Agenda of Finance and Infrastructure Committee Meeting

Finance and Planning Committee Meeting Agenda

25 February 2021

UNCONFIRMED MINUTES OF Central HAwkes Bay District Council
Finance and Planning Committee Meeting
HELD AT THE Council Chamber, 28-32 Ruataniwha Street, Waipawa
ON Thursday, 8 October 2020 AT 09:00am

PRESENT: Mayor Alex Walker

Cr Tim Aitken

Deputy Mayor Kelly Annand

Cr Gerard Minehan

Cr Brent Muggeridge

Dr Roger Maaka

Cr Kate Taylor

Cr Exham Wichman

IN ATTENDANCE: Joshua Lloyd (Group Manager, Community Infrastructure and Development)

Monique Davidson (Chief Executive)

Doug Tate (Group Manager, Customer and Community Partnerships)

Nicola Bousfield (People and Capability Manager)

Karakia and Waiata – DR ROGER Maaka

Introduction new staff member – Michael kilduff

1 Apologies

Apology

Committee Resolution

Moved: Cr Kate Taylor

Seconded: Cr Gerard Minehan

That the apologies for absence from Cr Jerry Greer be accepted.

Carried

2 Declarations of Conflicts of Interest

Nil

3 Standing Orders

Committee Resolution

Moved: Mayor Alex Walker

Seconded: Deputy Mayor Kelly Annand

THAT the following standing orders are suspended for the duration of the meeting:

· 20.2 Time limits on speakers

· 20.5 Members may speak only once

· 20.6 Limits on number of speakers

And that Option C under section 21 General procedures for speaking and moving motions be used for the meeting. Standing orders are recommended to be suspended to enable members to engage in discussion in a free and frank manner.

Carried

4 Confirmation of Minutes

Committee Resolution

Moved: Cr Gerard Minehan

Seconded: Cr Exham Wichman

That the minutes of the Finance and Infrastructure Committee Meeting held on 13 August 2020 as circulated, be confirmed as true and correct.

Carried

5 Report Section

5.1 Finance and Infrastructure Committee Monitoring Report

PURPOSE

The purpose of this report is to present to the Finance and Infrastructure Committee an update on key priorities.

Committee Recommendation

Moved: Deputy Mayor Kelly Annand

Seconded: Cr Exham Wichman

That, having considered all matters raised in the report, the report be noted.

5.2 Resolution Monitoring Report

PURPOSE

The purpose of this report is to present to the Committee the Finance and Infrastructure Resolution Monitoring Report. This report seeks to ensure the Committee has visibility over work that is progressing, following resolutions from Council.

Committee Resolution

Moved: Cr Tim Aitken

Seconded: Cr Gerard Minehan

Recommendation

That, having considered all matters raised in the report, the report be noted.

Carried

5.1 PGF Porangahau to Wimbledon Programme (PGG Terms of Reference)

PURPOSE

The matter for consideration by the Committee is the adoption of the terms of reference to form a project governance group (PGG) for the Porangahau to Wimbledon Road programme to support the commitment to increase the level of detail and oversight across the programme of works.

Committee Resolution

Moved: Mayor Alex Walker

Seconded: Cr Gerard Minehan

That having considered all matters raised in the report:

a) That the Finance and Infrastructure Committee adopt the PGF Porangahau to Wimbledon programme terms of reference.

Carried

The document Finance and Infrastructure Committee Meeting – Amended Reports was tabled, in amended reports:

PGF Porangahau To Wimbledon Programme (PGG Terms Of Reference)

The Chair acknowledged that the document is available to the public for review on request.

5.4 CHB Wastewater Management Strategy

PURPOSE

The matter for consideration by the Council is to receive the Wastewater Strategy that sets the direction for the wastewater projects across the district.

Committee Resolution

Moved: Cr Gerard Minehan

Seconded: Mayor Alex Walker

That having considered all matters raised in the report:

a) That the Finance and Infrastructure Committee approves Option One – to adopt the strategy.

Carried

5.5 Key Project Status Report - BigWastewaterStory

PURPOSE

Following the conception of #thebigwaterstory, Council set about implementing the programme that makes up #thebigwaterstory. A programme manager was appointed and focus given to defining the projects that form the programme in greater detail.

The six wastewater plants form a significant programme of works themselves, and we have prudently decided to report on the progress of these six wastewater plants and their subsequent upgrades and re-consenting separately from #thebigwaterstory.

The purpose of this key project status report serves as an opportunity to formally report to elected members on the progress of each of the projects and their expected delivery against time, scope, budget and quality standards against the larger programme objectives.

Committee Resolution

Moved: Mayor Alex Walker

Seconded: Cr Gerard Minehan

That, having considered all matters raised in the report, the report be noted.

Carried

5.6 Key Project Status Report - BigWaterStory

PURPOSE

Following the conception of #thebigwaterstory, Council set about implementing the programme. A programme manager was appointed and focus given to defining the projects that form the programme in greater detail.

Committee Resolution

Moved: Cr Brent Muggeridge

Seconded: Deputy Mayor Kelly Annand

That, having considered all matters raised in the report, the report be noted.

Carried

5.7 Waipukurau Second Water Supply - Preferred Option Recommendation

PURPOSE

The matter for consideration by the Committee is to endorse and approve project officers to proceed with Option Four as outlined in earlier updates given to this Committee on the Waipukurau Second Water Supply project in June 2020 and at an earlier workshop in April 2020.

Committee Resolution

Moved: Cr Tim Aitken

Seconded: Mayor Alex Walker

That having considered all matters raised in the report:

a) That the Finance and Infrastructure Committee endorse officers to proceed with Option Four (the Waipawa / Waipukurau Link) to detailed design.

Carried

6 Date of Next Meeting

It is noted that 2021 Committee meeting dates are yet to be set. The meeting schedule for 2021 will be circulated before the end of October 2020.

7 Time of Closure

Karakia – Dr Maaka.

The Meeting closed at 10.46am.

The minutes of this meeting will be confirmed at the first meeting of the year on the 26^th February 2021 .

...................................................

CHAIRPERSON

Finance and Planning Committee Meeting Agenda

25 February 2021

6 Report Section

6.1 Finance and Infrastructure Committee Monitoring Report

File Number: COU1-1410

Author: Monique Davidson, Chief Executive

Authoriser: Monique Davidson, Chief Executive

Attachments: Nil

PURPOSE

The purpose of this report is to present to the Finance and Infrastructure Committee an update on key priorities.

Recommendation

That, having considered all matters raised in the report, the report be noted.

significance and engagement

This report is provided for information purposes only and has been assessed as not significant.

BACKGROUND

Following the 2019 Triennial Local Body Elections, Council took the time to reset Council priorities, and agree on priorities for Committees.

The role of the Finance and Infrastructure Committee is:

· To assist Council to oversee financial and non-financial performance, including the delivery of the Council’s Capital Programme.

· To monitor Council activities and services performance against budget, Annual Plans, the Long Term Plan, Annual Reports and corporate and financial policies.

· The Finance and Infrastructure Committee also receives enforcement and compliance performance activity reporting to ensure financial and non-financial performance oversight of its regulatory functions.

· To provide governance oversight of Council’s operational programmes, services, activities and projects related to infrastructural assets.

· To enable the progress of the Council’s operational activities, projects and services.

The Finance and Infrastructure Committee has delegations to:

· Develop and adopt plans, projects and policies that advance the Council’s vision and goals in relation to its key Financial Strategy and Infrastructure Strategy while complying with the purpose of the Local Government.

· Monitoring the financial and non-financial performance of the organisation with a particular emphasis on the delivery of the capital works programme. Implementation and effectiveness of strategies, plans and policies.

· Specifically monitor and provide oversight of significant projects, including reviewing business cases and agreed on next steps of significant projects.

· The Finance and Infrastructure Committee is responsible for assisting Council in its general overview of procurement and tender activity. The Committee will accept and consider tenders which exceed the Chief Executive’s delegated authority to approve, for projects approved by Council through an Annual Plan or Long Term Plan. The Committee will make a recommendation to Council on the outcome of a tender process for resolution when above delegations.

· The Finance and Infrastructure Committee has delegation to approve or award contracts beyond the Chief Executive’s delegated authority within the parameters of approved AP/LTP Budgets up to $4 million.

