They raised considerations for involvement in the decision-making process, participation in the sale through potential preferential processes and retaining local ownership. This included submissions from iwi and hapū from outside the Bay of Plenty region and individuals, specific trusts and other organisations.

1.2.5 Council’s decision in response to submissions

At its LTP deliberations meeting on 28 May 2024, Council resolved to include in the LTP for adoption to enable the managed sell down of the PoTL shares held by Quayside to a minimum shareholding of 28%. Council also decided to fund and undertake further work on this matter so it could appropriately direct QHL in relation to parameters for any sale process and engage further with Mana Whenua, before future decisions of the Council to approve parameters and timeframes for any managed sell-down process.

1.3 Legislative Framework

Many of Council’s obligations including the manner in which it makes decisions are governed by the Local Government Act 2002 (LGA). In performing its role Council must act in accordance with principles set out in section 14 of the LGA. The key principles for the purpose of this decision are that Council should:

· take account of the interests of future as well as current communities;

· provide opportunities for Māori to contribute to decision-making processes;

· undertake commercial transactions in accordance with sound business practices;

· ensure prudent stewardship and the efficient and effective use of its resources, including planning effectively for the future management of its assets; and

· take account of the social, economic and cultural well-being of people and communities and the reasonably foreseeable needs of future generations.

These principles are also reflected in Council’s obligations under Part 7 of the LGA which sets out obligations in terms of Council’s financial management. In particular:

· section 100 requires Council to ensure it has sufficient projected revenue to meet its projected expenditure; and

· section 101 requires Council manages its financial dealings (including its investments and assets) in a manner which promotes the current and future interest of the community.

As outlined in the background section above, the Council’s objectives for the divestment reflect Council’s aim to reduce risk and improve the sustainability of the QHL dividend.

The Council decided that enabling the divestment was financially prudent as a way to promote rates affordability for ratepayers and Council can continue to meet planned levels of service.

Part 6 of the LGA sets out the processes and principles which apply to how Council consults its community and makes decisions. As set out in section 1.2 of this report Council undertook a full special consultative procedure during its Long Term Plan decision making and heard community views on the proposal to enable a managed sell down of its PoTL shares. Following this process, as required by section 97 of the LGA, Council made a decision to explicitly provide for the sale of the PoTL shares in its LTP 2024-34 and made an amendment to its significance and engagement policy (s76AA of the LGA). Having undertaken these steps in 2024, the current proposal reflects the next stage of Council’s decision-making process.

Sections 76 to 81 of the LGA set out the requirements in terms of its decision-making processes. In making a decision, Council must:

· seek to identify all reasonably practicable options for the achievement of the objective of a decision – s77(1)(a)

· assess the option in terms of their disadvantages and advantages – s77(1)(b);

· where the options involve a significant decision in relation to land or a body of water, take into account the relationship of Māori – s77(1)(c)

· Give consideration to the views and preferences of persons likely to be affected by, or have an interest in, the matter – s 78.

Section 79 of the LGA states Council has discretion to make judgments about how it achieves compliance with the above requirements that is largely in proportion to the significance of the matters affected by the decision; and about, in particular, the:

· extent to which different options are identified and assessed

· degree to which benefits and costs are to be quantified; and

· extent and detail of information to be considered.

Sections 4 and 81 of the LGA requires that Council must provide opportunities to Māori to engage in decision making processes.

1.4 Alignment with Strategic Framework

Sustainable development	Goal 12 We support development and growth that takes into account the four wellbeings of people and communities, the need to maintain and enhance the quality of the environment, and the reasonably foreseeable needs of future generations.
The Pursuit of Excellence	Goal 17 Ensuring an equitable approach to the four wellbeings and delivery of community outcomes.
How we work	1. We look to add value regionally

1.4.1 Community Well-beings Assessment

Dominant Well-Beings Affected

¨ Environmental

¨ Cultural

¨ Social

þ Economic

Medium - Positive

1.5 Significance

The shares in PoTL are a strategic asset and a decision to sell this is of high significance and must be explicitly provided for in an LTP. The LTP 2024-2034 explicitly enables a managed sell down to a minimum shareholding of 28%.

The current decision before Council is about setting the parameters for the managed sell down. This is a step in implementing the managed sell-down as enabled by the LTP 2024-2034 and the significance of this decision must be assessed on its own.

The recommended proposal/decision has been assessed against the criteria and thresholds in Council’s Significance and Engagement Policy and can be considered of low significance.

This assessment is based on current assumptions about risks, and of the performance results of current and future shareholdings, and include that:

· Maintaining a majority PoTL shareholding is not a requirement for this strategic asset of the Bay of Plenty Regional Council. It is important to note that any remaining shareholding continues to be a strategic asset of Council,

· It is unlikely there will be persons significantly affected by this decision

· There are no unbudgeted financial implication of this decision

· This decision does not impact Council’s capacity to perform its role.

2. Setting parameters for any sale of Port of Tauranga shares

2.1 Objectives of divestment and setting divestment parameters

To align with the LTP 2024-2034 Consultation Document, and LTP 2024-2034, any managed sell-down is required to meet the following objectives:

• diversification and reducing risk in the investment portfolio, and

• provide Council with a sustainable dividend that meets (or exceeds) forecasts in the LTP Financial Strategy, to promote rates affordability, and

• be compliant with legislative requirements and within the scope of the decisions documented in the approved LTP to minimise the risk of injunction and/or judicial review.

While achieving these objectives, Council also sought to:

· retain a degree of strategic control in order to preserve PoTL’s ability to support the regional economy

· enable existing local investors to remain invested in PoTL

· provide opportunities for Mana Whenua investors.

Council’s intention in setting parameters is to ensure that Quayside has the appropriate mandate to implement the sell-down on commercial terms, while delivering on the Council’s objectives and meeting the parameters set by Council.

2.2 Decision making process

After the LTP decision was made to enable divestment of PoTL shares, Council sought expert financial and commercial advice on approaches for divestment. It also engaged with relevant Iwi representatives.

2.2.1 Workshops to consider expert advice and guide engagement

Council sought advice from QHL who engaged specialist investment advisors to identify potential approaches for divestment. Council also engaged PwC to provide strategic advice and review advice provided by QHL. This advice was received in a series of confidential workshops held from August to December 2024. The workshops were confidential because they included commercially sensitive information, which if disclosed could prejudice Council’s and Quayside’s commercial positions and activities and could result in a loss of public value.

Given both PoTL and QHL are companies listed on NZX, additional care needed to be taken to ensure that compliance with NZX Listing Rules and the Financial Markets Conduct Act 2013 was maintained. Without confidential workshops, Councillors would not have been able to receive and discuss the expert advice they needed to eventually make an informed decision on parameters.

No decisions were made at these workshops, as they were for the purpose of information sharing and initial guidance only. During the workshops Councillors provided high-level feedback to staff and Quayside on the information presented to allow refinement of potential scope for eventual parameters.

For transparency, the scope of each workshop is described below. The full workshop materials are attached to this report as Public Excluded items given that the information remains commercially sensitive at this time (attachments 1-5).

August 2024

Councillors received information and advice about the timeframes and process for developing parameters, from staff. Discussion about matters raised in submissions to the LTP process, was guided by an external facilitator. This included:

· consideration of levels of ownership and control

· Council’s role as regulator versus investor in relation to PoTL

· the role of PoTL in the regional economy

· allocation of proceeds of any sale and whether a decision on that needed to be made at this time

· iwi rights and interests.

Councillors provided high-level guidance on the scope of potential parameters for a managed sell-down of PoTL shares, which included matters relating to

· timing and timeframes

· mana whenua engagement

· financial value

· strategic control

· future proofing.

Councillors sought additional advice on engaging with mana whenua, as well as advice on how interlinked elements of the possible parameters could be understood and considered

September 2024

At this workshop, Councillors were presented with information on the following:

· A draft Aligned Decision Matrix, considering interdependencies of assumptions and parameters, and the consequences for timing of decision-making.

· Possible additional consultation requirements, driven by legislation and commitments made by Council as part of its LTP decision-making.

· The non-financial value of PoTL to the region.

· An update on QHL’s corporate settings, its purpose, and the implications for its Statement of Investment Objectives (SIPO) and asset allocation decisions.

· Update from QHL on their ongoing work on identifying options for the approach to divestment.

October 2024

Information was presented to Councillors building on earlier parameter setting direction, including:

· Identifying decisions that need to be made prior to any sale, and decisions that could be made at any time.

· Elaborating on the implications of the potential parameters identified for the sale process, risks, possible trade-offs to consider.

Councillors considered a paper on the proposed approach to mana whenua engagement in relation to the divestment process.

November 2024

Following the October 2024 workshop QHL were provided with a working draft of potential parameters, that staff had prepared based on the high level guidance received to date from the Council.