· To establish a special committee, working group or community forum as needed.

The monitoring report which provides an update on the key priorities of the committee is below:

DISCUSSION

Key Priority	Responsible Officer	Progress Update
Lead and monitor the Wastewater Treatment Plan projects for across Central Hawke’s Bay.	Darren de Klerk	On Track - A Specific Key Project Status Report on this project is included in the agenda.
Monitor the implementation of #thebigwaterstory	Darren de Klerk	On Track - A Specific Key Project Status Report on this project is included in the agenda.
Complete and lead the Rates Review	Brent Chamberlain	Completed - The committee have completed this work, following the adoption of the Revenue and Financing Policy in October 2020. The decisions from the Rates Review, will be implemented from 1 July 2021.
Monitor the implementation and progress of Provincial Growth Fund projects.	Darren de Klerk	On Track - A specific Key Project Status Report on these projects will be included in the Finance and Infrastructure Agenda for 21 April 2021.
Lead the review of the Financial Strategy and associated policies that input into the Long Term Plan 2021-2031.	Brent Chamberlain	Completed – Council have now adopted the Draft Financial Strategy for community consultation as part of the Draft Long Term Plan 2021 – 2031.
Review the current Treasury Policy – Investment, Debt and Liability Management policies.	Brent Chamberlain	Completed – Council have now adopted the Draft Treasury for community consultation as part of the Draft Long Term Plan 2021 – 2031.
Monitor the implementation of the non-rateable income strategic framework.	Monique Davidson	On Track - Considerable effort continues to be given to the attraction of non-rateable income. The COVID-19 context has provided considerable opportunity for Council in the acceleration of capital investment to act as an economic stimulus. Council are actively working with the government on seeking external funding to deliver on Council and community priorities. At the time of writing this report, key achievements that align with this framework include funding for Mayors Taskforce for Jobs pilot and beyond, redeployment capital packages, water reform and PGF projects. Further work will continue over the coming months to assess key policies that form part of the non-rateable income strategic framework.
Develop a Land Transport Strategic Framework and ensure governance input into the three-year business plan before NZTA submission.	Josh Lloyd	Completed - The Land Transport Strategic Framework has been adopted and has been interpreted into the Draft Asset Management Plans developed for the Long Term Plan 2021- 2031 and the three-year business case submitted to NZTA.

Implications ASSESSMENT

This report confirms that the matter concerned has no particular implications and has been dealt with in accordance with the Local Government Act 2002. Specifically:

· Council staff have delegated authority for any decisions made;

· Council staff have identified and assessed all reasonably practicable options for addressing the matter and considered the views and preferences of any interested or affected persons (including Māori), in proportion to the significance of the matter;

· Any decisions made will help meet the current and future needs of communities for good-quality local infrastructure, local public services, and performance of regulatory functions in a way that is most cost-effective for households and businesses;

· Unless stated above, any decisions made can be addressed through current funding under the Long-Term Plan and Annual Plan;

· Any decisions made are consistent with the Council's plans and policies; and

· No decisions have been made that would alter significantly the intended level of service provision for any significant activity undertaken by or on behalf of the Council, or would transfer the ownership or control of a strategic asset to or from the Council.

Next Steps

The Finance and Infrastructure Committee will receive an updated monitoring report on 22^nd April 2021.

RECOMMENDATION

That, having considered all matters raised in the report, the report be noted.

Finance and Planning Committee Meeting Agenda

25 February 2021

6.3 Funding Assistance Rate Rebate - NZTA

File Number: 1112

Author: Shawn McKinley, Land Transport Manager

Authoriser: Monique Davidson, Chief Executive

Attachments: Nil

PURPOSE

The matter for consideration by the Committee is deciding where to apply the NZTA rebate of $279,973 refunded from a miscalculation of the funding assistance rate by NZTA.

RECOMMENDATION for consideration

That having considered all matters raised in the report:

a) That the Committee allocate the rebated funds of $279,973.00 to replenish the Adverse Events Contingency

BACKGROUND

In the latest review of the Funding Assistance Rate (FAR) Waka Kotahi (NZTA) found that they had made a mistake in the CHB funding assistance provided, dating back to 2018. The mistake was in favour of Council by 1%. In 2018 Waka Kotahi had advised the Council that their FAR for the next 3 years would be set at 60%. In the recent review they found that the assistance rate should have been set at 61%. To rectify this error Waka Kotahi calculated that Council was due for a payment of the 1% difference which has amounted to $279,973.00. This amount was included in the November 2020 Waka Kotahi claim and was paid to Council. The money claimed has been put into a holding account until such time as council decides what to do with the funds. As these funds are a repayment of the rates council contributed as their share of the land transport activity, they were rated and targeted to be spent on Land Transport.

DISCUSSION

Council has available funds of $279,973.00 to use on land transport activities at its discretion. Officers have outlined below some existing priority areas for investment within the land transport activity identified through routine asset management planning processes or through other completed planning activities such as the Integrated Spatial Plan work. Officers have not presented options below for other ways to invest the money that have not already been flagged as a priority or need through other means.

Further, Officers note that there is an ability split the funding between options or to target the funding towards options that are not presented in this report.

RISK ASSESSMENT and mitigation

Common risks associated with investment decision making apply to the options presented in this report. While the funds have been ‘rebated’ to Council and are not currently tagged to any specific investment programme, they must be used wisely and prudently. Officers consider the risks and mitigations in the table below to be applicable to this decision:

Risk	Description of Risk	Mitigation
Community perception	Potential loss of community confidence in decision outcome	Transparency and robustness in decision making process and sound justification for outcome
NZTA scrutiny	NZTA will seek assurance as to where/how funds were utilised and alignment with normal network outcomes	Utilise funds to address network needs in alignment with existing plans, policies and strategies
Audit assurance	Routine audit processes will check that funds rated for transport activities are spent on transport activities	Utilise funds as per financial policies
Asset management outcomes	Potential loss of opportunity to address network/asset risk through effective investment	Ensure funds are used to address risk/opportunity in the network/asset

FOUR WELLBEINGS

An assessment of the various options contributions to the four wellbeing’s is provided below:

	Option 1 That the funds be placed in the Adverse Events Contingency to replenish it	Option 2 That the funds be used to remove dangerous trees across the network	Option 3 That the funds be used to purchase property for roads in line with the spatial plan	Option 4 That the funds be used to invest in the sealing of unsealed roads
Social	Will allow Council to continue to invest in road repairs following emergency events to ensure community and social resilience	There are no considered social benefits or risks of the increase roadside tree removal	Will allow community growth and social connections without placing costs on ratepayers or developers.	Council have received feedback from subsets of the community or small isolated communities about the negative impacts of dust in terms of safety and health among other things. Impacts on health can cause social strain.
Cultural	The culture of our rural communities who are most affected by roads in weather events is one of resilience and connectedness. This fund allows Council and these communities to maintain that part of their unique cultural identity.	Roadside trees have a long history in CHB with many planted purposefully by land owners and previous authorities. The trees have largely become a nuisance and hazard now to the wider rural community and there is strong support for their removal.	Cultural impacts and changes in community make-up were a key part of the ISP work. This proposal is in line with ISP outcomes and direction.
Environmental	Will directly allow Council to continue to respond to environmental events impacting our roading assets.	Will allow Council to remove high risk trees that pose very little environmental benefit and are a greater risk than benefit. Works to be completed in line with best practice environmental management standards.	Will further support growth in Waipukurau with proposed development in the area to include environmental offset and enhancement measures such as parks and wetlands	Will directly allow Council to negate the negative environmental and health impacts of dust on a section of rural roads
Economic	All options allow Council to complete work that is not currently budgeted and would therefore need to be reprioritised from existing budgets or funded from ratepayers, private residents or developers.

Delegations or authority

This funding is over and above what is typically spent by the Land Transport activity and above what was set out in the previous Annual Plan. Therefore, officers are seeking the endorsement and direction of the Committee to allocate the funding/rebate.

sIGNIFICANCE AND ENGAGEMENT

In accordance with the Council's Significance and Engagement Policy, this matter has been assessed as low significance.

OPTIONS Analysis

Option 1 – That the funds be placed in the Catastrophic Events Fund and/or the Adverse Events Contingency

Council actively maintain two reserve funds to mitigate the financial impacts to Council of unforeseen events. Typically used to replace or rebuild infrastructure following weather events, the reserves have existed in Council for some years and are called upon most years as necessary. The two funds are described further below.

1. The Adverse Events Contingency - to provide funds to assist with the repairs to or to replace damaged council assets in the event of an unforeseen, major, short duration, natural event and should be maintained at a level of $500,000

The adverse events contingency has $156,000 in it presently and was last used extensively in 2019 to respond to storm events that damaged roading assets. Since at least 2008 this contingency has been used solely by the Land Transport activity but is set-up to be used by other departments for unforeseen events as needed also.

If used by land transport to respond to unplanned events, based on the rules around the NZTA Funding Assistance Rate (FAR), then any money used from the contingency is supplemented by a moving rate which starts at the normal FAR for the first 10% of the annual budget, then moves up by 20% after the 10% level is reached.

Determining the actual ability of the contingency to cover future events depends on the size of each event. Currently the only replenishment of the contingency is from the minor events activity within the land transport budget if it is not spent each fiscal year. The amount in the minor events is $300,000 per annum of which the council’s share is equal to their share of the FAR. In the last 2 years the minor events funding has been spent so no replenishment of the catastrophic events fund has taken place.

2. The Catastrophic Events Fund - to provide funds for the financial protections of the district in the event of an unforeseen catastrophic natural event and should be maintained at a level of $2,000,000

The catastrophic events contingency currently has approximately $2,906,000 in it. This fund was last used in 2019 also to support work to rebuild damaged roading assets. There is currently no planned or routine mechanism to replenish this fund.

Option 2 – that the funds be used to remove dangerous trees across the network on a case by case basis where they are specifically damaging vehicles or causing vehicles to take evasive action

Council has a large number of problem trees on roadsides that pose a risk to road assets and to traffic. Last counted comprehensively in 2018 the number of trees exceeded 100,000. The Trees also have a negative impact on resilience and reliability of our network.

Council routinely remove and plan for the removal of at risk trees within existing budgets however these budgets fall well short of the volume of work. Approximately $125,000 per year is currently targeted to address trees within existing budgets. In 2020 an injection of funds from MBIE to deploy workers affected by COVID and Drought gave Council an opportunity to address many more trees than would normally be achievable in a year. The majority of this money was spent targeting large areas of small wilding pines, predominantly in coastal areas, that would become a high risk in time as they grow.

To invest more in trees, Council would need to reprioritise other budget.

Vegetation management is an emerging priority for Council and work is in progress to formalise Council’s approach to managing the work. An update of information/data on trees is required and a simple means of prioritising work is being developed to further understand the size of the risk and work required. This work will allow Council to better inform investment decisions and internal priorities for budget in the future and will form a part of future submissions to NZTA through the routine 3yearly planning cycle or by special engagement as necessary.

Option 3 – that the funds be used to purchase property for roads in line with the Integrated Spatial Plan.

The Integrated Spatial Plan project has prioritised areas for growth in our urban centres. Of particular relevance to roading infrastructure is the targeted growth cell in Waipukurau between Porangahau and Tavistock Roads. Planning for this development is in the early stages with early landowner engagement commencing late in 2020. There are several transport/connection options but some obvious ones have been identified where land would need to be purchased by Council to create new roading assets.

An opportunity exists to put the funds/rebate available now into a reserve to purchase land at the right time to build roading assets into this growth cell.

While planning is in the early stages and has not been formalised in any form, it is difficult to predict the exact nature of any future development/growth in terms of design and timing. By placing the funds into a reserve to be used for land purchase when needed this allows Council to manage risk of unknowns now and if plans change, the funds could be removed from the reserve and used for another purpose at a future date.

Option 4 – that the funds be used to invest in the sealing of unsealed roads

In 2019 Council modified its existing Dust Suppression Policy on the back of a growing number of requests from road users to seal unsealed roads to control dust. The modified policy (adopted in 2019) set out an approach to how Council would work with property owners to manage unsealed roads with specific regard to dust. Importantly, the 2019 policy diverged from the previous policy in that it gave room for Council to contribute financially to sealing to control dust which was ruled out in the previous policy.

Council remain aware of several areas on the network where dust remains an issue. Non-seal methods have been trialled in many of these areas with varying degrees of success. Since the adoption of the Policy Council has not invested in the sealing of any roads to control dust as budget has not been able to be prioritised from other areas within the land transport activity and no external funding streams have been clearly available.

Council has invested funds to determining the extent of dust issues and known priority areas and to working with NZTA to understand their criteria for contributing under the FAR process.

At a rough-order estimate of $250,000/km for sealing, Council could utilise the available funding rebate to seal at least 1 km of unsealed road. These figures are widely variable and largely dependent on the type, width, condition and use of the road chosen.

	Option 1 That the funds be placed in the Adverse Events Contingency to replenish it	Option 2 That the funds be used to remove dangerous trees across the network	Option 3 That the funds be used to purchase property for roads in line with the spatial plan	Option 4 That the funds be used to invest in the sealing of unsealed roads
Financial and Operational Implications	Provides financial relief during times of contingency or emergency. Will not impact operational work programmes	Enables an increase in vegetation-related operational work programmes without financial impact on residents	A strategic purchase to acquire land for growth without burdening ratepayers or developers.	Funds do not currently exist to seal unsealed roads for the purpose of dust control. Any funds made available would allow work that is not currently planned to be completed without impacting existing budgets or ratepayers.
Long Term Plan and Annual Plan Implications	All options are in line with existing plans but afford Council the opportunity to complete extra work without impacting existing work programmes or budgets.
Promotion or Achievement of Community Outcomes	Ensures continued resilience of roading assets and Councils ability to respond quickly when things happen	Enhances the safety of our road users and reduces the impact and number of road closures	Contributes to connectivity, access and growth of our communities	Council have received a small number of repeated direct requests to seal roads to manage dust in isolated locations for small communities
Statutory Requirements	There are no direct statutory requirements governing the spending of the available funds/rebate other than the requirement that they be spent on land transport activities. It is expected that NZTA will at some time review the investment and expect it to be in line with existing plans and programmes of work.
Consistency with Policies and Plans	Consistent with the Special Fund Accounts Policy that sets out the intent and use of the two listed funds / contingencies	Consistent with risks identified in Council’s Land Transport Asset Management Plan. Further work is being completed to formalise the management of vegetation on the network.	Funds would be used to support growth consistent with the Integrated Spatial Plan	Councils Dust Suppression Policy provides room for Council to invest its own money in the sealing of roads and will give preference to sites where external funding is also available.

Recommended Option

This report recommends Option 1 – That the funds be placed in the Adverse Events Contingency to replenish it for addressing the matter.

NEXT STEPS

Following the adoption of any of the listed options, Officers will complete necessary work to transfer funds to the appropriate budget or reserve. Officers will also begin to plan for the completion of physical works if options 2 or 4 are chosen and will report back to this Committee on progress of that work through regular reporting.

Should a combination of options be chosen or an option not listed here be chosen then Officers will work as per the direction of Committee to carry out necessary work.

RECOMMENDATION

Option 1 – That the funds be placed in the Adverse Events Contingency to replenish it

Finance and Planning Committee Meeting Agenda

25 February 2021

6.4 Adoption of Sustainable Water Management Plan

File Number: 001

Author: Darren de Klerk, 3 Waters Programme Manager

Authoriser: Monique Davidson, Chief Executive

Attachments: 1. Sustainable Water Management Plan ⇩

PURPOSE

The matter for consideration by the Council is to adopt the Sustainable Water Management Plan.

RECOMMENDATION for consideration

That having considered all matters raised in the report:

a) The Finance and Infrastructure committee endorse and adopt the sustainable water management plan for implementation.

EXECUTIVE SUMMARY

The Sustainable Water Management (SWM) Plan (2021) has been developed to demonstrate Council’s programme for managing water demand such that the potential effects on the water takes are minimised. The SWM Plan identifies how the Council and the Community will improve water-use efficiency and reduce water loss in operations using a range of techniques that are consistent with industry practice and supports Council’s desire to become an efficient user of this valuable resource.

BACKGROUND

Hawke’s Bay Regional Council (HBRC) require a Water Management Strategy as part of the resource consent which demonstrates how demand for water from the water supply bore will be minimised at times of low flows in the Rivers.