To illustrate how the parameters could work in practice, QHL presented possible sale options and associated financial modelling and analysis. This included consideration of QHL’s commercial objectives and Council’s potential parameters.

Various sale options were shown to return higher dividends to Council (under the current distribution policy) than the status quo, and higher than the forecast dividends in the 2024-2034 Long Term Plan Financial Strategy. The details of the options are confidential and commercially sensitive.

Council requested further information on the options particularly in relation to risk of execution, and whether all the options could fully meet Council’s financial and non-financial objectives. Councillors sought more information on the options to fully understand the risks and implications, and the broader benefits of each approach.

December 2024

Council considered whether the QHL sale options were within the scope of the type of transaction foreshadowed in the information provided to the community through consultation during the LTP process. Staff advised that if the sale options were not in keeping with the LTP consultation, then the Council would likely need to undertake further consultation if such options were to be pursued. Given the nature of some of the options, public consultation may result in the option being difficult to practically execute.

QHL presented the three most likely sale options, one of which could not achieve all of the objectives for the divestment of the PoTL shareholding, as set out in the LTP. Draft potential parameters were considered against the approaches to test whether different parameter settings would enable Quayside to effectively implement the divestment, using whichever of approach it may choose.

2.2.2 Mana Whenua engagement

Council directed in its resolution of 28 May 2024 that further engagement with Mana Whenua occur prior to permitting any sell down of PoTL shares.

At a workshop on 23 October 2024, Council directed that the preferred method of engagement was face-to-face meetings with targeted mana whenua identified as having ahi kaa relationships in the Port of Tauranga area.

To date, engagement has taken place with Tauranga Moana iwi leaders from Ngāi Te Rangi, Ngāti Ranginui and Ngāti Pūkenga.

During this engagement with identified Mana Whenua, Mana Whenua expressed a desire to have an opportunity to engage in any sale process with Quayside. There was a strong view from Mana Whenua that a purchase of PoTL shares by Mana Whenua (or associated entities) would support the desire for local and long term ownership given their ahi kaa relationships with the Port of Tauranga area and provide an opportunity to continue to build a long-term partnership with Council.

2.3 Identifying parameters for consideration

To be workable, the divestment parameters set by Council should:

· Be aligned with Council’s strategic objectives

· Be clear and not introduce undue complexity in the process

· Work together as a suite of parameters

· Preserve confidentiality through the process, where required.

2.3.1 Draft parameters

Through the workshops, Councillors gave high-level direction on draft potential parameters for consideration at this meeting. The draft parameters listed below have been designed having regard to feedback from the community through the LTP submissions process, feedback from mana whenua and advice from external advisors including QHL.

Value:

· Optimise value to provide higher dividends to Council than the dividend projections set out in the 2024-2034 Long Term Plan.

· In doing so, have regard for both long-term market value and short-term market value of the PoTL and the QHL investment portfolio and undertake an efficient and effective sale process.

· If required, use part of the proceeds from the sale of the PoTL shares to repurchase the $200 million Perpetual Preference Shares of QHL.

Timing:

· Be timed to align with current and forecasted economic conditions.

Strategic: To ensure Council can achieve its objectives:

· Diversification – Aim to reduce the proportional market value of PoTL shares to no more than 50% of Quayside’s investment assets.

· Control - Minimum shareholding in PoTL is 28% of the Ordinary Shares issued.

· Regional Benefit - As far as practicable, ensure that the Port of Tauranga’s operations continue to support the Bay of Plenty regional economy. This includes minimising the risk of ownership and control passing beyond the preferred Australasia/Pacific region

Mana Whenua:

· Provide Mana Whenua with an initial opportunity to purchase PoTL shares recognising the long-term value that Mana Whenua bring.

Longer term settings:

· Align with an optimised Council Group tax position.

Other Matters:

· Any and all transactions are to be consistent with expectations set in the Long Term Plan 2024-2034 and Consultation Document which included continued listing of PoTL shares on the NZX.

· Complies with divestment reporting and accountability measures to be established by the Chief Executive in consultation with Quayside. Note that future Statement of Intent processes will set and review results from, and effectiveness of, the parameters.

· QHL should have the opportunity to report back to Council in due course, if in their considered opinion, the parameters are not commercially optimal or achievable for these matters to be re-considered.