As a requirement of the consents for Johnson Street, Waipawa (WP030817T), Tikokino Road, Waipawa (WP030818T), and State Highway 2, Waipukurau (AUTH-113708-03) the Central Hawke’s Bay District Council is required to submit a water management strategy to the HBRC.

In response to these requirements, the following Sustainable Water Management (SWM) Plan (2020-2023) has been developed to demonstrate Council’s programme for managing water demand such that the potential effects on the water takes are minimised. The SWM Plan identifies how the Council and the Community will improve water-use efficiency and reduce water loss in operations using a range of techniques that are consistent with industry practice and supports Council’s desire to become an efficient user of this valuable resource.

DISCUSSION

Purpose of this Plan

The purpose of our SWM plan is to highlight our activities and those areas where we are promoting water sustainability.

Our approach to water sustainability can be grouped into four key areas/ themes:

· engaging with our customers

· Ensuring environmental vitality and sustainability through our way of working

· improving our assets

· working with our stakeholders.

To ensure we value our most natural resource, water, our focus is on reducing leakage, working with our customers to use water wisely and in a sustainable manner and using the most appropriate ways to store and distribute water to ensure a reliable and consistent supply of water.

We are aware that the effects of water efficiency activities are difficult to measure (even where good demand component measurement is in place); however, we are committed to exploring water efficiency opportunities.

While the SWM Plan has been developed to meet consent conditions, it also serves as a base document for the implementation of Council’s long-term strategic direction and District Plan which identifies the sustainable management of natural and physical resources and the social, economic, environmental and cultural well-being of the community

RISK ASSESSMENT and mitigation

The plan supports the wider holistic water management plan approach outlined in bylaws currently planned for engagement in May 2021.

FOUR WELLBEINGS

Alignment with Council’s strategic framework:

· Social and Cultural – A health, safe place to live: Risks to public health are identified and appropriately managed

· Economic – A place with a thriving economy: Central Hawke’s Bay District has an efficient and affordable water infrastructure

· Environmental – A place that is environmentally responsible: Central Hawke’s Bay plans and manages water use to minimise the effect on the environment

Introduction

To achieve a holistic and integrated approach to three waters management in the District that is consistent with Council’s District Plan, other Policies, Plans, Strategies and Objectives and also reflect the principles of the Te Mana o Te Wai. The following overarching purposes has recently been set for all four water services bylaws (Water Supply, Stormwater, Wastewater and Trade Waste).

The Sustainable Water Demand Management Plan is an enabling tool to support the management of water demand in the district and complements the water supply bylaw whilst link to the plans and purposes below.

1. Integrated Approach

Adopt an integrated and holistic approach to the Three Waters (water supply, wastewater including trade waste and stormwater) that recognises the interconnections between each of the waters and promotes their sustainable use and management.

2. Environmental Responsibilities
Facilitate environmentally responsible practices by raising awareness of how the Three Waters interact and effect the District’s natural environment. Additionally, ensure that Council meet its own responsibilities in terms of resource consent requirements set by the Hawke’s Bay Regional Council.

3. Sustainable Practices
Encourage and incentivise the community and businesses to adopt practices that lead to the enhancement of the environment and the sustainable management of water resources including water and product stewardship, rainwater harvesting, waste minimisation and cleaner production.

4. Support Sustainable Growth
Support the sustainable provision of three waters infrastructure to enable future growth while minimising impacts on the environment.

5. Achieve Project Thrive Values
Develop and implement Three Water Bylaws to give effect to ‘Project Thrive’ values in particular trust, honesty, respect, innovation, and valuing people.

6. Te Mana o Te Wai
Recognise the fundamental concept of Te Mana o Te Wai as prescribed under the National Policy Statement for Freshwater Management 2020 and in particular the need to restore and preserve the balance between the water, the wider environment, and the community.

7. Tangata Whenua Status

Recognise the status of tangata whenua as Kaitiaki.

8. Durable Infrastructure
Develops and maintain durable and resilient infrastructure that achieves Council’s levels of service in an efficient and cost-effective manner.

Delegations or authority

Council has been involved in the approval process and this item has been workshopped with Council, the SWM plan also supports the bylaws that are currently being refreshed.

sIGNIFICANCE AND ENGAGEMENT

In accordance with the Council's Significance and Engagement Policy, this matter has been assessed of some significance and has been engaged on as part of the Long Term Plan pre-engagement in August 2020. Further engagement will take place as part of the Water Supply Bylaws in March 2021 as this plan supports the Bylaw.

OPTIONS Analysis

Option 1 – Adopt the Sustainable Water Management Plan

Option 2 – Reject the Sustainable Water Management Plan and provide guidance.

	Option 1 Adopt the Sustainable Water Management Plan	Option 2 Reject the Sustainable Water Management Plan and provide guidance
Financial and Operational Implications	No additional impact – built into LTP	Additional resource time to make amendments
Long Term Plan and Annual Plan Implications	Consistent with plan objectives	Not consistent
Promotion or Achievement of Community Outcomes	Promotes and support outcomes	Does not support future focussed outcomes
Statutory Requirements	Meets resource consent requirements	Continue to operate on old strategy from 2012.
Consistency with Policies and Plans	Consistent and supportive	Not consistent and working on outdated strategy.

Recommended Option

This report recommends Option One to Adopt the Sustainable Water Management Plan for addressing the matter.

NEXT STEPS

A work-stream approach has been adopted to deliver ‘The Plan’. The output will be consolidated into our Water Asset Management Plans which over time will inform the development of this document from an initial statement of strategic intent to a fully mature business approved Plan.

To implement the SWM Plan include requires making changes to our existing assets and practices; enhancing existing practices or delivering new activities. Regular reviews will monitor the success of each work-stream as presented in the action plan and the resulting impact on our demand assessment and predicted savings.

The individual projects identified as part of the Action Plan. Council intend to review the plan on a three-yearly cycle and will assess the timing and need for individual projects based on the success of pilots, trails and the available funding to support implementation.

RECOMMENDATION

To endorse and adopt the sustainable water management plan for implementation.

Finance and Planning Committee Meeting Agenda

25 February 2021

6.5 Preferred Option for Design and Construction of Kairakau Water Upgrade

File Number: 000123

Author: Darren de Klerk, 3 Waters Programme Manager

Authoriser: Monique Davidson, Chief Executive

Attachments: 1. Kairakau Water Upgrade - Options Assessment ⇩

PURPOSE

The matter for consideration by the Council is to provide Council with an update on the Kairakau Water System Upgrade and request approval from Council to progress with the options and recommendations developed following analysis of technical reviews, public and Iwi consultations.

RECOMMENDATION for consideration

That having considered all matters raised in the report:

a) The Finance and Infrastructure Committee approve Option 1 to upgrade and construct a water treatment plant to meet DWSNZ and safeguard ongoing water supply.

b) The Finance and Infrastructure Committee approve to locate the new treatment plant on land outlined in Scenario 2 – being to lease the existing Manawarakau Trust land neighbouring the existing spring and raw water storage.

c) The Finance and Infrastructure Committee approve to increase the project budget to $850,000 using existing waters budgets and/ or Tranche One – 3 Waters stimulus funding while ensuring no impact on rates.

EXECUTIVE SUMMARY

Officers have analysed 3 options from the updated concept design report against 5 treatment plant location scenarios. Following a multi criteria assessment adjudicated by the project team, officers recommend proceeding with upgrading and constructing a new treatment plant to meet drinking water standards whilst negotiating an adjusted lease on the current Brodie Place spring location for placement of the treatment plant.

Officers recommend deferring works related to post boundary compliance (mixing of roof water and council supply) and addressing water hardness pending further regulatory law changes and policy updates from the Taumata Arowai review.

The treatment plant upgrades will add much needed treatment to the existing supply in the form of additional disinfection and filtration and improve compliance monitoring and automation of the existing system. The project will also maximise onsite storage and add additional if required.

Officers have highlighted the need to increase the project budget to $850,000 to address the new treatment plant and land location and propose to manage this within existing waters budgets and/ or Tranche One - 3 Waters stimulus funding while ensuring no impact on rates.