2.4 Parameter settings

2.4.1 Trade-offs between parameters

During the workshops, it was noted that several of the potential parameters involved trade-offs between competing benefits inherent in each. For example, the greater the size of the divestment, the greater potential for reducing portfolio risk and accessing higher returns. However, greater divestment also reduces the level of control or influence over PoTL that Council (through QHL) can expect to retain. For example, with its current 54.14% shareholding, Quayside can appoint up to two members of the PoTL Board via a majority shareholder resolution.

There are two percentages within the draft parameters to be set. These are for strategic parameters, relating to control and diversification that specify a target maximum concentration in the PoTL shares and the minimum shareholding retained. These require trade-offs between strategic control, financial returns and risk.

2.4.2 Setting the control and diversification parameters

The LTP enables Council to sell-down to a minimum of 28% shareholding, but through the parameter setting Council could determine a higher percentage that Quayside must hold, for example 40%.

QHL has provided financial modelling to illustrate the implications of setting the control parameter at either 28% or 40% shareholding, and the consequences for forecasted dividends. The modelling has been peer reviewed by PwC and includes modelling from the perspectives of control (percentage of PoTL shareholding remaining) and diversification (the proportion of PoTL compared to QHL total portfolio). The analysis is contained in a confidential attachment (Attachment 6).

Selling a greater amount of the PoTL shares allows QHL to diversify more, reduce concentration risk, and have less dividend volatility. This also enables greater forecasted dividends to Council, noting that all options (including the status quo) are forecasted to deliver greater dividends than those included in the LTP.

These impacts are shown in the following graphs provided by QHL for the status quo, selling down to 40% and selling down to 28%. These graphs are based on modelling assumptions that have been peer-reviewed by PwC and will be subject to actual investment performance.

Any target to be set for the diversification objective, measured as the percentage of the QHL portfolio held in the PoTL, would need to take volatility into account including the variability in the potential sale price and fluctuations in returns across the portfolio.

The graph below shows the modelled investment concentration in the PoTL for the status quo and sell-down to either 28% or 40% of the ordinary shares, and two target concentration limits. A lower concentration limit represents greater investment diversification.

The following graph shows the forecasted QHL dividend to Council for the status quo and sell-down to either 28% or 40% of the ordinary shares compared to the current dividend budgeted in the LTP. Every scenario, including the status quo, results in higher than budgeted dividends to Council over time.

Despite the greater potential financial returns and lower overall risk from selling down to a minimum of 28%, Council could still decide that strategic control and regional benefit considerations lead to it being desirable to retain a higher percentage holding in the PoTL.

Below is a table summarising the trade-offs relating to the options for the sell-down limit parameter (28% or 40%) and the corresponding diversification parameter, which is linked. Details of the information and analysis underpinning this summary is in confidential attachments 1-6.

Parameter Option

Disadvantages

Advantages

Option 1

Diversification: Set target to reduce the value of PoTL shares to 50% of QHL’s investment assets.

Control - Minimum shareholding in PoTL is 28%.

Lower shareholding in PoTL may lead to less strategic control and influence.

Highest financial returns to Council ($686 million over 10 years) and highest potential to increase services and/or reduce rates.

Most diversified investment portfolio which results in lowest financial risk.

Council retains negative control and can block takeovers and certain transactions.

Council is possibly able to retain PoTL board seats due to 28% of voting rights held.

Option 2

Diversification: Set target to reduce the value of PoTL shares to 70% of QHL investment assets.

Control - Minimum shareholding in PoTL is 40%.

Lower shareholding in PoTL may lead to less strategic control and influence.

Second highest financial returns to Council ($604 million over 10 years) and potential to increase services and/or reduce rates.

Partially diversified investment portfolio which results in lower financial risk than the status quo financial risk.

Council retains negative control and can block takeovers and certain transactions.

Council is probably able to retain PoTL board seats due to 40% of voting rights held.

Based on the Council’s LTP decision, Option 1 is recommended because it achieves the best financial result and will result in Council still retaining strong influence.

Council could choose Option 2 (or another higher minimum shareholding percentage) if greater strategic influence is desired and considered to outweigh the greater financial benefits of Option 1.

Should Council set this parameter it is noted that this is a minimum shareholding and that it will be open to Quayside to hold a higher percentage of PoTL shares provided that such shareholding meets other parameters. Therefore, the recommended control parameter includes recognition that the final percentage shareholding could be higher than 28%.

2.4.3 Setting a parameter relating to overseas ownership

During workshops, Councillors reflected on some submissions to the LTP proposal that were concerned about the risks of overseas ownership and control, and what that might mean for the wider Bay of Plenty economy.

During workshops Councillors discussed the practicable options for setting a parameter of this type and expressed a preference for buyers within the Australasia/Pacific region. It was noted that even if initial transactions could achieve a desirable outcome (however it is measured) Council could not realistically influence any subsequent sales by new shareholders.

Council can choose whether to address the concerns of submitters through a parameter or not. The options are to either set an expectation that Quayside will endeavour to find buyers in the Australasia/Pacific region as its first preference, or to not set any expectation to consider whether owners are overseas or outside of the Australasia/Pacific region. The table below summarises the trade-offs of two practicable options. Details of the information and analysis underpinning this summary is in confidential attachments 2-5.

Parameter Option	Disadvantages	Advantages
Option 1 Set an expectation that as far as practicable Quayside will minimise the risk of ownership and control passing beyond the preferred Australasia/Pacific region.	Fewer potential buyers which could limit the sale price, or complicate the sale process Any benefit of a first transaction may not be sustained if investments are re-sold.		Addresses submitters concerns that new ownership and control may reduce the ability of Port of Tauranga’s operations to support the Bay of Plenty regional economy
Option 2 no requirement to consider domicile of new shareholders	Does not address submitters’ concerns.		QHL can maximise short and long term value of the portfolio, without the constraints of geographical considerations.

Based on the LTP submission points Option 1 is recommended because it seeks to address issues raised in some submissions.

2.4.4 Setting the Mana Whenua parameter

Council must consider whether or not to direct Quayside to provide an initial opportunity for Mana Whenua to make an offer to purchase the shares from Quayside.

Mana Whenua ownership, whether via an initial opportunity or via market transactions, will likely be for the long-term and reduce the risk of overseas ownership or control. Engagement with Mana Whenua has emphasised the importance of trust, respect and mutual benefit.

A high level analysis of the options are in the table below. Details of the information and analysis underpinning this summary is in confidential attachments 3-5.

Parameter Option

Disadvantages

Advantages

Option 1

Provide Mana Whenua with an initial opportunity to purchase PoTL shares recognising the long-term value that Mana Whenua bring.

Could risk perception of ‘special treatment’ however this is mitigated by not specifying sale conditions and this being a commercial matter for Quayside to address.

No financial disadvantages

Potentially allows for early sales of some shares.

Mana Whenua are likely to be long-term owners with interests aligned to those of Council.

Recognises those mana whenua having ahi kaa relationships in the Port of Tauranga area.

Option 2

no requirement to separately provide an opportunity to Mana Whenua to purchase shares from Quayside

Potentially reduces likelihood of Mana whenua ownership and partnership opportunities with Council.

The recommendation is to provide Mana Whenua with an initial opportunity to purchase PoTL shares that acknowledges the long-term value that Mana Whenua bring.

In making this recommendation it is further noted that:

· given the ahi kaa relationship that Mana Whenua have with the Port of Tauranga area it is likely that their ownership of shares (should that eventuate) would be for the long term; and

· the desire to achieve local ownership (as expressed in submissions) can also be achieved should a portion of shares ultimately be sold to Mana Whenua.

Should Council agree with the staff recommendation and set the parameter as proposed, it will be for QHL to undertake engagement with Mana Whenua and provide this opportunity. It is noted that it is open to QHL (following provision of an initial opportunity to mana whenua) to provide similar opportunities to other interested parties at an early stage. It is anticipated that QHL will provide such opportunities - having regard to standard commercial practice.

2.4.5 Setting of other parameters

Explanations for the recommendations of each of the remaining parameters are set out below:

· Value: While diversification is a key driver for divestment, it must be recognised the purpose of QHL and the benefits it brings to Council and its communities. It is prudent for Council to explicitly state that value should be considered and ensure compliance with any obligations in relation to the PPS that QHL must meet.

· Timing: Council recognises that in a transaction of this nature, timing is important and Council wishes to ensure it is specific that this should be considered by Quayside in any transaction.

· Longer term settings: It is financially prudent to ensure that the overall tax position of the Council Group is not negatively impacted by any transaction.

· Other Matters:

o Consistency with the Long Term Plan and Consultation Document aligns with Council’s obligations to its community and under the Local Government Act 2002

o It is prudent of Council to set reporting measures to have appropriate oversight over QHL as per usual practice.

3. Considerations

3.1 Risks and Mitigations

Council has obtained both legal and commercial advice through this process to ensure that it is aware of and has appropriately managed any risks. However, in terms of the risks associated with this decision specifically, there are no additional risks other than those that apply to any other decision of Council.