Officers consider this phased approach to align with the principles of Councils Asset Management Policy and intent of the Big Water Story. While not physically ‘digging once’ the phased approach ensures continued and targeted progression towards a future outcome of ensured compliance and improvement in drinking water for the residents of Kairakau. It is with this end goal in mind that the project steps outlined in this paper are recommended. By phasing the project while committing to a long-term view, Council is ensuring efficient investment over time and removing the need for rework.

progressing the project now as per the recommendations within this report allows progression towards a clear end goal and also allows Council and community to meet its shorter term objectives of having a compliant supply by Summer 2021/22.

BACKGROUND

Kairakau is a small coastal town in Central Hawke’s Bay, approximately 35 km south of Hastings. The town comprises primarily holiday homes, with some permanent residents; and a small camping ground. It is also a popular recreational destination for day visitors. There are approximately 11 permanent residents in the town, with up to 1,000 residents during peak holiday seasons.

The Kairakau water supply scheme was installed in the mid 1950’s, upgraded in the 1970s and expanded in 1993 to include the subdivision in Mananui street, Kapiti place and Brodie place. A new subdivision was added in 2007 on John Ross Place. Originally, the scheme only serviced the camping ground and the adjoining (original) holiday homes as a supplement to roof water collection. Expansion of the scheme occurred as a result of pressure for development in the area.

The scheme currently supplies 83 properties and the camping ground (approximately 20 sites). Water is pumped from two sources at the base of an adjacent hill; a shallow bore off Kapiti place, and a spring off Brodie place. Water is stored in raw water tanks, located next to the spring on Kapiti place, before it is dosed with liquid chlorine and pumped up to four treated water tanks on the hillside above 21 Kapiti place. Water is fed to the town via gravity mains from three treated water tanks which service the general consumers, and a fourth tank which supplies the campground exclusively. Each property has its own on-site storage tank which is typically connected supplied by roof water and the water supply scheme.

Finance and Infrastructure Committee endorsed the reallocation of the project from Year 5 of the 2018 Long Term Plan to Year 3 at a meeting on the 27^th February 2020, the project commenced following this meeting.

Finance and Infrastructure Committee received an initial options report in June 2020, endorsing upgrading the Kairakau water treatment plant to meet Drinking Water Standards (DWS) NZ while developing a water safety plan and the review of the water bylaw.

Finance and Infrastructure Committee received a progress update in November 2020 meeting pending a decision paper early in 2021. This would be inclusive of an updated options report and final recommendation for council to endorse on the upgrade option to be taken to design and construction following community engagement, compliance review and bylaw review into the options presented and considered.

Officers have identified a majority interest from the community for the retention of the water supply with significant concern placed on the location of any treatment plant. There is also an interest in addressing water hardness especially if rainwater is disconnected from the tanks so the houses are only fed from town supply. To assist decision making a multi criteria assessment (MCA) by the project team has been performed. The community has also requested a further engagement meeting following the council decision. This is planned for mid-March 2021 to coincide with Long Term Plan engagement.

DISCUSSION

Officers requested expediting budget in early 2020 to allow officers to develop this project due to issues with the existing infrastructure during summer 2019/2020, and to support an application for funding as part of the Tourism Infrastructure Fund, unfortunately due to COVID-19 the fund was cancelled a few days before applications were due in March 2020. In June 2020, officers presented an options report to the Finance and Infrastructure Committee to propose taking an option to design. Council requested further community engagement take place and the compliance issues around dual tanks be investigated further.

Following the options report presented in June 2020, and the update paper presented in November 2020 a formal Community meeting was held 6th December 2020. The Community raised concern on full reliance of the town supply due to the Water Hardness with discussion on treatment of this and any requirements under the DWSNZ. In addition, the location of any treatment plant, loss of reserve amenity and effects on adjacent properties was a significant topic.

Compliance Requirements - Further review of the requirements under the DWSNZ has been performed within an updated options report developed (refer enclosed). Clarification from WSP suggests that currently Council is responsible for the quality of supply at property boundaries under the DWSNZ.

The regulatory requirements with respect to the parts of the water supply system located on private properties is less clear. The existing Building Act 2004 and amendments provides for property owners to be responsible for water within their property, which would normally entail:

· Using a mains supply if available for drinking and food preparation

· Providing a filtration / treatment system for drinking water if no mains supply is available

· Avoiding contamination of the water supply system (backflow).

Advice sought from the DHB provided a reserved comment pending the new regulatory guidance. Regulatory law changes and policy from the Taumata Arowai review are yet to be published. With the potential for regulatory guidance assisting Councils on post boundary installations retrospectively, recommendations are to pause this aspect until such time as regulatory law changes become clear. Community messaging on the potential risks of cross contamination of Council and rainwater supplies may support the community in the interim.

Water Hardness – The existing Spring Supply and Bore Water provide very hard raw water, near 3 times higher than the typically accepted threshold for hard water. Hardness is deemed an aesthetic rather than health issue and treating water hardness is not a current requirement of DWSNZ.

The current Council supply dilutes with water collected from through roofwater, making the issue of Council supply hardness somewhat manageable for residents. However, separation of supplies identifies the Community require further engagement on potable water delivery (Rain water or Council).

In order to address hardness, a further treatment addition would be required, involving discharge design, management and ongoing operational costs. Options considered to address this discharge include;

1. Piping to the private sewerage system requiring a study on the effect of the sewerage treatment plant and associated consents,

2. Holding in additional tanks onsite and weekly removal by a sucker truck and tankering to a local wastewater plant in Waipawa or Otane.

3. Onsite treatment inside the boundary of each rate-payers address. We expect options to address this to require a full community study of all property configurations and developing agreement on responsibility for post boundary equipment. Given the complexities and pending regulatory guidance this is not presently analysed into the MCA or recommended at this stage.

Updated WSP Options Report 21 December 2020 – This has been developed considering the above following further investigations at the community and under the existing DWSNZ legislation.

For reference, the four options originally presented supply were;

1. Option 1: Upgrade water treatment plant to meet DWSNZ; retain roof water as potable supply; install restrictors to all properties to control peak demand.

2. Option 2: Upgrade water treatment plant to meet DWSNZ; remove roof water; install restrictors to all properties to control peak demand. - possibly add bore and storage to meet increased peak demands (To be further investigated)

3. Option 3: Decommission existing supply and put all properties on roof water only.

4. Option 4: Decommission existing supply and put all properties on roof water only including adding additional storage and adding point-of-entry treatment.

Of the four options previously consulted on with the community the updated December options report identifies three with the previous option 1 being discarded pending regulatory guidance.

1. Option 1: Upgrade water treatment plant to meet DWSNZ and safeguard ongoing water supply; and address ‘on-property’ tanks to the ‘extent required’ (previously option 2, to be developed during design stage).

2. Option 2: Decommission the existing Council supply and put all properties on roof water only (previously option 3).

3. Option 3: Decommission existing supply and put all properties on roof water only including adding additional storage and adding point-of-entry treatment.

Recommendation – Officers have recommended within the executive summary proceeding with Option 1 including developing the extent of changes required to on-property tanks on the land location outlined in Scenario 2 below.

Land Location Options

Five land location scenarios have been shortlisted and assessed by the project team.

· Scenario 1: Current Kapiti Place Local Purpose (recreation) Reserve positioned treatment plant adjacent to existing Bore.

· Scenario 2: Current Manawarakau Charitable Trust Inc land (protected by QEII Covenant) Brodie Place positioned treatment plant adjacent to existing Spring (on land held by Council) under new lease with Trust.

· Scenario 3: Current Manawarakau Charitable Trust Inc land (protected by QEII Covenant) positioned treatment plant adjacent to existing Spring (on land held by Council) under acquisition.

· Scenario 4: New Bore located on the Kairakau Legal Road. (not progressed pending response from Tangata Whenua).

· Scenario 5: Existing Council Kairakau Bush Recreation Reserve positioned treatment plant below current treatment tanks (Recreation Reserve, Lot 23 Deposited Plan 10063 – Crown land vested to District Council).

There are concerns from the community on the effect of placement of any expanded treatment plant - making no location ideal. All feedback received was consistent in respect of concerns on plant noise, aesthetics’, road access and loss of any reserve amenity’s.

Officers have assessed that scenario 2 provides the best outcome for the project, with the lowest risks on land and lowest community impact. The ongoing risk for council is highlighted within the lease arrangement proposed for the positioning of the plant.