The risks associated with this decision are primarily implementation risks which will be managed by Quayside and reported to Council through agreed established processes.

However, if Council sets parameters that are not clear, which create process risks or cannot be implemented or measured, the objectives of the divestment may be frustrated. This risk has been mitigated by taking external advice, from both Council and Quayside’s perspectives, and involving Quayside in workshops and the reviews of the draft high level parameters to ensure they are clear, practical and objectively achievable.

The Statement of Expectation and Statement of Intent process will be key tools to provide ongoing guidance to Quayside and setting accountability measures for the divestment process.

It is noted that declarations of conflicts of interests in this matter have been declared throughout the LTP process and subsequent workshops held since Council’s LTP decision in June 2024.

It is understood that Councillors intend to make similar declarations in relation to this decision. While it is for Councillors to manage any conflicts of interest, Councillors have sought advice from staff and external advisors throughout this process to ensure all appropriate steps (which may include abstention) are taken to manage conflicts of interest in a manner which protects Council’s decision-making process.

3.2 Climate Change

The matters addressed in this report are of a procedural nature and there is no need to consider climate change impacts.

3.3 Implications for Māori

Council recognises its obligations under the Local Government Act 2002 and its commitment to, and compliance with its resolution on 28 May 2024 to undertake further engagement. In recognition of these points Council has undertaken additional engagement with key Iwi leaders/representatives in December 2024 and January 2025.

3.4 Community Engagement

Section 1 of this report outlines the community engagement (LTP consultation process) that was undertaken in March-May 2024, prior to Council’s decision to enable the divestment of PoTL shares.

The recommended parameters are considered consistent with the LTP Consultation Document and adopted LTP 2024-2034, so additional public consultation is not considered necessary.

If Council chooses to set divestment parameters that are not consistent with the LTP Consultation Document or LTP 2024-2034, additional public consultation would be required.

3.5 Financial Implications

The objectives of permitting divestment (set out in section 1 of this report) are an important part of ensuring financial prudency. Diversification reduces risk and has positive financial implications for Council through a more sustainable dividend stream. This ultimately benefits ratepayers.

It is noted that QHL issued $200 million of Perpetual Preference Shares (PPS) in QHL to the public and other investors in 2008. The PPS are currently listed as debt securities on NZX. During the sell down process the Council may be required to repurchase the PPS^{^[2]} and may use part of the proceeds of any sell down of PoTL shares to do so. Financial modelling has assumed that $200 million of sale proceeds are used to repurchase the PPS. Repurchasing the PPS could:

· Create a drag effect on the QHL investment portfolio which is forecasted to return more than the PPS dividend payments.

· Lead to a credit rating upgrade because Standard and Poors treats the PPS as debt.

Dividend forecasts in the LTP are based on the current Distribution Policy (DP) and retaining the current 54% shareholding in PoTL. The DP calculates the annual dividend based on:

· 80% based on the last three years of dividends increased by inflation. This provides for smooth and predictable increases.

· 20% based on the net market value of investment portfolio. For this calculation the market value of PoTL shares is reduced to reflect cash dividends rather than a full return (dividends and capital growth).

Updated dividend forecasts for the different scenarios and the current LTP forecast are shown in the figure below. Actual results will depend on market results and the timing and amount of any managed sell-down of PoTL shares.

Over the next ten years, the total dividend forecasts are:

· LTP $516m.

· Status quo, no sell down, $552m ($36m more than LTP)

· Sell down to 40% $604m ($87m more than LTP)

· Sell down to 28% $686m ($170m more than LTP)

Dividends from QHL are currently used to reduce the general rates requirement, which benefits all ratepayers across the Region. General rates over the next ten years are currently forecast to increase from $45m to $66m (total $565m).

Future budgeting processes will need to incorporate updated dividend forecasts based on the actual results from any approved sale of PoTL shares.

4. Next Steps

Should Council resolve to permit Quayside to sell-down shares in PoTL in accordance with the parameters set, QHL will be informed of this decision and Quayside will be permitted to undertake a sale of PoTL shares within the parameters set.

Council will undertake steps to ensure appropriate reporting procedures are put in place and other associated processes, for example amendment of the SIPO, are progressed.

An important next step, following the approval of parameters, relates to the intended use of the funds that are created from future divestment transactions including future dividends. These matters will be discussed as part of future Annual Plan/Long Term Plan meetings and workshops.

Attachments

Attachment 1 - Workshop presentation 15 August 2024 (Public Excluded) ⇩

Attachment 2 - Workshop pack 25 September 2024 (Public Excluded) ⇩

Attachment 3 - Workshop pack 23 October 2024 (Public Excluded) ⇩

Attachment 4 - Workshop pack 27 November 2024 (Public Excluded) ⇩

Attachment 5 - Workshop pack 18 December 2024 (Public Excluded) ⇩

Attachment 6 - Quayside advice on options January 2025 (Public Excluded) ⇩



Report To:	Regional Council
Meeting Date:	13 February 2025
Report Writer:	Oliver Haycock, Director, Public Transport and Niki Carling, Team Leader, Transport Planning
Report Authoriser:	Mat Taylor, General Manager, Corporate
Purpose:	To seek Council’s endorsement on the zonal structure for the new fares system

Regional Fares Review - Revision of Western Bay Zones

Executive Summary

Over the last few months, staff have engaged with elected members of both Regional Council and the Public Transport Committee to develop a new fare system for the region. At the Regional Council meeting on 11 December 2024, elected members endorsed the principals of the fare system as recommended by the Public Transport Committee, these being:

a) Fare structure - Zonal

b) Adult base fare - $3.70, with prepaid card

c) Concessions

• Infant (free)

• Community Service Card (50%, national concession)

• Supergold (free; conditions as per national concession)

• Accessibility and +1 (free)

• Child/young person (50%)

d) Time of travel discount - 50% discount for off-peak travel (between 9.00am and 2.30pm and after 6.00pm)

e) Revenue based caps:

• Day cap (free travel after 3 trips p/day)

• Week cap (free travel after 7 trips p/week)

With regard to the zonal fare structure, elected members directed staff to review Western Bay of Plenty zone boundaries with a view to making fares in the Western Bay more equitable with those in the Eastern Bay on the basis of the fare charged per kilometre travelled. Staff were asked to bring a revised zonal structure to the Regional Council meeting on 13 February 2025 for consideration.

Recommendations

That the Regional Council:

1 Receives the report, Regional Fares Review - Revision of Western Bay Zones;

2 Adopts the revised zonal structure for the Western Bay of Plenty, presented as Option 2 in Section 2.1, to be implemented with the other outcomes of the Regional Fares Review

1. Introduction

A comprehensive process has been followed to review the public transport fare system for the Bay of Plenty region, in particular to meet:

a) the requirements of the Regional Public Transport Plan 2022-2032 (RPTP); and

b) the direction set in the Government Policy Statement on land transport 2024 to increase public transport fare-box recovery and third-party revenue.

The process has included workshops with Regional Council and the Public Transport Committee, with the direction given by elected members then used to undertake modelling of potential fare systems for the region.

At the meeting on 11 December 2024, elected members adopted the fare system as recommended by the Public Transport Committee at their meeting on 19 November 2024:

a) Fare structure	Zonal
b) Adult base fare	$3.70, with prepaid card
c) Concessions	· Infant (free) · Community Service Card (50%, national concession) · Supergold, (national concession; free travel 9.00am - 3.00pm and after 6.30pm on Monday to Friday, and all day on weekends and public holidays) · Accessibility and +1 (free) · Child/young person (50%)
d) Time of travel discount	50% discount for off-peak travel (between 9.00am and 2.30pm and after 6.00pm)
e) Fare products	Revenue based caps: · Day cap (free travel after 3 trips p/day) · Week cap (free travel after 7 trips p/week)

With regard to the zonal fare structure, staff were asked to review the boundaries for the north-western Bay of Plenty zones with a view to making fares in the western Bay more equitable with those in the eastern Bay on the basis of the fare charged per kilometre travelled. Staff were asked to bring a revised zonal structure to the Regional Council meeting on 13 February 2025.

1.1 Legislative Framework

The Regional Public Transport Plan 2022-2032 (RPTP) adopted in 2022 is the key statutory document for public transport planning and investment in the region, required under the Land Transport Management Act 2003 (LTMA).

‘An equitable fare and pricing system that attracts new customers and rewards frequent use’ is an objective of the RPTP. The primary RPTP action to achieve this objective is: ‘Undertake a comprehensive region-wide fare review to give effect to the RPTP fares and pricing policies.’

1.2 Alignment with Strategic Framework

Future ready communities	Goal 6 We will empower communities to make sustainable choices and transition towards a low emissions economy.
Connected and enabled communities	Goal 8 Communities are connected through an effective transport system, land use and urban design that improves wellbeing, livability and environmental outcomes.