In addition, this provides an additional community benefit in respect of supporting the QE ii bush reserve. The Manawarakau trustees have also identified they are willing to negotiate a new lease arrangement with council and also take a fair and reasonable approach to negotiating an annual rental under the new lease, but are not prepared to sell any land to council, only the grant of a lease and easements as proposed under this option.

A summary of the assessment of land location is below;

Location	Directly affected landowners	Assessed risk of community, challenge
Scenario 1: Kapiti place local purpose (recreation) reserve	6nr + community amenity reduced	High
Scenario2&3: Brodie place (Manawarakau charitable trust inc)	2nr note QEiiii covenant over entire property	Medium
Scenario 5: alternative Kairakau bush reserve parcel	7nr	High

Scenario 4: Alternative bore location – the district plan identifies a designation on the road reserve of Te Apiti road, around the headland.

This opportunity was identified in the 19 may 2020 options report and requires a test bore investigation as may offer better water quality. Presents issues being the road reserve does not appear to follow the current formed road, so a location survey and discussion with Kairakau lands trust (on behalf of tangata whenua) has begun and requires progressing.

Land stability in the location also needs investigating as a 2012 storm created significant slips. In addition, the adjacent stream has been highlighted of cultural significance to iwi. Should this option be pursued we expect significant iwi consultation will be required who have presently expressed concern at the placement of the treatment plant in this location. A further easement for the supply pipe may be required to bring water back to a treatment plant location (scenario’s 1,2,3 or 5).

Funding

Council set aside funding of $549,000 in Year 5 of the 2018 Long Term Plan, this was reallocated to Year 3 of the 2018 Long Term Plan by Council at a meeting in early 2020.

Following the work undertaken to date, officers have highlighted to complete the project to meet compliance requirements and community needs – the original budget of $549,000 is not sufficient, officers are requesting that the project budget be increased to $850,000.

Officers are proposing to work within wider water project budgets and/ or Tranche One of the 3 Waters Stimulus funding to meet this additional budget need. This project was set aside as a backup project in the Tranche One 3 Waters Stimulus and can be called upon if another project(s) budget is reduced.

The reason for the additional budget relates to the need to implement a treatment plant that meets DWSNZ standards whilst managing a new land requirement be it lease or own. Contingency has been built into the cost increase to manage the current risk in the market that there are minimal contractors showing interest in Treatment plant type work.

The newly set budget for Kairakau is comparable to the Takapau and Porangahau projects where budgets were $850k for Takapau and Porangahau at $1.2m.

RISK ASSESSMENT and mitigation

Compliance with Drinking Water Standards - The project aims to address the final water supply in the Council district that has not been upgraded to improve the ability to meet compliance requirements. This risk will increase if the project does not proceed to address the need to be compliant with drinking water standards.

Community views - In the discussion section above officers have addressed the process undertaken to engage with community on this project. There are still risks associated with community views on the project and these are planned to be managed through ongoing and consistent communication.

Land confirmation – An existing discussion and relationship built through the project with the preferred land location minimises the risk of not confirming the land for the site, along with a fair valuation through an independent party.

Budget and Funding – while budget needs to be increased to meet the project requirements, this can be managed within existing budgets.

Future phases – Risk lies in the work needed in future phases, if and when they are needed to be implemented, these phases relate to separation of the hybrid onsite tank system, the water hardness and the need to increase storage and ability to meet demand. This will be managed through future planning and asset management identifying when these phases may be required.

Current compliance risk – The risk carries through the following key areas;

· Ability to supply consistently during peak periods

· Visibility on the system through the lack of automation and transparency.

· The basic treatment process and the robustness of the manual processes

· Current compliance with the drinking water standards.

FOUR WELLBEINGS

Cultural – officers have engaged with Iwi on the project to date and provided updates on the options being investigated, whilst no additional water source and no significant change in location, Iwi interest remains low.

Social – The improvement in the treatment system will allow for more consistent supply to the community which we would expect in turn to have social benefits. There will need to be directly affected landowner engagement to minimise any effects and mitigate any negative aspects from the installation of a treatment plant on a neighbouring property.

Economic – an upgraded treatment plant expects to have a positive economic impact on the community.

Environmental – Improving onsite stormwater management and construction activities will be managed to ensure the project introduces environmental benefits, the footprint of the site will be managed through the next steps of design.

Delegations or authority

The project is within the Chief Executives delegations, but due to the public interest and committee engagement on the project to date. Officers continue to bring the project to the Finance and Infrastructure committee for decision making as committed to in previous papers in June and October 2020.

sIGNIFICANCE AND ENGAGEMENT

In accordance with the council's significance and engagement policy, this matter has been assessed of some significance, engagement has been performed with the community by email, letters to all ratepayers, facebook, direct door to door visits and a community meeting.

Additional engagement is taking place with directly affected landowners.

Initial engagement with local iwi via the Kairakau lands trust has taken place and will continue early in the design phase to ensure we align, provide opportunity and meet any cultural requirements.

Upon endorsement of an option, council officers will commence further engagement planning alongside the design works, to ensure the community is involved and any directly affected residents are involved in and have the ability to provide input into aesthetic design as the project develops.

OPTIONS Analysis

Option 1 - Construct a new water treatment plant to meet drinking water standards, locate on Manawarakau trust land via a lease, and increase project budget to $850,000.

Option 2 - Continue with the Status Quo.

Option 3 - Decommission existing water supply and consider supporting all properties to be safe and sufficient on roof water.

	Option 1 Construct a new water treatment plant to meet drinking water standards, locate on Manawarakau trust land via a lease, and increase project budget to $850,000.	Option 2 Continue with the Status Quo	Option 3 Decommission existing water supply and consider supporting all properties to be safe and sufficient on roof water.
Financial and Operational Implications	Increased financial implications, but managed within existing budgets, so no impact.	Lower financial implication, but continued higher operational impact and compliance risk.	Within budgets, but not delivering an outcome for the community.
Long Term Plan and Annual Plan Implications	Consistent with 2018 LTP	Inconsistent with 2018 LTP intentions.	Inconsistent with 2018 LTP intentions.
Promotion or Achievement of Community Outcomes	Achieves community outcomes and aligns with THRIVE objectives.	Does not promote, achieve or enhance any community outcomes.	Does not achieve community outcomes, as council moves away from the role of supplying water.
Statutory Requirements	Will meet the current statutory requirements (DWSNZ) and set the supply up to adapt to future requirements.	Will not meet the current statutory requirements and Council may be at risk of challenge	Risk with Statutory Requirements –in particular Section 130 and Section 131 of the LGA 2002
Consistency with Policies and Plans	Meets with 2018 and 2021 Long Term Plan objectives – Consistent with THRIVE values of durable infrastructure.	Not consistent with the 2018 or the 2021 Long Term Plan objectives. Inconsistent with THRIVE values of durable infrastructure.	Inconsistent with THRIVE values of durable infrastructure.

Recommended Option

This report recommends option number one to Construct a new water treatment plant to meet drinking water standards, locate on Manawarakau trust land via a lease, and increase project budget to $850,000 for addressing the matter.

NEXT STEPS

Upon approval of the recommended option, officers will;

· Develop Scenario 2 – develop lease discussions with the Manawarakau Trustees and progress discussions with QEII including actions required to conclude actual lease costs and regularisation of existing easement anomalies.

· Develop WSP option 1 into full design including identifying whether further changes are recommended to on-property tanks. One conclusion of land discussions and agreement is reached, plan to commence construction.

· Defer significant post boundary works until regulatory guidance is provided.

· Defer developing treatment for water hardness whilst mixing of supplies continues and the supply is manageable.

· Defer the need to increase water supply until water potable supply is solely from the council supply.

· Continue to engage with directly and indirectly affected community members.

RECOMMENDATION

Finance and Planning Committee Meeting Agenda

25 February 2021

6.6 Waipukurau Second Water Supply - Project Update

File Number: 000123

Author: Darren de Klerk, 3 Waters Programme Manager

Authoriser: Monique Davidson, Chief Executive

Attachments: Nil

Option Four blue route has been identified as preferred, with investigations under way to mitigate risks, work is underway at the Waipawa borefield to confirm sufficient water is available to meet project requirements.

Landowner engagements to date have been generally supportive with recommendations for significant due diligence requiring formal land access agreements, and DIA timeframe constraints placing acquisition and easement compensation negotiations as also needing developing. River crossing methodology is under investigation jointly with the wastewater project.

Following the concept design report these risks are better understood and will be developed further during the detailed design stages of the project and manageable within remaining hold points prior to construction to ensure the project does not proceed to a point of no return.

If successful, this option proceeds the greatest alignment to the original strategic assessment undertaken and is able to add resilience of storage and source to meet future demand, compliance requirements whilst aligning with council objectives of durable infrastructure, smart growth that allows the communities to prosper.

Recommendation

That, having considered all matters raised in the report, the report be noted.

PURPOSE

Further to the Finance and Infrastructure decision 8 October 2020, the matter for consideration by the Committee is to receive a progress update on the project and endorse continuation of developing the intended Option Four Blue Route (the Waipawa / Waipukurau Link) into land access, due diligence, landowner compensation negotiation and continued detailed design.

significance and engagement

This report is provided for information purposes only and has been assessed as not significant.

BACKGROUND

In October 2020 Council endorsed officers to proceed with Option Four (the Waipawa / Waipukurau Link) to detailed design. This included 3 potential land routes from the Waipawa Bore Field through to the Waipukurau reticulation system.

· Blue Route – Generally parallel to SH2, crossing Tuki Tuki River into James St reticulation.

· Yellow Route – Through middle country, crossing Tuki Tuki River into James St reticulation.

· Red Route – Along Lindsay Rd, crossing Tuki Tuki River into James St reticulation.

A route options comparison was undertaken in November analyzing physical route inspection, topography, elevations for reservoirs, desktop geology and pipeline lengths with the recommendation to proceed with Option Four - Blue Route.

Since the route options comparison, the following actions have been performed:

Water Source Validation – Investigation to validate a suitable supply at the Waipawa Bore field is in progress with a bore drilling contractor awarded under tender. A licence to occupy has been agreed with the landowners with the WSP Hydrologist guiding drilling locations. In addition, officers have engaged RDCL to perform geophysical services electrical resistivity tomography (ERT) providing 3D imaging to further assist refining drilling locations. Drilling work is expected to commence in February 2021. It is possible early detail on findings may be available for the Council meeting 25/02/21.

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Pipeline route - Refinement has been made to avoid where possible poor geological conditions, known fault lines, utilise existing road reserves, avoidance of significant compensation through land parcels, identification of preferred river crossing positions and identification of preferred service road access to the reservoir location. Further refinement of this route will be completed following onsite due diligence currently being planned (refer enclosed report), in particular there are presently two possible crossing locations identified on the Tuki Tuki requiring further investigation development during detailed design.

Reservoir and Critical Land Locations – Service road access, geotechnical conditions, and the proposed reservoir land parcel acquisition have been discussed with directly affected landowner who offers general support for the project. Further associated easements north of this also require early agreements in place to allow capital works to commence meeting DIA timeframes.

Compulsory purchase under the Public Works Act (PWA) 1981 is an option, but the process could take up to 12months and is not Council’s preferential land acquisition or easement process, therefore developing relationships early and formally with landowners is required, enabling DIA funding constraints to be met.

Landowners – The remaining directly affected landowners’ north of the Tiki Tuki River have all been contacted informally to discuss the intended project route, and any concerns they may have with easements or land acquisitions’. All have generally expressed support for the pipeline with a number of requests for extraordinary water supplies for stock to be drawn. Officers will identify a consistent design approach for this to include as part of the compensation package negotiation following Council direction. Allowances are included in project budgeting.

Archaeological – A land route assessment including desktop and physical inspection along the proposed has been performed (refer enclosed). The land based assessment has highlighted no items of interest along the route at this stage other than a known hilltop pah away from the physical pipeline. Further study on the proposed river crossing locations is in progress and expected early March.

Communications and Engagement Strategy – Coordination with the intended due diligence, procurement and Land acquisition strategy has been developed to align external communications on the project with the natural design stage. Indirectly affected landowners adjacent to the intended pipeline route have received letter notification of the proposed pipeline with a copy of the project memo so they are aware of any contractors working alongside their properties. Wider engagement will proceed as the project develops in accordance with the developed strategy.

Engagements – Alongside directly affected Landowner engagement, initial contact has been made with iwi including a general project information pamphlet identifying timeframes, pipeline route, river crossing locations and the archaeological assessment in progress.

Budget – Officers continue to monitor, refine and assess budgets as the design develops.

Concept Report ‘February 2021’ – we have identified a number of aspects requiring investigation in order to progress design. Officers summarise key points as follow:

· Geotechnical conditions: The area traversed by the project contains a number of fault lines and areas of unstable land. This may affect choices for reservoir construction design. No invasive site investigations have been undertaken as require landowner permissions opening compensation discussions.

· Water quality: Assumption that the water quality from the expanded borefield will be suitable for UV treatment without requiring turbidity removal to meet drinking water standards. Turbidity removal plant is not budgeted.

· River crossings: Proposed crossing methodology is in development with further site investigations.

· Planning: There is the possibility that archaeological or contaminated land issues might arise. At this stage, it is not expected to be problematic.

· Budget – We continue to gain confidence in the budget as the design progresses and the risks are unravelled further.

The following design assumptions have been highlighted;

· Opportunistic replacement of existing AC pipe on Tikokino Rd.

· Additional 100L/s supply yield from Waipawa Bore site.

· 3ML Central reservoir capacity coupled with 3ML Pukeora providing 6ML total.

· Reverse flow into Waipawa is not included in concept.

· Direct drilling under rivers is possible without ducting /sleeve.

· Single reservoir construction type requires development, currently assumed as Concrete but steel needs development.

· Excludes work to rising mains, existing reservoirs or existing reticulation systems (outside of scope) as funded elsewhere.

Key Risks Identified in the Concept Report;

· Obtaining acceptable and timely land access/acquisition agreements to enable the scheme to proceed,

· Schedule – the project has a challenging schedule which is partly due to the use of Government stimulus funding. Council processes and negotiations/agreements with third parties are further stressors to programme,

· Chilean needle grass is known to be present on one of the properties to be crossed which will require additional management,

· Inability to obtain a satisfactory consent to take the additional water from the Waipawa borefield,

· Inability of the borefield to produce the desired yield,

· Bore-field water quality,

· Capital costs are higher than expected, especially given the busy construction market and COVID related supply chain interruptions,

· COVID-19 lockdown interrupts progress,

· Failure of other critical assets which divert resources from the project.

Value Engineering

Development of Value engineering relies on increasing levels of design in order to validate true value. WSP have identified a series of Value engineering workshops for each key element identifying compromises or opportunities to assist the project. These will be developed during the detailed design stage and alongside due diligence.

DISCUSSION

Officers presented to this committee on the 8^th October 2020, with the committee resolution endorsing officers to proceed with Option Four (the Waipawa / Waipukurau Link) to detailed design. Offices have continued to refine the route in order to reduce where possible risks identified across the project.

Since October, there have been some further developments which may impact the project. Structural assessments have been completed by WSP for the existing Pukeora and Hunter Park reservoirs as well as the Abbotsford Road reservoirs. These concluded that all these structures provide between 15% and 34% of the current standard for new buildings. Structures less than 34%, triggers a legal obligation for these structures to be upgraded or replaced within seven years. The general condition of the Abbotsford road reservoirs identifies the requirement for significant remedial work. It is considered all will be uneconomic to strengthen, and that replacement and significant remedial work will be required.

The four reservoirs have been funded for with the current draft 2021 Long Term Plan and will be completed within the first six years of the plan. The reservoir replacements are reliant on another reservoir to be able to supply the towns while these reservoirs are replaced.

The project budget identified in the last committee meeting was $11.5m over four years (FY18/19 through to FY23/24) – expecting completion by 30 June 2024. The budget is still based on preliminary work, and will be firmed up as the design progresses, but carries risk and opportunity related to market responses, onsite land investigations, geotechnical conditions, reservoir design, land acquisition and easement expenses.

The project currently identifies 7 directly affected landowners (5 Private, LINZ, HBRC) including 2 land parcels requiring acquisition. The potential for significant delay associated with any compulsory public works act (PWA) acquisition process may delay landowner access restricting physical site due diligence recommended by WSP. Officers highlight informal discussions are well progressed, with directly affected landowners appearing supportive in principal, however formal discussions including compensation negotiation needs time to allow landowners to consider proposals, engage with their mortgage lenders, and if required source any support entitled under the PWA. Informally the process is expected to take in the region of 4-6months to complete, with additional focus on 3 identified key landowners.