The performance of the region’s public transport services is continually monitored and reported through KPIs in the Arotake quarterly reports, found on the Council’s website, here.

1.2.1 Community Well-beings Assessment

Dominant Well-Beings Affected

þ Environmental

¨ Cultural

þ Social

Low - Positive

¨ Economic

The well-being most affected by altering the zones in the western Bay of Plenty will be social. Wider zones will make western Bay passenger fares more equitable with those paid in the eastern Bay on the basis of the fare per kilometre travelled.

2. Zonal Fare Structure Discussion

2.1 Western Bay Zone Options

Two western Bay zonal structures have been considered (see Figure 1. below):

Option 1 – structure as previously presented to PTC and Regional Council.

Option 2 - revised structure with fewer zones in the Western Bay. This includes Ōmokoroa and Te Puke in the Tauranga urban zone and has Waihī and Waihī Beach in the same zone as Katikati.

Option 1

Option 2

Option 1 Option 2

Fig 1. Western Bay zoning options

2.2 Impact of Zone Options on Fares

Table 1 provides examples of future fares under both western Bay zone options. It can be seen that Option 2 makes average western Bay fares more equitable with those in the eastern Bay on a fare charged per kilometre travelled basis.

Table 1. Fare examples for journeys in the region

3. Considerations

3.1 Risks and Mitigations

The new fare system, including the proposed zonal fare structure, needs to be submitted to NZTA for National Ticketing Solution (NTS) configuration, to then feed into the NTS implementation process happening between now and August 2025. A decision at this meeting to confirm the zonal structure is paramount to meeting the NZTA deadline of the end of February 2025.

The proposed amendment to the zonal structure will likely make the fare changes across the region easier to justify given greater equity on a fare charged per kilometre travelled basis, and will potentially make travel on many western Bay routes more appealing due to lower fares. However, a reduction in the number of zones in the western Bay compared to those originally proposed will result in a reduction in revenue from those routes with lower fares, as discussed in 2.3.

3.2 Climate Change

The introduction of lower fares on a number of routes may help make public transport more appealing and broaden the customer base/frequency of use. Greater use of public transport instead of individual cars is inherently supportive of climate change mitigation, through reduced emissions.

3.2 Implications for Māori

Some of the region’s more rural communities have a disproportionately higher population of Māori who might potentially be negatively impacted by a zonal system when travelling longer distances to access urban centres. However, the proportion of Māori in the western Bay is lower than in the other districts in the region. Given a number of routes will be experiencing a fare reduction, there will be a positive impact for many passengers in this district, including those who identify as Māori.

3.3 Community Engagement

INFORM

Whakamōhio

To provide affected communities with balanced and objective information to assist them in understanding the problems, alternatives and/or solutions.

Council has already undertaken community consultation on the fares review, although this did not delve into detail about any specific fare structure. Information about the new zonal structure, pricing, etc will be imparted to the community prior to changes being introduced later in 2025.

3.4 Financial Implications

The amalgamation of fare zones in Option 2 is forecast to reduce farebox revenue by $3,000 per annum, when compared to Option 1. The low revenue impact is due to the low number of passengers travelling across the proposed zone boundaries.

Given the negligible impact on revenue, it is anticipated that this could be absorbed within current budgets.

4. Next Steps

The new fare system, including the proposed zonal fare structure, will be submitted to NZTA for National Ticketing Solution (NTS) configuration, to then feed into the NTS implementation process happening between now and August 2025.

Achieving Council direction to confirm the zonal structure is paramount to meeting the NZTA deadline of the end of February.

[2] A sale of PoTL Shares that reduces Quayside’s shareholding in PoTL below a majority (i.e. 50%) will trigger the put option over the PPS which means that PPS holders can require Council to repurchase the PPS. The Council’s call option (to buy back the PPS) may also be exercised pre-emptively, at any time. In both circumstances, the Council would be required to repurchase the PPS.

Chairperson	Chairman Doug Leeder
Deputy Chairperson	Cr Jane Nees
Members	All Councillors
Quorum	Seven members, consisting of half the number of members
Meeting frequency	Six weekly or as required for Annual Plan, Long Term Plan and other relevant legislative requirements

A Healthy Environment	Goal 1 The region’s diverse range of physical environments and natural ecosystems are in a healthy state.
Future ready communities
Connected and enabled communities
Sustainable development
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