The formal PWA process would be in excess of 12 months. Access for due diligence and associated agreements is now required to allow further de-risking of this project for Council. Officers are therefore recommending proceeding with formal land negotiations to reduce the extent of risk to the DIA funding constraints for $3.3m expenditure by 31 March 2022.

CHBDC is required to complete spend of the $3.3m Tranche One allocation prior to March 2022. In order to complete this expenditure by March 2022 to meet the funding requirements associated with the grant, Officers will continue with due diligence investigations including conditional land negotiations to progress detailed design, value engineering and budget refinement.

The project team have highlighted a number of recommendations needing addressing before entering and furthering detailed design. Officers identify the key items as:

· Identifying suitable supply quality and yield from the Waipawa Test Bores and securing this under consent from HBRC. – In progress.

· Review of Concept report assumptions with internal stakeholders and refinement. – In progress.

· Land access agreements/ Acquisitions. – Pending

· CHBDC continue with ongoing and proposed investigation work and landowner negotiations to address the primary risks which may affect the feasibility of this project. – Pending.

· A series of value engineering workshops is held to refine potential design solutions for certain key elements of the project. – Pending.

Following from the 8^th October F&I meeting we are proposing to establish hold points that if they do not develop suitably as planned would be opportunities to return to Council or committee for a further decision;

1. Any deviation from existing budget or plans with items in the design phase related to, but not subject to - landowner access, physical due diligence, preliminary design on reservoir, completion river crossing feasibility and formal landowner engagement expectations.

2. Procurement Plan or Strategy approval to outline final design packages for reservoir, access road, rising main, procurement planning including pre-contract materials ordering.

3. Tender Outcome Report – pre award of contracts – consistent with the process outlined in the pre-approved procurement plan for that contract.

RISK MANAGEMENT

The progress of option four and the project remains vital to ensure the risk of infrastructure failure is mitigated. Examples of recent concerns are highlighted below;

· Reservoirs failing structural assessments (largely due to age)

· Borefield concerns with producing water

System resilience concerns also highlighted below;

· One pipe from borefield to reservoir/ treatment plant that is Asbestos Concrete

· One pipe into Waipukurau town from treatment plant that is mostly Asbestos Concrete

· One Borefield and water source

· Limited storage (approx. 8 hours) and excessive water turnover

Project risks were highlighted with the Option Four paper in October 2020. The project team was requested to manage these as part of the design process, with the requirement to bring these risks back to Council in a decision paper outlining the option in greater detail and providing greater detail on the risks currently highlighted. Officers have developed the below measures to inform.

Project Risk	Update
Waipawa borefields ability to produce the additional water required to supply Waipukurau	Under investigation with geophysical services and test bores. Formal report is expected end of March 2021.
Consenting and groundwater take limitations	Discussion with HBRC modelling identifies consent availability of 100L/s. Consent risks remain pending lodgement which is subject to landowner agreement.
Land acquisition and landowners willing to work with council for easements and land sites.	Informal discussion with directly affected landowner held identifying a general willingness to work with CHBDC. Land parcels and easements require developed design and formal engagement in order to progress. Significant timeframes may extend from this subject to the formal engagement responses.
Project delays due to currently unknown factors like ground conditions, land access.	Due diligence strategy identifies recommendations for significant investigative tasks requiring land access and licences to occupy. Significant timeframes may extend from this subject to the formal engagement responses.
The tension between decision making to meet reform and grant funding objectives and making wise investment decisions	Project control group established including CHBDC operations, Design Consultant, Land Consultant and PMO office with PMO director oversight. Risk register developed as a control document.
Ground conditions including crossing two rivers	Early engagement in progress with specialist drilling contractor to identify a works methodology, investigations required will support consents.
Ground conditions implicating reservoir and geotechnical costs	The due diligence strategy identifies recommendations for investigative tasks requiring early land access and licences to occupy.
Additional Risks Identified
Cost inflation and market conditions.	Identification of level of budgeting confidence at 80%. Value Engineering planned alongside design development to seek further opportunities’.
Procurement and Staging	CHBDC are developing a procurement strategy for review and approval. Officers have identified 3 hold points.

Implications ASSESSMENT

This report confirms that the matter concerned has no particular implications and has been dealt with in accordance with the Local Government Act 2002. Specifically:

· Council staff have delegated authority for any decisions made;

· Unless stated above, any decisions made can be addressed through current funding under the Long-Term Plan and Annual Plan;

· Any decisions made are consistent with the Council's plans and policies; and

Next Steps

Officers will work to progress the design and value engineering of option four blue route, and open formal engagements with landowners on land access and compensation packages, as outlined within the above plans.

Continue to develop the sustainable water demand management plan. This plan is a long term action plan to improve sustainable water use. This project is at an early stage, and is likely to take several years to show any significant results. The plan will drive the actions the capital and operations team will make in the future and how we as Council sustainably manage and reduce water loss and use.

Through the design process, Council will continue to engage with the community including mana whenua to understand the impacts and considerations the project may have on them, including considerations on how this project will enable the vision of the spatial plan.

Officers propose to bring Option Four Blue Route back to the Committee at each of the identified hold points for decision to proceed.

RECOMMENDATION

That, having considered all matters raised in the report, the report be noted.

Finance and Planning Committee Meeting Agenda

25 February 2021

6.8 Key Project Status Report - BigWastewaterStory

File Number: 003

Author: Darren de Klerk, 3 Waters Programme Manager

Authoriser: Monique Davidson, Chief Executive

Attachments: 1. Key Project Status Report - BigWastewaterStory ⇩

Recommendation

That, having considered all matters raised in the report, the report be noted.

PURPOSE

significance and engagement

This report is provided for information purposes only and has been assessed as not significant.

BACKGROUND

Following charges in relation to the Waipawa wastewater treatment plant in 2016/ 2017, Council commissioned technical reviews into the Waipawa and Waipukurau wastewater plants, in summary the advice received from two independent experts, outlined the plants with their current treatment system and in their current state would never be able to meet consent compliance, in particular for ammonia. Council commenced work to respond to the court order and investigate a new treatment and discharge scheme in 2018.

The Otane wastewater plant had in 2017, received a new consent to upgrade the treatment system onsite and continue to discharge to the ‘unnamed farm drain’ and eventually to the Papanui stream. In mid-2018, just prior to awarding tenders for this upgrade, Council officers recommended to Council, that the Otane wastewater system be included in the Waipawa and Waipukurau review, and the onsite upgrade be placed on hold. In 2019, it was identified that the best practicable option for Otane was to convey to Waipawa for treatment and ultimately discharge. Otane is now firmly in the planning for the future of these plants.

The plants went through a robust community engagement process via a community reference group to identify preferred options to investigate and design for engagement in Long Term Plan 2021. These options will be presented at concept design level to the community as part of pre engagement in July 2020, and as formal engagement in early 2021. While some necessary works continue at all plants in conjunction with these major long term plans.

The Takapau wastewater plant received a 3 year consent extension through to October 2021, to allow Council to investigate different options for discharge.

The Porangahau and Te Paerahi wastewater plants both have their consents expiring in May 2021.

This programme of work across the six wastewater plants signals the need for specific reporting across this programme and its progress. In addition, the need to implement robust management controls through the formation of a project control group and project governance group.

DISCUSSION

The detail is outlined with the attached key project status report

Implications ASSESSMENT

This report confirms that the matter concerned has no particular implications and has been dealt with in accordance with the Local Government Act 2002. Specifically:

· Council staff have delegated authority for any decisions made;

· Unless stated above, any decisions made can be addressed through current funding under the Long-Term Plan and Annual Plan;

· Any decisions made are consistent with the Council's plans and policies; and

Next Steps

To continue to progress the short term improvements, and the long term programme in conjunction, in preparation for community engagement as part of long term plan 2021.

To progress the work set out in the wastewater strategy and then as committed to in Council’s funding and delivery plan in Tranche One of the 3 Waters reform programme.

To continue with prudent and robust programme management, the six wastewater projects now form their own programme, to provide appropriate oversight, it is planned that Council form a formal project control group, and a project governance group.

RECOMMENDATION

That, having considered all matters raised in the report, the report be noted.